1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 A LEXANDRO GRACIA, an individual, C ase No. 2:24-cv-01566 SPG (PVCx) 12 Plaintiff, ORDER DENYING PLAINTIFF’S

MOTION TO REMAND [ECF NO. 17]

13 v.

LEMONADE INSURANCE COMPANY,

14 a New York corporation; METROMILE

15 OPERATING COMPANY, INC., a Delaware corporation and DOES 1 through 16 100, inclusive, 17 Defendants. 18 19 20 Before the Court is Plaintiff Alexandro Gracia’s motion to remand to the Superior 21 Court of California for the County of Los Angeles. (ECF No. 17 (“Mot.”)). Defendant 22 opposes. (ECF No. 19). Having considered the parties’ submissions, the relevant law, and 23 the record in this case, the Court finds that the matter is suitable for resolution without oral 24 argument. Fed. R. Civ. P. 78(b); C.D. Cal. L. R. 7.15. For the reasons stated below, the 25 Court DENIES Plaintiff’s Motion. 26 27 28 1 I. BACKGROUND AND PARTIES 2 Plaintiff Alexandro Gracia (“Plaintiff”) alleges that Defendants Lemonade 3 Insurance Company and Metromile Operating Company, Inc. (together “Defendants”) 4 violated California’s employment laws. (ECF No. 1-4 (“FAC”)).1 Plaintiff alleges 5 discrimination, retaliation, failure to prevent discrimination, and disability discrimination 6 in violation of the Fair Employment and Housing Act (“FEHA”), wrongful termination in 7 violation of public policy, intentional and negligent infliction of emotional distress, and 8 failure to produce employment documents. (Id. at 1-2). Plaintiff’s initial complaint was 9 filed in state court on January 10, 2024. (ECF No. 1-1 at 1). Plaintiff filed his First 10 Amended Complaint on February 1, 2024. (FAC). On February 26, 2024, Defendant 11 Lemonade Insurance filed the Notice of Removal in this Court. (ECF No. 1). On March 12 25, 2024, Plaintiff filed the instant Motion. Defendants opposed on April 10, 2024. (ECF 13 No. 19 (“Opp.”)). 14 Plaintiff is, and at all relevant times was, a resident in the County of Los Angeles, 15 California. (ECF No. 17-1 at 6). Defendant Lemonade is a corporation organized and 16 existing under the laws of the State of New York, with its principal place of business in the 17 State of New York. (ECF No. 1 at 7). Defendant Metromile is a corporation organized 18 and existing under the laws of the State of New York, with its principal place of business 19 in the State of California. (Id.). 20 II. LEGAL STANDARD 21 To remove a case from a state court to a federal court, a defendant must file a notice 22 of removal “containing a short and plain statement of the grounds for removal.” 28 U.S.C. 23 § 1446(a). When removal is based on diversity of citizenship, the amount in controversy 24 must exceed $75,000 and the parties must be diverse. 28 U.S.C. § 1332. The party 25

26 1 In Plaintiff’s Motion and Plaintiff’s FAC, Plaintiff is identified as “Alexandro Garcia.” 27 Similarly, the official name on the Court’s ECF system is “Alexandro Garcia.” In 28 Plaintiff’s Opposition, Plaintiff identifies as “Alexandro Gracia” and notes that the previous identification is erroneous. 1 invoking the removal statute bears the burden of establishing that federal subject-matter 2 jurisdiction exists. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988). 3 “The removal statute is strictly construed, and any doubt about the right of removal requires 4 resolution in favor of remand.” Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 5 1244 (9th Cir. 2009). Moreover, if it is “unclear or ambiguous from the face of a state- 6 court complaint whether the requisite amount in controversy is pled, the removing 7 defendant bears the burden of establishing, by a preponderance of the evidence, that the 8 amount in controversy exceeds the jurisdictional threshold.” Urbino v. Orkin Servs. of 9 Cal., Inc., 726 F.3d 1118, 1121–22 (9th Cir. 2013) (internal citations and quotation marks 10 omitted). 11 A non-diverse party may be disregarded for purposes of determining whether 12 jurisdiction exists if the court determines that the party’s joinder was “fraudulent” or a 13 “sham.” Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001); Ritchey v. 14 Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998); McCabe v. Gen. Foods Corp., 811 15 F.2d 1336, 1339 (9th Cir. 1987). The term “fraudulent joinder” is a term of art and does 16 not connote any intent to deceive on the part of plaintiffs or their counsel. Lewis v. Time 17 Inc., 83 F.R.D. 455, 460 (E.D. Cal. 1979), aff’d, 710 F.2d 549 (9th Cir. 1983). The relevant 18 inquiry is whether the plaintiff has failed to state a cause of action against the non-diverse 19 defendant, and the failure is obvious under settled state law. Morris, 236 F.3d at 1067; 20 McCabe, 811 F.2d at 1339. 21 The burden of proving fraudulent joinder is a heavy one. The removing party must 22 prove that there is “no possibility that plaintiff will be able to establish a cause of action in 23 State court against the alleged sham defendant.” Good v. Prudential Ins. Co. of Am., 5 F. 24 Supp. 2d 804, 807 (N.D. Cal. 1998). In this regard, “[r]emand must be granted unless the 25 defendant shows that the plaintiff ‘would not be afforded leave to amend his complaint to 26 cure [the] purported deficiency.’” Padilla v. AT & T Corp., 697 F. Supp. 2d 1156, 1159 27 (C.D. Cal. 2009); Macey v. Allstate Prop. & Cas. Ins. Co., 220 F. Supp. 2d 1116, 1117 28 1 (N.D. Cal. 2002) (“If there is a non-fanciful possibility that plaintiff can state a claim under 2 California law against the non-diverse defendants the court must remand.”). 3 III. DISCUSSION 4 Plaintiff argues Defendants have failed to establish that complete diversity exists in 5 this action. Defendants oppose, arguing that Plaintiff attempts to destroy complete 6 diversity using a sham defendant, namely, Defendant Metromile. The Court turns to these 7 arguments now. 8 A. Amount in Controversy 9 “A removing defendant’s notice of removal need not contain evidentiary 10 submissions but only plausible allegations of jurisdictional elements.” Salter v. Quality 11 Carriers, Inc., 974 F.3d 959, 964 (9th Cir. 2020) (internal citation omitted). However, if 12 a plaintiff then contests the allegations in the notice of removal, both sides may “submit 13 proof and the court decides, by a preponderance of the evidence, whether the amount in 14 controversy requirement has been satisfied.” Dart Cherokee Basin Operating Co., LLC v. 15 Owens, 574 U.S. 81, 82 (2014). 16 Here, Defendants allege that this “case may be removed pursuant to the provisions 17 of 28 U.S.C. § 1441, in that it is a civil action wherein the amount in controversy for 18 Plaintiff’s claims exceeds the sum of seventy-five thousand dollars ($75,000), exclusive of 19 interest and costs….” (ECF No. 1 at 5). Plaintiff does not contest that the amount in 20 controversy exceeds the jurisdictional floor. Thus, the Court finds that the amount in 21 controversy is met. 22 B. Whether There Exists Complete Diversity 23 Defendants assert that this district court has removal jurisdiction based on diversity 24 of citizenship. 28 U.S.C. § 1332(a)(1). Section 1332 requires complete diversity of 25 citizenship; each of the plaintiffs must be a citizen of a different state than each of the 26 defendants. Caterpillar v. Lewis, 519 U.S. 61, 68 (1996). Nevertheless, one exception to 27 the requirement of complete diversity is where a non-diverse defendant has been 28 “fraudulently joined.” Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 1 2001). Defendants argue that Defendant Metromile is “erroneously named in the FAC as 2 Plaintiff’s employer and may be disregarded for purposes of diversity as a sham 3 defendant.” (ECF No. 1 at 7). Under Ninth Circuit precedent, a Court may properly 4 disregard a non-diverse defendant if it determines that party’s joinder is a “sham,” such 5 that no possible cause of action can be established against that party. Morris v. Princess 6 Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). The defendant is entitled to present the 7 facts showing the joinder to be fraudulent. (Id.). 8 Plaintiff seeks to assert a series of FEHA claims, a wrongful termination claim, and 9 claims for negligent and intentional infliction of emotional distress against Defendant 10 Metromile. To support a claim that a nondiverse defendant has been fraudulently joined, 11 the removing party must show that the plaintiff has failed to state a valid cause of action 12 against that nondiverse defendant, and the “settled rules of the state” must make the failure 13 evident by clear and convincing evidence. See Hamilton Materials, Inc. v. Dow Chem. 14 Corp., 494 F.3d 1203, 1206 (9th Cir. 2007) (internal quotation marks omitted). When 15 determining whether this burden has been met, courts may look to the face of the plaintiff’s 16 complaint, as well as to additional “summary judgment type evidence.” Morris, 236 F.3d 17 at 1068. The Court begins with Plaintiff’s FEHA claims. 18 FEHA establishes a civil right to be free from job discrimination based on certain 19 classifications, including race and sex. Vernon v. State of California, 116 Cal. App. 4th 20 114, 127 (2004). The FEHA predicates potential liability on the status of the defendant as 21 an “employer.” (Id.) (internal citations omitted). The FEHA defines an employer as “any 22 person regularly employing five or more persons, or any person acting as an agent of an 23 employer, directly or indirectly….” Cal. Gov’t Code § 12926. Defendants argue that 24 “Metromile is erroneously named in the FAC as Plaintiff’s employer….” (ECF No. 1 at 25 7). According to Defendants, “Plaintiff ceased to be employed by Metromile as of 26 December 31, 2022 after Lemonade, Inc. completed its acquisition of Metromile.” (Id. at 27 9). “Plaintiff became a Lemonade, Inc. employee on January 1, 2023 until his termination 28 on April 21, 2023.” (Id.). Since Metromile “did not have any employees” after December 1 31, 2022, and Plaintiff alleges that he first sustained injuries to his finger on or about March 2 18, 2023, the “causes of action in the FAC” all occurred “at a point when Plaintiff was no 3 longer employed by Metromile.” (Id. at 8-9). Because, Defendants argue, the events 4 giving rise to Plaintiff’s causes of action under FEHA all occurred when Plaintiff was an 5 employee of Defendant Lemonade, Defendant Metromile has been fraudulently joined. 6 Plaintiff contends, to the contrary, that “Defendants Lemonade and Metromile are 7 liable for the harms caused to Plaintiff because each Defendant jointly and separately 8 exercised direct and indirect control over Plaintiff’s employment conditions.” (Mot. at 7). 9 Plaintiff asserts – and Defendants do not deny – that “Metromile was the original employer 10 of Plaintiff.” (Mot. at 8). The chief disagreement between the Parties is, then, whether 11 Metromile ceased to be Plaintiff’s employer after December 31, 2022—that is, after its 12 acquisition by Lemonade. For the following reasons, the answer is Yes. 13 Defendants provide evidence, via a declaration by Julia Sigel, Senior Director of 14 People Ops for Lemonade Inc., that “[o]n January 1, 2023, all Metromile Operating 15 Company’s employees moved to the payroll of Lemonade, Inc. As such, on January 1, 16 2023, Gracia commenced employment with Lemonade, Inc. He was employed at 17 Lemonade, Inc. as a Sales Specialist.” (ECF No. 1-9 (“Sigel Decl.”) ¶ 5). “After 18 December 31, 2022, Metromile Operating Company ceased to have any employees, Gracia 19 ceased to be an employee of Metromile Operating Company, and Metromile Operating 20 Company had no control over the day-to-day activities, discipline, accommodation, 21 termination, or supervision of Lemonade, Inc.’s employees, such as Gracia.” (Sigel Decl. 22 ¶ 6). 23 In response, Plaintiff cites numerous authorities on the law of joint employment. See 24 (Mot. at 7-8). However, Plaintiff offers no evidence to suggest that Defendants were joint 25 employers of Plaintiff. Instead, Plaintiff simply states in conclusory fashion that “the facts 26 and allegations contained in the Complaint demonstrate that Defendants Lemonade and 27 Metromile were Plaintiffs’ joint employers and Defendants cannot demonstrate that there 28 is no possibility of stating a cause of action against them.” (Mot. at 8). Because this 1 conclusory assertion is not sufficient to rebut Defendants’ evidence and Plaintiff offers no 2 alternative set of facts that could be used to bring Metromile into the scope of his FEHA 3 claims, the Court holds Plaintiff has failed to bring a valid cause of action under FEHA 4 against this nondiverse defendant. 5 Because the remaining causes of action are all predicated on Defendant Metromile 6 having a role in the employment and discharge of Plaintiff, and the Court has held that 7 Defendant Metromile was not Plaintiff’s employer during the span of time in which the 8 causes of action were alleged to occur, Plaintiff has failed to state any causes of action 9 under the remaining claims, i.e., wrongful termination in violation of public policy, 10 intentional and negligent infliction of emotional distress, and failure to produce 11 employment documents.2 12 In light of the above, Defendant Metromile is a fraudulently joined defendant. 13 Because there is complete diversity between the remaining parties and the amount in 14 controversy for Plaintiff’s claims exceeds the sum of seventy-five thousand dollars, the 15 Court has diversity jurisdiction over this Action. 16 C. Plaintiff’s Request for Attorney’s Fees 17 28 U.S.C. Section 1447(c) provides, in relevant part, “An order remanding the case 18 may require payment of just costs and any actual expenses, including attorney fees, 19 incurred as a result of the removal.” Because Plaintiff’s Motion has been denied, the 20 request for attorney’s fees under § 1447 is also denied. 21 22 23 24 25 26

27 2 Although Defendants address the remaining causes of action, See (Opp. at 13-14), 28 Plaintiff does not. 1 CONCLUSION 2 For the foregoing reasons, the Court DENIES Plaintiff's Motion to Remand. 3 4 IS SO ORDERED. 5 6 ||DATED: April 30, 2024 --—. 7 ~ HON. SHERILYN PEACE GARNETT

UNITED STATES DISTRICT JUDGE

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