Rosas v. NFI Industries ( 2021 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 MARIA ROSAS, No. 2:21-cv-00046 WBS CKD 13 Plaintiff, 14 v. ORDER RE: PLAINTIFF’S MOTION TO REMAND 15 NFI INDUSTRIES, AKA NATIONAL DISTRIBUTION CENTERS LLC; and 16 DOES 1 through 50, inclusive 17 Defendants. 18 19 ----oo0oo---- 20 Plaintiff Maria Rosas brought this action against 21 defendant National Distribution Centers LLC1 (“defendant” or 22 “NDC”) in the California Superior Court for the County of San 23 Joaquin, alleging numerous violations of California state 24 1 Defendant states in its Notice of Removal (Docket No. 1) and its opposition to plaintiff’s motion to remand (Docket No. 25 6) that it was erroneously named in plaintiff’s complaint as “NFI Industries, aka National Distribution Centers LLC.” Plaintiff 26 does not dispute defendant’s assertion that she misnamed 27 defendant in her complaint or that National Distribution Centers LLC in fact employed plaintiff. (See Pl.’s Mot. to Remand 28 (Docket No. 3).) 1 employment anti-discrimination laws. (See Pl.’s Compl. 2 (“Compl.”) (Docket No. 1-1).) Defendant removed the action to 3 this court on January 8, 2021 on the basis of diversity of 4 citizenship. (See Notice of Removal (Docket No. 1)); 28 U.S.C. 5 §§ 1332, 1441, 1446. Plaintiff now moves to remand this action 6 to the California Superior Court for the County of San Joaquin. 7 (See Pl.’s Mot. to Remand (“Mot. to Remand”) (Docket No. 3).) 8 I. Factual and Procedural Background 9 Plaintiff worked for NDC from February 26, 2017 to July 10 23, 2020 as a customer service representative. (See Compl. 11 ¶ 15.) Plaintiff alleges that her supervisors constantly 12 criticized and harassed her at work, while favorably treating 13 other employees whom they had referred and/or hired, creating a 14 hostile work environment. (See Compl. ¶¶ 17-20.) Plaintiff 15 further alleges that she was wrongfully terminated on July 23, 16 2020 after she took a leave of absence and complained to Human 17 Resources about her supervisors’ conduct. (See id. at ¶¶ 21-22.) 18 Plaintiff’s complaint contains eight claims for violations of the 19 California Family Rights Act, violations of the California Fair 20 Employment and Housing Act (“FEHA”), wrongful constructive 21 termination in violation of California public policy, violations 22 of Labor Code § 1102.5, and intentional infliction of emotional 23 distress, all directed against NDC. (See id. at ¶¶ 2-4, 24-78.) 24 Plaintiff alleges that she was at all relevant times, 25 and still is, a resident of the State of California. (See id. at 26 ¶ 2.) NDC is a limited liability company (“LLC”) whose sole 27 owner is NFI, LP. (See Decl. of Sarah E. Pontoski (“Pontoski 28 Decl.”) ¶ 4 (Docket No. 1-8).) NFI, LP has four partners, three 1 of which are traditional trusts and one of which, NFI GP, LLC, is 2 a Delaware LLC. (Id. at ¶ 5.) NFI GP, LLC has three members: 3 Sidney R. Brown, who is domiciled in and a citizen of 4 Pennsylvania; Irwin J. Brown, who is domiciled in and a citizen 5 of Texas; and Jeffrey S. Brown, who is domiciled in and a citizen 6 of New Jersey. (Id. at ¶ 6.) 7 The Sidney R. Brown 2009 GST Exempt Family Trust Dated 8 November 30, 2009 is formed under the laws of the state of New 9 Jersey, and its two trustees, Sandra Brown and Scott Brucker, are 10 domiciled in and citizens of Pennsylvania. (Id. at ¶ 7.) The 11 Jeffery S. Brown 2015 GST Exempt Trust is formed under the laws 12 of the state of New Jersey, and its two trustees, Daniel Cooper 13 and Tracy Brown, are domiciled in and citizens of Pennsylvania 14 and New Jersey. (Id.) The Irwin J. Brown 2015 GST Exempt Family 15 Trust is formed under the laws of the state of Texas, and its 16 trustee, Scott Brucker, is domiciled in and a citizen of 17 Pennsylvania. (Id.) 18 II. Legal Standard 19 “[A]ny civil action brought in a State court of which 20 the district courts of the United States have original 21 jurisdiction, may be removed by the defendant or the defendants, 22 to the district court of the United States for the district . . . 23 where such action is pending.” 28 U.S.C. § 1441(a). However, if 24 “it appears that the district court lacks subject matter 25 jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). 26 On a motion to remand, the defendant bears the burden of showing 27 by a preponderance of the evidence that federal jurisdiction is 28 appropriate. Geographic Expeditions, Inc. v. Estate of Lhotka, 1 599 F.3d 1102, 1107 (9th Cir. 2010) (citation omitted). 2 III. Discussion 3 Federal courts have original jurisdiction over cases 4 where complete diversity exists between the parties and the 5 amount in controversy exceeds $75,000, exclusive of interest and 6 costs. 28 U.S.C. § 1332(a). To satisfy the requirements for 7 complete diversity, “each of the plaintiffs must be a citizen of 8 a different state than each of the defendants.” Morris v. 9 Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001) 10 (citing Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996)). 11 For diversity purposes, an individual’s citizenship is 12 determined by his or her domicile. Kantor v. Wellesley 13 Galleries, Ltd., 704 F.2d 1088, 1090 (9th Cir. 1983). An 14 individual’s domicile is “her permanent home, where she resides 15 with the intention to remain or to which she intends to return.” 16 Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001). 17 “[T]he existence of domicile for purposes of diversity is 18 determined as of the time the lawsuit is filed.” Lew v. Moss, 19 797 F.2d 747, 750 (9th Cir. 1986). 20 For removal purposes, an LLC is a citizen of all states 21 where its members and/or owners are citizens. Johnson v. 22 Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 23 2006). Similarly, the citizenship of a limited partnership is 24 determined by the citizenship of its partners. Carden v. Arkoma 25 Assocs., 494 U.S. 185, 195-96 (1990). The citizenship of 26 traditional trusts is based on the citizenship of their trustee 27 or trustees. Johnson, 437 F.3d at 899. Here, plaintiff alleges 28 that she was, at all relevant times, and still is, a resident of 1 California. (See Compl. ¶ 2.) The court therefore concludes that 2 plaintiff is a citizen of California for the purposes of 3 establishing diversity jurisdiction. 4 Plaintiff’s complaint names only one defendant, NDC. 5 (See Compl. ¶ 3.) According to a declaration attached to 6 defendant’s Notice of Removal, filed by the associate general 7 counsel of NFI Management Services, an affiliate entity to NDC, 8 NDC is an LLC whose sole member is NFI, LP. (See Pontoski Decl. 9 ¶¶ 2-4.) Because the Pontoski declaration also shows that the 10 four partners that make up NFI, LP are each traditional trusts 11 whose trustees live outside of California (see id. at ¶¶ 5-7), 12 or, in the case of NFI GP, LLC, a Delaware LLC whose three 13 members all live outside of California (see id.), defendant 14 argues that none of the entities that make up NDC are citizens of 15 California for the purposes of diversity jurisdiction, and, thus, 16 complete diversity of citizenship exists. See Johnson, 437 F.3d 17 at 899; Carden, 494 U.S. at 195-96. 18 Plaintiff does not dispute any of the information 19 presented in the Pontoski Declaration, or argue that the amount 20 in controversy is less than $75,000. (See generally Pl.’s Mot. 21 to Remand.) Rather, plaintiff argues that complete diversity of 22 citizenship does not exist for two reasons. First, plaintiff 23 argues that the traditional trusts that are partners of NFI, LP 24 should be considered “unincorporated associations” for the 25 purposes of establishing diversity jurisdiction and, therefore, 26 the citizenship of each of their members (as opposed to the 27 citizenship of their trustees) must be used to determine their 28 citizenship. (See Pl.’s Mot. to Remand at 7-8.) Second, 1 plaintiff argues that, even if the court finds that complete 2 diversity of citizenship exists between defendant and plaintiff, 3 plaintiff was “in [the] process [of] naming DOE 1 and 2 when 4 [defendant] filed its Notice of Removal.” (See id. at 2, 4.) 5 Because the two fictitious defendants, whom plaintiff identifies 6 in her motion as Angela Brown and Nathan Sorenson, are California 7 residents, plaintiff argues that they destroy diversity and thus 8 that the court must remand this action to state court. (See id.) 9 The court will address each argument in turn. 10 A. Citizenship of the Traditional Trusts 11 Plaintiff’s first argument relies primarily on the 12 Supreme Court’s decision in Carden v. Arkoma Associates. There, 13 the Supreme Court held that “diversity jurisdiction in a suit by 14 or against” artificial entities other than corporations “depends 15 on the citizenship of ‘all the members . . . the several persons 16 composing such association.” Carden, 494 U.S. at 195 (internal 17 citations omitted) (quoting Chapman v. Barney, 129 U.S. 677, 682 18 (1889); Great Southern Fire Proof Hotel Co. v. Jones, 177 U.S. 19 449, 456 (1900)). Plaintiff argues that trusts are one of the 20 artificial entities included in Carden’s holding, and, therefore, 21 that the citizenship of the trusts that make up defendant must be 22 determined by looking to the “citizenship of the bondholders 23 rather than that of the Trustees.” (See Mot. to Remand at 8.) 24 However, the Ninth Circuit has made it clear that 25 Carden does not apply to traditional trusts; rather, to analyze 26 the citizenship of a traditional trust for the purposes of 27 diversity jurisdiction, courts must look to the citizenship of 28 the trustee or trustees, not the beneficiaries. See Demarest v. 1 HSBC Bank USA, N.A. as Tr. for Registered Holders of Nomura Home 2 Equity Loan, Inc., Asset-Backed Certificates, Series 2006-HE2, 3 920 F.3d 1223, 1227 (9th Cir. 2019). As the Ninth Circuit 4 explained, the Supreme Court has established a different rule for 5 entities like so-called “real-estate investment trusts” (“REITs”) 6 and other artificial entities created by state law, which may 7 share the name “trust” but have little in common with the 8 traditional trust entity that establishes a fiduciary 9 relationship between the trustee and one or more beneficiaries. 10 Id. at 1227-28 (citing Americold Realty Trust v. Conagra Foods, 11 Inc., 136 S. Ct. 1012, 1014 (2016)). For the purposes of 12 diversity jurisdiction, REITs and other similar unincorporated 13 entities’ “members include [their] shareholders.” Id. (quoting 14 Americold, 136 S. Ct. at 1014). But this rule does not apply to 15 traditional trusts, which still must be analyzed according to the 16 citizenship of their trustees. Id. 17 Plaintiff does not dispute that the three trusts which 18 make up NFI, LP are traditional trusts. (See Pl.’s Mot. for 19 Remand at 4.) Rather, plaintiff contends that Americold’s rule 20 should be extended to traditional trusts. (See id.) Plaintiff 21 does not cite any authority in support of this contention beyond 22 cases from the Eleventh Circuit, which, in any event, all involve 23 non-traditional and business entities similar to the REITs at 24 issue in Americold. See, e.g., Riley v. Merrill Lynch, Pierce, 25 Fenner & Smith, Inc., 292 F.3d 1334 (11th Cir. 2002) (holding 26 that a business trust would be deemed, for diversity purposes, a 27 citizen of each state in which it had at least one shareholder). 28 Controlling Ninth Circuit precedent requires that this 1 court look to the citizenship of the trustee or trustees of each 2 the trusts that make up NFI, LP. See Demarest, 920 F.3d at 1230 3 (“In short, [the rule set out in Johnson v. Columbia Props. 4 Anchorage, LP, 437 F.3d 894 (9th Cir. 2006)] remains good law 5 when applied to what Americold labelled traditional trusts; in 6 such a case . . . the trustee is the real party in interest, and 7 so its citizenship, not the citizenships of the trust’s 8 beneficiaries, controls the diversity analysis.”). Because the 9 only evidence provided by either party as to the makeup of the 10 three trusts at issue, contained in the Pontoski Declaration, 11 indicates that none of the trustees are domiciled in California, 12 and that the fourth partner of NFI, LP (NFI GP, LLC) has three 13 individuals as members, none of whom are domiciled in, or 14 citizens of, California, the court finds that defendant has met 15 its burden of showing that complete diversity of citizenship 16 exists between plaintiff and NDC. See 28 U.S.C. § 1332. 17 B. Plaintiff’s Intent to Name Doe Defendants 18 In the alternative, plaintiff argues that this court 19 cannot assert diversity jurisdiction over her claims because she 20 intends to name two California residents, Angela Brown and Nathan 21 Sorenson, as defendants in this action. (See Mot. to Remand at 22 2, 4.) Plaintiff points out that her complaint “clearly 23 identifies” Brown as plaintiff’s unit manager and Sorenson as 24 plaintiff’s operational manager, and states that Brown and 25 Sorenson “created [an] unhealthy work environment, work under 26 constant pressure and harassment that caused plaintiff’s panic 27 and anxiety attacks at work, and that she need [sic] to be put on 28 anxiety medications.” (See id. at 2; Compl. ¶ 20.) 1 “The citizenship of fictitious defendants is 2 disregarded for removal purposes and becomes relevant only if and 3 when the plaintiff seeks leave to substitute a named defendant.” 4 Soliman v. Philip Morris Inc., 311 F.3d 966, 971 (9th Cir. 2002); 5 see also 28 U.S.C. § 1441(b)(1) (“In determining whether a civil 6 action is removable on the basis of the jurisdiction under 7 section 1332(a) of this title [diversity jurisdiction], the 8 citizenship of defendants sued under fictitious names shall be 9 disregarded.”). Though some the allegations in plaintiff’s 10 complaint identify Brown and Sorenson, and allege that their 11 conduct gave rise to the alleged hostile work environment 12 plaintiff experienced, neither individual is named as a party 13 defendant. (See Compl. ¶¶ 2-5.) 14 Because plaintiff has not sought leave to amend her 15 complaint to substitute a named defendant, the defendant 16 currently named in the complaint is completely diverse from 17 plaintiff, and there is no debate regarding the satisfaction of 18 the $75,000 requirement, the court finds that this action was 19 removable and will deny plaintiff’s motion to remand.2 20 IT IS THEREFORE ORDERED that plaintiff’s motion to 21 remand (Docket No. 3) be, and the same hereby is, DENIED. 22 23 2 Counsel advises that plaintiff will later seek leave to 24 amend the complaint to add nondiverse parties. In the event that occurs, “the court may deny joinder, or permit joinder and remand 25 the action to the State court.” Newcombe v. Adolf Coors Co., 157 F.3d 686, 690 (9th Cir. 1998) (explaining that if after removal 26 plaintiff seeks to join additional defendants whose joinder would 27 destroy subject matter jurisdiction, court has discretion to deny). 28 nnn nen ne een ee nn no nn nO on nn nn I I OOO EE 1] Dated: February 22, 2021 Pi he Vi (eh ce 2 UNITED STATES DISTRICT JUDGE 3 4 5 6 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10