Teng Medical Foundation, P.C. v. Cynosure, LLC ( 2021 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 TENG MEDICAL FOUNDATION, P.C., No. 2:21-cv-00818-TLN-DB 12 Plaintiff, 13 v. ORDER 14 CYNOSURE, LLC; MMP CAPITAL 15 INC.; AMUR EQUIPMENT FINANCE 16 INC.; TYLER JOHNSON; and DOES 1 through 25, inclusive, 17 Defendants. 18 19 20 This matter is before the Court on Defendant Cynosure, LLC’s (“Defendant”) Motion to 21 Strike. (ECF No. 10.) Plaintiff Teng Medical Foundation, P.C. (“Plaintiff”) filed an opposition. 22 (ECF No. 12.) Defendant replied. (ECF No. 15.) For the reasons set forth below, the Court sua 23 sponte REMANDS this action to state court. 24 /// 25 /// 26 /// 27 /// 28 1 I. FACTUAL AND PROCEDURAL BACKGROUND 2 In December 2019, Plaintiff, a California corporation, was interested in purchasing a 3 “Sculpsure Non-Invasive Body Contouring Platform” (the “Product”) from Defendant, a 4 Delaware limited liability corporation. (ECF No. 5 at 2–5.) Tyler Johnson (“Johnson”), a 5 California resident and an agent and employee of Defendant, contacted Plaintiff. (Id. at 4.) 6 Plaintiff alleges Johnson made multiple misrepresentations to induce Plaintiff to buy the Product. 7 (Id. at 4–6.) Plaintiff alleges it relied on Johnson’s misrepresentations and agreed to purchase the 8 Product through a contract. (Id. at 5.) Plaintiff alleges because Defendant’s representations were 9 false, Plaintiff was never able to generate a profitable level of revenue. (Id. at 5–7.) 10 On April 1, 2021, Plaintiff filed a Complaint in Placer County Superior Court against 11 Defendant and Does 1 through 25, alleging state law claims for breach of contract, breach of 12 implied covenant of good faith and fair dealing, negligent misrepresentation, and a violation of 13 California’s Unfair Competition Law. (ECF No. 1-1 at 3.) On May 6, 2021, Defendant removed 14 the action to this Court based on diversity jurisdiction. (ECF No. 1 at 3–5.) On May 24, 2021, 15 Plaintiff filed a First Amended Complaint (“FAC”) as a matter of course under Rule of Federal 16 Procedure (“Rule”) 15(a).1 (ECF No. 5.) In the FAC, Plaintiff added several other Defendants, 17 including Johnson. (Id.) It is undisputed that, as a California resident, Johnson would destroy 18 complete diversity. (See ECF No. 10 at 5.) On June 7, 2021, Defendant moved to strike 19 Plaintiff’s claims against Johnson pursuant to Rule 12(f), arguing that Johnson was fraudulently 20 joined to defeat diversity jurisdiction. (ECF No. 10.) 21 II. ANALYSIS 22 As a preliminary matter it is unclear whether Rule 12(f) is the proper vehicle to challenge 23 Johnson’s joinder. Rule 12(f) provides that a court “may strike from a pleading an insufficient 24 defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 25 12(f). A court will only consider striking a defense or allegation if it fits within one of these five 26 categories. Yursik v. Inland Crop Dusters Inc., No. CV-F-11-01602-LJO-JLT, 2011 WL 27 28 1 Defendant does not dispute that Plaintiff’s FAC was properly filed. (See ECF 10 at 4.) 1 5592888, at *3 (E.D. Cal. Nov. 16, 2011). However, the Court has an ongoing duty to assess 2 whether it has subject matter jurisdiction over a case. See Fed. R. Civ. P. 12(h)(3); United 3 Investors Life Ins. Co. v. Waddell & Reed Inc., 360 F.3d 960, 967 (9th Cir. 2004) (“[T]he district 4 court ha[s] a duty to establish subject matter jurisdiction over [a] removed action sua sponte, 5 whether the parties raised the issue or not.”); 28 U.S.C. § 1447(e) (“If after removal the plaintiff 6 seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the 7 court may deny joinder, or permit joinder and remand the action to the State court.”). As will be 8 discussed below, the Court finds there are no longer grounds for diversity jurisdiction and it is 9 appropriate to remand this case, sua sponte, for lack of federal subject matter jurisdiction. 10 “[D]istrict courts may disregard the citizenship of a non-diverse defendant who has been 11 fraudulently joined.” Grancare, LLC v. Thrower by and through Mills, 889 F.3d 543, 548 (9th 12 Cir. 2018). “A defendant invoking federal court diversity jurisdiction on the basis of fraudulent 13 joinder bears a ‘heavy burden’ since there is a ‘general presumption against [finding] fraudulent 14 joinder.’” Id. (citation omitted). Fraudulent joinder may be established by showing either: “(1) 15 actual fraud in the pleading of jurisdictional facts[;] or (2) inability of the plaintiff to establish a 16 cause of action against the non-diverse party in state court.” Id. Proving the latter theory requires 17 a defendant to show that an “individual joined in the action cannot be liable on any theory.” Id. 18 (citation omitted). “[A] federal court must find that a defendant was properly joined and remand 19 the case to state court if there is a possibility that a state court would find that the complaint states 20 a cause of action against any of the [non-diverse] defendants.” Id. (citation and internal quotation 21 marks omitted) (emphasis in original). 22 Defendant argues Plaintiff joined Johnson to defeat diversity. (ECF No. 10 at 6.) In 23 arguing Plaintiff has not stated a valid claim against Johnson, however, Defendant does not 24 actually refute Plaintiff’s allegations. Rather, Defendant focuses solely on the fact that Plaintiff 25 sues Johnson for his actions as Defendant’s “agent and employee” (ECF No. 5 ¶ 16), making 26 Johnson’s presence in this suit superfluous to the claims against Defendant. (ECF No. 10 at 7, 9.) 27 Although Defendant may be liable for Johnson’s actions as Johnson’s employer, Defendant has 28 not persuaded the Court that there is no possibility Johnson is also liable for his own actions. See 1 | Grancare, LLC, 889 F.3d at 548 (“We have upheld rulings of fraudulent joinder where a 2 | defendant demonstrates that a plaintiff is barred by the statute of limitations from bringing claims 3 | against that defendant . . . [or] where a defendant presents extraordinarily strong evidence or 4 | arguments that a plaintiff could not possibly prevail on her claims against the allegedly 5 | fraudulently joined defendant.”). Nor has Defendant persuaded the Court that any purported 6 | deficiencies in the pleading cannot possibly be cured by granting leave to amend. See id. at 550. 7 III. CONCLUSION 8 Because it is undisputed that Johnson is a California resident — and Defendant has not 9 | met its heavy burden to show Johnson was fraudulently joined — there is no longer complete 10 | diversity between the parties. As such, this Court lacks subject matter jurisdiction over □□□□□□□□□□□ 11 claims. The Court therefore REMANDS this action to Placer County Superior Court. 12 IT IS SO ORDERED. 13 | DATED: December 20, 2021 {\ f /) 14 “ ! Vk 15 Troy L. Nuhlep ] 16 United States District Judge 17 18 19 20 21 22 23 24 25 26 27 28