Artz v. Ulta Salon, Cosmetics & Fragrance, Inc. ( 2023 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 JENNIFER ARTZ, No. 2:23-cv-01599-DJC-DB 11 12 Plaintiff, 13 v. ORDER GRANTING MOTION TO REMAND AND DENYING REQUEST FOR 14 ULTA SALON, COSMETICS & COSTS AND FEES FRAGRANCE, INC., a California 15 corporation; MARIA CHARDONNAY 16 DOE, an individual; and DOES 1 THROUGH 100, inclusive, 17 Defendants. 18 19 20 Plaintiff Jennifer Artz brought a case in state court against Defendants Ulta 21 Salon, Cosmetics & Fragrance, Inc. (“Ulta”); Maria Chardonnay Doe (“Maria Doe”), an 22 individual; and 100 Doe defendants, alleging various violations of California’s 23 whistleblower statute, anti-workplace discrimination laws, and anti-disability 24 discrimination laws, all arising from Plaintiff’s employment with Ulta. Ulta removed the 25 matter to federal court, and Plaintiff seeks to remand the case back to state court, 26 arguing that this Court lacks subject matter jurisdiction. For the reasons set forth 27 below, the Court GRANTS Plaintiff’s Motion to Remand (ECF No. 8) because there is 28 not complete diversity of citizenship but DENIES Plaintiff’s Request for Costs and Fees. 1 BACKGROUND 2 I. Factual Background 3 Plaintiff was employed by Ulta as a Service Manager for about four years until 4 Ulta terminated Plaintiff’s employment on or about September 3, 2021. (See Compl. 5 for Damages (ECF No. 1-2 at 5–57) ¶ 2 (“Complaint” or “Compl.”).) The crux of 6 Plaintiff’s Complaint and causes of action against Defendants are that Plaintiff suffers 7 from bipolar disorder and requires a stable work schedule to help decrease her 8 episodes, and that Defendants denied Plaintiff a stable work schedule despite Plaintiff 9 raising these issues with Defendants. (See Pl.’s Mem. of P. and A. in Supp. of Pl.’s Mot. 10 for Remand and Req. for Att’y’s Fees, Costs, and Sanctions in the Amount of $7,140.00 11 (ECF No. 8) at 2–4 (“Motion” or “Mot.”); e.g., Compl. ¶¶ 53–61.) In addition to denying 12 Plaintiff a stable schedule, Plaintiff complains of an unsafe work environment caused 13 by nightshifts where only two employees were on-shift during which customers would 14 argue with each other, leading to injuries to Plaintiff’s arm and three bulging discs in 15 her back that she suffered after breaking up a fight on one occasion (see, e.g., Compl. 16 ¶ 58); and a demeaning work environment in which Defendants dismissed Plaintiff’s 17 concerns, expressed anger that she raised these concerns, and ultimately suspended 18 Plaintiff and terminated her employment as a result (see, e.g., id. ¶¶ 17–18, 58, 81). 19 II. Procedural Background 20 Plaintiff filed the Complaint in Solano County Superior Court on June 22, 2023. 21 (See Compl.; Mot. at 5.) Ulta removed the matter to federal court based on diversity 22 jurisdiction on August 2, 2023. (See Ulta’s Not. of Removal of Civil Action Under 28 23 U.S.C. §§ 1332, 1441(b), and 1446 (ECF No. 1) at 12 (“Removal Notice” or “Removal 24 Not.”).) Plaintiff moved to remand the matter back to state court on September 1st. 25 (See Mot.) Ulta filed its Opposition simultaneously with its Request for Judicial Notice 26 of: (1) the discrimination complaint Plaintiff filed with the California Department of Fair 27 Employment and Housing and related communications regarding the discrimination 28 complaint, and (2) three other exhibits containing cases in which plaintiffs received 1 non-economic or emotional distress damages exceeding $75,000. (See Ulta’s Opp’n 2 to Pl.’s Mot. (ECF No. 12) (“Opposition” or Opp’n”); ECF No. 13 (providing Ulta’s 3 Request for Judicial Notice, which the Court grants1).) Plaintiff filed her Reply on 4 September 25th. (See Pl.’s Reply Brief in Supp. of Pl’s Mot. (ECF No. 19) (“Reply”).) 5 The Court heard oral arguments on October 26, 2023, where Attorney Alisa 6 Khousadian appeared for Plaintiff, and Attorney Lisa C. Hamasaki appeared for Ulta. 7 (See ECF No. 24.) The matter is now fully briefed. 8 DISCUSSION 9 I. Legal Standard 10 A case may be removed to federal court if that court would have original 11 jurisdiction over the matter, which generally requires asserting federal question 12 jurisdiction under 28 U.S.C. § 1331 or diversity jurisdiction under 28 U.S.C. § 1332. 13 See 28 U.S.C. § 1441; Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) 14 (quoting Ansley v. Ameriquest Mortg. Co., 340 F.3d 858, 861 (9th Cir. 2003) (citation 15 omitted)). “However, it is to be presumed that a cause lies outside the limited 16 jurisdiction of the federal courts and the burden of establishing the contrary rests 17 upon the party asserting jurisdiction.” Hunter, 582 F.3d at 1042 (quoting Abrego 18 Abrego v. The Dow Chem. Co., 443 F.3d 676, 684 (9th Cir. 2006) (citation omitted)) 19 (internal quotation marks and alterations omitted). As a result, “[t]he ‘strong 20 presumption against removal jurisdiction means that the defendant always bears the 21 burden of establishing that removal is proper,’ and that the court resolves all 22 ambiguity in favor of remand to state court.” Id. (quoting Gaus v. Miles, Inc., 980 F.2d 23 564, 566 (9th Cir. 1992) (per curiam) (internal quotation marks omitted)). 24 1 Ulta’s Request for Judicial Notice (ECF No. 13) is GRANTED because this Court must take judicial 25 notice of materials when provided the means for so doing. See Fed. R. Evid. 201(c)(2). The Court takes judicial notice of Exhibits B, C, and D, as they are publicly accessible cases, but the Court does not take 26 judicial notice of the reasoning or conclusions in those cases — only taking notice of the damages amount. The Court also takes judicial notice of Exhibit A, as it contains a complaint before an 27 administrative agency, but the Court declines to take judicial notice of the communications related to the complaint contained in Exhibit A, as those are private communications not capable of review and 28 not generally known within this Court’s jurisdiction. See Fed. R. Evid. 201(b). 1 II. Analysis 2 A. Motion to Remand 3 1. Amount in Controversy 4 Plaintiff tries to dispute the estimate that Ulta provided in its Removal Notice 5 that totals well over $75,000 based on Plaintiff’s potential to recover: (1) lost earnings 6 since her termination on or about September 3, 2021; (2) damages for emotional 7 distress brought by plaintiffs in similar cases; and (3) attorney’s fees. (See Removal 8 Not. ¶¶ 21–36; e.g., Reply at 6–8.) However, whether Plaintiff tried to mitigate her 9 damages and whether Ulta “fail[ed] to show the plethora of cases where a plaintiff 10 loses at an employment trial,” or “cases where their attorneys were awarded less than 11 $75,000[,]” (Reply at 7–8,) is irrelevant for this Court’s decision because the Court may 12 use the defendant’s, Ulta’s, viewpoint of costs to determine whether the amount-in- 13 controversy more likely than not will exceed $75,000. See In re Ford Motor 14 Co./Citibank (S. Dakota), N.A., 264 F.3d 952, 958 (9th Cir. 2001) (“Under the ‘either 15 viewpoint’ rule, the test for determining the amount in controversy is the pecuniary 16 result to either party which the judgment would directly produce.” (citing Ridder Bros. 17 v. Blethen, 142 F.2d 395, 399 (9th Cir. 1944))). Based on the lost earnings and 18 potential to recover non-economic or emotional distress damages exceeding 19 $100,000, the Court finds that it is more likely than not that the total pecuniary loss for 20 Ulta will be greater than $75,000. 21 2. Fraudulent Joinder or Sham Defendant 22 The heart of the dispute for the Motion is whether “MARIA CHARDONNAY 23 DOE” who is referred to as “Maria DOE” throughout the Complaint is a sham 24 defendant or fraudulently joined party whose citizenship should be ignored for 25 purposes of establishing complete diversity and subject matter jurisdiction. (See 26 Compl. ¶ 4; Removal Not. ¶¶ 16–18; Mot. at 7–12; Opp’n at 4–9; Reply at 2–6.) Under 27 the doctrine of “fraudulent joinder” or “sham defendants,” a federal court may ignore 28 a non-diverse defendant’s citizenship if either of two stringent standards are met. See 1 Grancare, LLC v. Thrower by and through Mills, 889 F.3d 543, 548 (9th Cir. 2018) 2 (quoting Hunter, 582 F.3d at 1046 (citations omitted)). 3 The Ninth Circuit has held that “[t]here are two ways to establish fraudulent 4 joinder: ‘(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the 5 plaintiff to establish a cause of action against the non-diverse party in state court.’” 6 Grancare, LLC, 889 F.3d at 548 (quoting Hunter, 582 F.3d at 1044 (quoting 7 Smallwood v. Illinois Cent. R. Co., 385 F.3d 568, 573 (5th Cir. 2004))). Ulta does not 8 allege actual fraud and instead relies on the second method of establishing fraudulent 9 joinder, which requires showing that there is no possibility that a state court would 10 find that the complaint states a cause of action against the non-diverse defendant. 11 See id. 12 Ulta “bears a ‘heavy burden’ since there is a ‘general presumption against 13 [finding] fraudulent joinder.’” Grancare, LLC, 889 F.3d at 548 (quoting Hunter, 582 14 F.3d at 1046 (citations omitted)) (alteration included). For Ulta must not only establish 15 that Plaintiff could not state a claim under Rule 12(b)(6) against the allegedly sham 16 defendant. See id. at 549 (“A claim against a defendant may fail under Rule 12(b)(6), 17 but that defendant has not necessarily been fraudulently joined.”). The Court must 18 also determine “whether a deficiency in the complaint can possibly be cured by 19 granting the plaintiff leave to amend.” Id. at 550. 20 For instance, the Ninth Circuit has previously held that defenses that are 21 generally detached from the merits of the underlying cause of action are sufficient to 22 prove fraudulent joinder. See Grancare, LLC, 889 F.3d at 549 (“A standard that 23 equates fraudulent joinder with Rule 12(b)(6) conflates a jurisdictional inquiry with an 24 adjudication on the merits.”). In Grancare, LLC, the Ninth Circuit specifically cited 25 cases where fraudulent joinder was found based upon a successful statutes of 26 limitations challenge, see id. at 548 (first citing Ritchey v. Upjohn Drug Co., 139 F.3d 27 1313, 1320 (9th Cir. 1998); and then citing Hamilton Materials, Inc. v. Dow Chem. 28 Corp., 494 F.3d 1203, 1206 (9th Cir. 2007)), based on state law privileges, see id. 1 (citing McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)), or where it 2 was clear that the sham defendant could not be held liable under state law, such as 3 where the sham defendants were sued under a contract to which the actual defendant 4 was not a party and only the signatory to a contract could be liable under California 5 law, see id. (first citing United Computer Sys., Inc. v. AT & T Corp., 298 F.3d 756, 761 6 (9th Cir. 2002) (citations omitted); and then citing Kruso v. Int’l Tel. & Tel. Corp., 872 7 F.2d 1416, 1426–27 (9th Cir. 1989)). The Ninth Circuit also noted that it has “declined 8 to uphold fraudulent joinder rulings where a defendant raises a defense that requires 9 a searching inquiry into the merits of the plaintiff’s case, even if that defense, if 10 successful, would prove fatal.” Id. at 538–49 (citing Hunter, 582 F.3d at 1046)). 11 Ulta ultimately contends that Plaintiff fails to state a claim for harassment against 12 Maria Doe, Plaintiff’s supervisor while working at Ulta, as opposed to a discrimination 13 claim, because the acts alleged in the Complaint mostly relate to personnel and 14 administrative management decisions and the acts that could constitute harassment 15 do not amount to a hostile work environment. (See Opp’n at 5–7.) To establish a 16 prima facie case of hostile work environment harassment, a plaintiff must show that 17 “(1) she is a member of a protected class; (2) she was subjected to unwelcome 18 harassment; (3) the harassment was based on her protected status; (4) the harassment 19 unreasonably interfered with her work performance by creating an intimidating, 20 hostile, or offensive work environment; and (5) defendants are liable for the 21 harassment.” Galvan v. Dameron Hosp. Ass’n, 37 Cal. App. 5th 549, 563 (2019). A 22 hostile work environment claim requires proving that the “harassing behavior is 23 pervasive or severe.” Hughes v. Pair, 46 Cal. 4th 1035, 1042 (2009) (citing Miller v. 24 Dep’t of Corr., 36 Cal. 4th 446, 462 (2005)). The only disputed issue here is whether 25 the alleged conduct is sufficiently severe or pervasive to be abusive. 26 A hostile work environment requires the conduct to be both subjectively and 27 objectively abusive, such that a reasonable person with the plaintiff’s protected 28 characteristic would find the environment hostile or abusive. See Faragher v. City of 1 Boca Raton, 524 U.S. 775, 787 (1998) (citing Harris v. Forklift Sys., Inc., 510 U.S. 17, 21– 2 22 (1993)); e.g., Brooks v. City of San Mateo, 229 F.3d 917, 923 (9th Cir. 2000) 3 (quoting Fuller v. City of Oakland, Cal., 47 F.3d 1522, 1527 (9th Cir. 1995) (citing 4 Harris, 510 U.S. at 21–22), as amended (Apr. 24, 1995)); Craig v. M & O Agencies, Inc., 5 496 F.3d 1047, 1055 (9th Cir. 2007) (citing Fuller, 47 F.3d at 1527). Here, Plaintiff 6 pleads that she subjectively believed that the work environment was intolerable 7 because Plaintiff complained that the unsafe workplace triggered her episodes (see 8 Compl. ¶ 56(c)) and shared her workplace concerns on several occasions (see, e.g., id. 9 ¶ 17), stating that “[i]t is going to take someone to really get hurt for someone to 10 understand it’s serious.” (Id. ¶ 17(b).) 11 Even if the subjective component is met, the Court must still find that Plaintiff 12 establishes the objective component. Faragher, 524 U.S. at 788. “In evaluating the 13 objective hostility of a work environment, the factors to be considered include the 14 ‘frequency of discriminatory conduct; its severity; whether it is physically threatening 15 or humiliating, or a mere offensive utterance; and whether it unreasonably interferes 16 with an employee’s work performance.’” McGinest v. GTE Serv. Corp., 360 F.3d 1103, 17 1113 (9th Cir. 2004) (quoting Nichols v. Azteca Rest. Enterprises, Inc., 256 F.3d 864, 18 872 (9th Cir. 2001) (quoting Harris, 510 U.S. at 23)). There is a sliding scale for 19 establishing a hostile work environment that depends on the severity and 20 pervasiveness of the conduct, with more of one requiring less of the other. See, e.g., 21 Brooks, 229 F.3d at 925 (quoting Ellison v. Brady, 924 F.2d 872, 878 (9th Cir. 1991) 22 (citation omitted)). “A recurring point in the[ ] opinions is that ‘simple teasing,’ offhand 23 comments, and isolated incidents (unless extremely serious) will not amount to 24 discriminatory changes in the ‘terms and conditions of employment.’” Faragher, 524 25 U.S. at 788 (quoting Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 82 (1998)). 26 Nonetheless, “[t]he Supreme Court has followed a ‘middle path’ with regard to the 27 level of hostility or abuse necessary to establish a hostile work environment[,]” holding 28 that “[i]t is enough ‘if such hostile conduct pollutes the victim’s workplace, making it 1 more difficult for her to do her job, to take pride in her work, and to desire to stay on 2 in her position.’” McGinest, 360 F.3d at 1113 (quoting Harris, 510 U.S. at 21) (citing 3 Steiner v. Showboat Operating Co., 25 F.3d 1459, 1463 (9th Cir. 1994)). 4 Ulta argues that the only legally sufficient allegations are those claiming that 5 “[Plaintiff] was mocked by members of management (including DOE Defendant) and 6 that they often rolled their eyes at her.” (Reply at 6.) The Court agrees that, standing 7 alone, this would be insufficient to state a claim. However, Plaintiff also complained 8 about her supervisor, Maria Doe, demanding Plaintiff to cover shifts she was not 9 scheduled to work, which happened on multiple occasions, and reprimanding her for 10 requesting accommodations and raising the issue through an email to Maria Doe’s 11 superiors. (See Reply at 5; e.g., Compl. ¶¶ 18(b), 58(c)–(d).) While Ulta is correct that 12 these are generally personnel and management decisions, California courts will 13 occasionally use such decisions as a basis for liability where they “have a secondary 14 effect of communicating a hostile message. This occurs when the actions establish a 15 widespread pattern of bias.” Roby v. McKesson Corp., 47 Cal. 4th 686, 709 (2009) 16 (citing Miller v. Dep't of Corr., 36 Cal. 4th 446 (2005)), as modified (Feb. 10, 2010). 17 While the Court struggles to see a “widespread pattern of bias” in the complaint as 18 currently pled, it may well be that the Plaintiff can add additional allegations if further 19 discovery is permitted. 20 While the current complaint might not survive a motion to dismiss under 21 Federal Rule of Civil Procedure 12(b)(6), that is not the standard for determining 22 fraudulent joinder. See Grancare, LLC, 889 F.3d at 549. Rather, as the Ninth Circuit 23 has recognized, fraudulent joinder and removal should focus on procedural defenses 24 and immunities that are distinct from the underlying merits of the claim. See, e.g., 25 Ritchey, 139 F.3d at 1318–19 (citations omitted); Grancare, LLC, 889 F.3d at 548–49 26 (collecting cases); also id. at 549 (“A standard that equates fraudulent joinder with 27 Rule 12(b)(6) conflates a jurisdictional inquiry with an adjudication on the merits.”). 28 Therefore, “[a] claim against [Maria Doe] may fail under Rule 12(b)(6), but [Maria Doe] 1 has not necessarily been fraudulently joined.” Grancare, LLC, 889 F.3d at 549. 2 “Consequently, if a defendant simply argues that plaintiff has not pled sufficient facts 3 to state a claim, the heavy burden of showing fraudulent joinder has not been met.” 4 Ontiveros v. Michaels Stores, Inc., No. CV 12-09437-MMM-FMOX, 2013 WL 815975, at 5 *5 (C.D. Cal. Mar. 5, 2013) (collecting cases). “A defendant is not a fraudulently joined 6 or sham defendant simply because the facts and law may further develop in a way that 7 convinces the plaintiff to drop that defendant, and this Court cannot find that [Maria 8 Doe] is a fraudulently joined or sham defendant.” Padilla v. AT & T Corp., 697 F. Supp. 9 2d 1156, 1159 (C.D. Cal. 2009). 10 Here, Ulta has failed to provide any such procedural bar, immunity, or statute of 11 limitation to preclude a claim against Maria Doe and has only argued that Plaintiff fails 12 to state a claim against her. As a result, Ulta has failed “to show that [Maria 13 Doe] . . . cannot be liable on any theory.” Ritchey, 139 F.3d at 1318; see also id. at 14 1319 (collecting cases where joinder was only found fraudulent upon a showing that 15 no cause of action could be stated); Hunter, 582 F.3d at 1046 (“As the Eleventh Circuit 16 has stated, ‘if there is a possibility that a state court would find that the complaint 17 states a cause of action against any of the resident defendants, the federal court must 18 find that the joinder was proper and remand the case to the state court.’” (quoting 19 Tillman, 340 F.3d at 1279)). 20 Although the Court finds that the amount-in-controversy more likely than not 21 will exceed $75,000, the Court finds that Plaintiff has alleged a potentially viable cause 22 of action for harassment against Maria Doe. Thus, her alleged domicile in California 23 destroys complete diversity of citizenship. As a result, this Court lacks subject matter 24 jurisdiction, so the Court GRANTS Plaintiff’s Motion to Remand (ECF No. 8). 25 B. Sanctions Motion and Motion for Costs and Attorney’s Fees 26 Plaintiff also seeks an award of “costs and any actual expenses, including 27 attorney[’]s fees, incurred as a result of the removal[ ]” following multiple 28 communications trying to persuade Ulta on the reasonableness of removal. (Mot. at 1 14 (first quoting 28 U.S.C. § 1447(c); and then citing Martin v. Franklin Cap. Corp., 546 2 U.S. 132, 136 (2005)); see also Mot. Exs. A–D (ECF No. 18-2 at 5–18) (providing a copy 3 of four communications sent between 8/4–8/11/2023 regarding whether removal to 4 federal court was proper).) Absent unusual circumstances, a court may award costs 5 and attorney’s fees under § 1447(c) only where the removing party lacked an 6 objectively reasonable basis for seeking removal. Grancare, LLC, 889 F.3d at 552 7 (citing Martin, 546 U.S. at 141). When assessing the objective reasonableness of the 8 removal request, the Ninth Circuit has recognized that the degree of clarity in the law 9 at the time of removal is a relevant factor. See id. (citing Lussier v. Dollar Tree Stores, 10 Inc., 518 F.3d 1062, 1063 (9th Cir. 2008)). 11 Here, the Court finds that Ulta had an objectively reasonable basis for seeking 12 removal based on the alleged failure to state a claim against Marie Doe for 13 harassment. Although administrative and supervisory decisions can be used to 14 establish harassment by a supervisor, see, e.g., Roby, 47 Cal. 4th at 708 (citing Miller, 15 36 Cal. 4th at 446), the Court finds that Ulta reasonably relied on precedent indicating 16 that “[a] recurring point in the[ ] opinions is that ‘simple teasing,’ offhand comments, 17 and isolated incidents (unless extremely serious) will not amount to discriminatory 18 changes in the ‘terms and conditions of employment.’” Faragher, 524 U.S. at 788 19 (quoting Oncale v. Sundowner Offshore Servs., Inc., 523 U.S. 75, 82 (1998)). While 20 Ulta failed to meet the high burden imposed on defendants claiming fraudulent 21 joinder, which essentially requires that there be no possibility that the plaintiff’s cause 22 of action could succeed against the sham defendant, Ulta’s failure is not enough to 23 find that Ulta did not have an objectively reasonable basis for seeking removal. 24 Accordingly, the Court DENIES Plaintiff’s request for costs incurred under 28 25 U.S.C. § 1447(c). 26 //// 27 //// 28 //// 1 CONCLUSION 2 For the reasons set forth above, the Court GRANTS Plaintiff's Motion to Remand 3 | (ECF No. 8) under 28 U.S.C. § 1447 because there is not complete diversity of 4 | citizenship. However, the Court DENIES Plaintiff's Request for Attorney’s Fees, Costs, 5 | and Sanctions in the Amount of $7,140.00 (ECF No. 8). 6 The Clerk of Court is DIRECTED to REMAND the case to the Superior Court of 7 | California County of Solano and CLOSE this case. 8 9 10 IT IS SO ORDERED. 11 | Dated: _November 17, 2023 “Daniel J CoD tto— Hon. Daniel alabretta UNITED STATES DISTRICT JUDGE 13 14 15 16 | pJc3-Artz.23ev1599.MTR 17 18 19 20 21 22 23 24 25 26 27 28 441