Napoleon Gaitan v. XPO Cartage, Inc.

Filing 25

MINUTES (in chambers): ORDER GRANTING MOTION TO REMAND 18 by Judge S. James Otero. For the foregoing reasons, the Court GRANTS Plaintiff Napoleon Gaitan's Motion to Remand. The instant action is hereby REMANDED to the State of California for the County of Los Angeles, Long Beach. IT IS SO ORDERED. Case remanded to Los Angeles Superior Court of California, South District, Long Beach, NS033716. MD JS-6. Case Terminated. (mailed 7/24/17) (lom)

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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

DATE: July 24, 2017

CASE NO.: CV 17-03913 SJO (ASx)
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Gaitan v. XPO Cartage, Inc.

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PRESENT: THE HONORABLE S. JAMES OTERO, UNITED STATES DISTRICT JUDGE
Victor Paul Cruz
Courtroom Clerk

Not Present
Court Reporter

COUNSEL PRESENT FOR PLAINTIFF:

COUNSEL PRESENT FOR DEFENDANT:

Not Present

Not Present

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PROCEEDINGS (in chambers): ORDER GRANTING MOTION TO REMAND [Docket No. 18]
This matter is before the Court on Plaintiff Napoleon Gaitan's ("Plaintiff") Motion to Remand, filed
June 22, 2017. Defendant XPO Cartage, Inc. ("XPO") opposed the Motion ("Opposition") on July
6, 2017, and Plaintiff replied ("Reply") on July 13, 2017. The Court found this matter suitable for
disposition without oral argument and vacated the hearing set for July 31, 2017. See Fed. R. Civ.
P. 78(b). For the following reasons, the Court GRANTS Plaintiff's Motion.
I.

FACTUAL AND PROCEDURAL BACKGROUND

On March 30, 2016, Plaintiff filed a Complaint with the Labor Commissioner, State of California,
Department of Industrial Relations, Division of Labor Standards Enforcement (the "Labor
Commissioner"), captioned Napoleon Gaitan v. XPO Cartage, Inc. A Delaware Corporation DBA
XPO Logistics, State Case No. 05-66467 KR (the "Complaint"). (See Notice of Removal, Ex. 1
("Compl."), ECF No. 1.) The gravamen of Plaintiff's Complaint is his belief that XPO mis-classified
Plaintiff as an independent contractor, rather than as an employee, and therefore he should be
entitled to the benefits afforded to employees under the Labor Code. (See generally Compl.)
Plaintiff asserted six state law causes of action against XPO for (1) unpaid wages; (2) unlawful
deductions; (3) meal period premiums; (4) rest period premiums; (5) waiting time penalties under
section 203 of the Labor Code; and (6) liquidated damages under section 1194.2 of the Labor
Code. (See generally Compl.)
On December 20, 2016, the Labor Commissioner held an administrative hearing on the claims
asserted in Plaintiff's Complaint. (See Notice of Removal ¶ 2.) On April 14, 2017, the
Commissioner served XPO by mail with a copy of its Order, Decision or Award of the Labor
Commissioner ("ODA"), in which the Commissioner, among other things, ordered that XPO must
pay Plaintiff $188,198.27. (Notice of Removal, Ex. 2 ("ODA").)
XPO filed a Notice of Appeal of the ODA in the Superior Court of the State of California for the
County of Los Angeles — Long Beach ("Superior Court") on April 25, 2017. (Notice of Removal,
Ex. 3.) Over the next month, XPO filed several documents in the Superior Court, including an
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CIVIL MINUTES - GENERAL

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DATE: July 24, 2017

CASE NO.: CV 17-03913 SJO (ASx)

addendum to its Notice of Appeal that included a copy of Plaintiff's Complaint previously filed with
the Labor Commissioner. (Notice of Removal ¶ 3, Ex. 5.) On May 22, 2017, XPO filed its Answer
in the Superior Court, along with a peremptory challenge to the judicial officer, which the Superior
Court subsequently accepted. (Notice of Removal, Exs. 7-9.)
Two days after filing these documents, XPO filed a Notice of Removal, submitting that this Court
has original jurisdiction over this action pursuant to 28 U.S.C. section 1332(a)(1) ("Section 1332")
and that the action may be removed pursuant to 28 U.S.C. section 1441(b) ("Section 1441"). (See
Notice of Removal ¶ 6.) In its Notice of Removal, XPO argued that removal of an appeal from a
state administrative action is proper pursuant to BNSF Railway Company v. O'Dea, 572 F.3d 785
(9th Cir. 2009), and further argued that California district courts have noted specifically that an
appeal of a Labor Commissioner's decision under Labor Code section 98.2 is properly removable.
(Notice of Removal ¶¶ 7-8 [citations omitted].)
II.

DISCUSSION

Plaintiff presents a single argument as to why the instant action should be remanded: that
because XPO appealed the ODA to the Superior Court prior to filing its Notice of Removal, this
Court should deem it the "plaintiff" for the purpose of determining whether removal was proper.
(See generally Mot., ECF No. 18.) XPO disagrees, arguing Plaintiff's potential for the recovery
of damages from XPO remains the "mainspring of the proceedings" at issue here. (See generally
Opp'n, ECF No. 22.)
Section 1441(a) provides that, "[e]xcept as otherwise expressly provided by Act of Congress, any
civil action brought in a State court of which the district courts of the United States have original
jurisdiction, may be removed by the defendant or the defendants, to the district court of the
United States for the district and division embracing the place where such action is pending." 28
U.S.C. § 1441(a) (emphasis added). Thus, "[t]he right to remove a state court case to federal
court is clearly limited to defendants." Am. Int'l Underwriters (Philippines), Inc. v. Continental Ins.
Co., 843 F.2d 1253, 1260 (9th Cir. 1988) (citing 28 U.S.C. § 1441).
That the right to remove is "limited to defendants" does not automatically end the inquiry, however,
as the parties dispute whether XPO can be considered a "defendant" in light of its decision to
appeal the ODA to the Superior Court before removing to this Court. In support of their respective
arguments that XPO is or is not a "defendant" for purpose of analyzing whether removal is proper,
XPO relies heavily on Supreme Court precedent from the early- and mid-1900s, while Plaintiff
relies on more recent decisions from the federal courts of appeals. The Court grapples with these
and other authorities below.
"In Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214 (1941), the
Supreme Court analyzed the legislative history of the removal statute then contained in 28 U.S.C.
§ 71 and now embodied in 28 U.S.C. § 1441." Id. at 1260-61. "The Supreme Court quoted a
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House Report stating that 'it is believed to be just and proper to require the plaintiff to abide his
selection of a forum.'" Id. at 1661 (quoting H.Rep. No. 1078, 49th Cong., 1st Sess. 1 (1887)).
"Similarly, in Ryder Truck Rental, the court noted that the same policy considerations reflected in
the restrictions on removal should come into play in repetitive lawsuit situations." Id. (citing Ryder
Truck Rental v. Acton Foodservices Corp., 554 F. Supp. 277, 280 n.6 (C.D. Cal. 1983)). "Noting
that a plaintiff in a diversity suit can choose between a state and federal forum when it initiates the
suit, the court concluded, '[h]aving elected state court, plaintiff should be bound by its choice
absent compelling reasons to seek relief in another forum.'" Id. (quoting Ryder, 554 F. Supp. at
280).
In Oppenheimer & Co., Inc. v. Neidhardt, the Court of Appeals for the Second Circuit considered
whether the district court erred in permitting two claimants who initiated an arbitration action
against Oppenheimer with the National Association of Securities Dealers ("NASD"), Ferdinand
Neidhardt and Erich Hoepfer ("Claimants"), to remove a responsive action filed by Oppenheimer
in New York Supreme Court seeking to stay the arbitration. 56 F.3d 352, 354-55 (2d Cir. 1995).
In federal district court, Oppenheimer moved to remand, arguing, among other things, that
"because the Claimants instituted the demand for arbitration, they should be considered plaintiffs
rather than defendants in the New York State court proceeding and, therefore, ineligible to remove
under 28 U.S.C. § 1441(a)." Id. at 355. After rejecting arguments made by Oppenheimer that are
similar to those raised by XPO in this case, the Second Circuit noted that "[i]n recognition of the
fact that, in the initial choice of forum, only plaintiffs have the opportunity to select the federal
court, the statute conferring the right to remove on defendants is designed to allow defendants the
same opportunity." Id. at 356 (emphasis in original). "Thus Victorias Milling Co. v. Hugo Neu
Corp., 196 F.Supp. 64, 68 (S.D.N.Y.1961), held that for purposes of removal of arbitration
questions, the plaintiff is the party who first invokes the aid of a court." Id. (emphasis added)
(citations omitted). This is because "[t]he party who, by his own affirmative and voluntary act,
chose the jurisdiction of the state court, should be bound by his choice of forum." Victorias Milling,
196 F. Supp. at 69.
In this case, XPO "first invoke[d] the aid of a court" by appealing the ODA to the Superior Court.
(Notice of Removal, Ex. 3.) Thus, under the reasoning of Oppenheimer and Victorias Milling, one
would ordinarily conclude that XPO would not be entitled to remove under Section 1441(a). This
understanding is in line with a series of decisions from the Central District of California concerning
XPO, in which the district courts concluded that "XPO is the plaintiff for the purposes of the
removal statute, and therefore could not remove the case to federal court" because "XPO's
opportunity to choose federal court occurred when it filed the action; it does not get two chances
to select federal court." (Reply, Ex. A [collecting five orders from the Hon. Otis D. Wright in which
he denied requests to remand for procedural reasons].)
XPO argues, however, that it should be entitled to remove this action because Section 98.2 of the
California Labor Code ("Section 98.2") states that parties "may seek review [of Labor
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Commissioner awards] by filing an appeal to the superior court, where the appeal shall be heard
de novo." (Opp'n 2 [emphasis in brief].)
This argument does not persuade. Section 98.2(a) provides that "[w]ithin 10 days after service
of notice of an order, decision, or award the parties may seek review by filing an appeal to the
superior court, where the appeal shall be heard de novo." Cal. Labor Code § 98.2(a). As XPO
itself acknowledges, (Opp'n 9), BNSF Railway Co. v. O'Dea, a 2009 decision from the Ninth Circuit
Court of Appeals, holds "that district courts have diversity jurisdiction over appeals from state
administrative agency decisions when state law places such appeals in state trial courts, and, of
course, when the familiar citizenship and amount in controversy requirements are fulfilled." 572
F.3d 785, 791 (9th Cir. 2009) (Fisher, J., concurring). Thus, pursuant to this controlling authority,
the Court concludes that XPO was entitled to initiate its appeal in federal district court.
Garcia v. Orion Plastics Corporation, a case cited by XPO in support of its argument that it could
only remove to this Court after first filing an appeal with California superior court, does not alter
the Court's conclusion. In that case, Orion Plastics Corporation ("OPC") appealed an adverse
Labor Commissioner decision to Los Angeles Superior Court, after which plaintiff Garcia "filed a
Notice of Claims in the state court action alleging at least one additional claim not raised before
the Commissioner for violation of the federal Fair Labor Standards Act ('FLSA') . . . ." No. CV 1507514-AB (KSx), 2016 WL 2904853, at *1 (C.D. Cal. May 18, 2016). "In light of [Garcia's] addition
of a federal claim to his state action, on September 24, 2015, [OPC] removed this action to federal
court on the basis of federal question jurisdiction." Id. at *2 (emphasis added). Thus, only after
Garcia added federal claims to the state court action did the action become removable to federal
court. Here, by contrast, XPO first decided to initiate its action in state court, then immediately
removed without Plaintiff undertaking any relevant action. Thus, the reasoning of Oppenheimer
and Victorias Milling applies much more strongly in this case, and the Court concludes that, under
the unique circumstances presented in this case, XPO was not entitled to remove pursuant to
Section 1441(a). The Court accordingly REMANDS the instant action to the State of California
for the County of Los Angeles — Long Beach.
III.

RULING

For the foregoing reasons, the Court GRANTS Plaintiff Napoleon Gaitan's Motion to Remand.
The instant action is hereby REMANDED to the State of California for the County of Los Angeles
— Long Beach.
IT IS SO ORDERED.

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