Sonia Garcia v. Merchants Bank of California NA et al

Filing 13

ORDER GRANTING PLAINTIFFS MOTION TO REMAND 7 by Judge Otis D. Wright, II: Case Remanded to Los Angeles Superior Court, BC 661198. MD JS-6. Case Terminated. (lc)

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O JS-6 1 2 3 4 5 6 7 United States District Court Central District of California 8 9 10 11 SONIA GARCIA, an individual, 12 Case No. 2:17-cv-04791-ODW-SK Plaintiff, 13 ORDER GRANTING PLAINTIFF’S MOTION TO REMAND [7] v. 14 15 16 MERCHANTS BANK OF CALIFORNIA, N.A., a National Banking Association; SCOTT RACUSIN, an individual; and Does 1 through 50, inclusive, 17 Defendants. 18 19 I. 20 21 22 23 24 25 26 27 28 INTRODUCTION Before the Court is Plaintiff Sonia Garcia’s Motion to Remand. (Mot., ECF No. 7.) For the reasons discussed below, the Court GRANTS Plaintiff’s Motion to Remand. II. BACKGROUND In April 2015, Defendant Merchants Bank of California (“Merchants Bank”) hired Plaintiff Sonia Garcia as a Bank Secrecy Act (“BSA”) Officer. (See Compl. ¶ 11, ECF No. 1-2.) Plaintiff was responsible for ensuring Merchants Bank complied with the BSA, including the anti-money laundering (“AML”) provisions. (Id. ¶ 14.) 1 Plaintiff alleges that around July 2015, Plaintiff alerted her superiors at Merchants 2 Bank of transactions that potentially did not comply with the BSA. (Id. ¶ 18.) In 3 October 2015, she informed the Merchants Bank Board of Directors and executives of 4 the company’s potential BSA violations and, in response, the Board discounted her 5 concerns. (Id. ¶ 19.) 6 Plaintiff ultimately alerted the U.S. Office of the Comptroller of the Currency to 7 the suspicious transactions and federal regulators initiated a high-level review of 8 Merchants Bank. (Id. ¶ 21.) Plaintiff alleges that, subsequent to the initiation of the 9 review, Merchants Bank further stripped Plaintiff of her responsibilities and 10 reallocated them to another employee. (Id. ¶ 22.) Plaintiff complained about her 11 reduced responsibilities to the Chairman of the Consent Order Compliance Program 12 and the Human Resources Department. (Id. ¶ 23–24.) Plaintiff alleges that work 13 hostility intensified until Merchants Bank fired her in September 2016. (Id. ¶¶ 30–32, 14 35.) 15 On May 11, 2017, Plaintiff filed this action in state court against Defendants 16 Merchants Bank and Scott Racusin alleging claims for: (1) Whistleblower Retaliation 17 (Cal. Lab. Code section 1102.5); (2) Wrongful Termination in Violation of Public 18 Policy; (3) Defamation; (4) Violations of Business and Professions Code section 19 1700; and (5) Waiting-Time Penalties (Cal. Lab. Code section 203). (Id. 1.) On June 20 26, 2017, Defendants removed this action from state court to federal court. (Not. of 21 Removal, ECF No. 1.) 22 III. LEGAL STANDARD 23 Federal courts have subject matter jurisdiction only as authorized by the 24 Constitution and by Congress. U.S. Const. art. III, § 2, cl. 1; Kokkonen v. Guardian 25 Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). 26 jurisdiction where an action arises under federal law, or where each plaintiff’s 27 citizenship is diverse from each defendant’s citizenship and the amount in controversy 28 exceeds $75,000. 28 U.S.C. §§ 1331, 1332(a). A defendant may remove a case from 2 Federal courts have original 1 state court to federal court only if the federal court would have had original 2 jurisdiction over the suit. 28 U.S.C. § 1441(a). 3 construed against removal, and “[f]ederal jurisdiction must be rejected if there is any 4 doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 5 564, 566 (9th Cir. 1992). The party seeking removal bears the burden of establishing 6 federal jurisdiction. Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1251 (9th 7 Cir. 2006). IV. 8 The removal statute is strictly DISCUSSION 9 Plaintiff’s Complaint lacks any federally based claims and she premises all of 10 her claims on state law. (Mot. 14.) Plaintiff argues that her claims do not present a 11 substantial, disputed federal question, nor do they elicit the artful pleading doctrine. 12 (Id. at 14–15.) Defendants argue that Plaintiff’s state-law claims necessarily raise a 13 federal issue that requires the interpretation and application of BSA rules, AML 14 provisions, and related regulations. (Opp’n 11–12, ECF No. 10.) Defendants further 15 contend that Plaintiff’s claims are preempted by section 24 (Fifth) of the National 16 Bank Act and thus remand is improper. (Id. at 16.) 17 Plaintiff claims the interpretation of BSA rules is not an essential element of her 18 claims, and that whether Merchants Bank actually violated federal banking laws is 19 irrelevant. (Reply 9, ECF No. 11.) Plaintiff also argues that Defendants’ preemption 20 argument is simply a defense, and does not provide a basis for federal jurisdiction. 21 (Id. at 12.) The Court agrees with Plaintiff that the Complaint lacks any independent 22 basis for federal jurisdiction and, as such, remand is proper. 23 A. No Independent Basis for Federal Jurisdiction 24 The “well-pleaded complaint rule” provides “that federal jurisdiction exists 25 only when a federal question is presented on the face of the plaintiff’s properly 26 pleaded complaint.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Federal 27 question jurisdiction may exist where “a state-law claim necessarily raise[s] a stated 28 federal issue, actually disputed and substantial, which a federal forum may entertain 3 1 without disturbing any congressionally approved balance of federal and state judicial 2 responsibilities.” Grable & Sons Metal Prods, Inc. v. Darue Eng’g & Mfg., 545 U.S. 3 308, 314–15 (2005) (holding the meaning of a federal tax provision “is an important 4 issue of federal law that sensibly belongs in a federal court”). 5 Under California Law, Plaintiff may support her claim for wrongful termination 6 by demonstrating she maintained “reasonably based suspicions” for reporting her 7 employer’s potential violation. Green v. Ralee Eng’g Co., 19 Cal. 4th 66, 87 (1998). 8 Defendants assert that proving Plaintiff “reasonably believed the Bank was not 9 complying with the BSA and AML rules . . . necessarily will involve interpretation of 10 a complex scheme of federal banking statutes and regulations.” (Opp’n 12.) Plaintiff 11 argues she will not have to prove that Merchants Bank actually violated any federal 12 law. (Reply 9.) The California Supreme Court has determined that “an employee 13 need not prove an actual violation of law” in order to establish their “reasonably based 14 suspicions.” Green, 19 Cal. 4th at 87. Furthermore, Defendants have not sufficiently 15 demonstrated in what way Plaintiff’s case would involve the interpretation and 16 application of the BSA and AML rules and regulations. (See Opp’n 11–12.) 17 Defendants rely on Grable and D’Alessio to support their assertion that there is 18 federal jurisdiction here. (Opp’n 10–11.) In Grable, the Supreme Court found federal 19 jurisdiction existed because interpretation of a federal statute was an “essential 20 element” towards the resolution of plaintiff’s claims. Grable, 545 U.S. at 314. In 21 D’Alessio, the Second Circuit found federal jurisdiction where the plaintiff premised 22 her claims on the defendants’ failure to comply with federal laws and regulations. 23 D’Alessio v. N.Y. Stock Exch., Inc., 258 F.3d 93, 103 (2d Cir. 2001). Here, Plaintiff’s 24 claim is neither like Grable nor D’Alessio, as interpretation of a federal statute is not 25 an “essential element” of Plaintiff’s claim because she need only prove she had 26 “reasonably based suspicions” regarding her employer’s unlawful acts. See Green, 19 27 Cal. 4th at 87. This showing is unlike the showing required in D’Alessio, where the 28 plaintiff’s claims “necessarily require[d] an inquiry into whether the NYSE 4 1 satisfactorily performed its duty in identifying potential violations of the federal 2 securities laws and assisting in any criminal or civil investigation arising from a 3 member's noncompliance with those laws, [which were] both areas of strong federal 4 interest.” D’Alessio, 258 F.3d at 103. Here, the Court will be required to analyze 5 Plaintiff’s state of mind in reporting the alleged violations, as opposed to the thrust of 6 the regulations themselves. 7 Defendants contend that subject matter jurisdiction exists here because Plaintiff 8 has a private right of action available to her pursuant to 12 U.S.C. section 183j(b). 9 (Opp’n 13.) Defendants further support their contention by citing Merrell Dow 10 Pharm. Inc. v. Thompson, 478 U.S. 804, 817 (1986) to suggest that Congress intended 11 to confer subject matter jurisdiction over cases where section 183j(b) provides a 12 private right of action. 13 substantial federal question issue in cases where Congress has not provided a private 14 right of action. Merrell Dow Pharm. Inc., 478 U.S. at 817. However, “Merrell Dow 15 neither purported to establish a per se rule for cases where Congress has provided a 16 private right of action nor repudiated the well-established rule that ‘the party who 17 brings a suit is master to decide what law he will rely on.’” Lyster v. First Nationwide 18 Bank Fin. Corp., 829 F.Supp. 1163, 1169 (N.D. Cal. 1993) (citing The Fair v. Kohler 19 Die Specialty Co., 228 U.S. 22, 25 (1913)) (emphasis added). Here, the Court does 20 not have subject matter jurisdiction over Plaintiff’s claim simply because she could 21 have brought a claim under section 183j(b). Id. (Id.) In Merrell, the Court established that there is no 22 Courts have long understood that “the mere presence of a federal issue in a state 23 cause of action does not automatically confer federal-question jurisdiction.” Merrell, 24 478 U.S. at 813. The California Superior Court is a court of general jurisdiction and, 25 as such, is capable of undertaking any case, even where there may be the presence of a 26 federal issue. See Cal. Civ. Proc. Code § 410.10 (West). The Court finds there is no 27 subject matter jurisdiction over Plaintiff’s claims. 28 // 5 1 B. Complete Preemption Doctrine 2 Defendants argue that Plaintiff’s state law claims are preempted by section 24 3 (Fifth) of the National Bank Act. (Opp’n 16.) The complete preemption doctrine is a 4 narrow exception to the rule that courts must determine the existence of federal 5 question jurisdiction by looking at the plaintiff’s claims rather than the defendant’s 6 defenses. 7 preemption exists where “a federal statute wholly displaces the state-law cause of 8 action.” Id. (internal quotation marks omitted). Federal question jurisdiction exists 9 in those instances because the federal regulatory scheme subsumes the plaintiff’s 10 claim, and thus, “even if pleaded in terms of state law, is in reality based on federal 11 law.” Id. at 207–08 (internal quotation marks omitted). Aetna Health Inc. v. Davila, 542 U.S. 200, 207 (2004). Complete 12 In Lyster v. First Nationwide Bank Financial Corp., the plaintiff filed suit in 13 California Superior Court against his bank employer for, inter alia, wrongful 14 termination and retaliation, and the defendants removed to federal court. Lyster, 829 15 F.Supp. at 1165. 16 plaintiff’s claims would be preempted by 12 U.S.C. section 1831j should the case be 17 remanded to state court. Id. at 1167. In Lyster, the court determined that section 18 1831j “can hardly be considered a candidate for the ‘complete preemption corollary’ 19 [as it] does not preempt state law.” Id. at 1168. The Court here finds the facts and 20 circumstances in Lyster to be substantially similar to the case at hand. Defendants fail 21 to establish that the issue of preemption here is anything more than an affirmative 22 defense to two of Plaintiff’s claims to be adjudicated in state court. The Court finds 23 no reason to depart from the reasoning expressed in Lyster and, therefore, the 24 complete preemption doctrine is not applicable here. 25 // 26 // 27 // 28 // On a motion to remand, the defendants there argued that the 6 IV. 1 CONCLUSION 2 For the reasons discussed above, the Court GRANTS Plaintiff’s Motion to 3 Remand (ECF No. 7) and REMANDS this case to the Los Angeles Superior Court, 4 Case No. BC661198. 5 6 IT IS SO ORDERED. 7 8 September 19, 2017 9 10 11 ____________________________________ OTIS D. WRIGHT, II UNITED STATES DISTRICT JUDGE 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7

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