Blonde Beard, Inc. et al v. White Rabbit Group, Inc. et al

Filing 20

MINUTES (IN CHAMBERS) ORDER REMANDING ACTION by Judge Fernando M. Olguin. The above-captioned action shall be remanded to the Superior Court of the State of California for the County of Los Angeles, 111 N. Hill St., Los Angeles, CA 90012, for lack of subject matter jurisdiction pursuant to 28 U.S.C. 1447(c). Case Terminated. Made JS-6 (iv)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 20-8589 FMO (MAAx)

Title

Blonde Beard, Inc., et al. v. White Rabbit Group, Inc., et al.

Present: The Honorable

Date

October 14, 2020

Fernando M. Olguin, United States District Judge

Vanessa Figueroa

None

None

Deputy Clerk

Court Reporter / Recorder

Tape No.

Attorney Present for Plaintiff:

Attorney Present for Defendant:

None Present

None Present

Proceedings:

(In Chambers) Order Remanding Action

On July 21, 2020, Blonde Beard, Inc. and Jeff Jessamine (“Jessamine”) (collectively
“plaintiffs”) filed a Complaint in the Los Angeles County Superior Court against several defendants,
including White Rabbit Group, Inc., Vander Group, Derek J. Sine and Van Tucker (“defendants”),
asserting state law claims related to a contract dispute. (See Dkt. 1, Notice of Removal (“NOR”)
at ¶¶ 1, 4); (Dkt. 1-1, Complaint at ¶¶ 48-96). On September 18, 2020, defendants removed the
action on diversity jurisdiction grounds pursuant to 28 U.S.C. § 1332. (See Dkt. 1, NOR at ¶¶ 8-9).
Having reviewed the pleadings, the court hereby remands this action to state court for lack of
subject matter jurisdiction. See 28 U.S.C. § 1447(c).
LEGAL STANDARD
“Federal courts are courts of limited jurisdiction. They possess only that power authorized
by Constitution and statute[.]” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114
S.Ct. 1673, 1675 (1994). The courts are presumed to lack jurisdiction unless the contrary appears
affirmatively from the record. See DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n. 3, 126
S.Ct. 1854, 1861 (2006). Federal courts have a duty to examine jurisdiction sua sponte before
proceeding to the merits of a case, see Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583, 119
S.Ct. 1563, 1569 (1999), “even in the absence of a challenge from any party.” Arbaugh v. Y&H
Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 1244 (2006).
“The right of removal is entirely a creature of statute and a suit commenced in a state court
must remain there until cause is shown for its transfer under some act of Congress.” Syngenta
Crop Prot., Inc. v. Henson, 537 U.S. 28, 32, 123 S.Ct. 366, 369 (2002) (internal quotation marks
omitted). Where Congress has acted to create a right of removal, those statutes, unless otherwise
stated, are strictly construed against removal jurisdiction.1 See id. Unless otherwise expressly

1

For example, an “antiremoval presumption” does not exist in cases removed pursuant
to the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d). See Dart Cherokee Basin
Operating Co., LLC v. Owens, 574 U.S. 81, 89, 135 S.Ct. 547, 554 (2014).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 20-8589 FMO (MAAx)

Date

Title

Blonde Beard, Inc., et al. v. White Rabbit Group, Inc., et al.

October 14, 2020

provided by 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[.]” 28 U.S.C. § 1441(a); see Dennis v. Hart, 724 F.3d 1249, 1252 (9th Cir. 2013)
(same). A removing defendant bears the burden of establishing that removal is proper. See
Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 684 (9th Cir. 2006) (per curiam) (noting the
“longstanding, near-canonical rule that the burden on removal rests with the removing defendant”);
Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (“The strong presumption against removal
jurisdiction means that the defendant always has the burden of establishing that removal is
proper.”) (internal quotation marks omitted). Moreover, if there is any doubt regarding the
existence of subject matter jurisdiction, the court must resolve those doubts in favor of remanding
the action to state court. See Gaus, 980 F.2d at 566 (“Federal jurisdiction must be rejected if there
is any doubt as to the right of removal in the first instance.”).
“Under the plain terms of § 1441(a), in order properly to remove [an] action pursuant to that
provision, [the removing defendant] must demonstrate that original subject-matter jurisdiction lies
in the federal courts.” Syngenta Crop Prot., 537 U.S. at 33, 123 S.Ct. at 370. Failure to do so
requires that the case be remanded, as “[s]ubject matter jurisdiction may not be waived, and . .
. the district court must remand if it lacks jurisdiction.” Kelton Arms Condo. Owners Ass’n, Inc. v.
Homestead Ins. Co., 346 F.3d 1190, 1192 (9th Cir. 2003). Indeed, “[i]f at any time before final
judgment it appears that the district court lacks subject matter jurisdiction, the case shall be
remanded.” 28 U.S.C. § 1447(c); see Emrich v. Touche Ross & Co., 846 F.2d 1190, 1194 n. 2
(9th Cir. 1988) (“It is elementary that the subject matter jurisdiction of the district court is not a
waivable matter and may be raised at anytime by one of the parties, by motion or in the
responsive pleadings, or sua sponte by the trial or reviewing court.”); Washington v. United Parcel
Serv., Inc., 2009 WL 1519894, *1 (C.D. Cal. 2009) (a district court may remand an action where
the court finds that it lacks subject matter jurisdiction either by motion or sua sponte).
DISCUSSION
The court’s review of the NOR and the attached Complaint makes clear that this court does
not have subject matter jurisdiction over the instant matter. In other words, plaintiffs could not
have originally brought this action in federal court, as plaintiffs do not competently allege facts
supplying diversity jurisdiction.2 Therefore, removal was improper. See 28 U.S.C. § 1441(a);
Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429 (1987) (“Only state-court
actions that originally could have been filed in federal court may be removed to federal court by
the defendant.”) (footnote omitted).
When federal subject matter jurisdiction is predicated on diversity of citizenship, see 28
U.S.C. § 1332(a), complete diversity must exist between the opposing parties. See Caterpillar Inc.

2

Plaintiffs seek only to invoke the court’s diversity jurisdiction. (See, generally, Dkt. 1,

NOR).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 20-8589 FMO (MAAx)

Date

Title

Blonde Beard, Inc., et al. v. White Rabbit Group, Inc., et al.

October 14, 2020

v. Lewis, 519 U.S. 61, 68, 117 S.Ct. 467, 472 (1996) (stating that the diversity jurisdiction statute
“applies only to cases in which the citizenship of each plaintiff is diverse from the citizenship of
each defendant”). Jessamine appears to be a citizen of California. (See Dkt. 1, NOR at ¶ 11);
(Dkt. 1-1, Complaint at ¶ 5). However, defendants fail to set forth the citizenship of several of the
defendants, asserting in conclusory fashion that the court should disregard these entities because
they were fraudulently joined. (See Dkt. 1, NOR at ¶¶ 14-17).
“If a plaintiff fails to state a cause of action against a [non-diverse] defendant, and the
failure is obvious according to the well-settled rules of the state, the joinder is fraudulent and the
defendant’s presence in the lawsuit is ignored for purposes of determining diversity.” United
Comput. Sys., Inc. v. AT & T Corp., 298 F.3d 756, 761 (9th Cir. 2002) (internal quotation marks
omitted). “It is only where the plaintiff has not, in fact, a cause of action against the [non-diverse]
defendant, and has no reasonable ground for supposing he has, and yet joins him in order to
evade the jurisdiction of the federal court, that the joinder can be said to be fraudulent, entitling
the real defendant to a removal.” Albi v. Street & Smith Publ’ns, 140 F.2d 310, 312 (9th Cir. 1944)
(footnote omitted); see Allen v. Boeing Co., 784 F.3d 625, 634 (9th Cir. 2015) (“[J]oinder is
fraudulent when a plaintiff’s failure to state a cause of action against the resident defendant is
obvious according to the applicable state law.”). Defendants must show by “clear and convincing
evidence” that plaintiffs do not have a colorable claim against the alleged sham defendants. See
Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007) (“Fraudulent
joinder must be proven by clear and convincing evidence.”); see also Mireles v. Wells Fargo Bank,
N.A., 845 F.Supp.2d 1034, 1063 (C.D. Cal. 2012) (“Demonstrating fraudulent joinder” requires
showing that “after all disputed questions of fact and all ambiguities . . . are resolved in the
plaintiff’s favor, the plaintiff could not possibly recover against the party whose joinder is
questioned.”) (emphasis in original); Vasquez v. Bank of Am., N.A., 2015 WL 794545, *4 (C.D.
Cal. 2015) (finding defendants had not met the “heavy burden of persuasion to show to a near
certainty that joinder was fraudulent” because plaintiff could amend complaint to state at least one
valid claim) (internal quotation marks omitted). Indeed, “[a] defendant invoking federal court
diversity jurisdiction on the basis of fraudulent joinder bears a heavy burden since there is a
general presumption against [finding] fraudulent joinder.” Grancare, LLC v. Thrower, 889 F.3d
543, 548 (9th Cir. 2018) (internal quotation marks omitted).
The court finds that defendants have not only failed to show that the parties are diverse,
(see, generally, Dkt. 1, NOR at ¶¶ 14-17) (failing to set forth citizenship of defendants), but have
also failed to meet their “heavy burden” of showing by clear and convincing evidence that plaintiffs
do not have colorable claims against any non-diverse defendants. (See id.)
In sum, given that any doubt regarding the existence of subject matter jurisdiction must be
resolved in favor of remanding the action to state court, see Gaus, 980 F.2d at 566, the court is
not persuaded, under the circumstances here, that defendants have met their burden of showing
that the non-diverse defendants were fraudulently joined. As such, there is no basis for diversity
jurisdiction, and the court lacks subject matter jurisdiction over this matter.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 20-8589 FMO (MAAx)

Date

Title

Blonde Beard, Inc., et al. v. White Rabbit Group, Inc., et al.

October 14, 2020

This order is not intended for publication. Nor is it intended to be included in or
submitted to any online service such as Westlaw or Lexis.
CONCLUSION
Based on the foregoing, IT IS ORDERED that:
1. The above-captioned action shall be remanded to the Superior Court of the State of
California for the County of Los Angeles, 111 N. Hill St., Los Angeles, CA 90012, for lack of
subject matter jurisdiction pursuant to 28 U.S.C. § 1447(c).
2. The Clerk shall send a certified copy of this Order to the state court.
3. Any pending motion is denied as moot.

Initials of Preparer

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