Paleg v. Kmart Corporation et al

Filing 22

MINUTES (IN CHAMBERS) ORDER GRANTING MOTION TO REMAND by Judge Stephen V. Wilson re: 14 MOTION to Remand Case to State Court. Case Remanded to San Bernardino County Superior Court, CIVDS1705035. MD JS-6. Case Terminated. (mrgo)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

JS-6

CIVIL MINUTES - GENERAL
Case No.

CV 17-00899-SVW-SP

Title

Philip Paleg v. Kmart Corporation, et al.

Present: The Honorable

Date

July 11, 2017

STEPHEN V. WILSON, U.S. DISTRICT JUDGE

Paul M. Cruz

N/A

Deputy Clerk

Court Reporter / Recorder

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

N/A

N/A

Proceedings:

I.

IN CHAMBERS ORDER GRANTING MOTION TO REMAND [14]

Introduction

On March 16, 2017, Plaintiff Philip Paleg (“Plaintiff”) filed a complaint in San Bernardino County
Superior Court against his former employer Kmart, as well as parent companies Sears Holding
Corporation and Sears Management Corporation, and his former Kmart supervisor, Alfonso Delgado
(“Defendants”), alleging causes of action for (1) statutory wage and hour violations; (2) unfair business
practices; (3) unlawful discrimination; (4) wrongful termination of employment in violation of public
policy; and (5) intentional infliction of emotional distress. On May 9, 2017, Defendant removed the
action to this Court under 28 U.S.C. § 1441, asserting that jurisdiction was proper in federal court pursuant
to 28 U.S.C. §1332 based on complete diversity among the parties. Plaintiff and Defendant Delgado are
citizens of California. All other defendants are citizens of states other than California.
II.

Statement of Facts

Plaintiff worked for Kmart for nearly 40 years before he was terminated. At the time of his
termination, he was 62 years-old and employed as Store Manager of the Kmart in Apple Valley,
California. Dkt. 1, Ex. 1 at ¶ 10. Plaintiff has alleged one cause of action for Intentional Infliction of
Emotional Distress against Defendant Delgado, Plaintiff’s supervisor and a Kmart District Manager.

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

CV 17-00899-SVW-SP

Date

Title

July 11, 2017

Philip Paleg v. Kmart Corporation, et al.

Dkt. 14 at 4. Under his cause of action for IIED, Plaintiff alleges that Delgado required him to work
“long hours and excessive days without breaks and overtime compensation,” and that this was
“physically, mentally and emotionally taxing upon Plaintiff. Dkt. 1, Ex. 1 at ¶ 35. Plaintiff alleges that
this was designed to force Plaintiff to quit, “as part of a pattern and practice of engaging in age
discrimination against Kmart employees.” Id. Plaintiff alleges that Defendant Delgado participated in
conduct “beyond the normal confines of the employment relationship” by carrying out “unwarranted
actions and scrutiny against Plaintiff,” and attempting to induce him to quit. Id.
Plaintiff is a resident of California. Id. at ¶ 1. Kmart is incorporated in Michigan, has its
principal place of business in Illinois, and is therefore a citizen of both Michigan and Illinois. Dkt. 1 at
¶ 16. Sears Holding Management Company and Sears Holding Corporation are incorporated in
Delaware, have their principal places of business in Illinois, and are therefore citizens of both Delaware
and Illinois. Id. at ¶¶ 16-23. Defendant Delgado is a citizen of California. Id. at ¶ 25.
III.

Analysis
a. Legal Standard
Generally, a civil case can be removed to federal court if the case could have originally been
brought there. 28 U.S.C. §1441; Martin v. Franklin Capital Corp., 546 U.S. 132, 134 (2005). One basis
for removal is diversity jurisdiction under 28 U.S.C. §1332. A federal court has diversity jurisdiction
under 28 U.S.C. §1332 if the amount in controversy exceeds $75,000 and the parties to the action are
citizens of different states. See 28 U.S.C. §1332(a). Any instance of common citizenship between a
plaintiff and defendant “deprives the district court of original diversity jurisdiction over the entire action.”
Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005).
An exception to the requirement of complete diversity exists where a non-diverse defendant has
been fraudulently joined. Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). “[A]
non-diverse defendant is deemed a sham defendant if, after all disputed questions of fact and all
ambiguities in the controlling state law are resolved in the plaintiff’s favor, the plaintiff could not possibly
recover against the party whose joinder is questioned.” Padilla v. AT&T Corp., 697 F.Supp. 2d 1156,

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

CV 17-00899-SVW-SP

Date

Title

July 11, 2017

Philip Paleg v. Kmart Corporation, et al.

1158 (C.D. Cal. 2009); see also Good v. Prudential Ins. Co. of America, 5 F.Supp. 2d 804, 807 (N.D. Cal.
1998). (“[T]he defendant must demonstrate that there is no possibility that the plaintiff will be able to
establish a cause of action in State court against the alleged sham defendant.”). The party seeking
removal bears the burden of proving the joinder was fraudulent, and there is a general presumption against
fraudulent joinder. See Hamilton Materials, Inc. v. Dow Chemical Corp., 494 F.3d 1203, 1206 (9th Cir.
2007).
b. Possibility of Recovery
Defendant argues that Delgado was fraudulently joined because Plaintiff cannot “possibly
recover” against Delgado. Defendant asserts that Plaintiff’s single cause of action for Intentional
Infliction of Emotional Distress against Delgado is barred by the exclusivity provision of the Workers’
Compensation Act, that Plaintiff cannot adequately state a claim for emotional distress against Delgado,
and that Plaintiff’s claim is barred by the doctrine of managerial privilege.
i. Exclusivity Provision of the Workers Compensation Act
The California Workers’ Compensation Act is the sole remedy for employees against their
employers “for any injury sustained . . . arising out of and in the course of the employment . . . .” Cal.
Lab. Code. §§ 3600(a). Code §3601 provides that where the “conditions of compensation exist,” the right
to recover under the WCA is “the exclusive remedy” for injury of an employee against an employer acting
within the scope of employment. Id. Therefore, Defendant asserts, Plaintiff’s claim against Delgado is
barred.
Defendant relies on Nguyen v. Durham School Services L.P., 2016 WL 3436381 (C.D. Cal. June
16, 2016), Langevin v. Fed Exp. Corp., No. CV 14008105 MMM (FFMx), 2015 WL 1006367, at *14
(C.D. Cal. Mar. 6, 2015), and Miklosy v. Regents of the Univ. of Cal., 44 Cal. 4th 876, 902 (2008), to argue
that IIED claims are preempted by the WCA’s exclusivity provision. These federal and state courts held
that IIED claims based on employer retaliation against whistleblowers are barred by the exclusivity
provision of the WCA. Plaintiffs argues that his injury did not arise out of his normal employment
relationship with Delgado. Instead, the conduct complained of—illegal age discrimination—“was
unlawful activity in violation of California public policies prohibiting such discrimination in the
workplace.” Dkt. 14 at 11. Therefore, Plaintiff asserts, his claim does not fall within the exclusivity

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

CV 17-00899-SVW-SP

Date

Title

July 11, 2017

Philip Paleg v. Kmart Corporation, et al.

provision of the Workers’ Compensation Act and his claim is not barred. See Fretland v. County of
Humboldt, 69 Cal.App.4th 1478, 1492 (1999) (holding that plaintiff’s emotional distress claims against
his employer were not barred by the exclusivity doctrine because “discrimination is not a normal risk of
the compensation doctrine”); Watson v. Department of Rehabilitation, 212 Cal.App.3d 1271, 1287 (1989)
(holding that emotional distress claims against an employer were not barred by the WCA when the claims
were rooted in racial and age discrimination and “[s]uch discrimination is not a normal incident of
employment”); Barsell v. Urban Outfitters, Inc., No. CV-09-02604 MMM (RZx), 2009 WL 1916495
(C.D. Cal., July 1, 2009) (holding that there existed a “non-fanciful possibility” that the WCA did not bar
plaintiff’s emotional distress claim against her employer when the claim was “based on allegations of
disability discrimination”).
The authorities Defendant cites for the proposition that emotional distress claims are barred by the
WCA are unpersuasive. In the instant case, Plaintiff’s emotional distress claim is based on alleged
discriminatory conduct by Defendants, including Delgado. However, none of Defendants’ authorities
concern claims based on discriminatory conduct. Defendants’ reliance on Nguyen, Miklosy and Langevin
is misplaced because these cases stand for the proposition that IIED claims against employers for
retaliation against whistleblowing are barred by the exclusivity doctrine of the WCA. Defendant’s
reliance on Cole v. Fair Oaks Fire Protect. Dist., 43 Cal. 3d 148 (1987) is similarly misplaced because the
Plaintiff in Cole made no allegations of discrimination on behalf of the employer.
Defendants further argue that “Plaintiff cannot evade workers’ compensation preemption by
asserting that the gravamen of his IIED claim is Delgado’s purported discriminatory conduct” because
non-managers cannot be sued for discrimination under California law. Dkt. 17 at 14. Defendants cite
Reno v. Baird, 18 Cal. 4th 640 (1998) to support this proposition. Dkt. 17 at 8. In Reno, the Plaintiff
sued her supervisor for discrimination under the Fair Employment and Housing Act. The Court found
that the FEHA “prohibits only ‘an employer’ from engaging in improper discrimination,” and found that
“only the employer, and not individual supervisors may be sued and held liable.” Reno, 18 Cal. 4th at
645. However, the Court relied heavily on statutory interpretation and definitions within FEHA in its
reasoning. Because Plaintiff makes no claim under FEHA, it does not follow that Plaintiff’s IIED claim

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

CV 17-00899-SVW-SP

Date

Title

July 11, 2017

Philip Paleg v. Kmart Corporation, et al.

based on discrimination by his supervisor is barred by the WCA exclusivity provision, as there is still a
possibility Plaintiff will be able to establish his cause of action. The Court finds that there is a
non-fanciful possibility that Plaintiff’s IIED claim against Delegado is not barred by the WCA.
ii. IIED Pleading Standard
Defendant argues that Plaintiff did not adequately plead facts sufficient to allege a claim of
Intentional Infliction of Emotional Distress. Dkt. 1 at 8. To state a claim for IIED in California, Plaintiff
must allege that “(1) the defendant engaged in extreme and outrageous conduct with the intention of
causing, or reckless disregard of the probability of causing, severe emotional distress to the plaintiff; (2)
the plaintiff actually suffered severe or extreme emotional distress; and (3) the outrageous conduct was the
actual and proximate cause of the emotional distress.” Ross v. Creel Printing & Publ’g Co., 100 Cal.
App. 4th 736, 745 (2002). Plaintiff pled that “Delgado gave him unwarranted discipline, scrutiny and
pressure,” and “placed unreasonable demands and expectations on him.” Complaint at ¶¶ 35-36.
Defendant claims that because this is conduct that is a normal part of the work environment, “Plaintiff has
not pled any ultimate facts against Delgado in support of his intentional infliction of emotional distress
claim,” and remand should therefore be denied. Dkt. 17 at 10; see Kobos v. Schwan’s Home Serv., 2009
WL 2425399, at *3-4 (E.D. Cal. Aug. 7, 2009) (holding that a nondiverse defendant had been fraudulently
joined when the plaintiff failed to state a cause of action for intentional infliction of emotional distress
against the defendant employer); see also Janken v. GM Hughes Elecs., 46 Cal. App. 4th 55, 80 (1996)
(finding that an emotional distress claim failed when plaintiff failed to plead “outrageous conduct beyond
the bounds of human decency”).
However, “a defendant seeking removal based on an alleged fraudulent joinder must do more than
show that the complaint at the time of removal fails to state a claim against the non-diverse defendant.”
Padilla, 697 F.Supp. 2d 1156, 1159. Here, although Plaintiff’s allegations are not detailed, this is not
enough to justify deeming Delgado a sham Defendant. See Widder v. State Farm Fire & Cas. Co., No.
CIV 2:10-221 WBS KJN, 2010 WL 4386698 (E.D. Cal. Oct. 28, 2010) (holding that it would not be
“impossible or fanciful” for the plaintiff to establish liability against a nondiverse defendant by adding
more detail to or expanding upon the allegations in his complaint). Therefore, the Court finds that
Defendant’s argument that Plaintiff cannot meet the IIED pleading standard does not justify finding that

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

CV 17-00899-SVW-SP

Date

Title

July 11, 2017

Philip Paleg v. Kmart Corporation, et al.

Delgado was fraudulently joined.
iii. Managerial Privilege
Finally, Defendant asserts that Plaintiff’s claim against Delgado is barred because individual
managers cannot be held personally liable for tort claims brought by other employees arising from actions
taken within the course and scope of their managerial capacity. See McCabe, 811 F.2d 1336, 1339 (9th
Cir. 1987); Sheppard v. Freeman, 67 Cal. App. 4th 339, 346-7 (1998); Aalgaard v. Merchants Nat’l Bank,
Inc., 224 Cal.App.3d 674, 684-86 (1990); Becket v. Welton Becket & Assocs., 39 Cal. App.3d 815, 823-24
(1974); Marin v. Jacuzzi, 224 Cal. App. 2d 549 (1964).
However, none of Defendants’ authorities are persuasive because each cited case involves
intentional interference with a contract induced by a third party, which is not the issue in this case. See
Onelum v. Best Buy Stores, L.P., 948 F.Supp. 2d 1048, 1052 (C.D. Cal. 2013) (“Defendants fail to cite a
single case that applies this managerial privilege rule to the tort of intentional infliction of emotional
distress.”). Defendants fail to show that Plaintiff’s IIED claim is barred by the doctrine of managerial
privilege. Defendants have not met their burden of showing that there is no possibility Plaintiff can
succeed in his claim against Delgado, and therefore the motion to remand is GRANTED.
IV.
Subsidiary Issues
a. Plaintiff’s Request for Attorney’s Fees
Plaintiff requests that the Court order Defendant to pay attorney’s fees incurred as a result of
removal. Dkt. 14 at 21; See 28 U.S.C §1447(c). However, the Court finds that Defendants had a
reasonable basis for seeking removal. See Martin, 546 U.S. at 141 (“Absent unusual circumstances,
courts may award attorney’s fees under §1447(c) only where the removing party lacked an objectively
reasonable basis for seeking removal. Conversely, when an objectively reasonable basis exists, fees
should be denied.”).
b. Violations of Local Rule 7-3
Defendant contends that Plaintiff failed to meet and confer in violation of Local Rule 7-3.
Plaintiff disputes this contention. The Court finds that, even if true, Defendants suffered no real prejudice.
See Reed v. Sandstone Properties, L.P., No. CV 12-05021 MMM VBXX, 2013 WL 13444912, *6 (C.D.
Cal. Apr. 2, 2013) (considering a motion on its merits when no real prejudice resulted from a failure to

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

CV 17-00899-SVW-SP

Date

Title

July 11, 2017

Philip Paleg v. Kmart Corporation, et al.

comply with Local Rule 7-3).
V.

Conclusion
For the foregoing reasons, the Court GRANTS the Motion to Remand and remands the case back
to San Bernardino County Superior Court.

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