Rodriguez v. Emeritus Corporation et al

Filing 24

ORDER signed by District Judge Kimberly J. Mueller on 9/5/2018 GRANTING Rodriguez's #19 motion, DECLINES to retain supplemental jurisdiction over Rodriguezs PAGA claim, and DENIES defendants' pending #9 motion to compel arbitration and stay proceedings as MOOT. The Clerk of the Court is directed to CLOSE this case. CASE CLOSED. (Zignago, K.)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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JULIETTA RODRIGUEZ,

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Plaintiff,

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No. 2:18-cv-00341-KJM-CKD
ORDER

v.
EMERITUS CORPORATION, et al.,

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Defendants.

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On June 21, 2018, Julietta Rodriguez filed a motion asking this court to decline

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supplemental jurisdiction over her sole remaining claim based on California’s Private Attorneys

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General Act (“PAGA”). ECF No. 19. Defendants oppose primarily on grounds of alleged forum

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manipulation and forum shopping. For the reasons set forth below, the court GRANTS the

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motion, declining to retain supplemental jurisdiction over Rodriguez’s PAGA claim, and

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DENIES defendants’ pending motion to compel arbitration and stay proceedings, ECF No. 9, as

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MOOT.

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I.

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BACKGROUND
Rodriguez filed her complaint in this court on February 13, 2018, alleging thirteen

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claims arising from her employment with defendants. See generally Compl., ECF No. 1.

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Defendants filed a motion to compel arbitration and stay proceedings, requesting the court

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“dismiss [Rodriguez’s] first through third and fifth through thirteenth claims” along with a
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portion of Rodriguez’s fourth claim, to stay Rodriguez’s non-arbitrable representative claim

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under PAGA and to compel individual arbitration of Rodriguez’s remaining individual claims.

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ECF No. 9-1 at 9. Rodriguez opposed in part based on “binding precedent” in the Ninth Circuit.

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ECF No. 10 at 2. Defendants filed a reply. ECF No. 11.

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After the matter was briefed, the Supreme Court issued its decision in Epic

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Systems Corp. v. Lewis, 138 S. Ct. 1612 (2018), reversing the previously binding precedent

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Rodriguez had relied on in her opposition to defendant’s motion. Rodriguez then voluntarily

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dismissed twelve of her thirteen claims, maintaining only her state-law PAGA claim. Pl.’s Notice

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of Dismissal (Notice) at 1-3, ECF No. 16.

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After voluntarily dismissing the twelve claims, Rodriguez filed a motion

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requesting the court decline supplemental jurisdiction over her sole-remaining state law claim,

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requesting the court dismiss the claim without prejudice “so she may pursue it in an appropriate

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state-court forum.” Mot. at 4, ECF No. 19-1. Defendants oppose. Opp’n, ECF No. 21.

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Rodriguez has filed her reply. Reply, ECF No. 23. The court submitted the motion without oral

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argument, ECF No. 22, and resolves all pending motions below.

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II.

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LEGAL STANDARD
Under 28 U.S.C. § 1367(c), “[t]he district courts may decline to exercise

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supplemental jurisdiction over a claim” based on any of four circumstances: (1) “the claim raises

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a novel or complex issue of State law”; (2) “the claim substantially predominates over the claim

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or claims over which the district court has original jurisdiction”; (3) “the district court has

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dismissed all claims over which it has original jurisdiction”; or (4) “in exceptional circumstances,

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there are other compelling reasons for declining jurisdiction.” “A district court’s decision

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whether to exercise [supplemental] jurisdiction after dismissing every claim over which it had

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original jurisdiction is purely discretionary.” Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635,

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639 (2009) (citing 28 U.S.C. § 1367(c)).

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Additionally, the court should consider values of “judicial economy, convenience,

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fairness, and comity” when determining whether to exercise supplemental jurisdiction. Carnegie-

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Mellon Univ. v. Cohill, 484 U.S. 343, 350 (1988). The Ninth Circuit has emphasized that “[i]n
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the usual case in which federal law claims are eliminated before trial, the balance of factors will

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point toward declining to exercise jurisdiction over the remaining state law claims.” Gini v. Las

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Vegas Metro. Police Dep’t, 40 F.3d 1041, 1046 (9th Cir. 1994); see also Carnegie-Mellon Univ.,

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484 U.S. at 350 n.7 (“[I]n the usual case in which all federal-law claims are eliminated before

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trial, the balance of factors to be considered under the pendent jurisdiction doctrine—judicial

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economy, convenience, fairness, and comity—will point toward declining to exercise jurisdiction

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over the remaining state-law claims.”).

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After considering statutory and common law factors, the court may also consider

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whether a plaintiff has engaged in tactics to manipulate the forum. Carnegie-Mellon Univ., 484

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U.S. at 357. If the plaintiff has attempted to manipulate the forum, the court should take that

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conduct into account in determining whether the balance of factors supports a remand in that

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case. Id. But even if a plaintiff’s voluntarily eliminating federal claims may raise suspicion,

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courts have reasoned that “a plaintiff does not engage in manipulative behavior merely by

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eliminating federal claims from an amended complaint that were present in the original

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complaint.” Valmoja v. Akal Sec., Inc., No. 13-00343 LEK-BMK, 2013 WL 5376038, at *5 (D.

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Haw. Sept. 24, 2013); see also Baddie v. Berkeley Farms, Inc., 64 F.3d 487, 490 (9th Cir. 1995)

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(finding “nothing manipulative” about a “straight-forward tactical decision” by plaintiffs to

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“dismiss[] their federal claims and move[] for remand with all due speed after removal”); Loewe

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v. City of Honolulu, No. CIV. 10-00368, 2011 WL 322557, at *5 (D. Haw. Jan. 31, 2011)

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(dismissing a federal claim “is only considered manipulative if the plaintiff’s initial inclusion of

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the federal claim was in bad faith or for the ‘sole purpose of putting defendants through the

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removal-remand procedure’”) (citation omitted).

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III.

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ANALYSIS
Rodriguez contends two circumstances under 28 U.S.C. § 1367(c) warrant the

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court’s declining supplemental jurisdiction: “the PAGA claim raises novel and complex issues of

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state law and the [c]ourt has dismissed all claims over which it had original jurisdiction.” Mot. at

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4. Additionally, she argues, “fairness, equity, comity, and convenience dictate supplemental

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jurisdiction should be declined” and the sole remaining state-law claim, the PAGA claim, should
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be “dismissed without prejudice to it being pursued in the Superior State of California.” Mot. at

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3-4. Defendants argue Rodriguez’s “pattern of trying to manipulate the forum is blatant forum

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shopping,” and this manipulation along with the pendency of defendants’ motion to compel

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arbitration mean “the factors of economy, convenience, fairness, and comity weigh against the

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[c]ourt exercising its discretion to decline jurisdiction.” Opp’n at 2-3. In reply, Rodriguez

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contends her voluntary dismissal of federal claims does not weigh against the court’s declining

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supplemental jurisdiction.

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For the reasons below, the court finds the balance of factors favors declining
supplemental jurisdiction.
A.

Statutory Factors: Dismissal of the Federal Claims

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Rodriguez specifically relies on § 1367(c)(1) and (c)(3) to support her motion. See

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Opp’n at 3. According to Rodriguez, the sole remaining claim “raises a novel or complex issue of

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[s]tate law,” and “the district court has dismissed all claims over which it has original

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jurisdiction.” 28 U.S.C. § 1367(c)(1), (c)(3). Defendants contend § 1367(c)(3) does not apply

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because Rodriguez, not the court, has dismissed the claims. See Opp’n at 5-7. Additionally,

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“federal courts sitting in diversity adjudicate PAGA claims—and the underlying substantive

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violations of the Labor Code—all the time.” Id. at 8 (citation omitted).

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The court finds the statutory factors warrant declining supplemental jurisdiction

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here. First, although the PAGA claim here does not appear to raise any “novel” issues, PAGA

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involves “potential complexity” that “flows from the substance of the claim itself.” Sakkab v.

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Luxottica Retail N. Am., Inc., 803 F.3d 425, 438 (9th Cir. 2015) (PAGA actions not necessarily

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procedurally complex and therefore should not ward off arbitration, but PAGA claim’s substance

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potentially complex); Huff v. Securitas Sec. Servs. USA, Inc., 23 Cal. App. 5th 745, 761

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(2018), reh’g denied (June 13, 2018), review denied (Aug. 8, 2018) (“Where appropriate, cases

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brought under PAGA can be designated complex under the Rules of Court . . . .”). Although

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Rodriguez overstates her position when she asserts “state courts are uniquely equipped to handle”

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PAGA claims, see Mot. at 4, the court still finds this statutory factor weighs in favor of declining

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supplemental jurisdiction. “Because primary responsibility for developing and applying state law
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rests with state courts, this factor weighs in favor of remand.” Blue v. California Office of the

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Inspector Gen., No. 2:15-CV-02656-KJM-CKD, 2016 WL 1138145, at *3 (E.D. Cal. Mar. 23,

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2016) (citing Carnegie-Mellon Univ., 484 U.S. at 350 n.7 and Gini, 40 F.3d at 1046).

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Second, § 1367(c)(3) warrants declining supplemental jurisdiction. All claims

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over which the court had original jurisdiction have been dismissed. Although Rodriguez is

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incorrect that the court dismissed the federal claims in this case, § 1367(c)(3) does not distinguish

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between involuntary or voluntary dismissal. 28 U.S.C. § 1367(c)(3) (referring only to a

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circumstance in which “the district court has dismissed all claims over which it has original

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jurisdiction”); see Commercial Space Mgmt. Co. v. Boeing Co., 193 F.3d 1074, 1076 (9th Cir.

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1999) (“[O]nce a notice of voluntary dismissal is filed, the district court in which the action is

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pending loses jurisdiction” and cannot “rule at the defendant’s request on whether the plaintiff’s

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notice of dismissal in a second action is with prejudice or without prejudice.”); see also United

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Mine Workers of Am. v. Gibbs, 383 U.S. 715, 726 (1966) (“Certainly, if the federal claims are

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dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims

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should be dismissed as well.”).

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Many courts have declined supplemental jurisdiction after a plaintiff has

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eliminated its own federal claims. See, e.g., Blue, 2016 WL 1138145, at *1, 3-4 (declining to

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exercise supplemental jurisdiction where plaintiffs “removed all federal law claims” in amending

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complaint after defendants removed case); Vaca v. The Vons Companies, Inc., No. CV-15-6635-

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MWF-AGR, 2015 WL 7722345, at *4-5 (C.D. Cal. Nov. 30, 2015) (granting plaintiff’s request

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“to dismiss his preempted claims and remand the action,” dismissing those claims without

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prejudice and declining to exercise supplemental jurisdiction); Valmoja, 2013 WL 5376038, at *5

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(declining to exercise supplemental jurisdiction after plaintiff’s first amended complaint had

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removed federal law allegations from the original complaint); Iniguez v. Vantium Capital, Inc.,

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No. C 13-00037 WHA, 2013 WL 1320741, at *1 (N.D. Cal. Apr. 1, 2013) (granting motion to

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remand after plaintiff limited his claims for relief in first amended complaint to those arising

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under state law); Loewe, 2011 WL 322557, at *5 (declining to exercise supplemental jurisdiction

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where “[p]laintiffs amended their complaint at an early stage in the proceedings to eliminate the
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sole federal claim”); Baldain v. Am. Home Mortg. Servicing, Inc., No. CIVS090931 LKK GGH,

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2010 WL 1416549, at *2 (E.D. Cal. Apr. 8, 2010) (declining to exercise supplemental jurisdiction

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where “plaintiffs’ counsel indicated his preference to proceed in state court, and his willingness to

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dismiss his allegations and theories of liability that implicated federal law”).

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Defendants cite Bui v. Northrop Grumman Sys. Corp., No. 15-CV-1397-WQH-

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WVG, 2015 WL 8492502, at *4 (S.D. Cal. Dec. 10, 2015), order vacated in part on

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reconsideration, No. 15-CV-1397-WQH-WVG, 2016 WL 7178921 (S.D. Cal. Dec. 9, 2016).

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The Bui court relied on Ninth Circuit case law addressing a statute’s creation of original federal

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jurisdiction before class certification, ruling that denial of class certification would not defeat

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“continued jurisdiction under [28 U.S.C. § 1332(d)].” United Steel, Paper & Forestry, Rubber,

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Mfg., Energy, Allied Indus. & Serv. Workers Int'l Union, AFL-CIO, CLC v. Shell Oil Co., 602

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F.3d 1087, 1090-91 (9th Cir. 2010). In Shell Oil, the Ninth Circuit did not address supplemental

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jurisdiction as it did in Gini, 40 F.3d at 1046 or as the Supreme Court did in Carnegie-Mellon

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Univ., 484 U.S. at 350 n.7. The Bui court also relied on Supreme Court precedent providing that

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diversity jurisdiction depends on “the citizenship of the parties . . . with reference to the facts as

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they existed at the time of filing,” not any changes in the legal claims plaintiff asserted. Grupo

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Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 569 (2004); see Bui, 2015 WL 8492502, at *4.

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This court declines to follow Bui, a ruling rejecting a change in facts but not addressing a change

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in law, and instead maintains the reasoning it has set forth in previous orders, and by other district

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courts in the Ninth Circuit.

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The court next considers common law factors below.
B.

Judicial Economy, Convenience, Fairness and Comity
Rodriguez contends “fairness, equity, comity, and convenience dictate

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supplemental jurisdiction should be declined” and the sole remaining state-law claim, the PAGA

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claim, should be “dismissed without prejudice to it being pursued in the Superior State of

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California.” Mot. at 3-4. Defendants argue all four factors “weigh solidly in favor of the [c]ourt

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maintaining jurisdiction.” Opp’n at 8. Defendants refer to Rodriguez’s “attempts to manipulate

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the forum throughout this litigation” and the pendency of their motion to compel arbitration, “a
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potentially dispositive motion.” Id. In reply, Rodriguez explains she “elected to expedite things

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by herself invoking” the court’s jurisdiction because defendants have repeatedly removed cases

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filed in state court “by invoking diversity jurisdiction.” Reply at 2 (citing multiple examples in a

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footnote). The court finds these four factors collectively weigh in favor of declining

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supplemental jurisdiction, as explained below.

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1.

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Declining supplemental jurisdiction is in the interest of judicial economy and

Judicial Economy and Convenience

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convenience. This case is in its early stages. The parties have not filed a joint status report for

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scheduling the case, and the court has not conducted an initial scheduling conference. See ECF

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No. 22. Defendants have not filed an answer or a motion to dismiss. Although defendants

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contend they “have been actively litigating this case since it was filed in February” of this year,

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including by filing the pending motion to compel arbitration, Opp’n at 8-9, the court has not ruled

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on the motion. The bulk of the relief defendants request in that motion has been obtained through

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Rodriguez’s voluntary dismissal of most of her claims. Compare ECF No. 9-1 at 9 (motion to

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compel arbitration requesting court “dismiss [Rodriguez’s] first through third and fifth through

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thirteenth claims” along with portion of Rodriguez’s fourth claim, to stay Rodriguez’s non-

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arbitrable representative claim under PAGA and to compel individual arbitration of Rodriguez’s

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remaining individual claims), with Notice at 2 (voluntarily dismissing Rodriguez’s first through

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third and fifth through thirteenth claims, leaving only fourth claim remaining).

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The court therefore finds judicial economy and convenience weigh in favor of

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declining to exercise supplemental jurisdiction early in this case where the only other pending

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motion’s requested relief has been provided. See, e.g., Lankford v. City & Cty. of San Francisco,

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No. C 10-05518 MEJ, 2012 WL 299965, at *2 (N.D. Cal. 2012) (declining to exercise

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supplemental jurisdiction when matter was “in its early stages and the [c]ourt has not devoted a

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significant amount of resources to this litigation” because defendant’s motion for summary

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judgment was “first motion filed by either of the parties”); Marcos v. Equity One Lenders Grp.,

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No. C11-04000 HRL, 2011 WL 6225273, at *2 (N.D. Cal. Dec. 14, 2011) (declining to exercise

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supplemental jurisdiction because case was in its “early stages,” “[f]ew federal resources have
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been expended in determining the sufficiency of the pleadings as to the sole federal claim,” “state

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courts are equally competent and more familiar with the governing law,” and plaintiff determined

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he could not remedy defects in dismissed federal claim). This case is not one that has involved

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“lengthy pretrial proceedings.” See Danner v. Himmelfarb, 858 F.2d 515, 524 (9th Cir. 1988)

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(recognizing some courts have retained supplemental jurisdiction over state claims “whenever

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there have been lengthy pretrial proceedings” but refusing to “hold that the district court must

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exercise jurisdiction over pending state claims” in that circumstance).

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Defendants contend they “should not have to start over in state court.” Opp’n at 8.

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Yet if a plaintiff’s refiling in state court “may be a hardship [to plaintiff], but . . . is not an

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injustice,” then defendants’ litigating in state court a single, remaining PAGA claim after

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receiving much of their requested relief through Rodriguez’s voluntary dismissal of twelve other

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claims is also not an injustice. See Danner, 858 F.2d at 524 (citation omitted).

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2.

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Comity weighs in favor of declining supplemental jurisdiction. Although

Comity

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defendants are correct that federal jurisdiction was not defective at the time of filing, the court is

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mindful of the Supreme Court’s repeated statement that “‘[f]ederal courts are courts of limited

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jurisdiction,’ possessing ‘only that power authorized by Constitution and statute.’” Gunn v.

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Minton, 568 U.S. 251, 256 (2013) (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.

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375, 377 (1994)). As the Ninth Circuit has stated, “principles of comity will be well-served by

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allowing the state courts to resolve claims solely of state law.” Danner, 858 F.2d at 524. As in

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another recent case, “[b]ecause state courts have a strong interest in enforcing their own laws . . .

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the value of comity is served by this [c]ourt declining jurisdiction.” Fraser v. Washington State

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Dep’t of Corr., No. 11-5273, 2012 WL 1022153, at *6 (W.D. Wash. Mar. 26, 2012).

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Defendants have not argued any form of original jurisdiction continues to adhere.

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In the complaint, Rodriguez pleaded “the amount in controversy with respect to the individual

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claims exceeds $75,000” and “exceeds $5,000,000” for the class “believed to consist of more than

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2,500 individuals.” Compl. ¶ 9. But Rodriguez has dismissed all claims except for her fourth

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claim. Notice at 2-3. It is not clear from the face of the complaint that the remaining fourth
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claim, see Compl. ¶¶ 105-13, would satisfy diversity jurisdiction. Nor have defendants offered

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any evidence or a “plausible allegation that the amount in controversy exceeds the jurisdictional

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threshold” for Rodriguez’s sole remaining claim. See Dart Cherokee Basin Operating Co., LLC

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v. Owens, 135 S. Ct. 547, 554 (2014) (holding that “a defendant’s notice of removal need include

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only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold”

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and “[e]vidence establishing the amount . . . only when the plaintiff contests, or the court

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questions, the defendant’s allegation”).

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The court therefore concludes comity weighs in favor of declining supplemental

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jurisdiction. See Valmoja, 2013 WL 5376038, at *5 (“The possibility that diversity may exist is

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only slight, and does not amount to an issue of judicial economy that weighs in favor of the

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Court's retention of jurisdiction over this case.”).

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The court next addresses defendants’ accusation of attempted forum manipulation
and the final factor, fairness, below.

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3.

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Defendants accuse Rodriguez of “trying to manipulate the forum” and “blatant

Forum Manipulation and Fairness

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forum shopping.” Opp’n at 2, 6-7. In reply, Rodriguez explained she “elected to expedite things

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by herself invoking” the court’s jurisdiction because defendants have repeatedly removed cases

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filed in state court “by invoking diversity jurisdiction.” Reply at 2 (citing multiple examples in a

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footnote). Additionally, when voluntarily dismissing nearly all claims, Rodriguez explained her

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dismissal as partly “due to the existence of an express class action waiver within the arbitration

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agreement that is enforceable [under] the United States Supreme Court’s recent decision in the

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consolidated matter of” Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612 (2018). Notice at 2-3.

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Defendants’ argument ignores the effect of the Supreme Court’s ruling in Epic

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Systems Corp., 138 S. Ct. at 1621-32. There, the Supreme Court held the National Labor

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Relations Act (NLRA) did not displace the Federal Arbitration Act’s (FAA) requirement that

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courts enforce agreements to arbitrate. Id. at 1621-28. In effect, as one court has explained, “the

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Supreme Court reversed the Ninth Circuit’s determination that the mere inclusion of a concerted

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action waiver in an arbitration agreement rendered said agreement invalid and unenforceable as a
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standalone defense to arbitration.” Davis v. Red Eye Jack’s Sports Bar, Inc., No. 3:17-cv-01111-

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BEN-JMA, 2018 WL 2734037, at *2 (S.D. Cal. June 7, 2018); see also Morris v. Ernst & Young,

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LLP, 834 F.3d 975 (9th Cir. 2016), rev’d sub nom. Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612

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(2018).

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At the time Rodriguez filed her complaint, Morris, 834 F.3d 975, was good law.

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Rodriguez initially invoked federal jurisdiction to expedite matters, acknowledging that

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defendants regularly remove cases to federal court. Reply at 2. Although defendants assert

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Rodriguez “filed this case in federal court to avoid California Supreme court precedent” that held

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differently than the Ninth Circuit at the time, see Opp’n at 2 & n.1, “there is nothing inherently

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inappropriate with a plaintiff choosing to file suit in federal court because [s]he believes it is more

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favorable to [her].” Feezor v. Wal-Mart Stores, Inc., No. CIV. 05-CV-1962LLSP, 2006 WL

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220152, at *3 (S.D. Cal. Jan. 25, 2006).

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Rodriguez voluntarily dismissed her claims after the Supreme Court’s recent

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reversal of the Ninth Circuit, explaining this change in law motivated in part her decision to

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dismiss most of her claims. See Notice at 2-3 (citing Epic Sys. Corp. v. Lewis, 138 S. Ct. 1612

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(2018)). Previously, Rodriguez had relied on that Ninth Circuit precedent in her opposition to

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defendant’s motion to compel arbitration. See ECF No. 10 at 2. Given her dismissals following

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Lewis, defendants have obtained most of the relief they seek.

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This case is therefore like Marcos, 2011 WL 6225273, at *2. There, the court

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declined to exercise supplemental jurisdiction where the plaintiff determined he could not remedy

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defects in the dismissed federal claim. Here, Rodriguez determined she could no longer oppose

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defendants’ request for dismissal of many of her claims because the law changed. As in Marcos,

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this case is in its “early stages,” “[f]ew federal resources have been expended,” and “state courts

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are equally competent and more familiar with the governing law.” Id.

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The court “does not perceive a threat of gamesmanship” in this scenario because

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Rodriguez “would gain nothing from such a stratagem.” Vaca v. The Vons Companies, Inc.,

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No. CV-15-6635-MWF-AGR, 2015 WL 7722345, at *4 (C.D. Cal. Nov. 30, 2015) (reasoning

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“nothing would prevent [d]efendants from once again removing the action to federal court” if
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plaintiff “later decide[d] to amend the [c]omplaint to add a claim for breach of the collective

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bargaining agreement”).

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All factors, including fairness, weigh in favor of declining supplemental

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jurisdiction.

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IV.

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CONCLUSION
For the above reasons, the court GRANTS Rodriguez’s motion, declines to retain

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supplemental jurisdiction over Rodriguez’s PAGA claim, and DENIES defendants’ pending

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motion to compel arbitration and stay proceedings as MOOT.

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This resolves ECF Nos. 9 and 19.

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The Clerk of the Court is directed to CLOSE this case.

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IT IS SO ORDERED.

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DATED: September 5, 2018.

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UNITED STATES DISTRICT JUDGE

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