Lewis v. Home Depot, U.S.A., Inc. et al

Filing 21

ORDER by Judge Edward M. Chen Denying 12 Plaintiff's Motion to Remand. (emcsec, COURT STAFF) (Filed on 3/6/2013)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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AARON LEWIS,

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Plaintiff,
v.

ORDER DENYING PLAINTIFF’S
MOTION TO REMAND

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For the Northern District of California

United States District Court

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No. C-12-6354 EMC

HOME DEPOT U.S.A., INC., et al.,

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Defendants.
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(Docket No. 12)
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Having considered the parties’ briefing and accompanying submissions, as well as the oral

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argument of counsel, the Court hereby DENIES Plaintiff Aaron Lewis’s motion to remand. This

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order memorializes the rulings made by the Court at the hearing on February 14, 2013, and provides

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further analysis as necessary.

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I.

FACTUAL & PROCEDURAL BACKGROUND

Mr. Lewis initiated this action against Defendants Home Depot U.S.A., Inc. and Elena

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Perez, a human resources manager for Home Depot, in state court. In his complaint, Mr. Lewis

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asserted only state law causes of action. The sole claim pled against Ms. Perez was a claim for

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retaliation in violation of the California Family Rights Act (“CFRA”).

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Subsequently, Home Depot removed the case to federal court. Home Depot asserted that

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there was diversity jurisdiction over the instant action because Ms. Perez had been fraudulently

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joined to the lawsuit and therefore her citizenship could be ignored. According to Home Depot,

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there was fraudulent joinder because, as a matter of law, a supervisor such as Ms. Perez cannot be

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held individually liable under the CFRA. Mr. Lewis then filed the currently pending motion to

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remand.

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II.
A.

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DISCUSSION

Legal Standard
A case may be removed to federal court only if the federal court would have possessed

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original jurisdiction over the case. See 28 U.S.C § 1441 (a). Here, Home Depot contends that there

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is diversity jurisdiction. Diversity jurisdiction requires complete diversity of citizenship between the

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plaintiffs and defendants and an amount in controversy exceeding $75,000. See 28 U.S.C. § 1332

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(a).
It is undisputed that both Mr. Lewis and Ms. Perez are citizens of California, which would

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For the Northern District of California

United States District Court

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ordinarily preclude diversity jurisdiction. However, as noted above, Home Depot asserts that Ms.

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Perez has been fraudulently joined to the lawsuit precisely to defeat diversity jurisdiction.

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“Although there is a general presumption against fraudulent joinder, ‘[i]f the plaintiff fails to state a

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cause of action against a resident defendant, and the failure is obvious according to the settled rules

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of the state, the joinder of the resident defendant is fraudulent.’” Hamilton Materials, Inc. v. Dow

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Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007).

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B.

Express Language of CFRA

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As a preliminary matter, the Court notes that the express language of the CFRA establishes

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that a supervisor cannot be held individually liable under the statute. The CFRA provides that “[i]t

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shall be an unlawful employment practice for an employer to refuse to hire, or to discharge, fine,

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suspend, expel, or discriminate against, any individual because of . . . [a]n individual’s exercise of

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the right to family care and medical leave provided by subdivision (a).” Cal. Gov’t Code §

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12945.2(l). Thus, under the statute, only an “employer” may be held liable.

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“Employer” is defined in the CFRA as, inter alia, “[a]ny person who directly employs 50 or

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more persons to perform services for a wage or salary.” Cal. Gov’t Code § 12945.2(c)(2)(A). A

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supervisor is not one who “directly employs.”

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Although Mr. Lewis argues that a supervisor may be held individually liable under the

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CFRA because such liability is possible under the federal Family Medical Leave Act (“FMLA”), he

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ignores the fact that the term “employer” under the FMLA has a much more expansive definition.

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Under the FMLA, an “employer” means “any person . . . who employs 50 or more employees” and

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includes “any person who acts, directly or indirectly, in the interest of an employer to any of the

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employees of such employer.” 29 U.S.C. § 2611(4)(A)(ii)(I).

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Mr. Lewis further contends that a supervisor can be held individually liable based on a

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regulation issued by the California Fair Employment and Housing Commission (“FEHC”), which

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provides as follows: “[I]t shall be an unlawful employment practice for any person to discharge,

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fine, suspend, expel, punish, refuse to hire, or otherwise discriminate against any individual . . .

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because that individual has . . . exercised his or her right to CFRA leave.” 2 Cal. Code Reg. §
7297.7(a). But this argument is unavailing for two reasons.

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For the Northern District of California

United States District Court

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First, § 7297.7(a) simply reflects that a “person” can be held individually liable. This is

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consistent with § 12945.2(c)(2)(A) which states that an employer can be a person. But simply

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because an employer can be a person does not address the issue of whether the supervisor of an

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employer may be held individually liable.

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Second, even if the FEHC intended § 7297.7(a) to impose individual liability on a

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supervisor, the FEHC “has no discretion to promulgate [a] regulation[] that [is] inconsistent with the

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governing statute, in that [the regulation] ‘alter[s] or amend[s] the statute or impair[s] its scope.’”

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Colmenares v. Braemar Country Club, Inc., 29 Cal. 4th 1019, 1021 (2001). Interpreting the FEHC

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regulation to impose liability on “any person” regardless of employer status renders the CFRA’s

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definition of “employer” nugatory. Notably, Judge Alsup of this District reached this same

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conclusion in Wong v. Thomson Reuters (Mkts.) LLC, No. C 11-02864 WHA, 2011 WL 2912900, at

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*3 (N.D. Cal. July 20, 2011).

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C.

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Nazir
Not only does the express language of the CFRA establish that a supervisor may not be held

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individually liable, but also the only state court to have addressed the issue has held that a supervisor

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may not be held individually liable. See Nazir v. United Airlines, Inc., 178 Cal. App. 4th 243, 287

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(2009). In Nazir, plaintiff sued United Airlines and his individual supervisor for retaliation in

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violation of both the CFRA and the FEHA, among other claims. See id. at 250. The California

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Court of Appeal affirmed summary adjudication on the retaliation claims as to the plaintiff’s

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supervisor because “[t]here is...no individual liability for retaliation.” Id. at 287.

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Mr. Lewis criticizes the Nazir case, suggesting that it did not address the issue of whether a

Housing Act (“FEHA”)). But simply because the Nazir court cited a FEHA case -- Jones v. Torrey

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Pines Partnership, 42 Cal. 4th 1158 (2008) -- does not mean that it did not address the issue of

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liability under the CFRA. Indeed, a close reading of Nazir demonstrates that the court was opining

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on the issue of individual supervisor liability under both the FEHA and the CFRA. The court

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expressly noted that the plaintiff had asserted three claims for retaliation, one of which -- the ninth --

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was for retaliation under the CFRA. See Nazir, 178 Cal. App. 4th at 250, 287. The court then went

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For the Northern District of California

supervisor may be held individually liable under the CFRA (as opposed to the Fair Employment and

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United States District Court

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on to note that there is “no individual liability for retaliation, so the summary adjudication of these

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claims in favor of [the supervisor] is affirmed.” Id. at 287 (emphasis added). Necessarily, the Court

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of Appeal adjudicated the CFRA claim.

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Moreover, the fact that the Nazir court cited Jones in support of its decision on the CFRA

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makes sense. By citing Jones, the Nazir court implicitly found the rationale of Jones -- in which the

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California Supreme Court found that there was no individual supervisor liability under FEHA --

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applies to the CFRA as well. The policy rationales identified by the California Supreme Court in

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Jones are equally applicable to the CFRA. As Jones noted, individual supervisor liability would

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potentially punish supervisors that cannot avoid personnel decisions, hold individual supervisors

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liable for collective corporate employment decisions, and subject individual supervisors to the threat

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of a lawsuit after every personnel decision. See Jones, 42 Cal. 4th at 1167. These rationales apply

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to CFRA as well as the FEHA. Moreover, as with FEHA, individual supervisor liability under the

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CFRA would force employees to choose between loyalty to their employers and their personal

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interests in avoiding lawsuits. See id. at 1166. Finally, FEHA exempts “employers” with less than 5

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employees, and similarly the CFRA exempts “employers” with less than 50 employees. See Cal.

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Gov’t Code §§ 12926(d), 12945.2(c)(2)(A). Under both statutes, it would be inconsistent to exempt

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small employers yet hold individual supervisors liable for retaliation. Thus, each policy rationale

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behind prohibiting individual liability under FEHA applies with equal force to the CFRA.

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At the hearing, Mr. Lewis made one final argument in the attempt to avoid Nazir -- i.e., that

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for fraudulent joinder, the plaintiff’s failure to state a claim against the nondiverse defendant must

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be obvious according to the settled rules of the state. But Mr. Lewis has failed to point to any state

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court that has reached a conclusion contrary to that of the Nazir court, and so this Court must defer

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to the Nazir court’s interpretation of California law, the only appellate authority on point. See Owen

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v. United States, 713 F.2d 1461, 1464 (9th Cir. 1983) (“In the absence of a pronouncement by the

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highest court of a state, the federal courts must follow the decision of the intermediate appellate

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courts of the state unless there is convincing evidence that the highest court of the state would

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decide differently.”) (quoting Andrade v. City of Phoenix, 692 F.2d 557, 559 (9th Cir.1982) (internal
quotations omitted); Hernandez v. Towne Park, Ltd., No. CV 12-02972 MMM JCGX, 2012 WL

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For the Northern District of California

United States District Court

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2373372, at *21 n.62 (C.D. Cal. June 22, 2012) (opining, in the remand context, that the Ninth

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Circuit has “strongly stated that when applying California law, federal district courts should follow

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precedential decisions by the California Court of Appeal”).

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III.

CONCLUSION

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For the foregoing reasons, the Court agrees with Home Depot that Ms. Perez was

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fraudulently joined to the instant case, and therefore her citizenship may be disregarded. Without

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Ms. Perez, there is complete diversity, and therefore Home Depot properly removed the case to

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federal court. Mr. Lewis’s motion to remand is, accordingly, denied.

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This order disposes of Docket No. 12.

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IT IS SO ORDERED.

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Dated: March 6, 2013

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_________________________
EDWARD M. CHEN
United States District Judge

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