Anderson v. XTO Energy INC. et al

Filing 32

MEMORANDUM OPINION AND ORDER by Chief District Judge William P. Johnson GRANTING 23 Plaintiff's Motion to Remand to State Court. The Clerk of Court is hereby directed to take the necessary actions to remand the case to Eleventh Judicial District Court, County of San Juan, New Mexico. (mag)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
______________________

RONDALE ANDERSON,
on behalf of himself and all others similarly situated,
Plaintiff,
v.

Case No. 1:18-cv-00518 WJ/JHR

XTO ENERGY, INC, and
MICHAEL WAYNE MARRIOTT
Defendants.
MEMORANDUM OPINION AND ORDER
GRANTING PLAINTIFF’S MOTION TO REMAND
THIS MATTER comes before the Court upon Plaintiff’s Motion to Remand to State
Court, filed July 5, 2018 (Doc. 23). Having reviewed the parties’ briefs and applicable law, the
Court finds that Plaintiff’s Motion is well-taken and, therefore, is GRANTED. This matter is
therefore REMANDED to the Eleventh Judicial District Court, County of San Juan, State of
New Mexico.
BACKGROUND
This is a class action asserting a violation of New Mexico Minimum Wage Act. Plaintiff
was a lease operator for Defendant XTO Energy, Inc, in San Juan County, New Mexico. Plaintiff
filed a complaint against both XTO Energy, Inc. and Michael Marriott, alleging that they failed
to pay him and sixty other lease operators overtime as required under the New Mexico Minimum
Wage Act. Under the New Mexico Minimum Wage Act (“NMMWA”), “[a]n employee shall
not be required to work more than forty hours in any week of seven days, unless the employee is

paid one and one-half times the employee's regular hourly rate of pay for all hours worked in
excess of forty hours.” See NMSA § 50–4–22(D).
As a lease operator, Plaintiff maintained oilfield equipment, measured the level of oil in
tanks, and input data into spreadsheets regarding the amount of oil a well produces. Defendant
Marriott was the senior superintendent for Defendant XTO in New Mexico, and was allegedly
the senior supervisor in New Mexico. There were two layers of supervisors – foremen and
assistant superintendents – between Defendant Marriott and the lease operators. Plaintiff alleged
that Defendant Marriott had the authority to make personnel, scheduling, and compensation
decisions, which Defendants dispute.
The citizenship of the parties appears to be uncontested based on the face of the
complaint and the Notice of Removal. Plaintiff is a New Mexico citizen, and Defendant XTO
Energy is incorporated in Delaware, with its principal place of business in Texas. Doc. 1, p. 3.
Defendant Marriott is a citizen of New Mexico.
On June 4, 2018, Defendants filed a Notice of Removal (Doc. 1) on the basis of diversity
jurisdiction. Although Defendant Marriott is a citizen of New Mexico and therefore non-diverse
with Plaintiff, Defendants allege that Defendant Marriott was fraudulently joined. Specifically,
they assert that he is not an “employer” under the New Mexico Minimum Wage Act, and
therefore no claim under the Minimum Wage Act can be asserted against him. Defendants
included, as an appendix to their Notice of Removal, a declaration by Defendant Marriott which
purports to assert facts showing that he was not an employer.
On June 11, 2018, Defendant Marriott filed a Motion to Dismiss (Doc. 12) under Fed R.
Civ. P. 12(b)(6), arguing that claims against him should be dismissed, because he cannot be an
employer under the New Mexico Minimum Wage Act.

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On July 5, 2018, Plaintiff filed this Motion to Remand on the basis that the Court lacks
diversity jurisdiction, and Defendant Marriott was not fraudulently joined.
DISCUSSION
I.

Removal and Diversity Jurisdiction.
Federal courts are courts of limited jurisdiction; thus, there is a presumption against

removal jurisdiction, which the defendant seeking removal must overcome. See Fajen v. Found.
Reserve Ins. Co., 683 F.2d 331, 333 (10th Cir.1982); Martin v. Franklin Capital Corp., 251 F.3d
1283, 1290 (10th Cir. 2001).
Plaintiffs removed this case to federal court on the basis of diversity jurisdiction pursuant
to 28 U.S.C. § 1332(a). To invoke diversity jurisdiction, “a party must show that complete
diversity of citizenship exists between the adverse parties and that the amount in controversy
exceeds $75,000.” Dutcher v. Matheson, 733 F.3d 980, 987 (10th Cir. 2013). “Complete
diversity is lacking when any of the plaintiffs has the same residency as even a single
defendant.” Id.; see also Lincoln Prop. Co. v. Roche, 546 U.S. 81, 84, 126 S. Ct. 606, 609, 163
L. Ed. 2d 415 (2005) (“Defendants may remove an action on the basis of diversity of citizenship
if there is complete diversity between all named plaintiffs and all named defendants, and no
defendant is a citizen of the forum State.”). “[T]he relevant time period for determining the
existence of complete diversity is the time of the filing of the complaint.” Siloam Springs Hotel,
L.L.C. v. Century Sur. Co., 781 F.3d 1233, 1239 (10th Cir. 2015).
A matter may be remanded back to state court if the federal court lacks subject matter
jurisdiction (such as diversity jurisdiction). 28 U.S.C. § 1447(c). The removing defendant bears
the burden of proving subject matter jurisdiction.
II.

Fraudulent Joinder.

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However, fraudulent joinder is an exception to the requirement of complete diversity.
Black Iron, LLC v. Helm-Pacific, 2017 WL 2623846, at *4 (D.Utah, 2017). The joinder of a
non-diverse party is “fraudulent” when it serves no purpose other than “to frustrate federal
jurisdiction.” Dodd v. Fawcett Publ'ns, Inc., 329 F.2d 82, 85 (10th Cir. 1964). A defendant may
remove a case to federal court based upon diversity jurisdiction in the absence of complete
diversity if a plaintiff joins a non-diverse party fraudulently to defeat federal jurisdiction. See
Am. Nat'l Bank & Trust Co. v. Bic Corp., 931 F.2d 1411, 1412 (10th Cir.1991). The citizenship
of fraudulently joined defendants “should be ignored for the purposes of assessing complete
diversity.” Dutcher v. Matheson, 733 F.3d 980, 987-988 (10th Cir. 2013).
Fraudulent joinder must be “established with complete certainty upon undisputed
evidence.” Smoot v. Chicago, Rock Island & Pacific Railroad Co., 378 F.2d 879 (10th Cir.1967).
In evaluating a claim of fraudulent joinder, “all doubts are to be resolved against removal.”
Fajen v. Found. Reserve Ins. Co., 683 F.2d 331, 333 (10th Cir. 1982). In other words, the
removing party “bears a heavy burden of proving fraudulent joinder, and all factual and legal
issues must be resolved in favor of the plaintiff.” Dutcher, 733 F.3d at 988 (quoting Pampillonia
v. RJR Nabisco, Inc., 138 F.3d 459, 461 (2d Cir. 1998)). This is a high bar for Defendants to
meet, and poses a standard “more exacting than that for dismissing a claim under Fed. R. Civ. P.
12(b)(6)” and “which entails the kind of merits determination that, absent fraudulent joinder,
should be left to the state court where the action was commenced.”

Montano v. Allstate

Indemnity, 2000 WL 525592 at **1-2 (10th Cir. 2000) (unpublished).1

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Many district courts within the Tenth Circuit have referred to the standard for fraudulent joinder as requiring clear
and convincing evidence. See Bristow First Assembly of God v. BP p.l.c., 2016 WL 5415792, at *2 n.1 (N.D. Okla.
Sept. 28, 2016) (finding “no significant difference between the ‘complete certainty’ language in Smoot and the ‘clear
and convincing’ language in other cases); Spence v. Flynt, 647 F.Supp. 1266, 1271 (D. Wyo.1986); Castens v.
Conseco Life Ins. Co., 2012 WL 610001, at *2 (N.D. Okla. Feb. 24, 2012); De La Rosa v. Reliable, Inc., 113 F.
Supp. 3d 1135, 1163 (D.N.M. 2015).

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The party defending removal may carry this “heavy burden” and successfully assert
fraudulent joinder by demonstrating either: (1) actual fraud in the pleading of jurisdictional facts,
or (2) the inability of the plaintiff to establish a cause of action against the non-diverse party in
state court. Dutcher v. Matheson, 733 F.3d 980, 988 (10th Cir. 2013); Black Iron, LLC v. HelmPacific, 2017 WL 2623846, at *4 (D.Utah, 2017). The removing party must demonstrate that
there is no possibility that plaintiff would be able to establish a cause of action against the nondiverse defendant. Montano v. Allstate, 2000 WL 525592 at **1-2 (to prove fraudulent joinder,
the removing party must demonstrate that there is no possibility that plaintiff would be able to
establish a cause of action against the joined party in state court); see also Bellman v. NXP
Semiconductors USA, Inc., 248 F. Supp. 3d 1081, 1116 (D.N.M. 2017); Hart v. Bayer Corp., 199
F.3d 239, 246–47 (5th Cir. 2000).
A fraudulent joinder analysis is a jurisdictional inquiry and therefore a district court
should “pierce the pleadings, consider the entire record, and determine the basis of joinder by
any means available.” Dodd v. Fawcett Publ’ns, Inc., 329 F.2d 82, 85 (10th Cir. 1964) (citations
omitted); Albert v. Smith’s Food & Drug Centers, Inc. 356 F.3d 1242, 1247 (10th Cir.
2004)(fraudulent joinder analysis is a jurisdictional inquiry); Smoot, 378 F.2d at 882 (federal
courts may look beyond the pleadings to determine if joinder is fraudulent); see also De La Rosa
v. Reliable, Inc., 113 F.Supp.3d at 1151.
However, “this does not mean that the federal court will pre-try, as a matter of course,
doubtful issues of fact to determine removability; the issue must be capable of summary
determination and be proven with complete certainty.” Smoot v. Chicago, R.I. & P. R. Co., 378
F.2d 879, 882 (10th Cir. 1967).

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III.

Defendants failed to show there is no possibility of a claim against Defendant

Marriott.
Here, the pleadings on their face indicate a lack of complete diversity, because Defendant
Marriott, like Plaintiff, is alleged to be a citizen of New Mexico. Therefore, to support removal,
Defendants bear the burden of showing with complete certainty that there is no possibility of a
claim against Defendant Marriott. Defendants attempt to do so here by arguing that Defendant
Marriott cannot be an ‘employer’ under the New Mexico Minimum Wage Act.
A. There is no controlling law interpreting the definition of “employer” under the
New Mexico Minimum Wage Act.
Whether a supervisor is an “employer” under the NMMWA appears to be an issue of first
impression. Although the NMMWA defines employer, there is no case law construing the
definition of employer under that act in New Mexico or in the Tenth Circuit.
Under the NMMWA, an employer “includes any individual, partnership, association,
business trust, legal representative or any organized group of persons employing one or more
employees at any time, acting directly or indirectly in the interest of an employer in relation to an
employee.” NMSA § 50-4-21(B) (emphasis added). This language is exceedingly broad. The
plain language of the definition provides that individuals employed by a company may be an
“employer” themselves when they take certain actions in relation to employees on behalf the
corporate employer. There is no controlling law in New Mexico or the Tenth Circuit discussing
how this definition applies to individuals who act in a supervisory or managerial role. On this
basis alone, the Court concludes that Defendant has not shown there is “no possibility” that
Plaintiff has a claim against Defendant Marriott.

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Defendants propose that the court should apply the “economic reality” test under the
FLSA to determine whether Defendant Marriott is an employer. Initially, the Court notes that it
is unclear whether New Mexico would apply the economic reality test under the FLSA to
determine whether a supervisor was an “employer” under the New Mexico Minimum Wage Act.
Because the definition of employer is similar in both the Minimum Wage Act and the FLSA,
New Mexico courts may look to case law interpreting similar language under the FLSA. Garcia
v. Am. Furniture Co., 1984-NMCA-090, ¶ 13, 101 N.M. 785, 788, 689 P.2d 934, 937 (applying
FLSA economic realty test to definition of “employee” under NMMWA, and noting that New
Mexico courts may look to persuasive federal decisions under the FLSA in interpreting identical
language), cited in Armijo v. Wal-Mart Stores, Inc., 2007-NMCA-120, ¶ 47, 142 N.M. 557, 572,
168 P.3d 129, 144. However, there is no analogous Tenth Circuit law on when an individual
supervisor or manager may be considered an employer under the FLSA.
Moreover, making a fraudulent joinder case under these circumstances would require a
fact-intensive merits determination. Although at this stage the Court should look behind the
pleadings, “this does not mean that the federal court will pre-try, as a matter of course, doubtful
issues of fact to determine removability; the issue must be capable of summary determination
and be proven with complete certainty.” Smoot v. Chicago, R.I. & P. R. Co., 378 F.2d 879, 882
(10th Cir. 1967); see also Batoff v. State Farm Ins. Co., 977 F.2d 848, 853 (3d Cir. 1992) (“A
claim which can be dismissed only after an intricate analysis of state law is not so wholly
insubstantial and frivolous that it may be disregarded for purposes of diversity jurisdiction.”),
quoted in Montano v. Allstate Indemnity, 211 F.3d 1278 (Table), 2000 WL 525592, at *2 (10th
Cir. 2000) (unpublished); Hart v. Bayer Corp., 199 F.3d 239, 246–47 (5th Cir. 2000) (cautioning
against pre-trying a case to determine jurisdiction). Whether

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Defendant

Marriott

in

fact

controlled or told Plaintiff whether he could claim overtime is one of the core merits disputes of
this case, and cannot be determined on the basis of a declaration.
Even if the Court were to look to the FLSA to determine whether Defendant Marriott is
an employer, there appears to be a split in authority whether a supervisor has liability under the
FLSA. For example, in interpreting similar language in the FMLA, many cases have imposed
liability on supervisors who denied employees the right to take FMLA leave and then return to
work. Pinkard v. Lozano, 2007 WL 4116019, at *2 (D. Colo. Nov. 16, 2007) (to establish
individual liability within meaning of “employer” under FMLA, individual must have
supervisory authority over the plaintiff or control in some way the plaintiff’s ability to take leave
of absence and return to work); Kilvitis v. Cty. of Luzerne, 52 F. Supp. 2d 403, 412–13 (M.D. Pa.
1999) (collecting cases); Saavedra v. Lowe's Home Centers, Inc., 748 F. Supp. 2d 1273, 1292
(D.N.M. 2010) (Browning, J) (collecting cases and noting that most courts have held that
supervisors may be liable under the FMLA). This ambiguity in the law should be resolved in
favor of Plaintiff. Dutcher v. Matheson, 733 F.3d 980, 987-988 (10th Cir. 2013); Hart v. Bayer
Corp., 199 F.3d 239, 246–47 (5th Cir. 2000) (court must resolve all ambiguities in controlling
state law in favor of non-removing party).
B.

Even under the FLSA, it is possible that Defendant Marriott is an employer.

Even if the Court applied persuasive case law interpreting the FLSA on the definition of
“employer”, the Court is not convinced to a complete certainty that there is no possibility of a
claim against Defendant Marriott.
Defendants assert that the “economic reality” test applies. That test is primarily designed
to determine whether an individual is an employee subject to the relevant act, or an independent
contractor. Henderson v. Inter-Chem Coal Co., 41 F.3d 567, 570 (10th Cir. 1994), as modified

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on denial of reh'g (Dec. 5, 1994)(applying multiple factors in determining whether individual is
employee or independent contractor.); Johns v. Stewart, 57 F.3d 1544, 1557–58 (10th Cir. 1995).
To the extent the “economic reality” test does apply, the relevant question thereunder is the
supervisor’s role in the alleged FLSA violation, and whether the supervisor in fact had control
over the Plaintiff’s work schedule or overtime hours claimed. See, e.g., Lamonica v. Safe
Hurricane Shutters, Inc., 711 F.3d 1299, 1314 (11th Cir. 2013) (“our primary concern is the
supervisor's role in causing the FLSA violation, and it is possible for a supervisor to exercise
enough control to play a substantial role in causing the violation while working only part-time. In
short, the fact that control was exercised only occasionally “does not diminish the significance of
its existence.”); see generally Saavedra v. Lowe's Home Centers, Inc., 748 F. Supp. 2d 1273,
1286 (D.N.M. 2010); Pinkard v. Lozano, 2007 WL 4116019, at *2 (D. Colo. Nov. 16, 2007)
(Under FMLA, test for determining whether supervisor was an “employer” included whether the
supervisor had “control in some way the plaintiff's ability to take a leave of absence and return to
work.”).
Based on the Tenth Circuit’s rulings on similar language in other legislation, the likely
test in this circuit would be a supervisor’s role in the violations. Fernandez v. Mora-San Miguel
Elec. Co-op., Inc., 462 F.3d 1244, 1248 (10th Cir. 2006) (in determining whether party was an
employer under similar language in the Employee Polygraph Protection Act, test focuses on
whether “as a matter of economic reality, that person or entity exerts some degree of control over
the employer's compliance with EPPA.”) (internal quotation mark and citation omitted).
Upon reviewing Defendant Marriott’s declaration, the Court finds that Defendants have
not shown that there is no possibility of a claim under the NMMWA. For example, Defendant
Marriott asserts that he had no authority over the Plaintiff and class members, but notes that he

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made “recommendations” to corporate headquarters on a variety of issues, including termination
and the class members’ schedule. He also reviewed and approved time cards. Whether the
acceptance of these recommendations indicate that he had de facto control over the relevant
decisions in this case would bear on whether he was an “employer”, and requires an in-depth
merits analysis.
Therefore, the Court cannot conclude that there is no possibility that Defendant Marriott
was “acting directly or indirectly in the interest of an employer in relation to an employee” and
therefore an employer pursuant to NMSA § 50-4-21(B).
IV.

Court declines to rule on Motion to Dismiss (Doc. 12).
Because the Court concludes that diversity jurisdiction does not exist, the Court lacks

jurisdiction to consider the motion to dismiss.
CONCLUSION
On the face of the complaint, the Court lacks diversity jurisdiction, because Defendant
Marriott is a citizen of New Mexico and non-diverse with Plaintiff. Defendants failed to carry
their heavy burden of showing that Defendant Marriott was fraudulently joined, and have failed
to show that there is no possibility of a claim against him. Therefore, the Court lacks diversity
jurisdiction over this matter and it must be remanded pursuant to § 1447(c).
IT IS THEREFORE ORDERED that Plaintiff’s Motion to Remand (Doc. 23) is hereby
GRANTED for reasons described in this Memorandum Opinion and Order and that this action
is REMANDED to the Eleventh Judicial District Court, County of San Juan, New Mexico. The
Clerk of Court is hereby directed to take the necessary actions to remand the case.

_________________________________________
CHIEF UNITED STATES DISTRICT JUDGE
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