Ekeya v. Shriners Hospital for Children, et al
Opinion and Order - Plaintiff's Motion to Remand (ECF 7 ) is GRANTED, including Plaintiff's request for reasonable attorney fees. Defendants' Motion to Dismiss (ECF 6 ) is DENIED AS MOOT. This case is REMANDED to the Circuit Court of the State of Oregon for the County of Multnomah. The Clerk of the Court is directed to send the files in this case to the Clerk of the Multnomah County Circuit Court. The Court retains jurisdiction, however, to resolve Plaintiff's petition for attorney fees, if filed not later than fourteen days from the date of this Opinion and Order. Signed on 7/10/2017 by Judge Michael H. Simon. (mja)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
Case No. 3:17-cv-195-SI
OPINION AND ORDER
SHRINERS HOSPITAL FOR CHILDREN,
PORTLAND, a Colorado Non-Profit
Corporation, and JOHN CRAIG PATCHIN,
Kyann Kalin and Peter Stutheit, STUTHEIT KALIN LLC, 308 SW First Ave., Suite 325, Portland,
OR 97204. Of Attorneys for Plaintiff.
John M. Kreutzer and Jessica E. Wilcox, SMITH FREED & EBERHARD PC, 111 SW Fifth Ave.,
Suite 4300, Portland, OR 97204. Of Attorneys for Defendants.
Michael H. Simon, District Judge.
Plaintiff Kay Ekeya (“Ekeya”) asserts employment-related claims under Oregon law
against her former employer, Shriners Hospital for Children, Portland (“Shriners Portland”), and
the Hospital Administrator of Shriners Portland, John C. Patchin (“Patchin”) (collectively,
“Defendants”). Ekeya alleges that Shriners Portland retaliated against her by terminating her
employment after she reported that her immediate supervisor had violated patient privacy rights
PAGE 1 – OPINION AND ORDER
by allowing a news reporter into the hospital to take and publish photographs in areas not
generally open to the public. Ekeya also alleges that Patchin aided and abetted the unlawful
retaliation by Shriners Portland. Ekeya is a citizen of the State of Washington, Shriners Portland
is a Colorado non-profit corporation, and Patchin is a citizen of the State of Oregon. Plaintiff
commenced this action in state court in Oregon, and Defendants timely removed the case to
federal court, asserting diversity jurisdiction. In an effort to avoid the forum defendant rule,
which prohibits removal when a defendant is a citizen of the forum state, Defendants argue that
Plaintiff cannot state a colorable claim against Patchin and, thus, he has been fraudulently joined.
From this, Defendants argue that Patchin’s presence does not preclude removal. Before the Court
are Plaintiff’s motion to remand, arguing that Patchin has not been fraudulently joined, and
Defendants’ motion to dismiss Plaintiff’s claim against Patchin.
A. Removal, the Forum Defendant Rule, and Remand
A civil action generally may be removed from state court to federal court if the federal
district court would have had original, subject matter jurisdiction over the case. 28 U.S.C.
§ 1441(a). Subject matter jurisdiction may be based on either federal question jurisdiction or
diversity jurisdiction. 28 U.S.C. §§ 1331, 1332. Diversity jurisdiction exists over all civil actions
when the amount in controversy exceeds $75,000 and there is complete diversity among all
plaintiffs and defendants. 28 U.S.C. § 1332(a)(1). “[D]iversity jurisdiction does not exist unless
each defendant is a citizen of a different State from each plaintiff.” Owen Equip. & Erection Co.
v. Kroger, 437 U.S. 365, 373 (1978) (emphasis in original). A civil action otherwise removable
on the basis of diversity jurisdiction, however, “may not be removed if any of the parties in
interest properly joined and served as defendants is a citizen of the State in which such action is
brought.” 28 U.S.C. § 1441(b)(2); see also Lincoln Prop. Co. v. Roche, 546 U.S. 81, 84 (2005)
PAGE 2 – OPINION AND ORDER
(“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.”) (emphasis added). This latter clause is known as the “forum defendant rule.”
A motion to remand is the proper procedure for a plaintiff to use when challenging
removal. 28 U.S.C. § 1447; see also Moore-Thomas v. Ala. Airlines, Inc., 553 F.3d 1241, 1244
(9th Cir. 2009). Because federal courts are courts of limited jurisdiction, the removal statute is
strictly construed, and courts resolve any doubt in favor of remand. Provincial Gov’t of
Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009); Gaus v. Miles, Inc.,
980 F.2d 564, 566 (9th Cir. 1992) (per curiam). In other words, there is a “strong presumption”
against removal jurisdiction. Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009)
(citation and quotation marks omitted). The party seeking removal bears the burden of
establishing that removal is proper. Moore-Thomas, 553 F.3d at 1244.
B. Fraudulent Joinder
When considering diversity jurisdiction, an exception “to the requirement of complete
diversity is where a nondiverse defendant has been ‘fraudulently joined.’”1 Morris v. Princess
Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). If a defendant has been fraudulently joined,
“the district court may ignore the presence of that defendant for the purpose of establishing
diversity.” Hunter, 582 F.3d at 1042. There is, however, a “general presumption against
fraudulent joinder.” Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir.
2007). Further, a defendant bears a heavy burden of demonstrating fraudulent joinder by “clear
As courts and commentators often point out, the phrase “fraudulent joinder” is a “bit
misleading because the doctrine requires neither a showing of fraud nor joinder in one sense.” 16
Moore’s Federal Practice § 107.14[c][iv][A], at 107-58 (2011). “Fraudulent joinder does not
impugn the integrity of Plaintiffs or their counsel and does not refer to an intent to deceive.”
Dacosta v. Novartis AG, 180 F. Supp. 2d 1178, 1181 (D. Or. 2001).
PAGE 3 – OPINION AND ORDER
and convincing evidence.” Id. Thus, a removing defendant asserting fraudulent joinder must
overcome “both the strong presumption against removal jurisdiction and the general presumption
against fraudulent joinder.” Hunter, 582 F.3d at 1046 (citation and quotation marks omitted).
A “joinder is fraudulent when a plaintiff’s failure to state a cause of action against the
resident defendant is obvious according to the applicable state law.” Allen v. Boeing Co., 784
F.3d 625, 634 (9th Cir. 2015); McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th
Cir. 1987). “[I]f there is a possibility that a state court would find that the complaint states a
cause of action against any of the resident defendants, the federal court must find that the joinder
was proper and remand the case to the state court.” Hunter, 582 F.3d at 1046 (quotation marks
and citation omitted) (emphasis added).
In many circumstances, a court will consider only the plaintiff’s pleadings to determine
removability. When fraudulent joinder is at issue, however, a court may go “somewhat further.”
Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318-19 (9th Cir. 1998). A defendant seeking
removal is “entitled to present the facts showing the joinder to be fraudulent.” McCabe, 811 F.2d
at 1339. Thus, when determining whether there has been fraudulent joinder, a court may conduct
a “summary inquiry” that goes beyond the pleadings. Allen, 784 F.3d at 634. Such an inquiry,
however, “is appropriate only to identify the presence of discrete and undisputed facts that would
preclude plaintiff’s recovery against the in-state defendant.” Id. (quoting Hunter, 582 F.3d at
1044 (quoting Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568, 573-74 (5th Cir. 2004)))
(emphasis added). “[T]he inability to make the requisite decision in a summary manner itself
points to an inability of the removing party to carry its burden.” Id.
C. Motion to Dismiss for Failure to State a Claim
A motion to dismiss for failure to state a claim may be granted only when there is no
cognizable legal theory to support the claim or when the complaint lacks sufficient factual
PAGE 4 – OPINION AND ORDER
allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs.,
Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the legal sufficiency of a complaint’s
factual allegations, the court must accept as true all well-pleaded material facts and construe
them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668
F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir.
2010). To be entitled to a presumption of truth, allegations in a complaint “may not simply recite
the elements of a cause of action, but must contain sufficient allegations of underlying facts to
give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652
F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from the factual allegations must be
drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2
(9th Cir. 2008). The court need not, however, credit the plaintiff’s legal conclusions that are
couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).
A complaint must contain sufficient factual allegations to “plausibly suggest an
entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the
expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).
Shriners Portland is part of a non-profit organization that operates 22 hospitals in three
countries, including the United States. Plaintiff, Ekeya, worked in the Shriners Portland hospital
These background facts are derived from Plaintiff’s complaint, the declarations and
exhibits submitted by the parties in connection with Plaintiff’s motion to remand and
Defendants’ assertion of fraudulent joinder, and concessions made by counsel at oral argument
for purposes of the pending motions.
PAGE 5 – OPINION AND ORDER
for almost 16 years, from October 2000 until her employment was terminated on August 25,
2016. Throughout her employment, Ekeya consistently received favorable reviews and yearly
raises. In March 2016, Ekeya received a promotion from Public Relations Specialist to Public
In July 2016, the Hospital Administrator for Shriners Portland, Patchin, created a new
position of Director of Business Development at Shriners Portland. Patchin appointed Davene
Dietzler-Marihart (“Dietzler-Marihart”) to that job. Previously, Dietzler-Marihart had reported
directly to Ekeya, and Ekeya had reported directly to Patchin. After Patchin created the new
position for Dietzler-Marihar, Ekeya now reported directly to Dietzler-Marihart and DietzlerMarihart reported directly to Patchin. Ekeya was not pleased with this reorganization.
On July 22, 2016, Rhonda Smith (“Smith”), the Director of Human Resources for
Shriners Portland, met with Patchin and Dietzler-Marihart. According to Smith’s declaration,
Smith, Patchin, and Dietzler-Marihart discussed Ekeya’s unwillingness to work collaboratively
within the new structure of the hospital’s business development department. Both Smith and
Dietzler-Marihart expressed their views to Patchin that it was in the hospital’s best interest to
terminate Ekeya’s employment. As explained in Smith’s Declaration, Smith “recommended that
we should attempt to get a severance exception and release,” and both Patchin and DietzlierMarihart “agreed with my recommendation.” ECF 14 at 2 (¶ 3) (emphasis added).
After that meeting, but still on July 22, Smith sent an email to Kathy Dean, who worked
in Human Resources for the larger Shriners organization. Dean was based in in Florida. Smith
asked Dean for approval to provide a severance package to Ekeya. Smith understood that
Shriners did not typically provide severance for any reason other than a “position elimination”
and that this was not a position elimination situation. Id. at 5. In her email, Smith told Dean:
PAGE 6 – OPINION AND ORDER
Please see the attached [Request for Exception]. This employee has
served the hospital well for almost 16 years. We do, however, feel
it is best for the hospital if we part ways at this juncture. There
isn’t any history of performance problems, in fact, she was just
promoted to PR Manager. It is a matter of her ability to accept the
new reporting structure. It is a morale issue as well as a risk to the
successful implementation of some very important projects
(Providence, for one). We feel the distraction of dealing with a
significant personnel issue sets the Business Development office
up for failure.
Thank you for considering this request. We would like to act on
the termination decision as quickly as possible.
Id. at 6.
Dean responded promptly, stating: “I take it this is not a job elimination rather a ‘buy out’
to move forward?” Id. at 5. The phrase “buy out” appears to refer to the recommendation
described by Smith in her declaration that “we should attempt to get a severance exception and
release.” Smith replied to Dean by confirming that this was “not a position elimination; but the
position changed appreciably.” Id. Smith also told Dean:
Kathy, I know we typically do not provide a severance for
anything other than a position elimination. However, if this
employee stays it will be very detrimental to a new manager who
needs to immediately get her arms around some very important
Id. (emphasis added).
The phrase “if this employee stays,” with its conditional language, is significant to the
matter pending before the Court. When viewed in the light most favorable to Ekeya, this
phrasing indicates that when Smith sent her response to Dean on July 22, after having met with
Patchin and Dietzler-Marihart, Smith understood that there was still a possibility that Ekeya
might stay. Indeed, Smith was asking the Shriners organization for an exception to the policy of
not giving severance other than for a position elimination so that Shriners Portland might be able
to offer Ekeya severance in exchange her release of claims, which Smith, Patchin, and DietzlerPAGE 7 – OPINION AND ORDER
Marihart had discussed earlier that day.3 The Shriners organization, however, never approved the
severance exception for Ekeya, and Ekeya did not sign any release. By late August 2016, Ekeya
was still employed at Shriners Portland.
Earlier in August 2016, Dietzler-Marihart allowed a news reporter into areas of the
hospital closed to the public. Afterward, the news organization for which the reporter worked
published online a photograph showing a portion of the hospital’s non-public areas. Ekeya
believed in good faith that Dietzler-Marihart’s conduct violated federal law (specifically, the
Health Insurance Portability and Accountability Act (“HIPAA”)), state law, and Shriners’
privacy policies. Plaintiff reported this violation to a Shriners privacy officer and to a Senior
Regional Director of Public Relations for Shriners. On August 22, 2016, in the normal course of
her job duties, Plaintiff attended the monthly meeting of the Board of Governors of Shriners
Portland. Patchin and Dietzler-Marihart also attended that meeting. During the meeting, Ekeya
reported Dietzler-Marihart’s violation to the Board. Presumably, Deitzler-Marihart, Smith, and
Patchin were not pleased with Ekeya’s conduct.
Two days later, Shriners Portland prepared an Employee Counseling Report, dated
August 24, 2016. ECF 8 at 4. Under the heading “Action to be Taken,” the box labeled
“Discharge” was marked and the following statement was written: “Recommendation to be
reviewed by Human Resources before discussing with Employee.” Id. Under the heading
“Violation,” the report reads: “Insubordination: disrespectful behavior toward supervisor or
manager.” Id. The report also states the following about Ekeya: “Several hospital representatives
Although Patchin states in his declaration that “I made the decision to terminate
Plaintiff Kay Ekeya’s employment on July 22, 2016,” ECF 15 at 2 (¶ 4), viewing the facts in the
light most favorable to Ekeya, it appears that on that day Patchin may have made the decision to
request a severance exception for Ekeya and, if allowed, offer Ekeya severance in exchange for
her release of employment-related claims. Because Patchin’s deposition has not yet been taken, a
more complete inquiry into his precise decision will have to wait.
PAGE 8 – OPINION AND ORDER
have had conversations with you,” but you appear to have an “unwillingness to work
collaboratively in the current environment.” The narrative ends: “It has become increasingly
apparent you have decided not to participate as a team player. Your employment is terminated
effective August 25, 2016.” The form is signed by Ekeya as the affected employee and by Smith
as the “supervisor/witness.” Both Ekeya’s signature and Smith’s signature are dated August 25,
Ekeya asserts two claims in her lawsuit, which was originally filed in state court. As her
first claim, Ekeya alleges that Shriners Portland retaliated against her, in violation of Or. Rev.
Stat. § 659A.030(1)(f) and Or. Rev. Stat. § 659A.199(1), by terminating her employment shortly
after, and because, she reported and opposed Dietzler-Marihart’s unlawful conduct. As her
second claim, Ekeya alleges that Patchin fostered a pattern and practice of retaliation and aided
and abetted the unlawful retaliation by Shriners Portland against Ekeya, in violation of Or. Rev.
Stat. § 659A.030(1)(g). Defendants removed the action to federal court, notwithstanding the fact
that Patchin is a citizen of the forum state. In an effort to avoid the forum defendant rule,
Defendants assert that Patchin had been fraudulently joined. Ekeya has moved for remand, and
Defendants have moved to dismiss Patchin. The principal questions before the Court are whether
the fraudulent joinder doctrine applies in the context of the forum defendant rule and, if so,
whether Patchin was fraudulently joined and should be dismissed. In addition, Ekeya seeks an
award of attorney fees if she prevails on her motion to remand.
A. Whether Fraudulent Joinder Avoids the Forum Defendant Rule
In some cases, forum selection may be an important strategic decision for the parties. In
the absence of complete diversity and the requisite amount in controversy, “federal jurisdiction
exists only when a federal question is presented on the face of the plaintiff’s properly pleaded
PAGE 9 – OPINION AND ORDER
complaint.” Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). Thus, in the absence of
complete diversity, the plaintiff is the “master of the claim” and “may avoid federal jurisdiction
by exclusive reliance on state law.” Id.
An out-of-state defendant may desire to avoid potential prejudice resulting from being
sued in state court by a local plaintiff. Indeed, the primary reason why Congress provided for
removal to federal court based on diversity jurisdiction is to protect out-of-state defendants from
such possible prejudice. Lively v. Wild Oats Markets, Inc., 456 F.3d 933, 940 (9th Cir. 2006).
“The need for such protection is absent, however, in cases where the defendant is a citizen of the
state in which the case is brought.” Id. The purpose of the forum defendant rule, therefore, is to
allow “the plaintiff to regain some control over forum selection by requesting that the case be
remanded to state court” when it has been removed to federal court by a local defendant invoking
diversity jurisdiction but facing no potential out-of-state prejudice. Id.
One strategy that may be available to a plaintiff who desires to remain in state court is to
include in the lawsuit a nondiverse defendant. This strategy is intended to defeat removal by
creating a lack of complete diversity. When there is no possibility, however, that a state court
would find that the complaint states a cause of action against the nondiverse defendant, that
defendant likely will be dismissed from the lawsuit before trial, thus presenting to any remaining
out-of-state defendants the precise risk of prejudice that removal was intended to prevent. See
Hunter, 582 F.3d at 1046. This is the primary reason for the fraudulent joinder doctrine.
Another strategy that may be available to a plaintiff who desires to remain in state court
is to include in the lawsuit an in-state defendant. This strategy is intended to defeat removal by
operation of the forum defendant rule. As with the inclusion of a nondiverse defendant, when
there is no possibility that a state court would find that the complaint states a cause of action
PAGE 10 – OPINION AND ORDER
against the in-state (or resident, or forum) defendant, that defendant likely will be dismissed from
the lawsuit before trial, thus presenting to any remaining out-of-state defendants the precise risk
of prejudice that removal was intended to prevent. This leads to the question of whether the
fraudulent joinder doctrine applies to provide such defendants with relief from the forum
defendant rule even when there is complete diversity, just as it applies to provide defendants with
relief from the requirement of complete diversity. At the level of the federal appellate courts, this
appears to be an open question.
In Morris v. Nuzzo, 718 F.3d 660 (7th Cir. 2013), the Seventh Circuit observed:
The question before us is whether the district court erred in
applying the fraudulent joinder doctrine to Nuzzo, whose presence
triggers the forum defendant rule but does not compromise the
parties’ complete diversity. In other words, we are asked to
determine whether the fraudulent joinder doctrine creates an
exception to the forum defendant rule. It does not appear that any
court of appeals has answered this question. The few district courts
that have decided the issue are split. See, e.g., Yellen v. Teledne
Continental Motors, Inc., 832 F. Supp. 2d 490 (E.D. Pa. Dec. 6,
2011) (fraudulent joinder doctrine applies to a diverse forum
defendant); Sargent v. Cassens Corp., No. 06 CV 1042, 2007 WL
1673289 (S.D. Ill. June 7, 2007) (same); but see Yount v. Shashek,
472 F. Supp. 2d 1055 (S.D. Ill. 2006) (fraudulent joinder doctrine
does not apply to a diverse forum defendant); Davenport v. Toyota
Motor Sales, No. 09 CV 532, 2009 WL 4923994 (S.D. Ill. Dec. 14,
Id. at 666. Later in that case, the Seventh Circuit declined to resolve this question, commenting:
Ultimately, we think it a very close question whether the
fraudulent joinder doctrine ought to extend to diverse resident
defendants, and we are reluctant to rule definitively on the issue
today absent a more thorough and more able presentation of the
relevant balance of interests described above. In any event, we are
convinced that Nuzzo was not fraudulently joined
Id. at 670-71.
The situation in Morris v. Nuzzo is similar to the facts now before this Court. As will be
shown below, Patchin was not fraudulently joined. Thus, this Court does not need to resolve the
PAGE 11 – OPINION AND ORDER
question of whether the fraudulent joinder doctrine is available to provide relief from the forum
defendant rule. Nevertheless, the Court makes the following two observations. First, the text of
the forum defendant rule supports the conclusion that the fraudulent joinder doctrine should
apply. The relevant statute provides that a civil action otherwise removable solely on the basis of
diversity jurisdiction “may not be removed if any of the parties in interest properly joined and
served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C.
§ 1441(b)(2) (emphasis added). Under the fraudulent joinder doctrine, if there is no possibility
that a state court would find that the complaint states a cause of action against a particular
defendant, then that defendant should not be considered to have been “properly joined.” See
Wesenberg v. Zimmerman, 2002 WL 1398539, at *3 (D. Minn. June 24, 2002) (“Because the
Court finds that the Minnesota Defendants in this case were fraudulently joined, as opposed to
being ‘properly joined,’ the limitation of § 1441(b) does not apply.”).
Second, applying the fraudulent joinder doctrine to the forum defendant rule is entirely
consistent with the congressional purpose underlying the procedure that allows removal of cases
asserting only state claims. By permitting removal of cases when there is complete diversity,
Congress sought to allow out-of-state defendants to avoid the potential prejudice resulting from
litigating state claims in state court against a local plaintiff. Such a plaintiff is precluded from
defeating this congressional purpose by including a nondiverse defendant, against whom the
plaintiff has no possibility of stating a claim, along with other defendants against whom the
plaintiff can state a claim.
Similarly, a plaintiff should be precluded from defeating this congressional purpose by
including a local defendant, against whom the plaintiff has no possibility of stating a claim,
along with other defendants against whom the plaintiff can state a claim. In the first situation, the
PAGE 12 – OPINION AND ORDER
nondiverse defendant has been fraudulently (or improperly) joined and may be disregarded for
purposes of determining whether there is complete diversity. Similarly, in the second situation,
the local defendant should be found to have been fraudulently (or improperly) joined and may be
disregarded for purposes of considering whether the forum defendant rule requires remand. In
either situation, remand would be appropriate.4 The Court turns next to whether Patchin was
B. Whether Defendant Patchin Was Fraudulently Joined
Defendants make two arguments in support of their assertion of fraudulent joinder. First,
Defendants argue that because Patchin was the “primary actor” (or exercised “executive
authority”) in the decision to fire Ekeya, Patchin cannot be liable for “aiding and abetting” the
alleged wrongful termination of Ekeya by Shriners Hospital. This is the argument that a person
cannot aid and abet himself. Second, Defendants argue that because Patchin made the decision to
fire Ekeya before she engaged in protected activity, neither Patchin nor Shriners Hospital can be
liable for retaliation in violation of Oregon law.
The question before the Court in this case is different from the circumstance where a
forum (or in-state, or resident) defendant has not yet been served but has monitored court filings
and quickly removes a case involving complete diversity before being served. The forum
defendant may then attempt to avoid the implications of the forum defendant rule by making the
text-based argument that there has been no removal by a forum defendant who has been served
because the removing forum defendant had not yet been served at the time of removal. This is
sometimes referred to as the “resident defendant loophole.”
“Federal district courts are divided as to whether the forum defendant rule bars
pre-service removal based on diversity jurisdiction.” Deutsche Bank National Trust Co. v.
Hagen, 2015 WL 7720465, at *4 (D. Haw. Nov. 27, 2015); Phillips Constr., LLC v. Daniels Law
Firm, PLLC, 93 F. Supp. 3d 544, 550 (collecting and categorizing cases). These cases discuss the
conflict between what appears to be the plain meaning of § 1441(b)(2) and the intention of
Congress in allowing removal under limited circumstances in the context of a local defendant
removing an action based on diversity before that defendant has been served. In the present
dispute, however, there is no such conflict because both the text of the statute and its
congressional purpose align in supporting the conclusion that the fraudulent joinder doctrine
applies to the forum defendant rule.
PAGE 13 – OPINION AND ORDER
1. Whether Patchin can be liable for aiding and abetting the firing of Ekeya
Ekeya’s first claim alleges retaliation against Shriners Portland in violation of Oregon
law. Ekeya cites both Or. Rev. Stat. § 659A.030(1)(f)5 and Or. Rev. Stat. § 659A.199.6 To state a
claim for retaliation under Or. Rev. Stat. § 659A.030(1)(f), a plaintiff must allege that: (1) she
has “engaged in protected activity;” (2) she has been subjected to “any adverse treatment” by the
defendant; and (3) “[t]here is a causal connection between the protected activity and adverse
treatment.” Or. Admin. R. 839-005-0125.7 An employee engages in protected activity when he or
she “[e]xplicitly or implicitly oppos[e] an unlawful practice or what that other person reasonably
believed to be an unlawful practice.” Id. The requirements to state a claim for retaliation under
Or. Rev. Stat. § 659A.199 are the same as the requirements to state a claim under Or. Rev. Stat.
§ 659A.030(1)(f). See Brunozzi v. Cable Commc’ns, Inc., 851 F.3d 990, 998 (9th Cir. 2017) (“To
establish a prima facie case of retaliation under ORS 659A.199, the plaintiff must demonstrate
that (1) he was engaged in a protected activity; (2) he suffered an adverse employment decision;
Under Or. Rev. Stat. § 659A.030(1)(f), it is an unlawful employment practice “for any
person to discharge, expel or otherwise discriminate against any other person because that other
person has opposed any unlawful practice, or because that other person has filed a complaint,
testified or assisted in any proceeding under this chapter or has attempted to do so.”
Under Or. Rev. Stat. § 659A.199(1), it is an unlawful “employment practice for an
employer to discharge, demote, suspend or in any manner discriminate or retaliate against an
employee . . . for the reason that the employee has in good faith reported information that the
employee believes is evidence of a violation of a state or federal law, rule or regulation.”
In Portland State Univ. Chapter of Am. Ass’n of Univ. Professors v. Portland State
Univ., 352 Or. 697 (2012), the Oregon Supreme Court noted that Or. Admin. R. 839-005-0125,
adopted by the Oregon Bureau of Labor and Industries (“BOLI”), states the prima facie
requirements for a retaliation claim under Or. Rev. Stat. § 659A.030(1)(f). 352 Or. at 722 n.17.
See also Bronson v. Moonen, 270 Or. 469, 476 (1974) (“Administrative rules and regulations are
to be regarded as legislative enactments having the same effect as if enacted by the legislature as
part of the original statute.”).
PAGE 14 – OPINION AND ORDER
and (3) there was a causal link between the protected activity and the adverse employment
Ekeya’s second claim alleges that Patchin aided and abetted the unlawful retaliation by
Shriners Portland in violation of Oregon law. Ekeya cites Or. Rev. Stat. § 659A.030(1)(g), which
provides that it is an unlawful employment practice “for any person, whether an employer or an
employee, to aid, abet, incite, compel or coerce the doing of any of the acts forbidden under this
chapter or to attempt to do so.”
Defendants argue that Plaintiff’s claim against Patchin for aiding and abetting fails
because: (1) it was Hospital Administrator Patchin who, as the “primary actor” or person with
“executive authority,” made the decision to terminate Plaintiff; and (2) a person cannot aid and
abet himself. The first is a factual assertion, and the second is a legal argument regarding the
interpretation of § 659A.030(1)(g). The Court addresses the legal argument first.
In Schram v. Albertson’s Inc., 146 Or. App. 415, 422 (1997), the Oregon Court of
Appeals stated: “[T]he plain text of [§ 659A.030(1)(g)] clearly encompasses both employees and
employers and reaches those employees who aid or abet.” Neither the Oregon Supreme Court
nor the Oregon Court of Appeals, however, have yet explicitly addressed the question of whether
a complaint states a claim for aiding and abetting liability under § 659A.030(1)(g) against a
“primary actor,” or someone with “executive authority,” acting for a corporate employer when a
complaint alleges that a wrongful employment action has been taken by that person on behalf of
the corporate employer. Numerous decisions from the United States District Court, however,
have held that such allegations are sufficient to state a claim. See White v. Amedisys Holding,
LLC, 2012 WL 7037317, at *5-6 (D. Or. Dec. 18, 2012) (Findings and Recommendation),
adopted 2013 WL 489674 (D. Or. Feb. 7, 2013); Daniels v. Netop Tech, Inc., 2011 WL 127168,
PAGE 15 – OPINION AND ORDER
at *3 (D. Or. Jan. 14, 2011); Demont v. Starbucks, 2010 WL 5173304, at *5 (D. Or. Dec. 15,
2010); Chambers v. United Rental, 2010 WL 2730944, at *2 (D. Or. July 7, 2010); Gaither v.
John Q. Hammons Hotel Mgmt, LLC, 2009 WL 9520797, at *3 (D. Or. Sept. 3, 2009).
In White, U.S. District Judge Anna Brown adopted the Findings and Recommendation of
U.S. Magistrate Judge Janice Stewart, who explained that any discipline or termination by a
manager is not done to benefit that manager, but is done “on behalf of and within the course and
scope of her employment for the employer.” White, 2012 WL 7037317, at *5. Indeed, a
corporate entity can only be liable for unlawful employment actions based on the conduct of
employees, officers, or agents acting on behalf of the entity. Id. Thus, only where an employee is
“legally equivalent to the employer, as in a sole proprietorship, or arguably when exercising
‘executive authority’ would the employee be aiding and abetting himself or herself.” Id. Thus,
if the employee is simply acting on behalf of a separate and distinct
employing entity, then he or she could well aid, abet, compel or
coerce that employer’s unlawful employment practices. The
statute’s reference to both employers and employees, without
further qualification, supports this broad reading. This conclusion
does open the door to claims against a host of employees who, in
their role as supervisors, take adverse employment actions another
[sic] their subordinates, but such claims are not clearly barred by
the language in ORS 659A.030(1)(g) or by any Oregon case law.
In response, Defendants rely on two cases decided in the context of summary judgment,
not a motion to dismiss. In Hannan v. Business Journal Publications, Inc., 2015 WL 9265959
(D. Or. Oct. 2, 2015), U.S. Magistrate Judge Stacie Beckerman wrote in her Findings and
Recommendation that summary judgment should be granted in part, dismissing a claim under
Or. Rev. Stat. § 659A.030(1)(g) asserted against the publisher of the Portland Business Journal,
Craig Wessel (“Wessel”). The plaintiff, Hannan, was a former employee of the Portland
Business Journal. Hannan alleged several federal and state claims against both the Portland
PAGE 16 – OPINION AND ORDER
Business Journal and its publisher, Wessel. In recommending the dismissal by summary
judgment of Hannan’s claim against Wessel for aiding and abetting age discrimination, Judge
Beckerman accepted Wessel’s evidence and argument that because he was the “primary actor” in
the alleged discrimination, he cannot be liable for aiding and abetting. Judge Beckman
Hannan presents no evidence to dispute the conclusion that Wessel
was the decision maker for Hannan’s termination. While Hannan
argues that corporate approval was required to eliminate Hannan’s
job, she does not cite to any evidence. Her allegation is
undermined by Tierney’s unequivocal testimony that no corporate
approval was required.
Id. at *18. This Court adopted Judge Beckerman’s Findings and Recommendation. 2015
WL 7720496 (D. Or. Nov. 30, 2015).
In Peters v. Betaseed, Inc., 2012 WL 5503617 (D. Or. Nov. 9, 2012), U.S. District Chief
Judge Ann Aiken granted in part the defendants’ motion for summary judgment. The plaintiff,
Bruce Peters, had sued his former employer, Betaseed, Inc. and its president, Kurt Wickstrom.
Peters alleged whistleblower retaliation in violation of Or. Rev. Stat. § 659A.199 against
Betaseed and aiding and abetting liability against Wickstrom in violation of Or. Rev. Stat.
§ 659A.030(1)(g). Chief Judge Aiken denied Betaseed’s motion for summary judgment, but
granted Wickstrom’s motion, explaining that
the facts of this case differ from those of Gaither in one important
respect: here, Wickstrom was both plaintiff’s manager and the
executive authority of Betaseed, whereas in Gaither the manager
and employer were separate and distinct. To apply Gaither under
the present facts would be to suggest that it is possible to aid and
abet oneself. Because Wickstrom took action to terminate the
plaintiff within his role as president of Betaseed, I find that
plaintiff’s claim against Wickstrom for aiding and abetting under
§ 659A.030(1)(g) makes little sense under the plain meaning of the
Peters, 2012 WL 5503617, at *7.
PAGE 17 – OPINION AND ORDER
Ekeya replies that Hannan and Peters were not correctly decided in light of the plain text
of § 659A.030(1)(g) and the decision from the Oregon Court of Appeals in Schram. Schram,
however, does not directly address the issue of whether aiding and abetting liability exists when
the operative action is taken by the employer corporation’s primary actor or executive authority.
Similarly, the text of the statute does not unambiguously resolve this issue. It would assist future
litigants and trial courts for an Oregon appellate court to resolve this question in an appropriate
case. Because this legal question has not been resolved at the appellate level, it would be
inappropriate for this court to conclude that it is “obvious” that Ekeya’s aiding and abetting
allegations against Patchin fail to state a claim, which is required for a court to find fraudulent
joinder. Allen, 784 F.3d at 634.
There also is a second and independent ground for rejecting Defendants’ assertion of
fraudulent joinder at this time. Both Hannan and Peters were decided on motions for summary
judgment. Ekeya, however, has not yet had the opportunity to take discovery from defendants to
determine whether there is a genuine issue of material fact regarding whether Patchin truly was
the primary actor and executive authority with regard to the decision to terminate Ekeya’s
employment. At present, several facts appear to point to the conclusion that he was not,
notwithstanding his declaration and the declaration of Smith.
Patchin and Smith state that the decision to terminate Ekeya’s employment was made by
Patchin on July 22, 2016. To be precise, however, Smith stated that she recommended that “we
[using the first person plural pronoun] should attempt to get a severance exception and release,”
and both Patchin and Dietzler-Marihart agreed. Viewing the evidence in the light most favorable
to Ekeya, that appears to be the decision that Patchin made on July 22; namely, attempt to get a
severance exception from Shriners’ headquarters and then a release of claims from Ekeya before
PAGE 18 – OPINION AND ORDER
actually terminating Ekeya’s employment. This conclusion is further supported by the
conditional wording of Smith’s July 22 email to Dean, in which Smith wrote: “However, if this
employee [Ekeya] stays it will be very detrimental to a new manager [Dietzler-Marihart] who
needs to immediately get her arms around some very important initiatives.” ECF 14 at 5. The
conditional wording, “if this employee stays,” implies that a final decision excluding the
possibility of Ekeya staying had not yet been made as of July 22, 2016. As Defendants’ counsel
acknowledged at oral argument, Dean, working for Shriners in Florida, ultimately did not
approve the severance exception and no release was obtained from Ekeya. Further, she continued
to work for Shriners’ Portland for more than a month after July 22.
In addition, after the incident in August 2016 involving the news photographer and
Ekeya’s claimed “whistleblowing,” a decision was made by Shriners Portland to fire Ekeya, even
without a severance exception or release. Patchin does not state that he made that decision.
Further, on the Employee Counseling Report, dated August 24, 2016, after the box was marked
for “discharge,” the following sentence was written: “Recommendation to be reviewed by
Human Resources before discussing with Employee.” ECF 8 at 4. Thus, when viewed in the light
most favorable to Ekeya, there is, at this time, at least a factual possibility that Patchin was not
the “primary actor” or “executive authority” with respect to the decision in August 2016 to
terminate Ekeya’s employment without severance and without a release of claims. Because
discovery has not yet occurred and because this factual question has not been resolved by
summary judgment, it would be inappropriate for the Court to conclude that Ekeya’s aiding and
abetting claim against Patchin is an instance of fraudulent joinder.
2. Whether the decision to fire Ekeya was made before her protected activity
Defendants also argue that Patchin made the decision to fire Ekeya on July 22, 2016,
which was before Ekeya engaged in the allegedly protected activity that forms the basis of her
PAGE 19 – OPINION AND ORDER
retaliation claims. Defendants argue that if the decision to terminate Ekeya’s employment was
made on July 22, there can be no retaliation claim maintained against Shriners Portland.
Defendants add that if no claim can be stated against Shriners Portland, there can be no claim of
aiding and abetting stated against Patchin. Thus, conclude Defendants, this independently shows
that Patchin has been fraudulently joined.
The error in Defendants’ argument is similar to the error discussed previously. Although
a court may consider undisputed facts outside of a complaint when evaluating an assertion of
fraudulent joiner, the question of whether Patchin made an unconditional decision on July 22 to
fire Ekeya regardless of whether a severance exception could be obtained from Shriners’
headquarters or whether a release of claims could be obtained from Ekeya is far from being
undisputed. Further, Patchin’s declaration is silent on this precise question. Also, Smith’s
declaration and emails to Dean (with its conditional wording) imply that no such unconditional
decision had been made as of July 22. Also, the reference in the August 24, 2016 Employee
Counseling Report that the recommendation had “to be reviewed by Human Resources before
discussing with Employee,” further supports the conclusion that an unconditional decision to
terminate Ekeya’s employment was not in fact made until after the alleged whistleblowing
incident that occurred earlier in August. Because this is at least an open factual question at this
time, the record is insufficient to satisfy Defendants’ heavy burden of showing fraudulent joinder
by clear and convincing evidence.
C. Plaintiff’s Claim for Attorney Fees and Costs
Plaintiff requests an award of attorney fees and costs incurred in bringing her motion to
remand. “An order remanding the case may require payment of just costs and any actual
expenses, including attorney fees, incurred as a result of the removal.” 28 U.S.C. § 1447(c). “A
court may award attorney fees when removal is wrong as a matter of law.” Ansley v. Ameriquest
PAGE 20 – OPINION AND ORDER
Mortg. Co., 340 F.3d 858, 864 (9th Cir. 2003). Whether to award fees is within the discretion of
the court, id., and there is no presumption for or against awarding fees. Martin v. Franklin
Capital Corp., 546 U.S. 132, 138 (2005) (noting that “just as there is no basis for supposing
Congress meant to tilt the exercise of discretion in favor of fee awards under § 1447(c) . . . so too
there is no basis here for a strong bias against fee awards . . . .”) (emphasis in original). The
Supreme Court has described how a court should consider this question:
The appropriate test for awarding fees under § 1447(c) should
recognize the desire to deter removals sought for the purpose of
prolonging litigation and imposing costs on the opposing party,
while not undermining Congress’ basic decision to afford
defendants a right to remove as a general matter, when the
statutory criteria are satisfied.
In light of these “large objectives,” the standard for awarding fees
should turn on the reasonableness of the removal. 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.
Id. at 140-41 (internal citation omitted). Thus, the question is whether Defendants “lacked an
objectively reasonable basis for seeking removal.” As discussed above, Defendants bear a heavy
burden to show fraudulent joinder with evidence that is clear and convincing.
After reviewing the evidence and considering the parties’ written and oral arguments, the
Court finds: (1) the recommendation that Patchin appears to have accepted on July 22, 2016 was
to terminate Ekeya’s employment provided that a severance exception and release of claims
could be obtained; (2) the email from Smith to Dean on July 22, 2016, after Smith met with
Patchin, reflected conditional wording showing that Ekeya might still remain as an employee if a
severance exception and release of claims were not obtained; (3) Shriners did not allow a
severance exception and Ekeya did not provide a release of claims; (4) Ekeya’s allegedly
protected activity occurred in August; and (5) the final and unconditional decision to terminate
PAGE 21 – OPINION AND ORDER
Ekeya’s employment occurred after Ekeya’s allegedly protected activity and was subject to being
“reviewed by Human Resources before discussing with Employee.” Based on these findings, the
Court concludes that: (1) it was not objectively reasonable for Defendants to assert that Patchin
had been fraudulently joined; and (2) it was not objectively reasonable for Defendants to remove
this action in violation of the forum defendant rule when Patchin is a citizen of the forum state.
Plaintiff’s request for reasonable attorney fees, therefore, is granted.
Plaintiff’s Motion to Remand (ECF 7) is GRANTED, including Plaintiff’s request for
reasonable attorney fees. Defendants’ Motion to Dismiss (ECF 6) is DENIED AS MOOT. This
case is REMANDED to the Circuit Court of the State of Oregon for the County of Multnomah.
The Clerk of the Court is directed to send the files in this case to the Clerk of the Multnomah
County Circuit Court. The Court retains jurisdiction, however, to resolve Plaintiff’s petition for
attorney fees, if filed not later than fourteen days from the date of this Opinion and Order.
IT IS SO ORDERED.
DATED this 10th day of July, 2017.
/s/ Michael H. Simon
Michael H. Simon
United States District Judge
PAGE 22 – OPINION AND ORDER
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