Doe #4 v. Salesforce.com, Inc. et al

Filing 32

MEMORANDUM OPINION AND ORDER granting #6 MOTION to Remand. This action is remanded to the 157th Judicial District Court of Harris County, Texas. Case terminated on 7/18/2019. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

Case 4:19-cv-01641 Document 32 Filed on 07/18/19 in TXSD Page 1 of 10
United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTR�CT OF TEXAS
HOUSTON DIVISION
JANE DOE #4,

§
§
§
§
§
§
§
§
§
§
§
§
§
§

Plaintiff,
V.

SALESFORCE.COM, INC.; MICHAEL
LACEY; JAMES LARKIN; JOHN
BRUNST; SCOTT SPEAR; MEDALIST
HOLDINGS, LLC; LEEWARD
HOLDINGS, LLC; G6 HOSPITALITY,
LLC; NNJP, LLC;
Defendants.

July 18, 2019
David J. Bradley, Clerk

CIVIL ACTION NO. H-19-1641

MEMORANDUM OPINION AND ORDER OF REMAND

Plaintiff Jane Doe # 4
defendants Salesforce.com,

("Plaintiff"

Inc.

or "Jane Doe") sued

("Salesforce");

Michael Lacey;

James Larkin; John Brunst; Scott Spear; Medalist Holdings, LLC;
Leeward Holdings, LLC; 1 G6 Hospitality, LLC ("G6"); and NNJP, LLC2
(collectively, "Defendants") in the 157th Judicial District Court
of Harris County, Texas (the "State Court").

Salesforce removed

Defendants Michael Lacey, James Larkin, John Brunst, Scott
Spear, Leeward Holdings, LLC, and Medalist Holdings, LLC will be
referred to collectively herein as the "Backpage Defendants." In
its Notice of Removal, Salesforce claims that Plaintiff improperly
named Medalist Holdings, LLC rather than Medalist Holdings, Inc.,
which is the parent company for Backpage. See Notice of Removal by
Defendant Salesforce.com, Inc. ("Notice of Removal"), Docket Entry
No. 1, pp. 2-3 �� 6 and 7.
1

G6 and NNJP, LLC will be referred to collectively herein as
the "Hotel Defendants."
2

Case 4:19-cv-01641 Document 32 Filed on 07/18/19 in TXSD Page 2 of 10

the action on May 3, 2019.3

Pending before the court is Jane Doe's

Motion to Remand ("Plaintiff's Motion to Remand")
No. 26).

(Docket Entry

For the reasons explained below, Plaintiff's Motion to

Remand will be granted.
I.

Factual and Procedural Background

Jane Doe claims that Defendants are responsible in varying
capacities for the exploitation she experienced as a victim of sex
trafficking. 4

Jane Doe alleges that she was sexually exploited

through ads on a website called "Backpage."5

Traffickers, pimps,

and johns use Backpage to communicate with one another. 6

Jane Doe

alleges that the Backpage Defendants collaborated with her sexual
traffickers and sought to financially benefit from the trafficking
venture by knowingly permitting traffickers to transact business on
their website. 7

Salesforce licensed customer relationship manage-

ment ("CRM") software to Backpage. 8

Salesforce markets its CRM

software as designed to help users find new customers and grow

3

See Notice of Removal, Docket Entry No. 1.

See Plaintiff's Amended Petition and Request for Disclosure
to Salesforce, Inc. ("Petition"), Exhibit 3 to Notice of Removal,
Docket Entry No. 1-4, pp. 111-35.
4

5

See id. at 112

�

59.

6

See id. at 112

�

60.

7

See id. at 112

�

61, 127-28

8

See id. at 113

��

��

65-68.
-2-

117-18.

Case 4:19-cv-01641 Document 32 Filed on 07/18/19 in TXSD Page 3 of 10

their businesses. 9

Jane Doe's claims against Salesforce are based

on Salesforce's alleged failure to monitor how Backpage was using
Salesforce and the Backpage Defendants are

its CRM software.10

diverse from Jane Doe.11
Jane Doe's Petition also asserts claims against the non­
diverse Hotel Defendants.

Jane Doe alleges that she was sexually

assaulted at a Motel 6 owned and operated by the Hotel Defendants.12
Jane Doe alleges that the Hotel Defendants knowingly participated
in her trafficking through the operation of their hotel. 13

For

example, she alleges that the Hotel Defendants failed to properly
train their employees,
security cameras,

failed to install adequate lighting and

and knowingly catered

to

the needs of sex

traffickers.14
Jane Doe alleges that Salesforce, the Backpage Defendants, and
the Hotel Defendants were part of a single human trafficking
venture under Texas law. 15
9

See id. at 113

1

Jane Doe filed this action in the State

68.

10

See id. at 124-26.

11

See id. at 107

12

See id. at 120-21

13

14

11

18, 21-22; 108

1

25-26; 109

11

26-36.

89.

1

11

126.

See id. at 130-33.
See id. at 130-32

15

See Plaintiff's Motion to Remand, Docket Entry No. 26, p. 10;
see Petition, Exhibit 3 to Notice of Removal, Docket Entry No. 1-4,
p. 133 1 132 (citing Tex. Civ. Prac. & Rem. Code § 98.005 ("A
person who engages in the trafficking of persons or who
intentionally or knowingly benefits from participating in a venture
(continued... )
-3-

Case 4:19-cv-01641 Document 32 Filed on 07/18/19 in TXSD Page 4 of 10

Court on February 27,

2 O 18.16

Plaintiff amended her Original

Petition to add claims against Salesforce on April 3,

2019.17

Salesforce timely removed the action to this court on May 3, 2019,
arguing that the court has diversity jurisdiction over this action
because

the

Hotel

Defendants

were

fraudulently

misjoined

by

Plaintiff . 18 Plaintiff moved to remand the action on June 2, 2019 . 19
Salesforce and G6 filed responses on June 24, 2019.20

Plaintiff

replied on July 1, 2019. 21
II.

Removal Standard

"A party may remove an action from state court to federal
court if the action is one over which the federal court possesses
( ••• continued)
that traffics another person and is found liable under this chapter
or other law for any amount of damages arising from the trafficking
is jointly liable with any other defendant for the entire amount of
damages arising from the trafficking." (emphasis added)), and
p. 135,141 (alleging that "Defendants knowingly and intentionally
participated in a [sex trafficking] venture").
15

See Plaintiff's Original Petition, Exhibit 3 to Notice of
Removal, Docket Entry No. 1-4, p. 2.
16

Exhibit 3 to Notice of Removal, Docket Entry
17 See Petition,
No. 1-4, p. 105.
18
19

See Notice of Removal, Docket Entry No. 1, pp. 7-10.
See Plaintiff's Motion to Remand, Docket Entry No. 26.

See Defendant Salesforce.com, Inc. 's Response and Brief in
Opposition to Motion to Remand ("Salesforce's Response"), Docket
Entry No. 27; Defendant G6 Hospitality, LLC's Response in
Opposition to Jane Doe #4's Motion to Remand ("G6's Response"),
Docket Entry No. 28.
20

see Jane Doe's Reply to Salesforce's Response to Jane Doe's
Motion to Remand ("Jane Doe's Reply"), Docket Entry No. 31.
21

-4-

Case 4:19-cv-01641 Document 32 Filed on 07/18/19 in TXSD Page 5 of 10

subject matter jurisdiction."

Manguno v. Prudential Property and

Casualty Insurance Co., 276 F.3d 720, 723 (5th Cir. 2002) (citing
28 U.S. C.

§

1441 (a)).

"The party seeking to assert federal

jurisdiction, in this case [Salesforce], has the burden of proving
by a preponderance of the evidence that subject matter jurisdiction
exists."
321,

New Orleans

327

&

Gulf Coast Railway Co. v. Barrois, 533 F. 3d

(5th Cir. 2008).

Ambiguities or doubts are to be

construed against removal and in favor of remand.

Manguno, 276

F.3d at 723.
III.

Fraudulent Misjoinder Analysis

Fraudulent misjoinder is a concept developed by the Eleventh
Circuit in Tapscott v. MS Dealer Service Corporation, 77 F.3d 1353,
1360 (11th Cir. 1996), abrogated in part on other grounds by Cohen
v. Office Depot, Inc., 204 F.3d 1069 (11th Cir. 2000).

Fraudulent

misjoinder is to be applied only in limited circumstances when
failure to abide by applicable joinder requirements is "just as
fraudulent as the joinder of a resident defendant against whom a
plaintiff has no possible cause of action."

See Texas Instruments

Inc. v. Citigroup Global Markets, Inc., 266 F.R.D. 143, 147 (N.D.
Tex. 2010) (citing Tapscott, 77 F.3d at 1360).

"The Fifth Circuit

has not directly applied the fraudulent-misjoinder theory, but it
has

cited

Tapscott

with

approval

and

has

acknowledged

that

fraudulent misjoinder of either defendants or plaintiffs is not
permissible to circumvent diversity jurisdiction." Centaurus Unity
-5-

Case 4:19-cv-01641 Document 32 Filed on 07/18/19 in TXSD Page 6 of 10

LP v. Lexington Insurance Company, 766 F. Supp. 2d 780, 789 (S.D.
Tex. 2011) (citing In re Benjamin Moore & Co., 318 F.3d 626, 630-31
(5th Cir. 2002)).
Tapscott's

fraudulent-misjoinder

analysis

is

two-fold:

(1) has one defendant been misjoined with another defendant in
violation of the applicable joinder rules; 22 and (2) if so, is the
misjoinder

sufficiently

fraudulent misjoinder.23

egregious
Id.

to

rise

to

the

level

of

Texas Rule of Civil Procedure 40(a)

states that claims against multiple defendants may be joined in one
action if (1) "there is asserted against them jointly, severally,
or in the alternative any right to relief in respect of or arising
out of the same transaction, occurrence, or series of transactions
or occurrences"; and (2) at least one "question of law or fact
The Fifth Circuit has not indicated whether state or federal
joinder laws should be used in fraudulent-misjoinder analyses. The
court therefore concludes, consistently with its prior rulings and
the rulings of other courts in this Circuit, that Texas joinder
rules should govern since Plaintiff was required to follow Texas
joinder rules when she originally filed this action.
See
Centaurus, 766 F. Supp. 2d at 789; Wells Fargo Bank, N.A. v.
American General Life Insurance Co., 670 F. Supp. 2d 555, 563 (N.D.
Tex. 2009).
22

Salesforce argues that the court should not impose an
"egregiousness" requirement in determining whether the Hotel
Defendants have been fraudulently misjoined.
See Salesforce's
Response, Docket Entry No. 27, pp. 20-22.
While courts in this
Circuit have yet to agree on in what circumstances a misjoinder
should qualify as egregious, they appear uniformly to apply the
egregiousness requirement imposed by Tapscott.
See Texas
Instruments, 266 F.R.D. at 149. Consistent with its prior rulings,
Centaurus, 766 F. Supp. 2d at 789-90, the court will therefore
require that Plaintiff's joinder of the Hotel Defendants be
egregious for the court to find that the Hotel Defendants were
fraudulently misjoined.
23

-6-

Case 4:19-cv-01641 Document 32 Filed on 07/18/19 in TXSD Page 7 of 10

common to all of [the defendants] will arise in the action."

Tex

R. Civ. P. 40 (a).
Salesforce argues that the court has diversity jurisdiction
over this action because the non-diverse Hotel Defendants were
fraudulently misjoined.

Jane Doe argues that the Hotel Defendants

are properly joined because (1) her claims against all Defendants
arise from injuries she sustained as a result of her victimization
by a single sex trafficking venture and (2) common questions of law
and fact will arise in resolving her claims against Defendants.
The court concludes that Jane Doe's joinder of the Hotel
Defendants did not violate Texas's joinder rules.

Jane Doe's

claims against the Hotel Defendants, Salesforce, and the Backpage
Defendants

arise

transactions
traffickers

from

the

same

transaction

or

series

of

an alleged sex trafficking venture24 in which
were

permitted

to

use

Backpage,

which

utilized

Salesforce's CRM technology, to solicit johns to abuse Jane Doe in
hotels owned and operated by the Hotel Defendants.

Jane Doe

alleges that Defendants are each responsible in different ways for
the sexual exploitation she faced as a victim of that venture.
Jane Doe pled the same or similar legal claims against Salesforce,

Jane Doe's Petition appears to allege the existence of a
single sex trafficking venture,
of which Defendants were
participants: "Defendants knowingly and intentionally participated
in a venture that violated" the Texas Penal Code's sex trafficking
prohibition. See Petition, Exhibit 3 to Notice of Removal, Docket
Entry No. 1-4, p. 135 1 141 (emphasis added).
24

-7-

Case 4:19-cv-01641 Document 32 Filed on 07/18/19 in TXSD Page 8 of 10

the Hotel Defendants, and the Backpage Defendants; 25 and it is
likely that at least one of those claims will raise common
questions of law and fact.

Specifically, Jane Doe claims that

Defendants' actions "taken separately and/or together," violated
Texas Civil Practice and Remedies Code § 98.002, which allows a
victim of sex trafficking to hold defendants who "engage[d] in the
trafficking"

or

"intentionally or knowingly benefit[ted]

from

participating in a venture that traffic[ed]" the victim liable for
damages.

See Tex. Civ. Prac.

§

claims

98.002

Defendants,

and

against

&

the

Salesforce

Rem. Code
Hotel

are

§ 98.002.

Defendants,

likely

to

raise

Jane Doe's

the

Backpage

such

common

questions of fact as whether a single trafficking venture involving
all of Defendants existed, the extent of each defendant's knowledge
of the venture's existence and awareness of the other defendants'
participation in it, and what damages Jane Doe sustained.
Alternatively, even if Texas joinder requirements were not
satisfied,

Salesforce has failed to persuade the court that

Plaintiff's joinder of the Hotel Defendants is so egregious as to
be fraudulent.

A survey of fraudulent misjoinder cases conducted

See Petition, Exhibit 3 to Notice of Removal, Docket Entry
No. 1-4, pp. 124-26 (pleading claims for violations of Texas Civil
Practice and Remedies Code Chapter 98, negligence, and gross
negligence against Salesforce) ; pp. 126 -30 (pleading claims for
violation of Texas Civil Practice and Remedies Code Chapter 98,
negligence, and gross negligence against the Backpage Defendants);
pp. 130-33 (pleading claims for violation of Texas Civil Practice
and Remedies Code Chapter 98 and negligence against the Hotel
Defendants).
25

-8-

Case 4:19-cv-01641 Document 32 Filed on 07/18/19 in TXSD Page 9 of 10

by the Northern District of Texas recognized three situations in
which a misjoinder is potentially so egregious as to be considered
"fraudulent:"
(1) two or more lawsuits with little or no party overlap
have been combined in the same action (i.e., there are
multiple plaintiffs and defendants, but each plaintiff or
discrete set of plaintiffs is suing only one defendant or
a discrete set of defendants); (2) numerous plaintiffs
have sued a common defendant and assert claims that have
no shared factual element other than the presence of the
common defendant; and (3) a single plaintiff or group of
plaintiffs has joined multiple defendants in the same
action and is asserting claims against each defendant
that are both factually and legally unrelated.
See Texas Instruments, 266 F.R.D. at 149. Only the third situation
is potentially

applicable here.

But Jane Doe is

unrelated defendants over unrelated events.

not suing

While the involvement

of each defendant in the venture alleged by Jane Doe was different,
Defendants are all in some way connected to her sex trafficking.
Plaintiffs' joinder of the Hotel Defendants to her claims against
Salesforce and the Backpage Defendants therefore does not rise to
the level of egregiousness required for a finding of fraudulent
misjoinder.

The court therefore finds that Jane Doe did not

fraudulently misjoin the Hotel Defendants.
IV.

Conclusion and Order

For the reasons explained above,

the court concludes that

Salesforce has failed to carry its burden of proving that the court
has subject matter jurisdiction over this action.
-9-

Accordingly,

Case 4:19-cv-01641 Document 32 Filed on 07/18/19 in TXSD Page 10 of 10

Jane Doe's Motion to Remand (Docket Entry No. 26) is GRANTED.
action is

REMANDED

Harris County,

to

Texas.

the

157th

Judicial

This

District Court

of

The Clerk will provide a copy of this

Memorandum Opinion and Order of Remand to the District Clerk of
Harris County, Texas.
SIGNED at Houston, Texas, on this the 18th day of July, 2019.

SIM LAKE
SENIOR UNITED STATES DISTRICT JUDGE

-10-