MARGARET M. MORROW, District Judge.
On January 14, 2014, Ricardo Huitron filed this action in Los Angeles Superior Court against U.S. Foods, Inc. ("U.S. Foods") and Hugo Jimenez.
On July 24, 2014, the court issued an order to show cause why the case should not be remanded for lack of subject matter jurisdiction. The court noted that the notice of removal failed to establish Jimenez was fraudulently joined.
The right to remove a case to federal court is entirely a creature of statute. See Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979). The removal statute, 28 U.S.C. § 1441, allows a defendant to remove when a case originally filed in state court presents a federal question or is between citizens of different states and involves an amount in controversy that exceeds $75,000. See 28 U.S.C. §§ 1441(a), (b); see also 28 U.S.C. §§ 1331, 1332(a). Only state court actions that could originally have been filed in federal court can be removed. 28 U.S.C. § 1441(a); see Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987); Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988).
The Ninth Circuit "strictly construe[s] the removal statute against removal jurisdiction," and "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988), Takeda v. Northwestern Nat'l Life Ins. Co., 765 F.2d 815, 818 (9th Cir. 1985), and Libhart, 592 F.2d at 1064). "The `strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id. (citing Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d 709, 712 n. 3 (9th Cir. 1990); Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir. 1988)).
As noted, U.S. Foods contends the court has diversity jurisdiction to hear this action.
A corporation is "deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business." 28 U.S.C. § 1332(c)(1). The term "principal place of business" means "the place where a corporation's officers direct, control, and coordinate the corporation's activities. It is the place that Courts of Appeals have called the corporation's `nerve center.' And in practice it should normally be the place where the corporation maintains its headquarters — provided that the headquarters is the actual center of direction, control, and coordination[.]" Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010). In its notice of removal, U.S. Foods alleges that it is a Delaware corporation with its principal place of business in Rosemont, Illinois.
A person is a citizen of the state in which he has his domicile, i.e., a permanent home where he intends to remain or to which he intends to return. See Gilbert v. David, 235 U.S. 561, 569 (1915); Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001) ("A person's domicile is her permanent home, where she resides with the intention to remain or to which she intends to return"). In the complaint, Huitron alleges only that he resides in California.
In the notice of removal, U.S. Foods alleged that Jimenez is a California citizen.
The joinder of a non-diverse defendant is considered fraudulent, and the party's citizenship is disregarded for purposes of subject matter jurisdiction, "[i]f the plaintiff fails to state a cause of action against the [non-diverse] defendant, and the failure is obvious according to the settled rules of the state. . . ." Hamilton Materials, Inc. v. Dow Chemical Co., 494 F.3d 1203, 1206 (9th Cir. 2007) (quoting McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987)). "It is a commonplace that fraudulently joined defendants will not defeat removal on diversity grounds." Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998) (citing Emrich, 846 F.2d 1193 & n. 1; McCabe, 811 F.2d at 1339); see also Burden v. General Dynamics Corp., 60 F.3d 213, 221-22 (5th Cir. 1995) (concluding that the district court had subject matter jurisdiction where a defendant charged with intentional infliction of emotional distress had been fraudulently joined). The defendant must "prove that individuals joined in the action cannot be liable on any theory." Ritchey, 139 F.3d at 1318; see also McCabe, 811 F.2d at 1339 (stating that the removing defendant is entitled to present facts showing that the joinder is fraudulent); Campana v. American Home Products Corp., No. 1:99cv250 MMP, 2000 WL 35547714, *3 (N.D. Fla. Mar. 7, 2000) ("The removing party must show, with credible evidence, that there is no possibility that a plaintiff can state a cause of action against the nondiverse defendant").
A defendant must prove fraudulent joinder by clear and convincing evidence. Hamilton Materials, 494 F.3d at 1206 (citing Pampillonia v. RJR Nabisco, Inc., 138 F.3d 459, 461 (2d Cir. 1998)). Thus, "fraudulent joinder claims may be resolved by `piercing the pleadings' and considering summary judgment-type evidence such as affidavits and deposition testimony." Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1068 (9th Cir. 2001) (quoting favorably the Fifth Circuit's decision in Cavallini v. State Farm Mutual Auto Ins. Co., 44 F.3d 256, 263 (5th Cir. 1995) (citations omitted)); see also West American Corp. v. Vaughan Basset Furniture, 765 F.2d 932, 936 n. 6 (9th Cir. 1985) (stating that the court may consider affidavits, depositions, and other evidence); James W. M. Moore, MOORE'S FEDERAL PRACTICE § 102.21(5)(a) (3d ed. 2008) ("The federal court's review for fraud must be based on the plaintiff's pleadings at the time of removal, supplemented by any affidavits and deposition transcripts submitted by the parties").
Because courts must resolve all doubts against removal, a court determining whether joinder is fraudulent "must resolve all material ambiguities in state law in plaintiff's favor." Macey v. Allstate Property and Cas. Ins. Co., 220 F.Supp.2d 1116, 1117 (N.D. Cal. 2002) (citing Good v. Prudential, 5 F.Supp.2d 804, 807 (N.D. Cal. 1998)). "If there is a non-fanciful possibility that plaintiff can state a claim under [state] law against the non-diverse defendant[,] the court must remand." Id.; see also Good, 5 F.Supp.2d at 807 ("The defendant must demonstrate that there is no possibility that the plaintiff will be able to establish a cause of action in State court against the alleged sham defendant"). Given this standard, "[t]here is a presumption against finding fraudulent joinder, and defendants who assert that plaintiff has fraudulently joined a party carry a heavy burden of persuasion." Plute v. Roadway Package Sys., Inc., 141 F.Supp.2d 1005, 1008 (N.D. Cal. 2001).
To prove defamation, plaintiff must show that the defendant published a false, defamatory, and unprivileged statement that had a natural tendency to injure or that caused special damage. See Hernandez v. First Student, Inc., No. CV 10-8243 SVW (FMOx), 2010 WL 5313293, *3 (C.D. Cal. Dec.16, 2010); Smith v. Maldonado, 72 Cal.App.4th 637, 645 (1999). Slander is oral defamation, while libel is written defamation. See Ringler Associates Inc. v. Maryland Cas. Co., 80 Cal.App.4th 1165, 1180 (2000).
U.S. Foods does not attack the substance of Huitron's pleading. Instead, it asserts that his slander and libel claims fail as a matter of law. It contends that Jimenez's statement that Huitron was "dishonest" was merely an opinion that is not actionable as defamation. It further asserts that, to the extent the statement could constitute defamation as a matter of law, it cannot be proven false.
U.S. Foods also contends that Huitron cannot state a defamation claim because Jimenez's statements were privileged under California Civil Code § 47(c). Huitron counters that Jimenez acted with malice, and hence that the privilege is unavailable.
In sum, U.S. Foods has not carried its burden of proving that "there is absolutely no possibility" Huitron can prove his slander claim against Jimenez. It has thus failed to show that joining Jimenez as a defendant on that claim was fraudulent. See Morales v. Gruma Corp., CV 13-7341 CAS (FFMx), 2013 WL 6018040, *4 (C.D. Cal. Nov. 12, 2013) ("Like the statement about termination `due to performance' in Umamoto, plaintiff's allegations regarding statements made by Ynez and Bolanos are sufficiently specific to raise a `nonfanciful possibility' that plaintiff can state a claim for defamation in Los Angeles Superior Court").
U.S. Foods also contends that Huitron cannot state a libel claim. It cites the fact that Huitron admitted at deposition that he was presently unaware of any document in which Jimenez made a defamatory statement about him.
Because U.S. Foods' assertion that Huitron's claims against Jimenez fail as a matter of law is not persuasive, and because it has not shown that there is no possibility Huitron can state a slander or libel claim against Jimenez, it has failed to demonstrate by clear and convincing evidence that Jimenez was fraudulently named as a defendant. Consequently, the court is not free to disregard Jimenez's citizenship in determining whether diversity jurisdiction exists. Because Huitron and Jimenez are both California citizens, there is not complete diversity of citizenship. The court must therefore remand the case to Los Angeles Superior Court. 28 U.S.C. § 1447(c) ("If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded").
For the reasons stated, the court lacks subject matter jurisdiction to hear this action. The clerk is thus directed to remand the action to Los Angeles Superior Court forthwith.