JacQUELINE SCOTT CORLEY, Magistrate Judge.
Plaintiff OpenGov, Inc. ("OpenGov") sued Defendants GTY Technology Holdings Inc. ("GTY Holdings"), GTY Govtech, Inc. ("New GTY"), GTY Technology Merger Sub, Inc. ("Merger Sub"), GTY Investors, LLC ("GTY Investors"), Harry L. You, and Stephen J. Rohleder (collectively, "Defendants") in Superior Court of the State of California in and for the County of San Mateo, alleging four causes of action related to alleged misuse of Plaintiff's proprietary information. (Dkt. No. 11-1, Ex. 1.)
Plaintiff OpenGov is a Delaware corporation with its principal place of business and headquarters in California. (Dkt. No. 23-6 at ¶ 2.) The company was founded in 2012 and produces "cloud-based public sector software" that provides "budgeting, operational performance, and citizen engagement software to more than 2,000 public sector agencies nationwide." (Dkt. No. 11-1 at ¶¶ 2, 28.) Plaintiff's customers include municipalities, "school districts, and other public sector organizations." (Id. at ¶ 2.)
Defendant "GTY Holdings is a foreign company organized under the laws of the Cayman Islands with its principal place of business" in Nevada. (Dkt. No. 11 at ¶ 11.) The company was formed in 2016 as a special purpose acquisition company ("SPAC") to "effectuat[e] one or more business combinations in the technology industry." (Dkt. No. 8-1 at ¶¶ 2-3.) In October 2016, the company completed an initial public offering ("IPO") that "generated more than $550 million." (Id. at ¶ 4.) As part of the IPO, "GTY Holdings committed to return that cash to its public shareholders if it did not consummate a business combination within 24 months." (Dkt. No. 8-3, Ex. 1 at 2-3.) In September 2018, GTY Holdings announced that it had entered into a business combination consisting of agreements to acquire six companies for $497 million. (See generally Dkt. No. 8-7, Ex. 5.) According to the terms of the agreements, the business combination is intended to close by March 31, 2019.
Defendant New GTY is a Massachusetts corporation with its principal place of business in Nevada. (Dkt. No. 11 at ¶ 13.) The company was formed out of the business combination discussed above, with GTY Holdings and the six target companies becoming "direct or indirect wholly-owned subsidiaries of New GTY." (Dkt. No. 8-7, Ex. 5 at 3.)
Defendant Merger Sub is a Delaware corporation with its principal place of business in Nevada. (Dkt. No. 11-1 at ¶ 19.) The company was formed in August 2018 to effectuate the business combination discussed above. (Dkt. No. 11 at ¶¶ 5, 25.) Upon closing of the business combination, Merger Sub "will merge with and into" GTY Holdings, with the latter surviving "as a direct, wholly-owned subsidiary of New GTY." (Dkt. No. 8-7, Ex. 5 at 3.)
Defendant GTY Investors is a Delaware limited liability company ("LLC") with its principal place of business in Nevada. (Dkt. No. 11 at ¶ 23.) The LLC's members are citizens of "California, Hawaii, Maryland, Massachusetts, Nebraska, Nevada, New Hampshire, New Jersey, New York, and Texas." (Id.) GTY Investors was the "sponsor" or "promoter" of the GTY Holdings IPO. (Dkt. No. 8-4, Ex. 2 at 5 (GTY Holdings' October 2016 prospectus defining "sponsor" as "GTY Investors, LLC, . . . which is controlled by our founders."); see also Dkt. No. 11-1 at ¶ 33 (alleging that GTY Investors was "established . . . to act as the promoter (sometimes referred to as the `sponsor') of GTY Holdings.").) The company holds an ownership interest in GTY Holdings. (Dkt. No. 26 at 6.)
Defendant Harry L. You is the "President, Chief Financial Officer and Director of GTY [Holdings]." (Dkt. No. 8-1 at ¶ 1.) Mr. You is also a member and manager of GTY Investors and as such, holds a "promotional interest in GTY Holdings." (Dkt. No. 11-1 at ¶ 33; see also Dkt. No. 26 at 14.) Mr. You is a citizen of New Hampshire. (Dkt. No. 11 at ¶ 15.)
Defendant Stephen J. Rohleder is "member of GTY Holdings' leadership team." (Dkt. No. 8-3, Ex. 1 at ¶ 15.) Mr. Rohleder is a citizen of Texas. (Dkt. No. 11 at ¶ 17.)
The gravamen of the complaint is that Defendants misappropriated Plaintiff's "proprietary, confidential and trade secret information." (See Dkt. No. 11-1 at ¶ 1.)
Plaintiff produces cloud-based public sector software, and as part of Plaintiff's business strategy it "has been executing a proprietary, confidential `platform rollup acquisition strategy,' targeting for acquisition specific companies having particular attributes and products that, when integrated," would enhance Plaintiff's position in the "cloud-based public sector software solutions market." (Id. at ¶ 2.) In April 2017, Mr. You "proposed a transaction whereby GTY Holdings would use its $550 million SPAC Trust Account to acquire OpenGov and to finance the acquisition of one or more complimentary companies." (Id. at ¶ 4.) Defendants specifically "represented that GTY Holdings would acquire OpenGov for $225-$250 million in cash and stock and combine it with OpenGov's roll-up acquisition targets to create a vertically-integrated, public sector software business combination worth more than $1 billion." (Id. at ¶ 9.) OpenGov's chief executive officer ("CEO") Zachary Bookman would "become CEO of the combined company, and two of OpenGov's directors were to sit on its board." (Id.)
On May 9, 2017, Plaintiff and GTY Holdings entered into a non-disclosure agreement ("the Agreement") to advance the transaction discussions by providing GTY Holdings with proprietary and confidential information regarding Plaintiff's "insights, market intelligence, and cloud/software-as-a-service (SaaS) platform expertise." (Id. at ¶¶ 5-6.) Pursuant to the Agreement, GTY Holdings "promised to keep OpenGov's confidential information `strictly confidential,' and further agreed that such information could only be used by the GTY Defendants for a transaction that included OpenGov." (Id. at ¶ 6.) The Agreement specified "that Confidential Information included `the identities of any parties involved in such a possible transaction, and all other information provided in connection therewith.'" (Id.) The Agreement was signed by Plaintiff and Mr. You as "President & CFO" of GTY Holdings. (Dkt. No. 11-1, Ex. A at 34-38.)
After executing the Agreement, Plaintiff disclosed to Defendants "the details of OpenGov's platform roll-up acquisition strategy, including the identities and attributes of the specific acquisition targets that OpenGov had selected." (Dkt. No. 11-1 at ¶ 7.) Plaintiff also "arranged calls and meetings between the acquisition targets" and Defendants, "and brokered negotiations between those companies and . . . Defendants about the terms of a combination with OpenGov through a merger and acquisition using the GTY Holdings SPAC." (Id.) Mr. You told the "acquisition targets that they would be partners with OpenGov in the contemplated transaction." (Id. at ¶ 9.)
In July 2018, "after months of acquiring OpenGov's trade secrets and collaborating with OpenGov to execute OpenGov's platform roll-up acquisition strategy, and in the midst of negotiating the terms of a final letter of intent," Mr. You told Plaintiff that "Defendants did not intend to pursue the transaction." (Id. at ¶ 10.) Defendants then issued a press release on September 12, 2018 "announcing that GTY Holdings had entered into definitive agreements to acquire for $497 million six companies to `create the leading North American Saas/Cloud software company focused on the public sector.'" (Id. at ¶ 11.) The six companies consisted entirely of "roll-up acquisition target[s]" that had been previously selected by Plaintiffs and identified to Defendants, and "actively courted for a combination with OpenGov." (Id.) Defendants' press release "claimed that, `[a]fter an extensive search process, the [GTY] sponsors elected to bring together the best-in-class companies to establish an integrated software solution in the highly fragmented and underpenetrated public sector market.'" (Id. at ¶ 12 (alterations in original).) Defendants "intend to complete their business combination by May 1, 2019." (Id. at ¶ 14.)
Plaintiff alleges that the announced transaction reflects Defendants' seizure of Plaintiff's "platform roll-up acquisition strategy" through the misuse of Plaintiff's confidential and proprietary information, which was disclosed to Defendants pursuant to the Agreement. (Id. at ¶¶ 13-14.) Plaintiff's complaint seeks:
(Id. at ¶ 15.)
On November 19, 2018, GTY Holdings, New GTY, Mr. Rohleder, and Mr. You filed an action against OpenGov in the United States District Court for the Southern District of New York. See Complaint, GTY Tech. Holdings Inc., et al. v. OpenGov, Inc., Case No. 1:18-cv-10854 (S.D.N.Y. Nov. 19, 2018), Dkt. No. 1. The complaint seeks declaratory relief; specifically, "declarations that a certain confidentiality agreement between GTY Holdings and OpenGov has not been breached, that certain information is not confidential, proprietary and/or trade secret information of OpenGov, and that there is no enforceable agreement between GTY Holdings and OpenGov related to an acquisition of OpenGov by GTY Holdings." (Dkt. No. 11 at 2 n.1; see also Complaint, GTY Tech. Holdings Inc., Case No. 1:18-cv-10854 (S.D.N.Y. Nov. 19, 2018), Dkt. No. 1 at ¶¶ 32-43.) Pending before the court in that action are OpenGov's motion to dismiss the complaint, or in the alternative stay proceedings pending this Court's resolution of the instant action. See OpenGov Inc.'s Mot. To Dismiss, GTY Tech. Holdings Inc., S.D.N.Y. Case No. 1:18-cv-10854 (S.D.N.Y. Dec. 11, 2018), Dkt. No. 15. Also pending is the plaintiffs' "cross-motion to enjoin the prosecution" of the instant action in this Court. See id., Dkt. No. 25 at 1.
Plaintiff filed its complaint in state court on November 20, 2018, bringing causes of action for: (1) breach of contract (against GTY Holdings); (2) inducing breach of contract (against New GTY, Merger Sub, GTY Investors, Mr. You, and Mr. Rohleder); (3) fraud (against all Defendants); and (4) trade secret misappropriation (against all Defendants). (Dkt. No. 11-1 at ¶¶ 75-104.) Defendants removed the action to this Court eight days later. On December 1, 2018, Defendants filed an amended notice of removal to "correct[] minor nomenclature errors" in the earlier notice of removal. (Dkt. No. 11 at 2.) On December 11, 2018, the Court granted the parties' stipulated briefing schedule for the instant motions. (Dkt. No. 18.) The motions are fully briefed, and the Court heard oral argument on February 28, 2019.
Defendants insist that the Court should first consider (and grant) their pending motion to transfer (Dkt. No. 8) and thus presumably have the New York federal court decide whether the federal courts have subject matter jurisdiction. The Court disagrees. First, subject matter jurisdiction must be established as a threshold matter. See Bookout v. Beck, 354 F.2d 823, 825 (9th Cir. 1965) ("jurisdiction must be first found over the subject matter . . . before one reaches venue"). Second, even if the Court had discretion to transfer this action to New York pursuant to the first-to-file rule before deciding subject matter jurisdiction, there is no good reason to do so. The purpose behind the "first-to-file" rule is to promote efficiency. See Church of Scientology v. United States Dep't of the Army, 611 F.2d 738, 750 (9th Cir. 1979). There is nothing efficient about Defendants' proposal: transferring a fully briefed remand motion to the New York court for that court to decide whether Plaintiff's California state law claims against the non-diverse defendants defeat jurisdiction, and then, if the court finds it lacks jurisdiction, transferring the case back to this Court to then remand to the San Mateo Superior Court.
Plaintiff moves to remand this action on the grounds that the Court lacks subject matter jurisdiction because complete diversity of citizenship between the parties is lacking. Defendants counter that this action was properly removed because Plaintiff fraudulently joined GTY Investors and Merger Sub; thus, the citizenship of those defendants should be ignored for purposes of diversity.
"Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant." Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Federal district courts have original subject matter jurisdiction over cases in which there is both complete diversity of citizenship between the parties and an amount in controversy exceeding $75,000. 28 U.S.C. § 1332(a)(1). Complete diversity means that "each defendant must be a citizen of a different state from each plaintiff." In re Digimarc Corp. Derivative Litig., 549 F.3d 1223, 1234 (9th Cir. 2008). For purposes of diversity jurisdiction, "a corporation shall be 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). And "an LLC is a citizen of every state of which its owners/members are citizens." Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006).
A defendant seeking removal to federal court "bears the burden of establishing that removal is proper," and the "removal statute is strictly construed against removal jurisdiction." Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009). "Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992); see also 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.").
It is undisputed that Plaintiff is a citizen of both Delaware (its place of incorporation) and California (its principal place of business). It is likewise undisputed that Merger Sub is a citizen of Delaware (its place of incorporation), and GTY Investors is a citizen of California (the state in which one of its members is a citizen). Thus, it is undisputed that Plaintiff shares citizenship with GTY Investors and Merger Sub.
This does not end the inquiry, however. "In determining whether there is complete diversity, district courts may disregard the citizenship of a non-diverse defendant who has been fraudulently joined." Grancare, LLC v. Thrower by & through Mills, 889 F.3d 543, 548 (9th Cir. 2018). Defendants insist that GTY Investors and Merger Sub were fraudulently joined because they "were not involved in any of the conduct underlying OpenGov's claims and therefore OpenGov could not possibly state a claim against those defendants." (Dkt. No. 26 at 12 n.6.) Further, Defendants argue that the complaint lacks any "substantive allegations of wrongdoing" against GTY Investors and Merger Sub. (Id.)
"A defendant invoking federal court diversity jurisdiction on the basis of fraudulent joinder bears a heavy burden since there is a general presumption against [finding] fraudulent joinder." Grancare, 889 F.3d at 548 (alteration in original) (internal quotation marks and citation omitted). The Ninth Circuit recognizes "two ways to establish fraudulent joinder: (1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court." Id. (internal quotation marks and citation omitted). To establish fraudulent joinder the second way, the defendant must "show that the individuals joined in the action cannot be liable on any theory." Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998). "But if 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." Grancare, 889 F.3d at 548 (internal quotation marks and citation omitted).
The standard for determining fraudulent joinder is not equivalent to a Rule 12(b)(6) standard. See id. at 549 (noting that "[a] standard that equates fraudulent joinder with Rule 12(b)(6) conflates a jurisdictional inquiry with an adjudication on the merits."). Instead, "a federal court must find that a defendant was properly joined and remand the case to state court if there is a possibility that a state court would find that the complaint states a cause of action against any of the [non-diverse] defendants." Id. (alteration in original) (internal quotation marks and citation omitted). The "no possibility" standard is "similar to the `wholly insubstantial and frivolous' standard for dismissing claims under Rule 12(b)(1) for lack of federal question jurisdiction[,]" and "[t]he relative stringency of the standard accords with the presumption against removal jurisdiction, under which we `strictly construe the removal statute,' and reject federal jurisdiction `if there is any doubt as to the right of removal in the first instance.'" Id. at 549-50 (quoting Gaus, 980 F.2d at 566). If a federal court determines that a deficiency in the complaint regarding allegations against a non-diverse defendant could "possibly be cured by granting the plaintiff leave to amend," it must remand the case to state court. See id. at 550 (emphasis added).
"The defendant seeking removal is entitled to present the facts showing that the joinder is fraudulent." McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987); see also Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1068 (9th Cir. 2001) ("[F]raudulent joinder claims may be resolved by `piercing the pleadings' and considering summary judgment-type evidence such as affidavits and deposition testimony.") (internal quotation marks and citation omitted). In many cases, however, "the complaint will be the most helpful guide in determining whether a defendant has been fraudulently joined." Grancare, 889 F.3d at 549. The Court must thus determine whether Defendants have shown that Plaintiff could not possibly state a claim for relief against the non-diverse defendants. If Plaintiff can state a claim against at least one non-diverse defendant, diversity is destroyed and the case must be remanded.
The complaint brings claims against GTY Investors for: (1) inducing breach of contract (against New GTY, Merger Sub, GTY Investors, Mr. You, and Mr. Rohleder); (2) fraud (against all Defendants); and (3) trade secret misappropriation (against all Defendants). (Dkt. No. 11-1 at ¶¶ 81-104.) Defendants argue that "GTY Investors were not involved in any of the conduct underlying" those claims; thus, Plaintiff "could not possibly state a claim" against them. (Dkt. No. 26 at 12 n.6.) The Court disagrees, and concludes that Defendants fail to carry their heavy burden of showing that there is not at least a possibility of recovery against GTY Investors.
Plaintiff alleges that Mr. You and two other individuals "established GTY Investors to act as the promoter (sometimes referred to as the `sponsor') of GTY Holdings." (Dkt. No. 11-1 at ¶ 33.) The record supports that allegation. (See Dkt. No. 8-4, Ex. 2 at 5 (GTY Holdings' October 2016 prospectus defining "sponsor" as "GTY Investors, LLC, . . . which is controlled by our founders.").) Plaintiff further alleges that Mr. You is a member and manager of GTY Investors, and as such, holds a "promotional interest in GTY Holdings." (Dkt. No. 11-1 at ¶ 33.) According to the complaint, GTY Investors "hold[s] an approximately seventeen percent promotional interest in GTY Holdings." (Id.) The complaint further alleges, in pertinent part:
(Dkt. No. 11-1 at ¶ 7.) Thus, GTY Investors allegedly had knowledge of the Agreement and details of the potential transaction between Plaintiff and GTY Holdings.
The overarching narrative of the complaint is that all Defendants, including GTY Investors, were driven to engage in the underlying conduct by the two-year deadline under which GTY Holdings was working to complete its first business combination. Other evidence of record supports that narrative. GTY Holdings' prospectus states, in pertinent part:
(Dkt. No. 8-4, Ex. 2 at 49 (emphasis added).) Defendants acknowledge that GTY Investors "served as GTY Holdings' `promoter' or `sponsor,'" and "continues to hold . . . an interest in GTY Holdings." (Dkt. No. 26 at 6.) Likewise, Defendants acknowledge that Mr. You is "a member and manager of GTY Investors." (Id. at 14 (internal quotation marks omitted).) The record thus reflects GTY Investors' monetary interest in the success of GTY Holdings, its knowledge of the Agreement, and the interrelatedness of Mr. You, GTY Investors, and GTY Holdings.
Given the record discussed above, the Court cannot conclude that the claims against GTY Investors are "wholly insubstantial and frivolous," or that any deficiencies regarding the allegations against it could not possibly be cured with leave to amend. Indeed, Plaintiff's motion for remand specifies its theory of liability against all Defendants perhaps more succinctly than alleged in the complaint. (See Dkt. No. 22 at 7 ("This time pressure is what drove GTY to engage in the misconduct that is the gravamen of this case and the California action: unable to find a promising business combination of its own in time, GTY defrauded OpenGov, breached the Confidentiality Agreement, falsely traded on OpenGov's name and reputation, and stole OpenGov's trade secrets, including its proprietary combination of platform roll-up candidates.") (citing the entire complaint ("¶¶ 1-104")).) Plaintiff's motion further alleges that "[u]nless extended by agreement of the shareholders, GTY had two years to consummate a transaction, or the money invested would have to be returned to the shareholders, and GTY Investors would lose its promotional interest and its substantial expenditures incurred to take GTY Holdings public." (Id.)
Plaintiff's claim for inducing breach of contract alleges that GTY Investors, with knowledge of the Agreement, has "intentionally caused, and knowingly continue[s] to cause, GTY Holdings to breach the . . . Agreement with OpenGov by misusing OpenGov's confidential, proprietary, and trade secret information in violation of that Agreement." (Dkt. No. 11-1 at ¶ 84.) The record suggests that it is at least possible that GTY Investors exerted a degree of direction or control over GTY Holdings in its dealings with Plaintiff—especially given Mr. You's role in both entities. Defendants have not shown that Plaintiff cannot possibly succeed on this claim against GTY Investors, either legally or factually. For this reason alone, the motion to remand must be granted.
Defendants also have not shown that Plaintiff cannot possibly state a misappropriation of trade secrets claim against GTY Investors for the same reason. Indeed, the complaint alleges that Defendants announced in a press release that GTY Holdings' sponsors—GTY Investors—"elected to bring together best-in-class companies to establish an integrated software solution in the highly fragmented and underpenetrated public sector market." (Dkt. No. 11-1 ¶ 71.) In other words, Plaintiff alleges that GTY Investors used Plaintiff's trade secrets to establish the software solution.
Defendants' insistence that because GTY Investors "serves a limited role as GTY Holdings' `sponsor' or `promoter,' only providing certain limited support in connection with GTY Holdings," it was not involved in any conduct underlying Plaintiff's claims. (Dkt. No. 26 at 13-14.) Defendants further argue that Plaintiff "has failed to explain the factual basis for any claims against GTY Investors, including the heightened factual details necessary to state a fraud claim." (Id. at 14.) Defendants are wrong to the extent they suggest that Plaintiff's complaint must pass the heightened pleading requirements under Federal Rule of Civil Procedure 9(b) to defeat removal based on fraudulent joinder. As previously discussed, in the context of determining whether a defendant has been fraudulently joined, the complaint need not even state a plausible claim for relief under Rule 12(b)(6). See Grancare, 889 F.3d at 549-50. Defendants' opposition recognizes as much. (See Dkt. No. 26 at 12 n.6 ("Grancare correctly states the legal principle that the fraudulent joinder standard is not whether a plaintiff has failed to state a plausible claim for relief under Ruel 12(b)(6), but rather whether there is `any possibility' that a plaintiff could state a claim against the defendant.").) Here, the complaint demonstrates at least a possibility that Plaintiff could state a claim against GTY Investors.
Defendants provide no affirmative evidence—in the form of declarations or evidence outside of Plaintiff's complaint—that counsels a different result. Defendants instead insist that "pleading gaps" in the complaint as to GTY Investors demonstrate fraudulent joinder. (See id. at 13-14.) Pointing to deficiencies in the factual allegations in the complaint is appropriate under a Rule 12(b)(6) standard; however, it is insufficient to carry Defendants' heavy burden of showing that the claims against GTY Investors could not "possibly be cured by granting the plaintiff leave to amend." See Grancare, 889 F.3d at 550.
Further, the in-circuit district court cases cited by Defendants are distinguishable on their facts and thus unpersuasive. See Tipton v. Zimmer, Inc., No. CV 15-04171-BRO(JCx), 2016 WL 3452744, at *5 n.4 (C.D. Cal. June 23, 2016), aff'd, 715 F. App'x 763 (9th Cir. 2018) (finding non-diverse defendant fraudulently joined where defendant's "role in the alleged tortious conduct [was] not supported by any factual allegations describing his role," and deposition testimony "refute[d] the Complaint's only factual allegation pertaining to [the defendant].") (emphasis added); Salkin v. United Servs. Auto. Ass'n, 767 F.Supp.2d 1062, 1068-69 (C.D. Cal. 2011) (finding fraudulent joinder where defendants demonstrated that "USAA and USAA Life are separate entities that operate independently, and that USAA does not exert control over USAA Life's actions," thus, "[u]nder California law, there is no possibility given the evidence presented that [p]laintiffs [could] state a claim against USAA based on the actions of USAA Life."); Sandoval v. Bausch & Lomb, Inc., No. 08-cv-07373-FMC-CWx, 2008 WL 11340256, at *1 (C.D. Cal. Dec. 30, 2008) (finding fraudulent joinder where non-diverse defendant in product liability action submitted declaration showing that his duties as a store manager had no connection to the selection of products sold, or "the development, distribution, sales, or marketing" of the product at issue.); Maffei v. Allstate California Ins. Co., 412 F.Supp.2d 1049, 1052 (E.D. Cal. 2006) (finding fraudulent joinder of defendant-corporation where defendants submitted declaration attesting that the corporation was "nothing more than an empty corporate shell created in anticipation of a business plan that was never carried out," and as such, it "ha[d] never conducted any business of any kind"); Good v. Prudential Ins. Co. of Am., 5 F.Supp.2d 804, 807-08 (N.D. Cal. 1998) (finding fraudulent joinder of insurance agent-defendant because "under settled California law[,] . . . an insurance agent acting within the course and scope of his employment cannot be held liable for damages resulting from a negligent failure to insure.").
Defendants fail to meet their heavy burden of demonstrating fraudulent joinder as to GTY Investors. Because it is otherwise undisputed that GTY Investors shares citizenship with Plaintiff, the Court lacks subject matter jurisdiction and the case must be remanded. The Court need not address the parties' arguments regarding Merger Sub.
The Court GRANTS Plaintiff's motion to remand because Defendants fail to show that GTY Investors, which shares citizenship with Plaintiff, was fraudulently joined. Accordingly, the Court REMANDS this case to San Mateo County Superior Court. The Court DENIES as moot Defendants' motion to transfer and GTY Investors and Merger Sub's motion to dismiss.
This Order disposes of Docket Nos. 8, 22, and 24.
