Suckoll v. Walmart Inc.

ORDER GRANTING MOTION TO REMAND FOR LACK OF SUBJECT MATTER JURISDICTION

Derrick K. Watson, United States District Judge

Plaintiff Sabrina Suckoll seeks to remand her employment discrimination case to State court for lack of complete diversity because she, like Defendant Nicole Kuailani, are both citizens of Hawai'i. Walmart asserts that Kuailani's citizenship should be ignored for purposes of determining diversity first because she has not yet been served, and second because of fraudulent joinder.

Neither of Walmart's arguments is persuasive. First, diversity depends on the citizenship of the parties named in the complaint at the time of removal “regardless of service or non-service.” Clarence E. Morris, Inc. v. Vitek, 412 F.2d 1174, 1176 (9th Cir. 1969). Second, it is far from evident that Kuailani was fraudulently joined because Walmart does not claim actual fraud and has not shown that Suckoll cannot state a claim against Kuailani.

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As a result, because this Court lacks diversity jurisdiction, the only basis for subject matter jurisdiction cited in Walmart's notice of removal, this action is REMANDED to the First Circuit Court for the State of Hawai'i.

LEGAL STANDARD

Pursuant to 28 U.S.C. §§ 1441(a) and 1446(b), a defendant may timely remove any civil action from State court to federal court, provided the federal court has original jurisdiction over the action. As relevant here, one basis for federal jurisdiction is diversity of citizenship under 28 U.S.C. § 1332(a), which consists of actions “between . . . citizens of different States” in which the amount in controversy exceeds $75, 000.^[1] Diversity jurisdiction requires “complete diversity between all plaintiffs and all defendants.” Lincoln Prop. Co. v. Roche, 546 U.S. 81, 84 (2005) (citing Strawbridge v. Curtiss, 7 U.S. 267 (1806)) (emphasis added).

“Subject-matter jurisdiction can never be waived or forfeited.” Gonzalez v. Thaler, 565 U.S. 134, 141 (2012). “It is to be presumed that a cause lies outside [a federal court's] limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted). Indeed, “[f]ederal jurisdiction

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must be rejected if there is any doubt as to the right of removal.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).

RELEVANT BACKGROUND

On August 24, 2021, in the First Circuit Court for the State of Hawai'i, Suckoll sued her employer Walmart, Inc., her immediate supervisor Nicole Kuailani, and “Doe” Defendants 1-25 for gender discrimination and retaliation under state law. Complaint, Dkt. No. 1, Exh. A, ¶¶ 1-4. Suckoll and Kuailani are both citizens of Hawai'i. Id. at ¶ 1; Dkt. No. 13 at 5. Walmart is a citizen of Delaware, its place of incorporation, and Arkansas, its principal place of business. See Dkt. No. 13 at 4; 28 U.S.C. § 1332(c)(1). Walmart was served on August 26, 2021. Dkt. No. 6 at 4. Kuailani has not yet been served. See id.

Suckoll alleges three state law-based employment claims: (1) gender discrimination, in violation of Haw. Rev. Stat. (H.R.S.) § 378-2(a)(1), against Walmart; (2) retaliation, in violation of H.R.S. § 378-2(a)(2), against Walmart; and (3) aiding and abetting Walmart's discriminatory actions, in violation of H.R.S. § 378-2(a)(3) and the common law, against Kuailani. Complaint at ¶¶ 32-49.^[2]

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Suckoll's claims are based on the following alleged facts: Suckoll worked at Walmart as an Assistant Manager beginning in 1999, id. at ¶¶ 10-11; on an unnamed date, she became subject to Kuailani's supervision, id. at ¶ 12; Kuailani generally favored male employees over females, id. at ¶ 16; Kuailani often cursed at female employees but never males, id. at ¶ 17; Kuailani chronically understaffed areas assigned to female management and then criticized the female supervisor for her area's performance, but did not do the same to men, id. at ¶ 18-19; Kuailani gave unfairly critical evaluations to female employees, id. at ¶ 20; Kuailani approved Sunday leave for male employees, allowing them to watch NFL football games, but denied female employees scheduling adjustments for emergency health care needs, id. at ¶ 21; Kuailani frequently allowed her female significant other, who was not employed by Walmart, to work at the store and bark orders at the female employees, id. at ¶¶ 25-26; and finally, Kuailani and Walmart ultimately terminated Suckoll on August 19, 2019 for fabricated disciplinary events and other pretextual reasons and replaced her with a less experienced, less qualified male. Id. at ¶¶ 22-23, 27-29.

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On September 15, 2021, after service solely on Walmart, Walmart removed the action to this Court, asserting diversity jurisdiction-even though Walmart acknowledges Suckoll and Kuailani are both citizens of Hawai'i, and thus, non-diverse-because Kuailani “has not been served.” Dkt. No. 1, ¶¶ 6-7. On September 24, 2021, Suckoll moved to remand to State court for lack of complete diversity. Dkt. No. 7-1.

On October 22, 2021, Walmart opposed remand, restating its original nonservice argument and adding a new argument that Kuailani was fraudulently joined. Dkt. No. 13. On October 29, 2021, Suckoll replied, denying fraudulent joinder. Dkt. No. 14. After considering the parties' briefings, the Court elected to decide the case without oral argument. Dkt. No. 15. This Order follows.

DISCUSSION

Both parties agree that Suckoll and Walmart are diverse. See Dkt. No. 1, ¶¶ 4, 6, 7; Dkt. No. 7-1 at 1-2. Thus, the only question is whether Kuailani counts in the diversity calculus.^[3] Contrary to Walmart's contentions, (1) non-service does not exclude Kuailani from that calculus, and (2) it is not evident that Kuailani was fraudulently joined. Accordingly, because Walmart has not carried its burden of

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demonstrating this Court's subject matter jurisdiction, a necessary predicate for removal, this case must be REMANDED to State court.

I. Kuailani destroys diversity even though she has not been served.

Walmart argues Kuailani's non-diverse citizenship should be ignored because she has not been served. Dkt. No. 1, ¶¶ 6-7. As Suckoll points out in both her Motion to Remand and her Reply, the Ninth Circuit does not agree. Dkt. Nos. 7-1 at 7; 14 at 2. In Clarence E. Morris, Inc. v. Vitek, 412 F.2d 1174, 1176 (9th Cir. 1969), the Ninth Circuit held: “Whenever federal jurisdiction in a removal case depends upon complete diversity, the existence of diversity is determined from the fact of citizenship of the parties named and not from the fact of service.” Vitek, in other words, explicitly rejected any notion that “[Section] 1441(b), by implication, expand[s] removal jurisdiction to permit removal, despite want of diversity, if a resident defendant whose presence would defeat diversity ha[s] not been served.” Id. at 1176 n.1.^[4] Inexplicably, Walmart continues to assert this nonservice argument in its Opposition Brief, including reference to the inapplicable

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“forum defendant” rule in Section 1441(b), ^[5] without addressing Vitek. See Dkt. No. 13 at 2 (“Because Kuailani was not properly joined and served at the time of removal, there was complete diversity and removal was proper.”). Because Vitek forecloses Walmart's approach, the absence of service on Kuailani cannot provide it with a basis to overcome the lack of diversity between Suckoll and Kuailani.

II. Kuailani has not been fraudulently joined.

As an initial matter, Walmart waived its claim of fraudulent joinder by failing to timely present that basis for removal. Walmart was required to file a “notice of removal . . . containing a short and plain statement of the grounds for removal . . . within 30 days after [receiving] . . . a copy of the initial pleading.” 28 U.S.C. § 1446(a)-(b)(1). “[T]he notice must make the basis for federal jurisdiction clear, and contain enough information so that the district judge can determine whether jurisdiction exists.” 14C Charles Alan Wright et al., Fed. Prac. & Proc. § 3733 (4th ed. 2017). In its Notice of Removal, Walmart never mentioned fraudulent joinder; it premised removal on non-service alone. Dkt. No. 1. Only after Suckoll filed her Motion to Remand, drawing Walmart's attention to Vitek, Dkt. No. 7-1 at 7, did Walmart add the new claim of fraudulent joinder in its

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Opposition brief-57 days after service of the Complaint and well beyond Section 1446's 30-day cut-off. See Dkt. No. 13.

After the 30-day window has expired, “defendants may not add completely new grounds for removal or furnish missing allegations.” 14C Wright et al., Fed. Prac. & Proc. § 3733; City of Oakland v. BP PLC, 969 F.3d 895, 911 n.12 (9th Cir. 2020) (holding notice of removal cannot be untimely amended to add an entirely new basis for removal); Barrow Dev. Co. v. Fulton Ins. Co., 418 F.2d 316, 317 (9th Cir. 1969) (holding defendants can make technical clarifications to “allegations of jurisdiction previously made” but cannot “add allegations of substance”). Fraudulent joinder is an entirely new basis for removal based on diversity that is waived if not timely raised. Many other district courts have held likewise. See, e.g., Dasilva v. Germany, 514 F.Supp.3d 393, 399 (D. Mass. 2021); Ramirez v. McMoRan Expl. Co., 2011 WL 3324320 (W.D. Tex. 2011) at *3 (holding defendant could not raise fraudulent joinder anew “in response to a well-crafted motion to remand” and compiling seven other district court cases holding the same); Sullivan v. BNSF Ry. Co., 447 F.Supp.2d 1092, 1099 (D. Ariz. 2006) (“It would be a substantial injustice to allow Defendants to remove a case on one ground and then, when faced with a serious challenge to that ground,...