793 F. Supp. 2d 1117
N.D. Cal.2011Background
- Plaintiff Graybill-Bundgard sued Standard Insurance and the California Commissioner of Insurance in state court for denial of disability benefits and sought mandamus relief.
- The Commissioner demurred; the state court sustained the demurrer without leave to amend, effectively dismissing the Commissioner from the case.
- Defendant removed the case to federal court arguing that complete diversity existed after the Commissioner’s dismissal.
- Plaintiff moved to remand, arguing removal was improper because the demurrer dismissal was not a final order for purposes of removal.
- The court analyzed the timeliness and viability of fraudulent joinder and potential state-law defenses, including statute of limitations and exhaustion.
- The district court granted remand, concluding the removal was improper and the case could not be removed under 28 U.S.C. § 1447.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal was proper under complete diversity | Graybill-Bundgard argues no complete diversity existed at removal. | StandardIns argues diversity existed after demurrer dismissal. | Removal improper; lack of final order and lack of valid diversity. |
| Whether the demurrer-order was a final order for removal | Order sustaining demurrer is not final until state appellate process exhausted. | Demurrer constitutes final dismissal for removal purposes. | Not final; state appellate process not exhausted. |
| Whether voluntary/involuntary rule prevents removal | Dispositive to keep case in state court if dismissal was not voluntary. | Fraudulent joinder excises non-diverse party leading to removal. | Rule applies; not removable because not a voluntary act by plaintiff. |
| Whether fraudulent joinder defeats removal | There is a plausible state-law claim against the Commissioner. | There is no possible state-law action against the Commissioner due to joinder. | Fraudulent joinder not established; plaintiff may have mandamus action. |
| Whether statute of limitations or exhaustion arguments bar mandamus claim | Limitations clock runs from denial of benefits; exhaustion not proven necessary. | Limitations and exhaustion bar mandamus claim. | Arguments rejected; plaintiff's claim timely and exhaustion not required here. |
Key Cases Cited
- Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241 (9th Cir. 2009) (remand proper for challenging removal; strict construction of removal)
- Self v. General Motors Corp., 588 F.2d 655 (9th Cir. 1978) (final judgment requires exhaustion of state appellate remedies)
- Poulos v. Naas Foods, Inc., 959 F.2d 69 (7th Cir. 1992) (finality for removal; voluntary/involuntary rule context)
- California v. Keating, 986 F.2d 346 (9th Cir. 1993) (voluntary/involuntary rule applicability)
- Gaus v. Miles, Inc., 980 F.2d 564 (9th Cir. 1992) (presumption against removal; burden on defendant)
- Plute v. Roadway Package Sys., 141 F. Supp. 2d 1005 (N.D. Cal. 2001) (fraudulentjoinder standard; look for possible state claims)
- Dodson v. Spiliada Maritime Corp., 951 F.2d 40 (5th Cir. 1991) (fraudulent joinder standard in diversity analysis)
- Ritchey v. Upjohn Drug Co., 139 F.3d 1313 (9th Cir. 1998) (look for possibility of recovery against non-diverse party)
- Peterson v. Am. Life & Health Ins. Co., 48 F.3d 404 (9th Cir. 1995) (mandamus relief against Commissioner; discretion and abuse)