Monica Reyes v. Dunbar Armored, Inc., 2:19-cv-10974

Plaintiff Monica Reyes sued Dunbar Armored, Inc. and her former supervisor, Virginia Fuentes, in Los Angeles County Superior Court alleging, inter alia, whistleblower retaliation (Cal. Lab. Code § 1102.5) and IIED.
Defendants removed to federal court; the court issued an Order to Show Cause why the case should not be remanded for lack of subject-matter jurisdiction.
Defendants argued Fuentes is a non-diverse "sham defendant" because (1) § 1102.5 does not impose individual liability on supervisors and (2) Reyes’s IIED claim is barred by the Workers’ Compensation Act.
Reyes filed a 24-page Motion to Remand; the court deemed most of it Plaintiff’s reply and considered only 10 specified pages to streamline briefing.
Reyes relied on the 2014 amendment to § 1102.5 (prohibiting retaliation by "any person acting on behalf of the employer") to argue ambiguity as to individual liability.
The court concluded ambiguity existed as to § 1102.5 individual liability, found Fuentes was not a sham defendant, and remanded the case to state court for lack of diversity; it did not resolve the IIED/Workers’ Comp issue.

Issue	Reyes' Argument	Defendants' Argument	Held
Whether Fuentes is a "sham" non-diverse defendant defeating diversity jurisdiction	Reyes says § 1102.5 (after 2014 amendment) can apply to "any person acting on behalf of the employer," so claims against Fuentes are arguably viable	Defendants say Reyes cannot state a claim against Fuentes, so her joinder is fraudulent and removal is proper	Court: Doubt resolved against removal; ambiguity exists, so Fuentes is not a sham and diversity jurisdiction is lacking
Whether § 1102.5 supports individual liability against a supervisor	Reyes points to the 2014 amendment and authority recognizing ambiguity on individual liability	Defendants rely on decisions holding § 1102.5 doesn’t impose liability on individual supervisors	Court: Ambiguity exists; must resolve in favor of plaintiff for removal analysis, so claim may be viable
Whether Reyes's IIED claim is barred by the Workers’ Compensation Act (precluding recovery against individual supervisor)	Reyes contends IIED claim is plead sufficiently	Defendants contend IIED based on employment "personnel activity" is barred by workers’ compensation exclusivity	Court: Did not decide IIED/Workers’ Comp issue because remand was compelled by lack of diversity; declined to reach merits

Ritchey v. Upjohn Drug Co., 139 F.3d 1313 (9th Cir. 1998) (fraudulent-joinder principle used to assess removal)
Morris v. Princess Cruises, Inc., 236 F.3d 1061 (9th Cir. 2001) (joinder deemed fraudulent if plaintiff fails to state a claim against resident defendant)
McCabe v. General Foods Corp., 811 F.2d 1336 (9th Cir. 1987) (same fraudulent-joinder standard)
Padilla v. AT&T Corp., 697 F. Supp. 2d 1156 (C.D. Cal. 2009) (defendant must show no possibility plaintiff can prevail against non-diverse defendant)
Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203 (9th Cir. 2007) (fraudulent joinder must be proven by clear and convincing evidence; presumption against fraudulent joinder)
Luther v. Countrywide Home Loans Servicing, LP, 533 F.3d 1031 (9th Cir. 2008) (removal burden rests on removing defendant)