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Ekeya v. Shriners Hospital For Children

United States District Court, D. Oregon

July 10, 2017

KAY EKEYA, Plaintiff,
SHRINERS HOSPITAL FOR CHILDREN, PORTLAND, a Colorado Non-Profit Corporation, and JOHN CRAIG PATCHIN, an individual, Defendants.

          Kyann Kalin and Peter Stutheit, Stutheit Kalin LLC, Attorneys for Plaintiff.

          John M. Kreutzer and Jessica E. Wilcox, Smith Freed & Eberhard PC, Attorneys for Defendants.


          Michael H. Simon United States District Judge

         Plaintiff Kay Ekeya (“Ekeya”) asserts employment-related claims under Oregon law against her former employer, Shriners Hospital for Children, Portland (“Shriners Portland”), and the Hospital Administrator of Shriners Portland, John C. Patchin (“Patchin”) (collectively, “Defendants”). Ekeya alleges that Shriners Portland retaliated against her by terminating her employment after she reported that her immediate supervisor had violated patient privacy rights by allowing a news reporter into the hospital to take and publish photographs in areas not generally open to the public. Ekeya also alleges that Patchin aided and abetted the unlawful retaliation by Shriners Portland. Ekeya is a citizen of the State of Washington, Shriners Portland is a Colorado non-profit corporation, and Patchin is a citizen of the State of Oregon. Plaintiff commenced this action in state court in Oregon, and Defendants timely removed the case to federal court, asserting diversity jurisdiction. In an effort to avoid the forum defendant rule, which prohibits removal when a defendant is a citizen of the forum state, Defendants argue that Plaintiff cannot state a colorable claim against Patchin and, thus, he has been fraudulently joined. From this, Defendants argue that Patchin's presence does not preclude removal. Before the Court are Plaintiff's motion to remand, arguing that Patchin has not been fraudulently joined, and Defendants' motion to dismiss Plaintiff's claim against Patchin.


         A. Removal, the Forum Defendant Rule, and Remand

         A civil action generally may be removed from state court to federal court if the federal district court would have had original, subject matter jurisdiction over the case. 28 U.S.C. § 1441(a). Subject matter jurisdiction may be based on either federal question jurisdiction or diversity jurisdiction. 28 U.S.C. §§ 1331, 1332. Diversity jurisdiction exists over all civil actions when the amount in controversy exceeds $75, 000 and there is complete diversity among all plaintiffs and defendants. 28 U.S.C. § 1332(a)(1). “[D]iversity jurisdiction does not exist unless each defendant is a citizen of a different State from each plaintiff.” Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978) (emphasis in original). A civil action otherwise removable on the basis of diversity jurisdiction, however, “may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C. § 1441(b)(2); see also Lincoln Prop. Co. v. Roche, 546 U.S. 81, 84 (2005) (“Defendants may remove an action on the basis of diversity of citizenship if there is complete diversity between all named plaintiffs and all named defendants, and no defendant is a citizen of the forum State.”) (emphasis added). This latter clause is known as the “forum defendant rule.”

         A motion to remand is the proper procedure for a plaintiff to use when challenging removal. 28 U.S.C. § 1447; see also Moore-Thomas v. Ala. Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009). Because federal courts are courts of limited jurisdiction, the removal statute is strictly construed, and courts resolve any doubt in favor of remand. Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir. 2009); Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per curiam). In other words, there is a “strong presumption” against removal jurisdiction. Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (citation and quotation marks omitted). The party seeking removal bears the burden of establishing that removal is proper. Moore-Thomas, 553 F.3d at 1244.

         B. Fraudulent Joinder

         When considering diversity jurisdiction, an exception “to the requirement of complete diversity is where a nondiverse defendant has been ‘fraudulently joined.'”[1] Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). If a defendant has been fraudulently joined, “the district court may ignore the presence of that defendant for the purpose of establishing diversity.” Hunter, 582 F.3d at 1042. There is, however, a “general presumption against fraudulent joinder.” Hamilton Materials, Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). Further, a defendant bears a heavy burden of demonstrating fraudulent joinder by “clear and convincing evidence.” Id. Thus, a removing defendant asserting fraudulent joinder must overcome “both the strong presumption against removal jurisdiction and the general presumption against fraudulent joinder.” Hunter, 582 F.3d at 1046 (citation and quotation marks omitted).

         A “joinder is fraudulent when a plaintiff's failure to state a cause of action against the resident defendant is obvious according to the applicable state law.” Allen v. Boeing Co., 784 F.3d 625, 634 (9th Cir. 2015); McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). “[I]f 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.” Hunter, 582 F.3d at 1046 (quotation marks and citation omitted) (emphasis added).

         In many circumstances, a court will consider only the plaintiff's pleadings to determine removability. When fraudulent joinder is at issue, however, a court may go “somewhat further.” Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318-19 (9th Cir. 1998). A defendant seeking removal is “entitled to present the facts showing the joinder to be fraudulent.” McCabe, 811 F.2d at 1339. Thus, when determining whether there has been fraudulent joinder, a court may conduct a “summary inquiry” that goes beyond the pleadings. Allen, 784 F.3d at 634. Such an inquiry, however, “is appropriate only to identify the presence of discrete and undisputed facts that would preclude plaintiff's recovery against the in-state defendant.” Id. (quoting Hunter, 582 F.3d at 1044 (quoting Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568, 573-74 (5th Cir. 2004))) (emphasis added). “[T]he inability to make the requisite decision in a summary manner itself points to an inability of the removing party to carry its burden.” Id.

         C. Motion to Dismiss for Failure to State a Claim

         A motion to dismiss for failure to state a claim may be granted only when there is no cognizable legal theory to support the claim or when the complaint lacks sufficient factual allegations to state a facially plausible claim for relief. Shroyer v. New Cingular Wireless Servs., Inc., 622 F.3d 1035, 1041 (9th Cir. 2010). In evaluating the legal sufficiency of a complaint's factual allegations, the court must accept as true all well-pleaded material facts and construe them in the light most favorable to the non-moving party. Wilson v. Hewlett-Packard Co., 668 F.3d 1136, 1140 (9th Cir. 2012); Daniels-Hall v. Nat'l Educ. Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). To be entitled to a presumption of truth, allegations in a complaint “may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.” Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). All reasonable inferences from the factual allegations must be drawn in favor of the plaintiff. Newcal Indus. v. Ikon Office Solution, 513 F.3d 1038, 1043 n.2 (9th Cir. 2008). The court need not, however, credit the plaintiff's legal conclusions that are couched as factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009).

         A complaint must contain sufficient factual allegations to “plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007)).


         Shriners Portland is part of a non-profit organization that operates 22 hospitals in three countries, including the United States. Plaintiff, Ekeya, worked in the Shriners Portland hospital for almost 16 years, from October 2000 until her employment was terminated on August 25, 2016. Throughout her employment, Ekeya consistently received favorable reviews and yearly raises. In March 2016, Ekeya received a promotion from Public Relations Specialist to Public Relations Manager.

         In July 2016, the Hospital Administrator for Shriners Portland, Patchin, created a new position of Director of Business Development at Shriners Portland. Patchin appointed Davene Dietzler-Marihart (“Dietzler-Marihart”) to that job. Previously, Dietzler-Marihart had reported directly to Ekeya, and Ekeya had reported directly to Patchin. After Patchin created the new position for Dietzler-Marihar, Ekeya now reported directly to Dietzler-Marihart and Dietzler-Marihart reported directly to Patchin. Ekeya was not pleased with this reorganization.

         On July 22, 2016, Rhonda Smith (“Smith”), the Director of Human Resources for Shriners Portland, met with Patchin and Dietzler-Marihart. According to Smith's declaration, Smith, Patchin, and Dietzler-Marihart discussed Ekeya's unwillingness to work collaboratively within the new structure of the hospital's business development department. Both Smith and Dietzler-Marihart expressed their views to Patchin that it was in the hospital's best interest to terminate Ekeya's employment. As explained in Smith's Declaration, Smith “recommended that we should attempt to get a severance exception and release, ” and both Patchin and Dietzlier-Marihart “agreed with my recommendation.” ECF 14 at 2 (¶ 3) (emphasis added).

         After that meeting, but still on July 22, Smith sent an email to Kathy Dean, who worked in Human Resources for the larger Shriners organization. Dean was based in in Florida. Smith asked Dean for approval to provide a severance package to Ekeya. Smith understood that Shriners did not typically provide severance for any reason other than a “position elimination” and that this was not a position elimination situation. Id. at 5. In her email, Smith told Dean:

Please see the attached [Request for Exception]. This employee has served the hospital well for almost 16 years. We do, however, feel it is best for the hospital if we part ways at this juncture. There isn't any history of performance problems, in fact, she was just promoted to PR Manager. It is a matter of her ability to accept the new reporting structure. It is a morale issue as well as a risk to the successful implementation of some very important projects (Providence, for one). We feel the distraction of dealing with a significant personnel issue sets the Business Development office up for failure.
Thank you for considering this request. We would like to act on the termination decision as quickly as possible.

Id. at 6.

         Dean responded promptly, stating: “I take it this is not a job elimination rather a ‘buy out' to move forward?” Id. at 5. The phrase “buy out” appears to refer to the recommendation described by Smith in her declaration that “we should attempt to get a severance exception and release.” Smith replied to Dean by confirming that this was “not a position elimination; but the position changed appreciably.” Id. Smith also told Dean:

Kathy, I know we typically do not provide a severance for anything other than a position elimination. However, if this employee stays it will be very detrimental to a new manager who needs to immediately get ...

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