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Valley v. International Business Machine Corp.

United States District Court, D. Oregon, Portland Division

March 14, 2018

KEITH VALLEY, an individual Plaintiff,
v.
INTERNATIONAL BUSINESS MACHINE CORPORATION dba IBM, INC., a New York Corporation, SETERUS, INC., fka KYANITE FINANCIAL BUSINESS SERVICES, INC., a Delaware corporation, and AMANDA LOWE, an individual, Defendants.

          FINDINGS AND RECOMMENDATION

          JOHN V. ACOSTA UNITED STATES MAGISTRATE JUDGE.

         Introduction

         Plaintiff Keith Valley (“Valley”) filed this lawsuit in state court against his former employers alleging claims for wage violations, retaliation, and breach of contract. Defendants timely removed the lawsuit to this court asserting diversity jurisdiction and identifying defendant Amanda Lowe (“Lowe”) as a “sham defendant.” Presently before the court is Valley's motion to remand, and his request for attorney fees and costs related to his motion.

         The court finds Valley failed to state a cause of action against Lowe according to the settled rules of the state, Lowe should be disregarded for jurisdictional purposes, and complete diversity exits. Alternatively, Valley seeks to recover sums wrongfully collected as a tax, thereby raising a substantial issue of federal law. Accordingly, the court has diversity and federal question jurisdiction over this action, removal was proper, and the motion to remand and Valley's request for attorney fees and costs should be denied.

         Background

         Defendant Seterus, Inc. (“Seterus”), is a fully-integrated mortgage loan servicing company and a wholly-owned subsidiary of defendant International Business Machine Corporation (“IBM”) (Lowe Decl., ECF No. 20, ¶¶ 2, 4.) From October 24, 2015, to May 25, 2017, Valley worked for Seterus as a bankruptcy asset specialist at a loan servicing center in Beaverton, Oregon. (Compl. ECF No. 1-1, ¶ 5;Terbenche Decl. ECF No. 21, ¶ 4.) Initially, Valley was hired by a third party and assigned to IBM as a contractor. (Terbenche Decl., ¶ 4.) In October 2016, IBM hired Valley directly. (Terbenche Decl. ¶ 5; Ex. 1.)[1]

         While working at Seterus, Valley reported directly to Maggie Parrish (“Parrish”) and Megan Snyder (“Snyder”), both of whom worked in Seterus's Beaverton office and served as Valley's day- to-day managers. (Lowe Decl. ¶ 6.) Parrish and Snyder reported to Shannon Stock (“Stock”), Assistant Vice President of the Bankruptcy group, who worked out of the Raleigh, North Carolina office and was only infrequently at the Beaverton office. (Lowe Decl. ¶¶ 6. 13.) Lowe was the Assistant Vice President of Operational Controls responsible for general operations of the foreclosure department as well as risk and compliance, and worked out of the Beaverton office. (Lowe Decl. ¶¶ 3, 4.) Both Stock and Lowe reported to Michael Perry (“Perry”), Vice President of Default Management. (Lowe Decl. ¶ 6.)

         Valley alleges he was not allowed rest breaks or meal periods, and IBM and Seterus withheld too much money from his paychecks, did not paid wages in a timely manner, and did not properly report and pay taxes, all in violation of Oregon law. (Compl. ¶¶ 7, 9, 14, 16, 17, 18.) With regard to improper withholding, Valley specifically alleges “[a]t the time of hire Plaintiff claimed two dependen[t]s on his W-4 form. More money was being deducted from his gross wages than required.” (Compl. ¶ 9.) In November 2016, Valley contacted the human resources and payroll departments to complain about “additional deductions from his gross wages.” (Compl. ¶ 9.) The payroll department advised Valley that “employees made mistakes and miscalculated the deductions and withholdings of Plaintiff's wages and other recently hired employees. As a result, Plaintiff['s] net wage payment was lower than it should have been.” (Compl. ¶ 10.) IBM and Seterus promised Valley he would receive the “additional deduction from his wages in the form of a separate check, ” which never arrived. (Compl. ¶ 11.) Valley alleges his communications with other coworkers about the payroll issues and his advocacy on the issue “did not endear [him] to management, ” and he was terminated “[a]pproximately six months after his efforts to address company wide wage theft, ” along with other employees who complained about wage theft. (Compl. ¶ 12.) He claims his termination was based on his good faith reports of conduct he believed to be illegal. (Compl. ¶ 28.)

         Valley asserts claims against IBM and Seterus for unlawful deductions under Or. Rev. Stat 652.610(3); late wage payments under Or. Rev. Stat. 652.120; breach of contract; and whistleblower retaliation under Or. Rev. Stat. 659A.199. Valley's sole claim against Lowe is for aider and abettor liability under Or. Rev. STAT.659A.030(1)(g).

         In support of his claim against Lowe, Valley alleges:

At all times material to this action, Defendant Amanda Lowe (herein referred to as “Lowe”) is a natural person residing in Oregon. Defendant [Lowe][2] was employed by Defendant IBM and Defendant Seterus and managed the Plaintiff subject to his terms of employment.
Defendant Lowe, an Assistant Vice President, holds a management role and was aware of the issues with Payroll miscalculations. Defendant Lowe did not address the issues raised by Plaintiff. A lack of response and leadership on the part of Ms. Lowe allowed the wage and hour abuses to continue.
Amanda Lowe aided, abetted, incited, compelled and/or coerced the illegal wage theft and retaliation for his good faith reports of conduct he believed to be illegal.

(Compl. ¶¶ 4, 13, 33.)

         Lowe represents she did not supervise, hire, or review Valley's performance, and had no authority to counsel, discipline, or adjust Valley's grievances. (Lowe Decl. ¶ 7.) Parrish and Snyder were Valley's direct supervisors in the Beaverton office and available to assist him with any concerns. (Lowe Decl. ¶ 13.) However, according to Valley, Lowe held a management role and was generally the person of authority in the Beaverton office. (Valley Decl., ECF No. 13, ¶¶ 3, 4.) Lowe admits she provided administrative support to the bankruptcy team from time-to-time by executing court documents or settlement agreements requiring the signature of an Assistant Vice President. (Lowe Decl. ¶ 13.)

         Occasionally, employees in the Beaverton office from other departments and over which Lowe had no control would come to her with concerns. (Lowe Decl. ¶ 8.) In these instances, Lowe generally consulted with human resources and let them work on a resolution. (Lowe Decl. ¶ 8.) On one occasion in November 2016, Valley approached Lowe regarding an error in his first IBM payroll check. (Lowe Decl. ¶ 9.) Lowe relayed Valley's complaint to human resources and Stock, and believed human resources was working on the issue. (Lowe Decl. ¶ 9.) Lowe represents she was not involved in, and did not provide any input into, Valley's termination, which was a part of a reduction in workforce due to financial circumstances. (Lowe Decl. ¶¶ 11, 12.)

         Sheri Terbenche (“Terbenche”), Managing Director for Seterus, stated the error in Valley's first paycheck directly from IBM resulted from a delay in entering Valley's W-4 information. (Terbenche Decl. ¶ 10.) As a result, Valley's withholding allowance was set at “0” rather than the “2” claimed by Valley on his W-4 for his November 15, 2016 payroll check. (Terbenche Decl. ¶ 10.) While Terbenche advised Valley the errors would be remedied and he would receive an appropriate refund in his December 15, 2016 payroll check, the adjustment and refund were actually reflected in his November 30, 2016 payroll check. (Terbenche Decl. ¶¶ 9, 11.)

         Valley filed this action in the Circuit Court of the State of Oregon for the County of Multnomah on August 8, 2017. IBM, Seterus, and Lowe (collectively “Defendants”), filed a notice of removal on September 8, 2017, identifying Lowe, the sole defendant with Oregon citizenship, as a sham defendant fraudulently joined to defeat diversity jurisdiction. Valley filed a motion to remand contending he has alleged a viable claim against Lowe, thereby defeating Defendants alleged diversity jurisdiction. In their opposition brief, Defendants assert for the first time the existence of federal question jurisdiction based on Valley's claim for a refund of federal taxes erroneously withheld from his paycheck.

         Legal ...


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