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Grancare, LLC v. Thrower

United States Court of Appeals, Ninth Circuit

April 26, 2018

GranCare, LLC, DBA Vale Healthcare Center; Mariner Health Care, Inc., Defendants-Appellants,
v.
Ruth Thrower, by and through her Successor in Interest, Rosie Lee Mills; Rosie Lee Mills; Helen Mills; Loretta Eddings; Lashawn Thrower; Perry Johnson, Jr.; Ellen Mason, Plaintiffs-Appellees.

          Argued and Submitted October 18, 2017 San Francisco, California

          Appeal from the United States District Court for the Northern District of California William Alsup, District Judge, Presiding D.C. Nos. 3:15-cv-05362-WHA, 3:15-cv-05575-WHA

          Ben Ogletree (argued), Verdi & Ogletree PLLC, Washington, D.C., for Defendants-Appellants.

          David M. Medby (argued), Mark A. Schadrack, and Stephen M. Garcia, Garcia Artigliere & Medby, Long Beach, California, for Plaintiffs-Appellees.

          Before: Michael Daly Hawkins, William A. Fletcher, and Richard C. Tallman, Circuit Judges.

         SUMMARY[*]

         Remand / Removal

         The panel affirmed the district court's order remanding a case that GranCare LLC had removed to federal court and awarding costs and attorney's fees pursuant to 28 U.S.C. § 1447(c), after finding that GranCare administrator Remy Rhodes was not fraudulently joined as a party in order to defeat diversity and that removal to federal court was objectively unreasonable.

         The heirs of Ruth Thrower filed suit in California state court, naming as defendants GranCare, and a GranCare administrator, Remy Rhoades. GranCare removed to federal court even though the named parties were not completely diverse. The district court granted Thrower's heirs' motion to remand, and awarded them costs and attorneys' fees.

         The panel first addressed GranCare's argument that the award was improper because the district court's remand order was legally incorrect. The panel rejected GranCare's argument that the district court applied an incorrect standard for fraudulent joinder. The panel held that the fraudulent joinder standard shared some similarities with the analysis under Fed.R.Civ.P. 12(b)(6), but the tests for fraudulent joinder and failure to state a claim were not equivalent. The panel further held that if a plaintiff's complaint could withstand a Rule 12(b)(6) motion with respect to a particular defendant, that defendant had not been fraudulently joined; but the reverse was not true, and if a defendant could not withstand a Rule 12(b)(6) motion, the fraudulent joinder inquiry did not end there. The panel concluded that Thrower's heirs had shown a possibility of recovery against Rhodes. Specifically, the panel held that Thrower's heirs had shown a colorable claim against Rhodes under California's Elder Abuse and Dependent Adult Civil Protection Act, as well as a colorable negligence per se claim.

         The panel next addressed GranCare's argument that even if incorrect, removal was objectively reasonable, and the award was improper. Costs and attorneys' fees may be awarded against GranCare if its decision to remove was objectively unreasonable. The panel held that GranCare's reliance on a district court's order in Johnson v. GranCare LLC, No. 15-CV-03585-RS, 2015 WL 6865876 (N.D. Cal. Nov. 9, 2015) (determining that Rhodes was a fraudulently joined defendant), was unreasonable due to clear factual distinctions between the cases. The panel held that, unlike the complaint in Johnson, the complaint in this case contained detailed allegations against Rhodes, and it was obvious that GranCare would not have been entitled to removal in this case even if the Johnson standard had been applied.

         The panel concluded that the district court's award of costs and attorneys' fees was not premised on an erroneous view of the law or a clearly erroneous assessment of the evidence.

          OPINION

          W. FLETCHER, Circuit Judge:

         Defendant-Appellant GranCare LLC ("GranCare") removed a diversity case to federal court, arguing that the sole non-diverse defendant, nursing home administrator Remy Rhodes, was fraudulently joined as a defendant in order to defeat diversity and prevent removal. The district court remanded the case and awarded costs and attorney's fees to Plaintiffs pursuant to 28 U.S.C. § 1447(c) after finding that Rhodes was not fraudulently joined and that removal was objectively unreasonable. GranCare appeals the award, arguing that the district court applied an ...


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