Ninth Circuit Affirms Order to Remand Removal of Diversity Case; Garcia Artigliere & Medby Successfully Represents Plaintiff

San Francisco, Calif. – On April 26, 2018, the U.S. Court of Appeals for the Ninth Circuit affirmed the U.S. District Court for the Northern District of California’s order remanding a case and awarding costs and attorney’s fees in which Defendant-Appellant GranCare LLC (“GranCare”), a nursing operator, 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 decision was in favor of Plaintiff Ruth Thrower, et al. after finding that Rhodes was not fraudulently joined and that removal was objectively unreasonable pursuant to 28 U.S.C. § 1447(c).

Garcia & Artigliere attorneys Stephen Garcia and David Medby successfully represented Thrower in GranCare, et al v. Ruth Thrower, et al.

“The Ninth Circuit’s decision clearly establishes that knowingly false premises asserted by attorneys who would deny an elder adult justice as to those who abuse our elders is unacceptable,” said Attorney Stephen Garcia. “Secondly, and equally importantly, the Ninth Circuit has now confirmed the opinion of the California Court of Appeal in Fenimore v. Regents of the Univ. of Cal. (2016) 245 Cal.App.4th 1339, once again affirming that a long term care facility which exhibits ‘systemic understaffing’ may be held liable for recklessness pursuant to the Elder Abuse and Dependent Adult Civil Protection Act. Moreover, the Ninth Circuit opinion confirms what was long clear to our firm, yet which defendants have argued to the contrary in reliance on a completely erroneous interpretation of the opinion in Winn v. Pioneer Medical Group, Inc. (2016) 63 Cal.App.4th 148, and that is that a skilled nursing facility administrator is a ‘care custodian’ within the meaning of Welfare & Institutions Code § 15610.57, finally putting to bed what we have long maintained to be a spurious contention of the defense. And finally, the opinion will hopefully put to an end the unfortunate tactic of those who would abuse our elder and dependent adults of improperly attempting to delay the day of justice in courts in the State of California, and elsewhere, by frivolous removals to federal court. This opinion is a strong and important opinion which supports our efforts to ensure justice and the health and safety of elder and infirm adults, the guiding goal and focus of our law firm for over two and a half decades.”

Allegations and Background

Thrower died on July 30, 2015, after a stay at a nursing facility operated by GranCare. On September 14, 2015, Thrower’s estate and her heirs filed suit in California state court naming as defendants, among others, GranCare and a GranCare administrator, Remy Rhodes. The complaint alleged that Thrower suffered a fall while residing at the facility, which could have been prevented by the adoption of an adequate care plan, and that GranCare staff delayed sending Thrower to a hospital for treatment. The complaint alleged elder abuse, negligence, negligent hiring and supervision, and wrongful death, and an additional claim against GranCare for fraud.

On December 7, 2015, defendants removed the case to federal court, even though the named parties were not completely diverse; Thrower’s heirs and defendant Rhodes are all California citizens. The remaining defendants contended that Rhodes is a sham defendant who was fraudulently joined to the lawsuit for the purpose of defeating diversity. They also contended that the complaint was “devoid of allegations that Defendant Rhodes herself committed any specific wrongdoing” and failed to “ascrib[e] any particular act or omission by Rhodes.” Finally, they contended that Rhodes, as a non-clinician administrator, owed no duty of care to Thrower under California law.

Defendants relied on a district court order in Johnson v. Grancare LLC, No. 15-CV-03585-RS, 2015 WL 6865876 (N.D. Cal. Nov. 9, 2015) as supporting removal. In Johnson, the heirs of a different resident who died at a GranCare facility sued the same set of defendants in California state court for elder abuse. Id. at 1. As in this case, defendants removed to federal court on the basis of diversity, asserting that Rhodes had been fraudulently joined. Id. The district court in Johnson concluded that “[t]he standard for determining whether a defendant is fraudulently joined is similar to that of a 12(b)(6) motion to dismiss.” Id. at 2. Under that standard, the court held that the complaint failed to plead viable claims against Rhodes and denied plaintiffs’ motion to remand. GranCare argued in the district court that the reasoning and result in the Johnson order compelled the same outcome in this case because plaintiffs “[did] not plead a viable cause of action against Rhodes.” At a hearing in this case, GranCare conceded that there was “some possibility, if plaintiff[s] properly pleaded such,” that Thrower’s heirs could state a cause of action against Rhodes, but GranCare emphasized that the complaint contained “no allegations” against her.

The district court granted plaintiffs’ motion to remand. In the court’s view, Johnson improperly conflated the test for fraudulent joinder with the test under Rule 12(b)(6). The court observed that no appellate decision has “explicitly established how [the] standard [for fraudulent joinder] interacts with the ‘plausibility’ standard used in evaluating motions to dismiss under Rule 12(b)(6),” but concluded that fraudulent joinder should not be found if there is “any possibility” that a plaintiff could state a claim against the defendant, even if the complaint actually fails to state a claim. Applying this standard, the district court remanded. The district court granted plaintiffs’ request for costs and attorney’s fees after finding that removal was “patently unreasonable.”