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Carolyn Chin v. Hill Companies

September 28, 2012


The opinion of the court was delivered by: Hon. Harold Baer, Jr., District Judge:


Carolyn Chin ("Plaintiff") brought this discrimination and retaliation action in New York state court pursuant to the New York City Human Rights Law ("NYCHRL"), N.Y.C. Admin. Code § 8-101 et seq., and against defendants CH2M Hill Companies, Ltd. ("LTD"), CH2M Hill, Inc. ("INC"), and Lee McIntire (collectively, "Defendants"). Defendants removed the case to federal court based on diversity jurisdiction. Defendants argue that INC, whose presence in this suit destroys complete diversity, is fraudulently joined as a defendant. Plaintiff now moves to remand the case back to state court arguing that INC is properly named in this suit. For the following reasons, Plaintiff's motion to remand is GRANTED.


Plaintiff served as an independent director on LTD's board of directors from 2003 until 2009, when her term concluded and she was not nominated for re-election. Compl. ¶ 2. On February 14, 2012, Plaintiff filed a complaint in New York Supreme Court. Id. ¶ 1. Plaintiff alleges that she was not re-nominated to LTD's board of directors because Defendants discriminated against her on the basis of her sex, race, and disability and because Plaintiff had complained of gender discrimination in connection with a female employee whose employment had been terminated. Compl. ¶ 7. Plaintiff discussed that termination with defendant McIntire, and she believes it was as a result of that conversation and her support for the employee that she was not re-nominated to the board.

Defendants removed the case on May 21, 2012. It is undisputed that both Plaintiff and INC are citizens of Florida for jurisdictional purposes and that this destroys complete diversity if INC is indeed properly named in this suit.*fn1 Defendants argue "that although Plaintiff and INC are citizens of the same state[,] . . . complete diversity is present because INC was fraudulently joined and therefore should not be considered for purposes of determining diversity jurisdiction." Def.'s Opp'n 3. Plaintiff moved to remand on June 26, 2012, arguing that INC was not fraudulently joined, and thus the Court lacks subject-matter jurisdiction. Pl.'s Supp. 11.


The moving party claiming fraudulent joinder in the Second Circuit "bears a heavy burden." Pampillonia v. RJR Nabisco, Inc., 138 F.3d 459, 461 (2d Cir. 1998). Defendants must demonstrate, by clear and convincing evidence, either that there has been outright fraud committed in the plaintiff's pleadings, or that there is no possibility, based on the pleadings, that a plaintiff can state a cause of action against the non-diverse defendant in state court.

Id. In addition to this heavy burden of proof born by Defendants, all factual and legal ambiguities are on such a motion resolved in favor of Plaintiff. Briarpatch Ltd., L.P v. Phoenix Pictures, Inc., 373 F.3d 296, 302 (2d Cir. 2004).

There is no indication here that Plaintiff intended to defeat diversity jurisdiction by naming INC. Instead, the Defendants raise two principal arguments for why there is no possibility that Plaintiff can state a cause of action against INC in state court: (1) No action by INC is alleged in the complaint (and only LTD could have taken action against her as a director); and (2) the New York City Human Rights Law ("NYCHRL") does not reach INC because INC has no connection to New York City and New York City cannot regulate the internal affairs of a foreign corporation, and outside directors are not covered by the NYCHRL.


The parties dispute which defendant is the subject of each of Plaintiff's specific allegations of discrimination and retaliation. Plaintiff unfortunately lumps INC and LTD together and treats them as one: "The Headquarters of CH2M Hill Companies, Ltd. and CH2M HILL INC [sic] (collectively referred to as 'CH2') is in Denver, Colorado." Compl. ¶ 3. This mistake, however, is understandable given that representations made to the outside world by the CH2M companies treats the CH2M entities as one. See Pl.'s Supp. 4--5 (citing declarations and noting that LTD and INC and other subsidiaries are referred to by the CH2M entities as an "enterprise" or a "global organization", "share the same legal team and the same human resources", fail to distinguish between the entities on officers' letterheads, and refer to McIntire as having "the operations and leadership responsibility for the CH2M HILL enterprise"). But because certain actions may have been taken only by LTD, such as nominating Plaintiff to serve on LTD's board, the complaint makes sense only if certain of the collective references to "CH2" are understood to be an action solely by LTD or INC. Plaintiff points the Court to several actions by INC that she says are supported by the allegations in the complaint-such as the source of payments for Plaintiff's service on the board-references which Defendants argue are either demonstrably erroneous or impossible.

I decline the parties' invitation to sort out said discrepancies. The issue as I see it is simply whether Plaintiff has defeated Defendants' "right of removal by merely joining as defendants parties with no real connection with the controversy." Pampillonia, 138 F.3d at 460-- 61 (2d Cir. 1998) (citations omitted).

To start with, INC is not merely a nominal party. INC's principal place of business and mailing address are in Colorado, the same as LTD. Paparella Decl. Ex. L. There are members of the LTD board of directors who are employees or directors of INC. Chin Decl. ¶ 11; Rimas Decl. ¶ 7. There is overlap in the legal counsel, Chin Decl. ¶ 12, and perhaps in the human resources department, Pl.'s Supp. 5. Most importantly, one of the underlying bases for this action is the complaint of discriminatory treatment of a high-level employee of INC and the resultant response by Defendants. It is no coincidence that Plaintiff named INC as a defendant, "one of approximately ten wholly owned, direct subsidiaries of [LTD]", Madia Decl. ¶ 9. It is a coincidence, albeit a fortuitous one for Plaintiff, that INC happens to be a citizen of Florida, but this hardly supports the Defendants' contention that they are a victim of an attempt by Plaintiff to name as a defendant a citizen without a real connection to this case. As will be discussed below, it is too narrow a view, on this motion at least, to construe Plaintiff's case as one only for a failure to nominate her to the board of LTD. Plaintiff ...

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