United States District Court, D. Maryland, Southern Division
J. HAZEL UNITED STATES DISTRICT JUDGE.
action is brought by Plaintiff Melissa Allen against
Defendants RBC Capital Markets, LLC (“RBC”),
Warren Bischoff, and John Gerold alleging various violations
of Maryland law. Plaintiff filed this action in the Circuit
Court for Montgomery County, Maryland. ECF No. 1-7. RBC
timely filed a Notice of Removal and a Motion to Dismiss. ECF
Nos. 1, 12. Plaintiff filed a Motion to Remand, contending
that the Court lacks subject-matter jurisdiction over her
claims, and that removal was therefore improper. ECF No. 9.
No hearing is necessary. See Loc. R. 105.6 (D. Md.
2018). For the following reasons, Plaintiff's Motion to
Remand, ECF No. 9, is granted.
is a Chinese-American woman who worked for Defendant RBC in
Chevy Chase, Maryland. ECF No. 1-7 ¶¶ 10-11. Her
first line supervisor was Defendant John Gerold, Managing
Director-Financial Advisor, and her second line supervisor
was Defendant Warren Bischoff, Senior Managing
Director-Complex Director. Id. ¶¶ 6-7.
2018, Defendant Gerold met with a client to recommend some
changes to his portfolio. Id. ¶ 17. At that
meeting, the client asked for communications to be sent to
his AOL email account, rather than his Gmail email account.
Id. On July 25, 2018, the client sent an email from
his Gmail account agreeing to the recommended changes and
reiterating that future correspondence should be sent to his
AOL email account. Id. ¶ 18. Defendant Gerold
called the client to confirm the changes to the account-a
call that Plaintiff overheard. Id. ¶ 19. The
following day, Defendant Gerold forwarded an email to
Plaintiff from the client's AOL email address stating
that he wanted $98, 625 sent from his RBC investment account
to his checking account. Id. ¶ 20. Gerold
directed Plaintiff to execute this transaction. Id.
He did not ask Plaintiff to contact the client to confirm the
transaction. Id. Unbeknownst to any of the parties,
this email actually came from a hacker posing as the client.
Id. ¶ 22.
and other RBC staff proceeded to begin executing the
transaction. The hacker sent routing information for a new
banking account at Bank of America to Plaintiff, who reported
it to Gerold during a morning meeting on July 27, 2018.
Id. ¶ 24. RBC's compliance department
initially rejected the transfer request because the
client's wife was a joint account holder and had not
signed the form. Id. ¶ 25. When Plaintiff
reached out to get her signature, the hacker-posing as the
client-said she was unavailable. Id. The compliance
department decided to approve the transfer, and Plaintiff
once more informed Gerold of the proceedings involving the
transfer. Id. ¶¶ 25-26. Another member of
the RBC team, after realizing there were insufficient funds
to complete the transfer, placed an order to sell stocks in
the client's portfolio to raise the funds. Id.
¶ 27. That team member did not call the client to
confirm the sale but certified on the transfer form that he
had done so. Id.
the account had sufficient funds to cover the transfer,
Plaintiff submitted the wire transfer form and checked the
box “Spoke with Client to Confirm” as, Plaintiff
alleges, was standard practice when the managing team member
said that they had already done so. Id. ¶ 28.
Plaintiff alleges that RBC management, including Defendants
Bischoff and Gerold, “frequently instructed [Plaintiff]
and other employees to (1) skip confirming instructions with
clients, (2) enter notations that Gerold had spoken with the
client when he had not done so, (3) log into the RBC system
as Gerold to expedite trades, and (4) share passwords,
including with unauthorized personnel.” Id. .
stroke of good fortune for the client, RBC received a
rejection notice from Bank of America because the name and
account information for the ACH transfer did not match.
Id. ¶ 29. Plaintiff called the client to
determine the cause of the problem, and only then did it
become clear that the client's email account had been
compromised. Id. On August 2, Defendant Bischoff
informed Plaintiff that her employment was being terminated.
Id. ¶ 36. One day later, Bischoff texted
Katherine Paguyo and offered Paguyo Plaintiffs former
position; Paguyo declined and said she was angry with
Bischoff about Plaintiffs termination. Id. ¶
37. Bischoff replied, “Don't be mad at me. I
didn't wire $98, 000 to a hacker. I tried to save
her.” Id. RBC also disclosed on Plaintiffs U5
form, a background database for registered brokers, that
Allen was terminated for “violation of the Firm's
wire transfer policy.” Id. ¶ 38.
filed her first complaint in state court against RBC on
November 13, 2018, alleging discrimination on the basis of
race and gender, wage and hour claims, and defamation in
violation of Maryland state law. ECF No. 1-3. On December 26,
2018, she filed an amended complaint adding defamation claims
against Warren Bischoff and John Gerold. ECF No. 1-7. On the
same day, before Bischoff and Gerold had been served, RBC
filed a notice of removal to this Court. ECF No. 1. Plaintiff
has moved to remand, ECF No. 9, and Defendant has moved to
dismiss, ECF No. 12.
defendant may remove any civil action from state court to a
federal district court if the district court has original
jurisdiction over the action. 28 U.S.C. § 1441(a). The
burden is on the defendant to prove that the district court
may exercise jurisdiction. Strawn v. AT&T Mobility,
LLC, 530 F.3d 293, 296-97 (4th Cir. 2008).
“Because removal jurisdiction raises significant
federalism concerns, ” it must be strictly construed.
Mulcahey v. Columbia Organic Chems. Co., 29 F.3d
148, 151 (4th Cir. 1994). “If federal jurisdiction is
doubtful, a remand is necessary.” Id.
Defendant contends that this action was properly removed
because 28 U.S.C. § 1441(b)(2) only bars removal where
“any of the parties in interest properly joined and
served as defendants is a citizen of the State in
which such action is brought” (emphasis added). Neither
Maryland defendant had been served at the time of removal.
plain text of Section 1441(b)(2) makes clear that the statute
is not itself a source of jurisdiction; rather, it governs
the proper removal of a case where diversity jurisdiction has
already been established. Id. (“A civil action
otherwise removable solely on the basis of the jurisdiction
under section 1332(a) . . .”). The Court must still
have jurisdiction over the case. Thus, the lack of service on
the Maryland defendants does not permit removal if the
Maryland defendants destroy diversity jurisdiction.
Defendants' citation to Clawson to argue that
the lack of service is dispositive is misleading, as the
passage quoted addresses the treatment of unserved defendants
for the purpose of determining unanimous consent to removal,
not establishing diversity jurisdiction. See Clawson v.
FedEx Ground Package Sys., 451 F.Supp.2d 731, 736 (D.
Md. 2006). Indeed, Clawson explicitly states that
“[i]f [defendant] had destroyed complete diversity,
then his presence would have precluded removal whether or not
he had been served.” Id.
1332(a) gives a federal court jurisdiction over an action
where there is complete diversity of citizenship of the
parties and an amount in controversy in excess of $75, 000,
exclusive of interest and costs. All three of Plaintiff Allen
and Defendants Bischoff and Gerold are citizens of Maryland.
ECF No. 1-7 ¶¶ 4, 6, 7. But RBC, a Minnesota
corporation with its principal place of business located in
Minneapolis, Minnesota, contends that Bischoff and Gerold
have been fraudulently joined, and therefore the diversity of
citizenship between it and Plaintiff establish subject-matter
doctrine of fraudulent joinder permits a federal court to
disregard, for jurisdictional purposes, the citizenship of
non-diverse defendants.” McFadden v. Fed. Nat'l
Mortg. Ass'n, 525 Fed.Appx. 223, 227 (4th Cir.
2013). To establish fraudulent joinder, a defendant
“must show either that: (1) ‘there is no
possibility that the plaintiff would be able to establish a
cause of action' against the non-diverse party, or (2)
there has been ‘outright fraud in the plaintiff's
pleading of jurisdictional facts.'” Id.
(quoting Hartley v. CSX Transp., Inc., 187 F.3d 422,
424 (4th Cir. 1999)). RBC seeks to establish the former,
contending that the defamation allegations against Bischoff
and Gerold do not state a claim. “The party alleging
fraudulent joinder bears a heavy burden-it must show that the
plaintiff cannot establish a claim even after resolving all
issues of law and fact in the plaintiff's favor.”
Hartley, 187 F.3d at 424. Furthermore, this standard
is “even more favorable to the plaintiff than ...