Unreported / Non-Citable
Background
On July 30, 2026, plaintiff Albert Ybarra filed an employment action in Santa Clara County Superior Court against Linde Gas & Equipment, Inc. (“Linde”), Steven Chicca, and Mark Scott, asserting California state-law claims including fraud in the inducement, intentional infliction of emotional distress, retaliation, wrongful termination, and violations of California Labor Code §§ 98.6, 1102.65, and 1198.5.
Linde removed the action to federal court on August 21, 2026, asserting diversity jurisdiction under 28 U.S.C. § 1332(a).
Linde’s notice of removal stated that Ybarra is a California resident, Linde is a Delaware corporation with its principal place of business in Danbury, Connecticut, the amount in controversy exceeds $75,000, and removal was timely.
However, Linde’s removal notice did not address the citizenship of defendants Chicca and Scott, nor did it provide any basis for disregarding their citizenship for diversity purposes.
The reviewing court therefore addressed the dispute in the posture described above, applying the governing standard to the existing record rather than deciding questions the opinion expressly reserved.
The Court’s Holding
The court issued an order to show cause requiring Linde to clarify its assertion of diversity jurisdiction by October 23, 2026.
The court noted that complete diversity requires consideration of all named parties’ citizenship, and the forum defendant rule under 28 U.S.C. § 1441(b)(2) applies only to cases “otherwise removable solely on the basis of” diversity jurisdiction—meaning complete diversity must exist as a foundational matter before the forum defendant rule becomes relevant.
Citing Ninth Circuit precedent (Lively v.
Wild Oats Mkts., Inc., 456 F.3d 933, 939 (9th Cir. 2006)) and district court decisions (Colbert v.
Tesla, Inc.; Fityan v.
World Courier, Inc.; Doe v.
Mitchell), the court emphasized that the forum defendant rule is separate from the statute conferring diversity jurisdiction and cannot cure a lack of complete diversity.
The court expressly declined to rule on whether diversity jurisdiction exists or is lacking for other reasons.
This was an order to show cause, not a remand order.
Linde was required to file a clarifying jurisdictional statement by October 23, 2026.
The court expressly left open whether diversity jurisdiction exists or is lacking for other reasons, so the case’s federal forum remained unresolved when the order issued.
Key Takeaways
- The court has a continuing obligation to ensure subject matter jurisdiction under Fed. R. Civ. P. 12(h)(3).
- Complete diversity must exist among all named parties for diversity jurisdiction; the citizenship of non-diverse defendants cannot be disregarded without justification.
- The forum defendant rule (28 U.S.C. § 1441(b)(2)) is an additional limitation on removal, not a substitute for complete diversity—it applies only when the case is “otherwise removable solely on the basis of” diversity jurisdiction.
- Linde must file a statement by October 23, 2026, clarifying the citizenship of defendants Chicca and Scott and explaining why their citizenship does not defeat diversity.
- The court made no determination on the ultimate existence of diversity jurisdiction, leaving that question open pending Linde’s response.
Why It Matters
This order underscores the court’s independent duty to police subject matter jurisdiction in removed cases.
It clarifies that the forum defendant rule does not relax the complete diversity requirement but operates as a separate barrier to removal even when complete diversity exists.
The ruling aligns with Ninth Circuit precedent holding that diversity is determined from the citizenship of all named parties, not merely those served.
The case remains in federal court pending Linde’s response, but remand is a likely outcome if Chicca and Scott are California citizens and no other basis for federal jurisdiction exists.
For practitioners, the limits of the disposition are as important as its result: the decision controls the identified issue and posture, while leaving reserved questions and further proceedings to the tribunal handling the case.