Unreported / Non-Citable
Background
Michael and Solina Walton sued in Marin County Superior Court on June 22, 2026. The defendants include PG Acquisition II LLC and Perfect Timing Personnel Services, Inc. Defendants removed on August 31, 2026, invoking diversity jurisdiction under 28 U.S.C. § 1332. It was uncontested that Perfect Timing shares California citizenship with plaintiffs, so complete diversity was missing. Plaintiffs timely moved to remand and sought the attorney fees they incurred because of removal. Both sides had consented to magistrate judge jurisdiction.
Defendants, who bore the burden of establishing federal jurisdiction, argued that Perfect Timing's California citizenship should be disregarded under two exceptions. Their notice of removal asserted fraudulent joinder, contending that plaintiffs' contract claims against Perfect Timing arose from a contract with a trust, and that under California law a trust is not a legal entity that can contract or sue and be sued. Their opposition to remand instead emphasized the nominal party exception, arguing that Perfect Timing was a secondary actor against whom the allegations were not substantial. Plaintiffs are the trustees of the trust at issue, and their complaint asserts breach of contract and declaratory relief claims against Perfect Timing and seeks damages from it.
The Court’s Holding
The court granted the motion to remand. On fraudulent joinder, it explained that a defendant carries a heavy burden because of the general presumption against finding fraudulent joinder, and that the possibility that a state court would find the pleadings state a cause of action against the joined party is enough to return the case to state court. Trustees may transact business and litigate on behalf of a trust's property, citing Moeller v. Superior Court, and plaintiffs here are the trustees. That created more than a possibility of a viable claim against Perfect Timing. The court also noted that defendants' opposition did not substantially address this exception.
On the nominal party exception, the court held that the question is whether a party is a real party to the controversy, not how prominently it appears in the complaint or whether it is a secondary actor. Nominal parties have no interest in the action and are joined merely to perform a ministerial act. Because plaintiffs assert contract and declaratory relief claims against Perfect Timing and seek damages from it, the pleadings did not come close to showing that it has no interest.
The court granted fees in part under § 1447(c), concluding that the weakness of both removal theories and defendants' prompt abandonment of the first showed no objectively reasonable basis for removal. It found counsel's $650 hourly rate reasonable but the claimed 19.3 hours excessive, because the issues were not complicated and counsel offered only a generalized statement of hours without task-level documentation. It found six hours reasonable, awarded $3,900, and remanded to Marin County Superior Court. The merits of the underlying claims were not decided.
Key Takeaways
- A defendant seeking to disregard a non-diverse party's citizenship bears the burden of proving an exception, and the Ninth Circuit construes the removal statute strictly against federal jurisdiction.
- Fraudulent joinder fails if a state court could possibly find a viable claim against the non-diverse defendant, and plaintiffs' status as trustees supplied that possibility here.
- The nominal party exception asks whether the party is a real party to the controversy, so a defendant facing contract and declaratory claims and a damages demand is not nominal merely because it is a secondary actor.
- Fees under § 1447(c) turn on whether removal lacked an objectively reasonable basis, and courts may cut claimed hours that are excessive or poorly documented.
Why It Matters
This is an unreported district court order by a magistrate judge sitting by consent, so it carries persuasive weight only. It applies settled Ninth Circuit principles in a recurring setting, where a removing defendant tries to avoid a non-diverse co-defendant. It shows how thinly supported fraudulent joinder and nominal party theories fare, and that quickly abandoning one removal theory can help support a finding that removal lacked an objectively reasonable basis.
The order also shows fee discipline: the court accepted the hourly rate but cut the hours by about two-thirds, relying on comparable reductions in other Northern District decisions. The ruling resolves only the forum, and the merits return to state court.