Employers who are sued in state court by employees may obtain significant advantages in the litigation by removing the lawsuit from state court to federal court. For instance, federal courts require a unanimous jury verdict (instead of a supermajority verdict), and jurors in federal court are often drawn from pools that demographically are more conservative and less tolerant of high awards of damages in civil actions. However, not all cases can be removed to federal court, and certain circumstances must be present to execute such a maneuver. A common basis for removal known as “diversity jurisdiction” may exist if the employee is a California resident and the employer is incorporated and headquartered in a different state (even though the employer does business or has operations in California).
Until very recently there was some reason to think that “diversity jurisdiction” would not permit removal if the lawsuit was filed on behalf of the employee by the California Department of Fair Employment and Housing (“DFEH”). That perception changed drastically on April 26, 2011, when the U.S. Court of Appeals for the Ninth Circuit ruled, in a split decision, that the “DFEH is [not] a real party in the controversy for the purposes of diversity jurisdiction.” Simply put, where the DFEH files a lawsuit on behalf of a California employee against an employer that is incorporated and headquartered in another state, the employer may be able to remove the case to federal court under the Ninth Circuit’s decision in DFEH v. Lucent Technologies, Inc., Case Nos. 09-15057 and 09-15060.
There is a very short timeframe in which an employer may remove such a lawsuit to federal court once the basis for “diversity jurisdiction” becomes apparent. It is possible that the publication of the opinion in DFEH v. Lucent Technologies, Inc., started that 30-day clock ticking for cases that have already been filed by the DFEH against out-of-state corporations. Employers who are sued by the DFEH should explore the risks and benefits of removal with their legal counsel at the earliest opportunity.