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Doe v. Salesforce.Com, Inc.

United States District Court, S.D. Texas, Houston Division

July 18, 2019

JANE DOE #4, Plaintiff,



         Plaintiff Jane Doe # 4 ("Plaintiff" or "Jane Doe") sued defendants Sales, Inc. ("Sales force"); Michael Lacey; James Larkin; John Brunst; Scott Spear; Medalist Holdings, LLC; Leeward Holdings, LLC;[1] G6 Hospitality, LLC ("G6"); and NNJP, LLC[2](collectively, "Defendants") in the 157th Judicial District Court of Harris County, Texas (the "State Court"). Salesforce removed the action on May 3, 2019.[3] Pending before the court is Jane Doe's Motion to Remand ("Plaintiff's Motion to Remand") (Docket Entry No. 26). For the reasons explained below, Plaintiff's Motion to Remand will be granted.

         I. Factual and Procedural Background

         Jane Doe claims that Defendants are responsible in varying capacities for the exploitation she experienced as a victim of sex trafficking.[4] Jane Doe alleges that she was sexually exploited through ads on a website called "Backpage."[5] Traffickers, pimps, and johns use Backpage to communicate with one another.[6] Jane Doe alleges that the Backpage Defendants collaborated with her sexual traffickers and sought to financially benefit from the trafficking venture by knowingly permitting traffickers to transact business on their website.[7] Salesforce licensed customer relationship management ("CRM") software to Backpage.[8] Salesforce markets its CRM software as designed to help users find new customers and grow their businesses.[9] Jane Doe's claims against Salesforce are based on Salesforce's alleged failure to monitor how Backpage was using its CRM software .[10] Salesforce and the Backpage Defendants are diverse from Jane Doe.[11]

         Jane Doe's Petition also asserts claims against the non-diverse Hotel Defendants. Jane Doe alleges that she was sexually assaulted at a Motel 6 owned and operated by the Hotel Defendants.[12]Jane Doe alleges that the Hotel Defendants knowingly participated in her trafficking through the operation of their hotel. [13] For example, she alleges that the Hotel Defendants failed to properly train their employees, failed to install adequate lighting and security cameras, and knowingly catered to the needs of sex traffickers.[14]

         Jane Doe alleges that Salesforce, the Backpage Defendants, and the Hotel Defendants were part of a single human trafficking venture under Texas law.[15] Jane Doe filed this action in the State Court on February 27, 2018 .[16] Plaintiff amended her Original Petition to add claims against Salesforce on April 3, 2019.[17]Salesforce timely removed the action to this court on May 3, 2019, arguing that the court has diversity jurisdiction over this action because the Hotel Defendants were fraudulently misjoined by Plaintiff .[18] Plaintiff moved to remand the action on June 2, 2019 .[19]Salesforce and G6 filed responses on June 24, 2019.[20] Plaintiff replied on July 1, 2019.[21]

         II. Removal Standard

         "A party may remove an action from state court to federal court if the action is one over which the federal court possesses subject matter jurisdiction." Manguno v. Prudential Property and Casualty Insurance Co., 276 F.3d 720, 723 (5th Cir. 2002) (citing 28 U.S.C. § 1441 (a)) . "The party seeking to assert federal jurisdiction, in this case [Salesforce], has the burden of proving by a preponderance of the evidence that subject matter jurisdiction exists." New Orleans & Gulf Coast Railway Co. v. Barrois, 533 F.3d 321, 327 (5th Cir. 2008). Ambiguities or doubts are to be construed against removal and in favor of remand. Manguno, 276 F.3d at 723.

         III. Fraudulent Misjoinder Analysis

         Fraudulent misjoinder is a concept developed by the Eleventh Circuit in Tapscott v. MS Dealer Service Corporation, 77 F.3d 1353, 1360 (11th Cir. 1996), abrogated in part on other grounds by Cohen v. Office Depot, Inc., 204 F.3d 1069 (11th Cir. 2000). Fraudulent misjoinder is to be applied only in limited circumstances when failure to abide by applicable joinder requirements is "just as fraudulent as the joinder of a resident defendant against whom a plaintiff has no possible cause of action." See Texas Instruments Inc. v. Citigroup Global Markets, Inc., 266 F.R.D. 143, 147 (N.D. Tex. 2010) (citing Tapscott, 77 F.3d at 1360). "The Fifth Circuit has not directly applied the fraudulent-misjoinder theory, but it has cited Tapscott with approval and has acknowledged that fraudulent misjoinder of either defendants or plaintiffs is not permissible to circumvent diversity jurisdiction." Centaurus Unity LP v. Lexington Insurance Company, 766 F.Supp.2d 780, 789 (S.D. Tex. 2011) (citing In re Benjamin Moore & Co., 318 F.3d 626, 630-31 (5th Cir. 2002)).

         Tapscott's fraudulent-misjoinder analysis is two-fold: (1) has one defendant been misjoined with another defendant in violation of the applicable joinder rules;[22] and (2) if so, is the misjoinder sufficiently egregious to rise to the level of fraudulent misjoinder.[23] Id. Texas Rule of Civil Procedure 40(a) states that claims against multiple defendants may be joined in one action if (1) "there is asserted against them jointly, severally, or in the alternative any right to relief in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences"; and (2) at least one "question of law or fact common to all of [the defendants] will arise in the action." Tex R. Civ. P. 40 (a).

         Salesforce argues that the court has diversity jurisdiction over this action because the non-diverse Hotel Defendants were fraudulently misjoined. Jane Doe argues that the Hotel Defendants are properly joined because (1) her claims against all Defendants arise from injuries she sustained as a result of her victimization by a single sex trafficking venture and (2) common questions of law and fact will arise in resolving her claims against Defendants.

         The court concludes that Jane Doe's joinder of the Hotel Defendants did not violate Texas's joinder rules. Jane Doe's claims against the Hotel Defendants, Salesforce, and the Backpage Defendants arise from the same transaction or series of transactions -- an alleged sex trafficking venture[24] in which traffickers were permitted to use Backpage, which utilized Salesforce's CRM technology, to solicit johns to abuse Jane Doe in hotels owned and operated by the Hotel Defendants. Jane Doe alleges that Defendants are each responsible in different ways for the sexual exploitation she faced as a victim of that venture. Jane Doe pled the same or similar legal claims against Salesforce, the Hotel Defendants, and the Backpage Defendants;[25] and it is likely that at least one of those claims will raise common questions of law and fact. Specifically, Jane Doe claims that Defendants' actions "taken separately and/or together," violated Texas Civil Practice and Remedies Code § 98.002, which allows a victim of sex trafficking to hold defendants who "engage[d] in the trafficking" or "intentionally or knowingly benefit [ted] from participating in a venture that traffic[ed]" the victim liable for damages. See Tex. Civ. Prac. & Rem. Code § 98.002. Jane Doe's § 98.002 claims against the Hotel Defendants, the Backpage Defendants, and Salesforce are likely to raise such common questions of fact as whether a single trafficking venture involving all of Defendants existed, the extent of each defendant's knowledge of the venture's existence and awareness of the other defendants' participation in it, and what damages Jane Doe sustained.

         Alternatively, even if Texas joinder requirements were not satisfied, Salesforce has failed to persuade the court that Plaintiff's joinder of the Hotel Defendants is so egregious as to be fraudulent. A survey of fraudulent misjoinder cases conducted by the Northern District of Texas recognized three situations in ...

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