Products Liability Law Daily Wrap Up, JURISDICTION—MOTOR VEHICLES—C.D. Cal.: Claimant’s attempt to remand products liability action to state court fails where one of the defendants was fraudulently joined, (Feb 5, 2026)

By Nicholas Kaster, J.D.

The court was unaware of any cases holding a retailer's former employee liable for transactions made after his employment ended.

A federal district court in California has denied a claimant’s motion to remand his products liability action against Mercedes Benz to state court, finding that one of the defendants in the suit was fraudulently joined. The defendant in question, the general manager of the dealership from which the claimant leased a car that was later involved in an accident, stopped working at the dealership months before the alleged recall that formed the basis of the claimant’s allegations and several months before the claimant leased his car. The court thus found that any claim against the general manager for products liability was “fanciful.” Discounting that defendant’s citizenship, the court held that diversity jurisdiction was satisfied (Rahimnejad v. Mercedes Benz USA, LLC, No. 8:25-cv-02828-FWS-ADS (C.D. Cal. Feb. 3, 2026)).

Background. The claimant, a citizen of California, leased a car from Laguna Mar, doing business as Mercedes Benz of Laguna Niguel, in November 2024. In December 2024, while driving this vehicle, the claimant alleged that he began pressing on the gas pedal when the vehicle suddenly began rapidly accelerating which caused the claimant to hit another car. The claimant maintained that he tried to brake but “the brakes were inoperable.” Therefore, the vehicle continued to rapidly accelerate through the intersection before eventually colliding with a wall.

About two months before the claimant leased the vehicle, Mercedes issued a recall on the vehicle “due to an issue” caused by “improper welds, which could lead to a loss of vehicle control.” The recall condition had not been repaired when the claimant leased the car. As a result of this accident, the claimant asserted two causes of action for negligent and strict products liability against Mercedes Benz, Laguna Mar, and a California resident who was allegedly the general manager of Laguna Mar.

The claimant originally filed this action in Orange County Superior Court. On December 12, 2025, Mercedes removed the case to federal court. The claimant sought to remove the products liability case to Orange County Superior Court. Mercedes-Benz USA, LLC filed an opposition to the motion.

Diversity jurisdiction. When a suit originates in state court, a defendant may remove to federal court only when the suit could have been filed in federal court originally. In civil cases, subject matter jurisdiction is generally conferred upon federal district courts either through diversity jurisdiction or federal question jurisdiction. Mercedes removed the case on the basis of diversity jurisdiction. Diversity jurisdiction requires complete diversity between the parties and the amount in controversy must exceed $75,000.

The claimant argued there was no diversity jurisdiction because he and the general manager were both citizens of California and, separately, that Mercedes failed to establish that Laguna Mar was not also a California citizen for purposes of diversity jurisdiction. Mercedes opposed remand, arguing that the general manager was fraudulently joined and his citizenship should be disregarded and that Laguna Mar was a Florida citizen for diversity purposes.

In determining whether there is complete diversity, district courts may disregard the citizenship of a non-diverse defendant who has been fraudulently joined. However, courts apply both a “strong presumption against removal jurisdiction,” and a “general presumption against fraudulent joinder.” Accordingly, a defendant invoking federal court diversity jurisdiction on the basis of fraudulent joinder bears a heavy burden of proving fraudulent joinder by “clear and convincing evidence.”

Fraudulent joinder. A defendant may establish fraudulent joinder through: (1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court. Under the second method, “if there is a possibility that a state court would find that the complaint states a cause of action against any of the resident defendants, the federal court must find that the joinder was proper and remand the case to the state court.” Defendants seeking removal based on fraudulent joinder must overcome both “the strong presumption against removal jurisdiction” and the “general presumption against fraudulent joinder.”

In this case, the court was persuaded that the general manager was a sham defendant whose citizenship should be disregarded. Mercedes submitted sufficient evidence that he stopped working at the Laguna Mar dealership in July 2024. The recall upon which the claimant based his allegations was issued in September 2024. The claimant leased his vehicle in November 2024 and was involved in the alleged crash in December 2024.

The parties did not cite, and the court said it was unaware of, a case in which an employee of a retailer was found liable on issues related to a transaction that occurred after the employee stopped working with the retailer. Given that the general manager left the dealership months before the alleged recall, and several months more before the claimant leased his car, the court found that any claim against the general manager for products liability was “fanciful.”

The claimant speculated that “it is unknown what inspection, recall-tracking, or vehicle-release protocols were in place during” the general manager’s tenure, when the vehicle was received by the dealership, when the dealership was notified of the recall, or what managerial policies governed pre-delivery inspections and recall compliance. But the claimant made no argument tying these “unknowns” into the elements of a claim against the general manager. Although the burden to show fraudulent joinder is heavy, the court concluded that Mercedes met its burden to show that the general manager was fraudulently joined and therefore discounted his citizenship for purposes of assessing diversity of parties.

Because Laguna Mar is a limited liability company, its citizenship is determined by the citizenship of its members. Here, Mercedes submitted evidence which established that Laguna Mar’s sole member is a Florida resident. Because the record established that Laguna Mar’s sole member resides in Florida, without evidence to the contrary, the court found that Mercedes adequately established that Laguna Mar was diverse from the claimant. Thus, the court found that complete diversity existed between the parties and that diversity jurisdiction was satisfied. Accordingly, the court denied the claimant’s motion to remand the case.

The case is No. 8:25-cv-02828-FWS-ADS.

Judge: Slaughter, F.

Attorneys: Faud Haghighi (Law Offices of Faud Haghighi) for Morteza Rahimnejad. Ruben Till Hackstein (Squire Patton Boggs US LLP) for Mercedes Benz USA, LLC and Mercedes-Benz of Laguna Niguel f/k/a Doe 2.

Companies: Mercedes Benz USA, LLC; Mercedes-Benz of Laguna Niguel; Murgado Automotive Group, Inc.

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