Unreported / Non-Citable
Background
Anna Livingston is a resident of Burlison, Tennessee. She worked remotely from her home as a sales executive in Karl Storz Endoscopy-America’s Airway division from February 2019 to January 2024, covering a sales territory spanning Memphis, Little Rock, and Northern Mississippi. Karl Storz is a California company headquartered in El Segundo. Livingston alleged that during her remote employment she experienced discrimination, retaliation, and other adverse treatment connected to her July 2023 maternity leave, including issues with commissions, leave administration, performance communications, and vehicle reimbursement.
Livingston filed suit in Los Angeles Superior Court asserting sixteen causes of action: California FEHA discrimination, retaliation, and accommodation claims; CFRA retaliation; constructive discharge in violation of California public policy; the California Equal Pay Act; the federal Pregnancy Discrimination Act and Pregnant Workers Fairness Act; Title VII; the federal Equal Pay Act; and three Tennessee statutory claims. Karl Storz removed under federal question and diversity jurisdiction. Livingston moved to remand. Karl Storz moved to dismiss the FAC and transfer venue to the Western District of Tennessee.
The Court’s Holding
The court denied remand, denied transfer without prejudice, and granted dismissal with leave to amend.
On removal, Livingston argued the resident-defendant rule (28 U.S.C. § 1441(b)(2)) barred removal because Karl Storz is a California citizen. The court rejected that argument because the notice of removal also invoked federal question jurisdiction based on the federal Title VII, Equal Pay Act, Pregnancy Discrimination Act, and Pregnant Workers Fairness Act claims. With at least one independent federal hook, supplemental jurisdiction over the state-law claims was proper.
On dismissal, the court applied the line of California cases — Russo v. APL Marine Services, Sexton v. Spirit Airlines, Hill v. Workday — holding that FEHA, CFRA, and California common-law employment claims do not apply extraterritorially. Whether California law reaches a remote out-of-state employee turns on (1) the situs of employment (the employee’s principal place of work or definite base of operations) and (2) the situs of the material elements of the cause of action (where the conduct giving rise to liability occurred).
On situs of employment, the court found Livingston worked remotely from Tennessee, covered a Mid-South territory, and pleaded no work performed in California. Tennessee, not California, was therefore her situs of employment.
On situs of the material elements, the court found Livingston’s allegations centered on her remote employment and treatment while in Tennessee. Her general assertion that California-based decisionmakers developed or ratified the challenged policies was not enough — the FAC named only two managers (one in Illinois, one in Texas), and her opposition brief tried to introduce new California-decisionmaker allegations not in the complaint, which a plaintiff cannot do (Forrett v. Gourmet Nut). The court granted leave to amend so Livingston could plead, with specificity, who in California made what decisions.
On the motion to transfer venue, the court held that the action could have been brought in the Western District of Tennessee — federal question and diversity jurisdiction would lie there, personal jurisdiction would be proper based on Karl Storz’s significant business operations there, and venue would be proper because a “substantial part” of the alleged events occurred where Livingston resided and worked. But because the FAC was being dismissed for amendment, the court reserved ruling on the convenience-of-the-parties analysis and denied transfer without prejudice.
Key Takeaways
- FEHA, CFRA, and California common-law employment claims do not apply extraterritorially without a clear legislative statement, which California has not provided.
- The extraterritoriality test asks (1) where the employee’s situs of employment is and (2) where the material elements of the cause of action occurred — not where the employer or the employee resides.
- For remote workers, the situs of employment is typically the employee’s home state, not the employer’s headquarters.
- Generic allegations that California-based decisionmakers “developed, implemented, or ratified” challenged policies will not establish a substantial California connection without specific facts about who, what, and when.
- A plaintiff cannot use opposition briefs to raise new factual allegations not in the operative complaint (Forrett v. Gourmet Nut).
- Federal-question removal under § 1331 trumps the resident-defendant rule of § 1441(b)(2), which only applies when removal is based solely on diversity.
- Even when a court is inclined to transfer venue under § 1404(a), it may reserve the convenience analysis until the operative complaint is settled.
Why It Matters
This decision is a significant data point for the growing universe of remote-work employment litigation. As more workers reside in one state and work remotely for employers based elsewhere, the question of which state’s laws govern their employment is likely to recur. The court’s strict application of the extraterritoriality framework — situs of employment plus situs of material elements — provides a clear roadmap.
For California employers, the order is broadly protective: out-of-state remote employees generally cannot invoke FEHA or CFRA simply because their employer is based in California. For employee plaintiffs, the practical message is to plead with care — specifying the California-based decisionmakers, the California-based decisions, and the California-based meetings or communications that connect the wrongful conduct to California — or risk dismissal. For employment lawyers more generally, the case underscores the limits of extraterritorial application of state employment laws and signals that the federal courts in California will continue to apply Russo and its progeny rigorously.