MEMORANDUM **

Essie Evans appeals (1) the district court’s denial of her motion, under 28 U.S.C. § 1447(c), to remand to state court her action against the California State Employees Association (“CSEA”) and Mutual of Omaha Insurance Company; and (2) the Fed.R.Civ.P. 12(b)(6) dismissals of her claims against CSEA and Mutual of Omaha. We review the district court’s denial of a motion to remand a removed case de novo. Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1315 (9th Cir. 1998). We reverse and remand with instructions to vacate the 12(b)(6) dismissals and to remand the matter to state court for lack of diversity.

On the face of the complaint, complete diversity does not exist because Essie and CSEA are both residents of California. 28 U.S.C. § 1332. “Fraudulently joined” defendants, however, will not defeat removal on diversity grounds. McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). “Fraudulent joinder is a term of art. If the plaintiff fails to state a cause of action against a resident defendant, and the failure is obvious according to the set-tied rules of the state, the joinder of the resident defendant is fraudulent.” Id.

Here, CSEA cannot be said to be a “sham defendant” because Essie’s claim against it is not an obvious failure. CSEA possibly has a good statute of limitations defense, but that defense is not so obvious as to make CSEA a “sham defendant.”

Consequently, the district court was without jurisdiction to grant CSEA’s and Mutual of Omaha’s 12(b)(6) motions. The district court is instructed to vacate the 12(b)(6) dismissals of both actions and is instructed to remand the matter to state court for lack of diversity.

REVERSED AND REMANDED.