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adopting FSD rule with respect to later-added defendants
Summary of this case from Piacente v. State Univeristy of Ny. at BuffaloOpinion
CAUSE NO. 1:02-cv-01848-JDT-TAB.
April 4, 2003
Robert G. McCoy, Cascino Vaughan Law Offices, Chicago, IL.
Donald J. Berger Berger James Gammage, South Bend, IN.
Kevin R. Knight, Ice Miller, Indianapolis, IN.
Dennis F. Cantrell, Bingham McHale LLP, Indianapolis, IN.
Susan Mehringer, Lewis Wagner, Indianapolis, IN.
Janet Nelson, Hume Smith Geddes Green Simmons, Indianapolis, IN.
REPORT AND RECOMMENDATION ON PLAINTIFFS' MOTION TO REMAND
Plaintiffs, who are Indiana citizens, filed an original action in state court on May 22, 2000 naming both diverse and non-diverse Defendants. In January 2001, the remaining Indiana Defendant was dismissed from the case. On September 30, 2002, after the case resided in state court for almost two and one-half years, Plaintiffs were granted leave to file a fourth amended complaint. Plaintiffs filed their complaint, and added Owens-Illinois, a diverse Defendant. On November 26, 2002, Owens-Illinois removed this action to federal court based on diversity jurisdiction. At the time of removal, no remaining Defendant was a citizen of Indiana.
Citing 28 U.S.C. § 1446(b), Plaintiffs move to remand the case to state court claiming that removal was improper because: (1) once the last Indiana Defendant was dismissed in January 2001, the thirty-day clock starting running for the remaining first-served diverse Defendant to remove the case; and (2) the case resided in state court for over one year. Defendants oppose this motion. For the reasons set forth below, the Magistrate Judge recommends that Plaintiffs' motion to remand be GRANTED.
I. Procedural History
The fourth amended complaint filed in the Howard Superior Court alleges that Clarence Graft (represented by his Administrator and surviving wife, Wanitta Graft (collectively as "Plaintiffs")), worked as a plumber and pipefitter throughout several work sites in the state of Indiana. Throughout his twenty-year career, C. Graft was exposed to asbestos fibers at various work sites. On March 30, 2000, C. Graft was diagnosed with lung cancer. [Fourth Am. Compl. ¶¶ 2-4]. Plaintiffs allege that exposure to asbestos-containing products eventually caused C. Graft's death. [Mot. to Remand, p. 2 n. 2].
On May 22, 2000, the Grafts filed an original complaint in state court. The Grafts at that time were Indiana citizens, as were three of the Defendants. On January 17, 2001, Delco Electronics Corporation, the remaining Indiana citizen Defendant, was dismissed with prejudice from the lawsuit. [Not. of Removal, Ex. B]. On September 30, 2002, the state court granted Plaintiffs' leave to file a fourth amended complaint naming Owens-Illinois, an Illinois corporation, as a Defendant for the first time. [Id.]
On November 26, 2002, within thirty days of receiving Plaintiffs' fourth amended complaint, pursuant to 28 U.S.C. § 1446(b), Defendant Owens-Illinois filed a notice of removal asserting diversity of citizenship as the sole basis for subject matter jurisdiction. All of the remaining Defendants (Alcoa, DaimlerChrysler Corporation, and Zurn Industries), consented to the removal. [Not. of Removal ¶ 6]. In response, on December 24, 2002, Plaintiffs filed a motion to remand the case to state court.
Defendants claim that the other Defendants named by Plaintiffs who did not consent to the removal petition were "fraudulently joined." [Not. of Removal, ¶ 4]. For instance, Defendants state that Delco Inc. and USI Chemical Corporation were dismissed with prejudice in on January 17, 2001 and February 6, 2001 respectively. [Not. of Removal, Ex. B, pp. 15-16]. Further, on September 16, 2002, Plaintiffs' claims against Commonwealth Edison were dismissed via summary judgment, Foster-Wheeler and Plaintiffs reached a settlement, and Anchor Packing Company filed an unopposed motion for summary judgment. [Not. of Removal, Ex. B, p. 21; ¶ 6]. However, as set forth below, whether these Defendants were fraudulently joined is immaterial, considering that the Court has granted Plaintiffs' motion to remand.
II. Discussion A. Standard on Motion to Remand
The federal courts "are courts of limited jurisdiction." United Phosphorus, Ltd. v. Angus Chemical Co., ___ F.3d ___, 2003 WL 910592, *12 (7th Cir. Mar. 10, 2003). Likewise, the right to remove an action from a state court to a federal court exists only in limited circumstances. See Roddy v. Urban League of Madison County, 2002 WL 1398534, *2 (S.D.Ind. 2002). The party invoking the Court's jurisdiction bears the burden of proving that jurisdiction exists. Alliant Energy Corp. v. Bie, 277 F.3d 916, 919 (7th Cir. 2002). See also Fate v. Buckeye State Mut. Ins. Co., 174 F. Supp. d 876, 878-79 (N.D.Ind. 2001) ("Generally, the party seeking a federal forum has the burden of establishing that jurisdiction in the federal courts is appropriate."). Courts should interpret removal statutes narrowly and presume that the plaintiff may choose his or her forum. See, e.g., Gutierrez v. Schoen Machinery USA, Inc., 2003 WL 291912, *2 (N.D.Ill. Feb. 10, 2003), citing Doe v. Allied Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993) ("We note that the removal statute is to be interpreted narrowly and that any ambiguity is to be resolved in favor of the state"). However, "any doubts regarding jurisdiction should be resolved in favor of remanding the action to state court." Thomas v. Guardsmark, Inc., 2003 WL 57028, *1 (N.D.Ill. Jan. 7, 2003).
B. The One-Year Statute of Limitations in 28 U.S.C. § 1446(b) Precludes Removal
28 U.S.C. § 1446(b) provides:
If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.
Gutierrez, 2003 WL 291912, at *1, quoting in part § 1446(b); Maglione v. Cottrell, Inc., 2000 WL 988529, *2 (N.D.Ill. 2000). Citing the one-year provision in section 1446(b), Plaintiffs claim that the case should be remanded since their case was originally filed on May 22, 2000, and Defendants removed the case on November 26, 2002, far past the one-year limitation for removal. [Mot. to Remand, pp. 3-4]. In response, Defendants contend that the filing of Plaintiffs' fourth amended complaint on September 30, 2002 was an entirely new action, and therefore started the one-year limitations period anew. [Defs.' Resp. to Mot. to Remand, pp. 3-4]. For example, Defendants note that the fourth amended complaint sets forth, for the first time, a violation of the Indiana Wrongful Death Act, and names three new Defendants, Owens-Illinois, Zurn, and Alcoa. [Id. at p. 4].
A "key question for courts regarding removal under § 1446(b) has been when the action commences for purposes of the statute." Sledz v. Flintkote Co., 209 F. Supp.2d 559, 561-62 (D.Md. 2002). In such instances, "[c]ourts which have considered that question have looked to the law of the state in which the state court action originated to determine when an action `commences.'" Id. at 562, citing Zumas v. Owens-Corning Fiberglas Corp., 907 F. Supp. 131, 132 (D.Md. 1995). In Indiana, "[a] civil action is commenced by filing with the court a complaint, or such equivalent pleading or document as may be prescribed by statute. . . ." Jackson v. City of Jeffersonville, 771 N.E.2d 703, 706 (Ind.Ct.App. 2002), quoting Ind. Trial Rule 3.
A "commencement" approach was adopted in Sasser v. Ford Motor Co., 126 F. Supp.2d 1333 (M.D.Ala. 2001). In that case, on July 31, 1998, the plaintiff filed a complaint in state court against nondiverse defendants. On October 12, 1999, the plaintiff filed an amended complaint naming a diverse defendant, and added several claims. On March 3 and March 21, 2000, the state court dismissed the plaintiff's claims against the nondiverse defendants. The diverse defendant then removed the case on May 17, 2000. Plaintiff opposed the removal, claiming it was untimely. In granting the plaintiff's motion to remand, the court held that the diverse defendant failed to satisfy the one-year requirement. The court reasoned that for the purposes of § 1446(b), the action was commenced at the time of the filing of the initial complaint, as removal statutes are to be construed narrowly and "where plaintiff and defendant clash about jurisdiction, uncertainties are resolved in favor of remand." Id. at 1336, quoting Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994). See also Sledz, 209 F. Supp.2d at 562-64 (in applying Maryland law, the court adopted the reasoning in Sasser and granted plaintiff's motion to remand); Waller v. American Seafood Co., 1999 WL 694109, *2 (E.D.La. 1999) (applying Louisiana law on commencement of action and granting plaintiff's motion to remand).
Here, although Defendants contend that the commencement of this action took place upon the filing of Plaintiffs' fourth amended complaint on September 30, 2002, Indiana Trial Rule 3 provides otherwise. Defendants removed this case two years and six months after it was commenced in the state court. Applying the one-year rule of section 1446(b), the last day any defendant could have removed this action was May 22, 2001. Indeed, many courts that have addressed this issue have concluded that the one-year limit is an absolute jurisdictional bar. See, e.g., Lindsey v. Dillard's, Inc., 306 F.3d 596, 600 (8th Cir. 2002) ("Failure of a party to remove within the one year limit precludes any further removal based on diversity."); Bearup v. Milacron, 2002 WL 482548, *3 (E.D.Mich. 2002) ("If a case which was not initially removable, then later becomes removable because a non-diverse defendant has been dismissed but the dismissal occurred one-year after the case was filed, § 1446(b) would bar such a removal."); Santiago v. Barre National, Inc., 795 F. Supp. 508, 510 (D.Mass. 1992) ("the one-year bar is absolute"); Green Point Sav. Bank v. Hidalgo, 910 F. Supp. 89, 92 (E.D.N.Y. 1995) ("the one-year limitation in section 1446(b) goes to subject matter jurisdiction"); Foiles by Foiles v. Merrell Nat. Laboratories, a Div. of Richardson-Merrell, Inc., 730 F. Supp. 108, 110 (N.D.Ill. 1989) ("the plain language of § 1446(b) reads as a blanket prohibition on removal of a diversity case more than one year after commencement of the action.").
In addition, in amending section 1446 in 1988 to reflect the one-year limit for removal in diversity cases, Congress's main concern was that "[r]emoval late in the proceedings may result in substantial delay and disruption." Ariel Land Owners, Inc. v. Dring, 2003 WL 215820, *9 (M.D.Pa. Jan. 28, 2003), quoting S. Res. 1482, 100th Cong.2d Sess., 134 CONG. REC. S16308 (Oct. 14, 1988). Here, while this case resided in the state court for over two years and six months, it made substantial progress. According to the state court docket sheet, several Defendants have been dismissed either through summary judgment or settlement, the complaint has been amended four times, and discovery has taken place. [Not. of Removal, Ex. B]. The substantial passage of time, coupled with the resources depleted by the parties and by the state court, support remand. See, e.g., Schweihs v. Burdick, 1995 WL 124267, *3 (N.D.Ill. 1995), citing Kite v. Wolf Medical Instruments Corp., 761 F. Supp. 597, 599 (S.D.Ind. 1989) ("The purpose of the one-year bar is to prevent removal where substantial progress on the case has been made in state court.").
Defendants cite Chott v. Cal Gas Corp., 746 F. Supp. 1377, 1378 (E.D.Mo. 1990), for the proposition that Plaintiffs' fourth amended complaint constituted a new action. In that case, the plaintiffs commenced an action against diverse and non-diverse defendants in the state court. One year later, the plaintiffs settled the case with the non-diverse defendant. A few months thereafter, the plaintiffs voluntarily dismissed the action against the diverse defendant without prejudice. The plaintiffs subsequently reinstated the case against the diverse defendant in state court. When the defendant removed the case, plaintiffs filed a motion to remand. The court held that the removal complied with the one-year rule in section 1446(b) since the voluntarily dismissal essentially made the reinstated case a new action. Id. Plaintiffs' case is easily distinguishable, since they have never dismissed this action in an apparent effort to subvert the one-year rule and avoid federal jurisdiction.
The Court concludes that the plain language of section 1446(b) operates an absolute jurisdictional bar on removal of a diversity case more than one year after the commencement of an action.
C. Thirty Day Period for Removal Commences When Service is Accomplished on the First-Served Defendant
As previously noted, under 28 U.S.C. § 1446(b), "[i]f the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable. . . ." See Radaszewski ex rel. Radaszewski v. Garner, 2002 WL 31430325, *2 (N.D.Ill. 2002), quoting section 1446(b). Plaintiffs contend that Defendants have not complied with the thirty-day rule in that the first served Defendant, DaimlerChrysler, had thirty days from January 17, 2001, the date the last Indiana citizen was dismissed from the case, to file a notice of removal. [Mot. to Remand, p. 5]. In response, Defendants claim they complied with the thirty-day rule in that the last served Defendant, Owens-Illinois, served on October 28, 2002, filed a timely notice of removal on November 26, 2002. [Defs.' Resp. to Mot. to Remand, pp. 5-6].
Since this case involves multiple Defendants served on different days, the issue becomes: "when does the thirty-day time period for removal begin to run?" Auchinleck v. Town of LaGrange, 167 F. Supp.2d 1066, 1068 (E.D.Wis. 2001). Section 1446 does not contemplate service among multiple defendants, and the Seventh Circuit has not squarely addressed how to handle this problem. Id. However, other courts within this circuit follow the "first served defendant" rule in which the time period begins to run when the first defendant has been served, and the failure of any party to file a notice of removal within thirty days precludes removal for all future defendants. See id.; Phoenix Container, L.P. v. Sokoloff, 83 F. Supp.2d 928 (N.D.Ill. 2000) ("this court follows the majority of courts that have ruled on the issue in this district and elsewhere, and adheres to the `first-served defendant' rule"); Higgins v. Kentucky Fried Chicken, 953 F. Supp. 266, 268 (W.D.Wis. 1997) ("The majority of courts have held that there is only one thirty-day period in which defendants can remove and that this period starts with service on or notice to the first defendant"); Runge v. Maffei, 1996 WL 164383, *2 (N.D. Ill. 1996) ("the 30-day clock under Section 1446(b) began to tick when service was made on the first-served defendant"); Regalado v. City of Chicago, 946 F. Supp. 560, 562 (N.D.Ill. 1996) (referencing "well-established" principle that receipt of complaint by first defendant begins thirty-day time period for all defendants).
Here, when Delco Electronic Corporation, the last Indiana citizen Defendant, was dismissed on January 17, 2001, DaimlerChrysler was still a Defendant to the action. As the first served Defendant, DaimlerChrysler had thirty days to remove this action to federal court but failed to do so. See, e.g., Phoenix Container, 83 F. Supp.2d at 932 ("If the first-served defendant does not opt to remove before his time to remove expires, he waives his right to remove the case from state court. Allowing a later-served defendant to remove after the first-served defendant has waived his removal rights would be futile, because the first-served defendant would be unable to join that petition and the case therefore would be unremovable.").
Defendants ask the Court to adopt the "later-served defendant" rule. Under this rule, each defendant to an action is entitled to thirty days after service to remove an otherwise removable action, and all defendants can consent to that removal, even if their own thirty-day periods have expired. See Marano Enters. v. Z-Teca Rests., L.P., 254 F.3d 753, 757 (8th Cir. 2001); Brierly v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527, 533 (6th Cir. 1999). However, the Court declines Defendants' invitation to veer from precedent established by several courts in this circuit that have adopted the first-served defendant rule. The first-served rule is more consistent with the plain language of the statute as well as the policy justifications which support the thirty-day removal period. As a result, the Court agrees with Plaintiffs that Defendants untimely filed their notice of removal. The thirty-day clock began running on the first-served Defendant DaimlerChrysler on January 17, 2001, the date Delco Electronic Corporation was dismissed. Thus, the thirty days for DaimlerChrysler to remove the case lapsed on Febrary 16, 2001.
Some courts also refer to this as the "last served defendant" rule.
In sum, courts should not try to rewrite the removal statutes since they are to be construed strictly. See, e.g., Boone County Utilities, LLC v. Boone County Bd. of Commissioners, 2003 WL 203158, *2 (S.D.Ind. Jan. 28, 2003) ("the removal statutes must be strictly construed, with all doubts resolved in favor of remand"); National Collegiate Athletic Ass'n. v. Coors Brewing Co., 2002 WL 31431479, *1 (S.D.Ind. 2002) ("the propriety of removal is to be strictly construed against removal, with all doubts resolved in favor of remand."). The Court finds that pursuant to 28 U.S.C. § 1446(b), Defendants did not timely remove the case. Therefore, Defendant Owens-Illinois' November 26, 2002 notice of removal must fail. Accordingly, the Magistrate Judge recommends that Plaintiffs' motion to remand be GRANTED.
D. Award of Costs and Expenses
"An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." Wisconsin v. Hotline Indus., Inc., 236 F.3d 363, 365 (7th Cir. 2000), citing 28 U.S.C. § 1447(c). The Court has discretion to award attorney's fees and costs under this section because it "is not a sanctions rule; it is a fee-shifting statute, entitling the district court to make whole the victorious party." Garbie v. DaimlerChrysler Corp., 211 F.3d 407, 410 (7th Cir. 2000). The Court may exercise its discretion based upon the propriety of the removal. See Katonah v. USAir, Inc., 876 F. Supp. 984, 990 (N.D.Ill. 1995). The standard for awarding attorney's fees and costs under § 1447(c) "is less strict than under the more familiar Fed.R.Civ.P. 11; the statute does not require a showing of bad faith or frivolousness." Traynor v. O'Neil, 94 F. Supp.2d 1016, 1022 (W.D.Wis. 2000).
The Court declines to award Plaintiffs costs and expenses for two reasons. First, in their motion to remand, Plaintiffs did not request this relief. Therefore, it is waived. Second, even if Plaintiffs made the request, that motion would be denied because, as evidenced by the split of authority on these issues, Defendants had a reasonable belief that removal was appropriate in this instance. See, e.g., Phoenix Container, 235 F.3d at 354 (denying sanctions where defendants' argument for review of a remand order was a "nice try"); Analytical Surveys, Inc. v. Intercare Health Plans, Inc., 101 F. Supp.2d 727, 736 (S.D.Ind. 2000) (in denying motion for costs and expenses, the court held that "the defendants' removal of this action was a reasonable response to a complaint"); Fain v. FSC Securities Corp., 111 F. Supp.2d 1039, 1044 (N.D.Ind. 2000) (in denying motion for costs and expenses, the court noted that "even though not required, the Court does not find evidence of bad faith or intentional delay on the part of defendants in their removal of the within cause to this Court.").
Accordingly, the Magistrate Judge recommends that Plaintiffs not be awarded any costs or expenses in light of the Magistrate Judge's recommendation that Plaintiffs' motion to remand be granted.
III. Conclusion
For the reasons set forth above, the Magistrate Judge recommends that Plaintiffs' motion to remand be GRANTED, and that the case be remanded to the Howard Superior Court.
SO ORDERED.