Summary
In Roblez v. Ramos, 2001 WL 896942 (N.D. Tex. Aug. 1, 2001), the district court for the Northern District of Texas found unpersuasive a removing defendant's argument that the court should realign a non-consenting co-defendant with the plaintiff as an exception to the rule of unanimity.
Summary of this case from Eagle Capital Corp. v. Munlake Contractors, Inc.Opinion
CIVIL ACTION NO. 3:01-CV-0366-G.
August 1, 2001.
MEMORANDUM ORDER
Before the court are the following motions: (1) the motion of the defendant Evenflo Company, Inc. ("Evenflo") to realign the defendant Lydia Ramos ("Ramos") as a party plaintiff; (2) Evenflo's motion for summary judgment; (3) the motion of the plaintiff Richard Roblez to remand this case to state court; and (4) the motion of the defendant Breed Technologies, Inc. ("Breed") for summary judgment. For the reasons stated below, Evenflo's motion to realign Ramos as a plaintiff is denied, the, plaintiff's motion to remand this case to state court is granted, and decision of the motions for summary judgments reserved to the state court judge on remand.
I. BACKGROUND
This is a personal injury case. The plaintiff Richard Roblez ("Roblez"), seeks a monetary recovery for himself and his minor daughter, Samantha Roblez, as compensation for injuries resulting from a motor vehicle accident. This recovery is sought against Lydia Ramos ("Ramos"), Roblez's wife and Samantha's mother, who was driving the vehicle in which Samantha was a passenger; Breed, the maker of the sensing device which activated the vehicle's airbags; and Evenflo, the manufacturer of the infant seat in which Samantha was riding at the time of the accident.
Roblez filed this case in the County Court at Law No. 2 of Dallas County, Texas, initially against Ramos only. The next day, however, he added claims against Breed and Evenflo. Evenflo then removed the case to this court on the basis of diversity of citizenship.
II. ANALYSIS
The court will consider the motions to realign and to remand together, as they each require the court to decide whether it has subject matter jurisdiction over this case. Evenflo contends that "Ramos is not a proper Defendant for determining diversity jurisdiction," Motion to Realign Lydia Ramos as a Party Plaintiff ("Motion to Realign") at 2, and that when her citizenship is disregarded, there is complete diversity among the remaining parties. Id; Notice of Removal at 4-8. Roblez maintains that the court "does not have subject-matter jurisdiction over this matter." Plaintiff's Motion and Brief in Support to Remand to State Court at I.
A. Right to Removal Strictly Construed
Title 28 U.S.C. § 1441(a) permits removal of "[a]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction." Under this statute, "[a] defendant may remove a state court action to federal court only if the action could have originally been filed in the federal court." Aaron v. National Union Fire Insurance Company of Pittsburg, Pennsylvania, 876 F.2d 1157, 1160 (5th Cir. 1989), cert. denied, 493 U.S. 1074 (1990) (citations omitted). Removal jurisdiction must be strictly construed, however, because it implicates important federalism concerns. Frank v. Bear Stearns Company, 128 F.3d 919, 922 (5th Cir. 1997); see also Willy v. Coastal Corporation, 855 F.2d 1160, 1164 (5th Cir. 1988). Furthermore, "any doubts concerning removal must be resolved against removal and in favor of remanding the case back to state court." Cross v. Bankers Mutiple Line Insurance Company, 810 F. Supp. 748, 750 (N.D. Tex. 1992); see also Shamrock Oil Gas Corporation v. Sheets, 313 U.S. 100, 108-09 (1941); Healy v. Ratta, 292 U.S. 263, 270 (1934). The burden of establishing federal jurisdiction is on the party seeking removal — in this case, Evenflo. See Wilson v. Republic Iron Steel Co., 257 U.S. 92, 97 (1921); Winters v. Diamond Shamrock Chemical Company, 149 F.3d 387, 397 (5th Cir. 1998), cert. denied, 526 U.S. 1034 (1999).
B. Should Ramos Be Joined as a Plaintiff or Defendant?
The removability of a case is determined as of the date of filing. See Carlton v. BAWW, Inc., 751 F.2d 781, 785 (5th Cir. 1985) ("The general rule, of course, is that diversity is determined at the commencement of the lawsuit"). Roblez commenced this case by asserting a claim of negligence against Ramos. This garden variety tort suit, by one Texas citizen against another, presented no ground for federal jurisdiction.
A case not initially removable may become so, however, by a voluntary act of the plaintiff. See 28 U.S.C. § 1446(b); Weems v. Louis Dreyfus Corporation, 380 F.2d 545, 545-49 (5th Cir. 1967). In this instance, Roblez amended his original petition to add Breed and Evenflo as defendants. Although the amendment was a voluntary act by Roblez, on its face it still did not create a basis for federal jurisdiction, as there were no federal claims, and complete diversity of citizenship was lacking. See Lowe v. Ingalls Shipbuilding, A Division of Litton Systems, Inc., 723 F.2d 1173, 1177 (5th Cir. 1984) ("The required diversity under section 1332(a)(1) must be complete: Where one or more plaintiffs sue one or more defendants, each plaintiff must be of a different citizenship than each defendant.") (emphasis in original) (citation omitted); see also Owen Equipment and Erection Company v. Kroger, 437 U.S. 365, 373 (1978) (same).
One exception to the complete diversity rule, however, is the doctrine of fraudulent or improper joinder, in which the removing party contends that the federal forum to which he is entitled is being denied by the original plaintiff through joinder of a non-diverse defendant against whom, under the governing law, no relief is possible. See Johnson v. Heublein Inc., 227 F.3d 236, 240 (5th Cir. 2000); Jernigan v. Ashland Oil Inc., 989 F.2d 812, 815 (5th Cir.), cert. denied, 510 U.S. 868 (1993). The burden of showing fraudulent joinder is a heavy one, Cavallini v. State Farm Mutual Auto Insurance Co., 44 F.3d 256, 259 (5th Cir. 1995); B., Inc. v. Miller Brewing Company, 663 F.2d 545, 549 (5th Cir. 1981), and all doubts are resolved against removal. Acuna v. Brown Root Inc., 200 F.3d 335, 339 (5th Cir.), cert. denied, 530 U.S. 1229 (2000); Blackmore v. Rock-Tenn Company, Mill Division, Inc., 756 F. Supp. 288, 289 (N.D. Tex. 1991) (citations omitted).
In this case, however, Evenflo does not claim that Roblez's joinder of Ramos was fraudulent. Rather, Evenflo argues that the court should realign the parties to reflect their true interest in the litigation and that, upon such realignment, the citizenship of the parties will be completely diverse. Motion to Realign at 2-3. The court finds this argument unpersuasive.
First, the court is not convinced that this procedure — realignment to allow removal — is authorized, at least on the facts presented here. The two cases principally relied on by Evenflo, City of Indianapolis v. Chase National Bank of City of New York, 314 U.S. 63, 69 (1941), and Zurn Industries, Inc. v. Acton Construction Co., Inc., 847 F.2d 234 (5th Cir. 1988), are not removal cases. Both dealt with the question of whether diversity of citizenship was complete in cases filed originally in federal court. The issue in those cases, therefore, was whether the plaintiffs could proceed in the federal forum they had chosen. The instant case, arriving in this court on the basis of removal, poses a different question, however: whether the defendant's choice of a federal forum trumps the plaintiff's usual right to select the forum.
Of all the cases cited by Evenflo, only two — Standard Oil Co. of California v. Perkins, 347 F.2d 379, 382 (9th Cir. 1965), and Smilgin v. New York Life Ins. Co., 854 F. Supp. 464, 466 (S.D. Tex. 1994) — are removal cases. See generally Brief in Support of Motion to Realign Lydia Ramos as a Party Plaintiff. The first of these, Standard Oil Co. of California v. Perkins, did not involve any realignment of the parties, as they were arrayed in the state case, to allow removal to federal court; on the contrary, the suit, which was removed to the federal court on diversity grounds without any rearrangement of the parties, was brought by a single plaintiff against a single defendant. Perkins, 347 F.2d at 381. The only complication, after the case was already in federal court, was whether the addition of two allegedly indispensable parties destroyed diversity. Id. at 381-82.
The second of these cases, Smilgin, is the only authority that even arguably supports Evenflo's position. On close inspection, however, Smilgin does not authorize the result Evenflo seeks. Smilgin began as a breach of contract suit in state court. Two insurance agents, Reese and Grissen, sued New York Life, claiming that they were owed additional commissions. Smilgin, an additional plaintiff, was an assignee of 1% of the other plaintiffs' claims. The plaintiffs also sought a declaratory judgment that Booher, an individual defendant, was not entitled to any share of the commissions as the result of any alleged agreement. Id. at 465. The defendant New York Life removed the case to federal court on the basis of diversity of citizenship, despite the fact that (1) there was no diversity between Smilgin and New York Life and (2) Booher did not join in the notice of removal. Id. The court denied the plaintiffs' motion to remand. First, applying well-settled precedent from Grassi v. Ciba-Geigy, Ltd., 894 F.2d 181, 185 (5th Cir. 1990), that a federal district court has both the authority and responsibility to examine the motives underlying a partial assignment which destroys diversity, and to disregard the assignment in determining jurisdiction if it is found to have been made principally to defeat removal, the court ignored the citizenship of Smilgin (the one percent assignee) in determining complete diversity. Second, the court decided that "[t]he Plaintiffs' declaratory claims against Booher are entirely separate and distinct in terms of the legal and factual issues. . . ." 854 F. Supp. at 465. The court therefore treated Booher, whose claims were entirely derivative of the plaintiffs', 854 F. Supp. at 465, as a nominal party. Nominal parties are not required to consent to removal, Tri-Cities Newspapers, Inc. v. Tri-Cities Printing Pressmen and Assistants' Local 349, International Printing Pressmen and Assistants' Union of North America 427 F.2d 325, 326-27 (5th Cir. 1970), and the test for determining whether parties are nominal is the same as for "fraudulent joinder." Farias v. Bexar County Board of Trustees for Mental Health Mental Retardation Services, 925 F.2d 866, 871 (5th Cir.), cert. denied, 502 U.S. 866 (1991).
These competing interests, the plaintiff's (mostly unlimited) right to choose his forum against the defendant's (conditional) right to a federal forum, are generally resolved by the judicially created doctrine of fraudulent joinder. See Bentley v. Halliburton Oil Well Cementing Co., 174 F.2d 788, 791 (5th Cir. 1949) ("The doctrine of fraudulent joinder had its inception in the courts, and originally was a judicial pronouncement intended to protect non-resident defendants from any misstatement of fact or misjoinder of parties or causes of action knowingly made by plaintiffs for the purpose of . . . defeating removal to a federal court."). "The fraudulent-joinder doctrine tries to strike a reasonable balance among not rewarding abusive pleading by the plaintiff, the plaintiff's tactical prerogative to select the forum, and the defendant's statutory right to remove." 14B Wright, Miller Cooper, FEDERAL PRACTICE AND PROCEDURE § 3723 (3d ed. 1998) at 625-29. Original jurisdiction cases such as Zurn and City of Indianapolis, however, are not concerned with this balance. If a defendant can remove, on diversity grounds, a case properly filed in state court without — at the same time — shouldering (what the case law describes as) the heavy burden of showing fraudulent joinder, this balance will obviously be upset.
See Burns v. Windsor Insurance Company, 31 F.3d 1092 (11th Cir. 1994):
Defendant's right to remove and plaintiff's right to choose his forum are not on equal footing; for example, unlike the rules applied when plaintiff has filed suit in federal court with a claim that, on its face, satisfies the jurisdictional amount, removal statutes are construed narrowly; where plaintiff and defendant clash about jurisdiction, uncertainties are resolved in favor of remand.Id. at 1095 (citations omitted).
Second, even if it be assumed arguendo that a realignment of the parties can be ordered ex post facto to justify the removal that has already occurred, the court is not convinced that Evenflo has carried its burden of showing that Ramos should be realigned in this case. Evenflo contends that the interests of Roblez and Ramos coalesce in obtaining the largest possible monetary recovery for their minor daughter and that Ramos should therefore be aligned as a co-plaintiff. Motion to Realign at 2. Roblez responds that he is seeking, under Texas law, a determination of the degree of fault attributable to all the parties who may be liable for his daughter's injuries. Plaintiff's Response to Evenflo Company, Inc.'s Motion to Realign Lydia Ramos as a Party Plaintiff ("Response") at 2-3.
City of Indianapolis declares it the duty of the federal courts to "look beyond the pleadings, and arrange the parties according to their sides in the dispute." 314 U.S. at 69. Whether "the necessary collision of interest exists" is to be determined "from the principal purpose of the suit, and the primary and controlling matter in dispute." Id. (citations and internal quotation marks omitted). Under this standard, which Evenflo admits is difficult to apply, see Brief in Support of Motion to Realign Lydia Ramos as a Party Plaintiff at 6-7, the court cannot say that Roblez's claim against Ramos should be disregarded in determining diversity of citizenship. To the contrary, Zuni suggests that the appropriate inquiry under City of Indianapolis is whether "there is a bona fide dispute between citizens of different states." 847 F.2d at 237. Here, Evenflo seems to concede that Roblez has a valid claim against Ramos under Texas law but maintains that this claim is insignificant in comparison to Roblez's claims against itself and Breed. See Motion to Realign at 2-3. This approach — weighing the size of the various claims — flies in the face of Zurn, which teaches that once the original claim is tested for complete diversity of citizenship, the addition of other claims neither creates nor destroys jurisdiction. "The fact that the claims [for or against other parties] were for a greater dollar amount makes no difference in the absence of a showing that Zurn's original claim was a sham to assert federal jurisdiction." Zurn, 847 F.2d at 238.
Evenflo also asserts that this claim has been settled. See Motion to Realign ("Roblez reached a settlement with Ms. Ramos' automobile insurance carrier prior to the initiation of this litigation.") at 2. Roblez denies that any settlement has occurred. Response at 1. Although settlement might be the basis for applying the doctrine of fraudulent joinder to Roblez's claim against Ramos, see Estate of Martineau v. ARCO Chemical Company, 203 F.3d 904 (5th Cir. 2000); Vasquez v. Alto Bonito Gravel Plant Corporation 56 F.3d 689 (5th Cir. 1995), Evenflo has the burden of proof on this issue, Martineau, 203 F.3d at 910; Vasquez, 56 F.3d at 692, and it has offered no proof to support its claim of settlement.
Moreover, in a multi-defendant tort case based on diversity, our circuit has rejected an argument similar to that made by Evenflo here. Scott v. Fancher, 369 F.2d 842 (5th Cir. 1966). There, one of the defendants, Ray Scott, argued that he and another defendant, E.F. Short, should be cast "as opposing parties because under no theory of the facts could Short have been found at fault." Id. at 843-44. This, of course, is virtually indistinguishable from Evenflo's present argument that Evenflo and Ramos, instead of being co-defendants, should be realigned on opposite sides of the case. The Court of Appeals, however, was unpersuaded:
Re-alignment of the parties is to be accomplished on the basis of the facts available at the commencement of the action. [The plaintiffs] had charged both Scott and Short with negligence and at that time it could not be said that the allegations were baseless. Accordingly, no re-alignment was required.Id. at 844. In support, the court cited Texas Pacific Coal Oil Co. v. Mayfield, 152 F.2d 956 (5th Cir. 1946), which announced the following rule: "Parties defendant will not be realigned if there remains in the case any issue as to which plaintiff needs some relief against such parties." Id. at 957. Under this rule, realignment of Ramos cannot be required here, at least until Roblez has received the full proceeds of any liability insurance covering Ramos for this accident.
III. CONCLUSION
Because Roblez has a plausible justification for the alignment of parties as he has joined them, the controlling principle is that all doubts are resolved against removal. Evenflo's motion to realign Ramos as a party plaintiff is therefore DENIED, and Roblez's motion to remand this case the state court is GRANTED.
Decision of the pending motions for summary judgment is RESERVED to the judge of the state court on remand.
The clerk shall mail a certified copy of this memorandum order to the county clerk of Dallas County, Texas. 28 U.S.C. § 1447(c).