Summary
finding that because the defendant had not shown that equitable tolling was applicable in the circuit, remand was appropriate
Summary of this case from Staggs v. Union Pacific Railroad CompanyOpinion
Case No. 01-CV-74455-DT
February 28, 2002
MEMORANDUM OPINION AND ORDER
I. BACKGROUND
On November 26, 2001, Defendant Quaker Chemical Corporation removed the instant suit from the Genesee County Circuit Court, State of Michigan. Defendant Quaker indicated in its Notice of Removal that the Court has original jurisdiction on the basis of complete diversity of citizenship based on 28 U.S.C. § 1332(a).
Defendant Quaker admits in its Notice of Removal that the case has been removed more than one year from the date the case was filed. The underlying action was filed with the Genesee County Circuit Court on October 4, 1999. On October 26, 2001, General Motors ("GM") was dismissed from the State Court action pursuant to an order "approved as to form" by Plaintiffs. On November 26, 2001, Defendant Quaker removed the matter claiming that since GM's dismissal, the case had become removable based on the Court's diversity jurisdiction. Defendant Quaker claims it timely removed the matter within 30 days of the order dismissing GM.
Plaintiffs have now filed the instant motion claiming that the removal is untimely because it was removed some two years after the case was filed in State Court.
In response, Defendant Quaker argues that the one year limitation should be equitably tolled because the underlying action was stayed for a period of time pending GM's appeal on its motion for summary disposition based on the exclusive remedy provision under Michigan's Workers' Compensation Act in a related case. Plaintiffs apparently filed three (3) law suits against various defendants in State Court which involve similar facts. The first case filed was Bock et at v. General Motors and Cincinnati Milacron, Genesee County Circuit Court Case No. 96-464060-NO, which is before the Honorable Robert M. Ransom. The second case filed was the instant case entitled Bearup et at v. General Motors Corp. et al, 99-66346-NO, also before Judge Ransom. The third case filed was Milton Gibson et al. v. GM et al, 99-66596-NO, before Judge Ransom. In the Bock case, GM and Cincinnati Milacron filed a motion for summary disposition which was denied by the trial court. GM and Cincinnati Milacron appealed the decision. The two later filed cases, Bearup and Gibson, were stayed pending resolution of the appeals of GM and Cincinnati Milacron in the Bock case, Michigan Court of Appeals Docket Nos. 215630 and 216558. On July 20, 2001, the Court of Appeals dismissed GM as a defendant in the Bock case based upon the workers' compensation exclusive remedy rule. On October 19, 2001, after the Court of Appeal's decision in the Bock case was entered on July 20, 2001, a scheduling order was entered by the State Court setting various dates in the instant case. On October 26, 2001, the State Court entered its order dismissing GM without prejudice in the instant case pending a ruling from the Michigan Supreme Court. The Order indicated Plaintiffs would submit an order dismissing with prejudice GM should the Michigan Supreme Court affirm the Court of Appeal's decision. To date, no decision has been rendered by the Michigan State Supreme Court. On November 26, 2001, Defendant Quaker removed the instant case to this Court.
At oral argument, the parties informed the Court that while all three cases were initially assigned to one judge, one of the cases was reassigned to another judge so that one judge did not have to handle three potential class action lawsuits.
II. ANALYSIS A. Jurisdiction/Removal
The district court has basically three basis for its jurisdiction: 1) federal question under 28 U.S.C. § 1331; 2) diversity of citizenship, plus over $75,000 amount in controversy under 28 U.S.C. § 1332; and 3) the United States is a party under 28 U.S.C. § 1345, 1346. In a diversity matter, a federal district court has original jurisdiction over any civil action "where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between — (1) citizens of different State." 28 U.S.C. § 1332(a). The existence of subject matter jurisdiction generally is a question of law. Greater Detroit Resource Recovery Author v. United States, 916 F.2d 317, 319 (6th Cir. 1990).
28 U.S.C. § 1441(a) provides for removal of actions filed in state court to the district court if the district court has original jurisdiction over the cause of action. 28 U.S.C. § 1446 provides that a notice of removal "shall be filed within thirty days after the receipt by the defendant, through service or otherwise, a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant . . ." 28 U.S.C. § 1446(b). However, "[i]f the cases 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." 28 U.S.C. § 1446(b) (italics added). 28 U.S.C. § 1447(c) states that "[a] motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a)." 28 U.S.C. § 1447(c) (italics added) To challenge defects in the removal procedure, including a claim that the removal took place after relevant time limits had expired, a "motion" to remand must be filed no later than 30 days after the filing of the removal notice. Wisconsin Dep't of Corrections v. Schacht, 524 U.S. 381, 392 (1998).
B. One-Year Limitation under 28 U.S.C. § 1446(b)
The issue in this case is whether Defendant Quaker failed to timely remove the matter because the case was removed more than one year from the date the underlying case was filed in State Court. There is no dispute that Defendant Quaker removed the matter on November 26, 2001, more than one year from when the case was filed — October 4, 1999. Defendant claims that the time limitations in the removal statute is not jurisdictional, but is a "formal requirement which may be subject to waiver or estoppel." Defendant cites Vogel v. US. Office Products, 56 F. Supp.2d 859, 865 (W.D. Mich. 1999) to support its argument. Defendant notes that the Vogel case was reversed, but on other grounds. See Vogel v. US. Office Products, 258 F.3d 509 (6th Cir. 2001). Defendant argues that equitable tolling should be applied in this case because the underlying matter had been stayed in the State Courts pending resolution of GM's motion for summary disposition.
The Vogel opinion is not persuasive since it has been reversed on appeal, albeit, on other grounds. Defendant cites no Sixth Circuit case nor any other district court case in this Circuit supporting its argument that equitable tolling applies to the one year limitation found in § 1446(b). The Sixth Circuit has held that the statute conferring removal jurisdiction is to be construed strictly because removal jurisdiction encroaches on a state court's jurisdiction. Brierly v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527, 534 (6th Cir. 1999), citing Shamrock Oil Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941). "Thus, in the interest of comity and federalism, federal jurisdiction should be exercised only when it is clearly established, and any ambiguity regarding the scope of § 1446(b) should be resolved in favor of remand to the state courts." Brierly, 184 F.3d at 535. The one-year limitation of removal of diversity cases applies only to those cases that were not initially removable. Id. 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. Id. at 535, n. 4; See also Caterpillar Inc. v. Lewis, 519 U.S. 61, 68-69, 75 (1996).
Several district court cases in this Circuit have held that the one-year limitation found in 28 U.S.C. § 1446(b) is mandatory or jurisdictional. In Norman v. Sundance Spas, Inc., 844 F. Supp. 355 (W.D. Ky. 1994), the district court held that the one year limitation found in § 1446(b) applied to diversity cases even though a defendant was later joined in the case. The district court noted that "the 1988 amendment to § 1446(b) abridging defendants' right to remove diversity cases beyond one year represents a deliberate legislative trend to curtail federal jurisdiction over suits between litigants of diverse citizenship." Id. at 359. In O'Rourke v. Communique Telecommunications, Inc., 715 F. Supp. 838 (E.D. Mich. 1989) (J. Duggan), the district court found that removal was improper because defendant's petition for removal was not filed within one year after commencement of the action, contrary to section 1446(b). Id. at 829. In Cofer v. Horsehead Research and Development Co., Inc., 805 F. Supp. 541 (E.D. Tenn. 1991), the district court cited numerous cases holding that the one year provision in 28 U.S.C. § 1446(b) is jurisdictional. Id. at 543. In Brock v. Syntex Laboratories, Inc., 791 F. Supp. 721 (E.D. Tenn. 1992), the district court noted that the legislative history of the 1988 Act supports the conclusion that the one-year limitation is mandatory as opposed to permissive. Id. at 723. "The House Report explained that the one-year limit is intended to prevent disruption of state court proceedings resulting from dismissal of a non-diverse party late in a case." Id. The House Report states that the one-year limit on removal based on diversity jurisdiction is "a means of reducing the opportunity for removal after substantial progress has been made in state court." See HR. Rep. No. 889, 1006h Cong., 2d Sess. 91988), reprinted in 1988 U.S. Code Cong. Admin. News, 5982, 6032. "To accept defendant's position that the one-year limitation is merely procedural would, in effect, destroy the mandatory language of the statute." Brock, 791 F. Supp. at 723. "Congress intended that no diversity cases over a year old could be removed." Id. The Sixth Circuit affirmed the Brock case stating that "the district court correctly determined that the one-year time limitation for removal of diversity cases under 28 U.S.C. § 1446(b) (1988 Supp. 1993) is a jurisdictional bar." Brock v. Syntex Laboratories, Inc., 7F.3d 232, 1993 WL389946 "Z"1 (6th Cir. Oct. 1, 1993) (unpublished).
The only "exception" to the one-year limitation recognized by the district courts in this Circuit are cases involving fraudulent joinder. See, Hardy v. Ajax Magnathermic Corp., 122 F. Supp.2d 757, 759 (W.D. Ky. 2000) (The one-year limitation does not bar removal in this case if plaintiffs fraudulently joined the non-diverse defendant).
There is no dispute that Defendant Quaker removed the action more than one year from the time the action was filed in State Court. Although the matter was stayed pending the disposition of the motion for summary disposition filed by GM and Cincinnati Milacron through the appellate courts and discovery did not begin until July 2001, the related Bock case was filed in 1996. Plaintiffs in this case filed a motion to certify the class in December 17, 1999. In addition to the instant case, there are two other related cases in State Court which were not removed. Having three related cases in two different courts would not serve the interest of judicial economy. In any event, based on the cases cited above, and the clear language of § 1446(b), the one year limitation for diversity cases is mandatory and jurisdictional. Defendant Quaker is barred from removing the instant case more than one year after it was filed in State Court. The case will be remanded.
C. Equitable Tolling
Even if equitable tolling was recognized in this Circuit, Defendant Quaker has not shown that the facts in this case are "exceptional" such that equitable tolling should apply. Defendant Quaker cited cases from the Fifth Circuit to support its argument: Brown v. Demco, Inc., 792 F.2d 478, 483 (5th Cir. 1986) ("exceptional circumstances might permit removal even when a later-joined defendant petitions more than precisely thirty days after the first defendant is served."); Doe v. Kerwood D.O., 969 F.2d 165, 169 (6th Cir. 1992) ("it is within the equitable power of the court to consider such exceptional circumstances on a case-by-case basis."); Glover v. W.R. Grace, 773 F. Supp. 964, 965 (E.D. Tex. 1991) (four-day delay excused from 30-day time limit); Value Recovery Group, Inc. v. Monze Hourani, 115 F. Supp.2d 761 (S.D. Tex. 2000) (the court recognized that in certain cases the thirty-daytime limit could be equitably tolled); and Ferguson v. Security Life of Denver Ins. Co., 996 F. Supp. 597, 603 (N.D. Tex. 1998) (the one-year limitation on removal contained in § 1446(b) is not absolute but subject to equitable exceptions).
Most of these cases involve the 30-day limitation found in § 1446(b) as applied to later joined defendants and not the one-year limitation. Also, while the Fifth Circuit has held that untimely removal may be proper in exceptional cases, the Fifth Circuit has yet to find circumstances that warrant equitable tolling. See Brown, 792 F.2d at 482 ("[t]o permit the defendants in this case to obtain removal after they have tested state-court waters for fours years would give them a second opportunity to forum-shop and further delay the progress of the suit"). Defendant Quaker in this case has not shown, first of all, that in this Circuit, equitable tolling is applicable. Secondly, Defendant Quaker has not shown that the facts in this case — that the case was stayed pending an appeal in a related case — constituted exceptional circumstances such that this Court should apply equitable tolling.
D. Voluntary/Involuntary Dismissal
Remand is also proper because GM was not voluntarily dismissed. Removal is improper where diversity is created by court order, not by voluntary dismissal of the non diverse defendant. O'Rourke, 715 F. Supp. at 829. "Where a non-diverse defendant has been involuntarily dismissed, courts have generally held that the case is not removable." Wiacek v. Equitable Life Assurance Society of the United States, 795 F. Supp. 223, 225 (E.D. Mich. 1992) (J. Zatkoff). "This voluntary/involuntary distinction is grounded in the observation that when a non-diverse party is eliminated from an action pursuant to a court order (i.e., involuntarily), the order of dismissal may be the subject of appeal; consequently, although diversity may temporarily exist between the parties, federal jurisdiction might ultimately be destroyed if the state appellate court reverses the order of dismissal." Id.
Although Plaintiffs signed the order of dismissal dismissing GM from the case, it was "as to form" and "without prejudice" and based on the "involuntary dismissal" issued by the Michigan Court of Appeals' opinion. Without the ruling of the Michigan Court of Appeals, Plaintiffs would not have agreed to sign the order "as to form." Plaintiffs initially opposed GM's motion for summary disposition and the trial court denied GM's motion. GM then appealed the matter to the Michigan Court of Appeals which reversed the trial court's decision. Plaintiffs appealed the Michigan Court of Appeals' decision to the Michigan Supreme Court which is currently pending in that court. Based on their initial opposition to GM's motion for summary disposition at the trial level and Plaintiffs' appeal to the Michigan Supreme Court, it is clear that Plaintiffs' "agreement" to dismiss GM was not voluntary but based on the Michigan Court of Appeals' decision. The Michigan Supreme Court may reverse the Michigan Court of Appeals' decision, and, therefore, diversity may only be temporary. The dismissal of GM cannot be construed as "voluntary."
III. CONCLUSION
For the reasons set forth above,
IT IS ORDERED that Plaintiffs' Motion to Remand ( Docket No. 4, filed December 18, 2001) is GRANTED.
IT IS FURTHER ORDERED that matter is REMANDED back to the Genesee County Circuit Court.
IT IS FURTHER ORDERED that the CLERK OF COURT process the necessary paperwork in order to effect the remand forthwith.