Opinion
No. 3:01-CV-2331-P
June 6, 2002
MEMORANDUM OPINION AND ORDER
Presently before the Court are:
1. Plaintiff Lisa Marie Porter's Motion to Remand and Brief in Support Thereof, filed January 17, 2002;
2. Defendants Brietling USA, Inc., Brietling S.A., Marie Bodman, and Robert Dumar's Motion to Dismiss and Answer to Lisa Marie Porter's First Amended Original Petition, filed January 31, 2002;
3. Plaintiffs Motion to Amend Order, filed February 4, 2002;
4. Defendants' Response to Plaintiffs Motion to Remand and Brief in Support Thereof, with appendix, filed February 6, 2002;
5. Defendants' Response to Lisa Porter's Motion to Amend Court's January 21, 2002 Order, filed February 25, 2002;
6. Plaintiffs Response to Motion to Dismiss for Failure to State a Claim and Brief in Support Thereof, filed February 26, 2002;
7. Plaintiffs Response to Motion to Dismiss for Lack of Personal Jurisdiction Under Rule 12(b)(2) and Brief in Support Thereof, filed February 26, 2002;
8. Defendants Supplement to the Brief in Support of Defendant Brietling S.A.'s Motion to Dismiss for Lack of Personal Jurisdiction, filed March 22, 2002;
9. Defendants Reply to Response to Motion to Dismiss for Failure to State a Claim and Brief in Support Thereof, filed April 3, 2002; and
10. Brietling S.A.'s Reply to Response to Motion to Dismiss for Lack of Personal Jurisdiction Under Rule 12(b)(2) and Brief in Support Thereof; filed April 3, 2002.
On January 21, 2002, pursuant to an order issued by the Honorable Judge Joe Kendall, the Court ordered consolidated into the above captioned case the following two cases: (1) Brietling USA, Inc. v. Lisa Porter, Civil Action No. 3:01-CV-2331-X and (2) Lisa Marie Porter Brietling USA, Inc., Brietling S.A., and Marie Bodman, Civil Action No. 3:01-CV-2674-X. Thereafter, by Special Order No. 2-203, the consolidated case was reassigned to the docket of the undersigned under the caption Brietling USA, Inc. v. Lisa Porter, Civil Action No. 3:01-CV-2331-P.
For purposes of clarity, Brietling USA, Brietling S.A., Marie Bodman, and Robert Dumar shall hereinafter be referred to collectively as "Defendants," and Lisa Marie Porter, also known as Lisa Porter, will be referred to as "Plaintiff" or "Porter."
Defendants' Motion to Dismiss and Answer was filed under the revised caption following consolidation and addresses the allegations made in Plaintiffs First Amended Original Petition, which was attached to the Plaintiffs Motion to Remand and Brief in Support Thereof filed January 17, 2002 in Lisa Marie Porter v. Brietling USA, Inc., Brietling S.A., Marie Bodman, and Robert Dumar, Civil Action No. 3:01-CV-2674-X.
After a thorough review of the evidence, the pleadings, the parties' briefs, and the applicable law, for the reasons set forth below, the Court is of the opinion that Plaintiffs Motion to Amend the Court's January 21, 2001 Order of Consolidation and Plaintiffs Motion to Remand should be GRANTED. The Court is further of the opinion that Defendants' Declaratory Judgment action should be STAYED pending resolution of Plaintiffs state case. The Court does not reach Defendants motions to dismiss on the merits.
The Court held a hearing in this matter on April 30, 2002. At the conclusion of the hearing, the Court granted Defendants an additional thirty (30) days in order to conduct limited discovery for the purposes of establishing the residency of Plaintiff See Minute Order dated 4/30/2002. The parties have not submitted any further evidence contradicting Plaintiffs assertion that she is a resident of the State of Texas. Therefore, the Court considers the pending motions based on the record as it appears before it.
BACKGROUND
Plaintiff Lisa Marie Porter filed her Original Petition in the 134th Judicial District, Dallas County, Texas on November 18, 2001, against Brietling USA, Inc., Brietling, SA., and Marie Bodman, asserting claims of wrongful termination under the Sabine Pilot doctrine and slander. Three days later, on November 21, 2001, Plaintiff amended her petition to add a slander claim against Robert Dumar, a resident of the State of Texas.On November 20, 2001, Brietling USA, Inc. brought its own action in this Court under 28 U.S.C. § 2201, styled Brietling USA, Inc. v. Lisa Porter, seeking a declaration that under Texas Law, Mrs. Porter, a former employee of Brietling, was discharged for cause within the meaning of an Employment Agreement existing between Brietling and Porter. Thereafter, on December 18, 2001, Brietling USA, Inc., Brietling, S.A., and Marie Bodman ("Removal Defendants"), filed a Notice of Removal, asserting that removal was proper under 28 U.S.C. § 1441 because the Court had diversity jurisdiction of the state action under to 28 U.S.C. § 1332. Defendant Dumar did not join in the removal of this action.
Defendants assert that at the time of filing the Notice of Removal, the state court docket sheet did indicate the existence of a First Amended Petition. However, counsel for the Removal Defendants states that the docket sheet did not identify any new parties or causes of actions, and despite repeated efforts, he was unable to obtain a certified copy of the First Amended Petition for inclusion with the Notice of Removal of December 18, 2001. Further, counsel asserts that Porter did not effect service of her First Amended Original Petition upon Defendant Dumar until January 2, 2002, and never served a copy of that pleading upon the remaining Defendants.
On January 17, 2002, Plaintiff filed a Motion to Remand the state case, asserting that Defendants had improperly removed her cause of action as the presence of Mr. Dumar created a lack of complete diversity at the time of removal since Plaintiff was also a citizen of the State of Texas. Meanwhile, on January 21, 2002, Judge Kendall ordered consolidated the removed and the declaratory judgment actions, which were thereafter transferred to this Court's docket on January 24, 2002. See footnote 1 supra.
On January 25, 2002, Defendants filed an Amended Notice of Removal stating that diversity jurisdiction continued to exist because the citizenship of Dumar should be disregarded as he is a "sham" defendant who Plaintiff fraudulently joined in order to defeat jurisdiction. Alternatively, Defendants argue that removal is proper because federal subject matter jurisdiction exists over Brietling USA, Inc.'s claim under the Declaratory Judgment Act, 28 U.S.C. § 2201, and supplementary jurisdiction exists over Porter's tort law, conspiracy, and employment-based claims pursuant to 28 U.S.C. § 1367 (a). The Court shall proceed to address each of these arguments.
DISCUSSION I. Removal and Remand A. Fraudulent Joinder
Once a case has been removed to federal court, it is the removing party which must show that the court has jurisdiction to hear the plaintiffs claims. Jernigan v. Ashland Oil, Inc., 989 F.2d 812, 815, (5th Cir. 1993). A defendant who removes an action to federal court and alleges fraudulent joinder of a non-diverse defendant thus bears the burden of proving the alleged fraud by clear and convincing evidence. Parks v. New York Times Co., 308 F.2d 474, 478 (5th Cir. 1962); see also Grassi v. Ciba-Geigy, Ltd., 894 F.2d 181, 186 (5th Cir. 1990); Dodson v. Spillada Maritime Corp., 951 F.2d 40, 42 (5th Cir. 1992). "The burden of proving a fraudulent joinder is a heavy one. The removing party must prove that there is absolutely no possibility that a plaintiff will be able to establish a cause of action against the in-state defendant in state court, or that there has been outright fraud in the plaintiffs pleading of jurisdictional fact." Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 259 (5th Cir. 1995) (quoting Green v. Amerada Hess Corp., 707 F.2d 201, 205 (5th Cir. 1983).
In deciding a fraudulent joinder issue, the district court must evaluate the plaintiffs factual allegations in the light most favorable to the plaintiff and resolve all contested issues of substantive fact as well as any uncertainties as to the current state of controlling substantive law in favor of the plaintiff. Id. If there is any possibility that the plaintiff has stated a cause of action against any non-diverse defendant, the federal court must conclude that joinder is proper, thereby defeating complete diversity, and the case must be remanded. Sid Richardson Carbon Gasoline Co. v. Interenergy Resources, Ltd., 99 F.3d 746, 751 (5th Cir. 1996) (emphasis added). The court's examination should focus not on whether the plaintiff will or is likely to prevail in the merits of the claim, but rather on whether there exists any possibility that the plaintiff might do so. Burden v. General Dynamics Corp., 60 F.3d 213, 216 (5th Cir. 1995).
Contrary to the assertions of Defendants, such a possibility remains in the present case. A brief discussion of the background facts here is necessary to evaluate the Plaintiffs claims. Mrs. Porter was employed by Brietling USA, Inc. for eleven (11) years as a Regional Sales Representative for the company's Midwest Region. Pl.'s First Am. Orig. Pet. at 2. Over this time, she posted high earnings and successfully promoted the Brietling image and products, which consist of high profile jewelry and luxury watches manufactured by Brietling, S.A. in Switzerland. See Id. at 2-3; see also Pl.'s Resp. to Mot. to Dismiss for Lack of Personal Jurisdiction at 4-5.
Porter alleges that beginning in late 2000 and early 2001, she began having disagreements with Defendant Marie Bodman, a Brietling representative, regarding whether the company's "military sales program" was legally proper. Pl.'s First Am. Orig. Pet. at 3. More specifically, Plaintiff was concerned that the company's policy of offering "professional" watches to certain military squadrons (i.e., the Blue Angels, Thunderbirds or Top Gun pilots) at prices below what other military personnel were receiving (e.g., discounts of 86% as opposed to 65% to 38% for the Army Golden Knights or B-2 Pilots) was improper and illegal. See Id. at 3-4. Plaintiff further claims that in an email to Ms. Bodman dated on August 28, 2001, she stated: "[in order to clarify our discussion yesterday regarding military sales, I have been informed that our current pricing structure to the military is illegal. Therefore, I cannot and will not participate in any further military orders until the pricing structure is rectified or until a legal pricing structure is established." See Id. at 4. The next day, Ms. Bodman responded in a letter terminating Plaintiff for alleged "insubordination, failure to follow instructions and fabrications." Id.
Porter asserts that immediately following her termination, Ms. Bodman and Robert Dumar, Plaintiffs replacement, began making false, malicious, and slanderous statements about Plaintiff to her customers and contacts. See Id. As a result, Porter brought an action against Defendants Brietling USA, Inc. and Brietling, S.A. for violation of Texas common law and for conspiracy to commit an illegal act by terminating her for refusing to participate in a criminal act under Sabine Pilot Service, Inc. v. Hauck, 687 S.W.2d 733 (Tex. 1985). See Id. at 10-13 Plaintiff also included a claim for slander against Dumar for allegedly stating to third parties that Plaintiff was loading them [her accounts] up with merchandise that doesn't sell, which she considered false and made with malice or reckless disregard for its falsity, and which she stated substantially damaged her in terms of lost earnings and mental anguish. Id. at 13-14. Defendants' position is that such a statement by Mr. Dumar, on its face, cannot be considered anything more than his subjective assessment of his predecessor, or of his company's product, and is not reasonably capable of a defamatory meaning. Br. in Supp. of Defs.' 12(b)(6) Mot. to Dismiss. at 9.
Plaintiff also included a claim for slander against Ms. Bodman, in particular for allegedly stating to third parties that "several accounts have complained about her." Pl.'s First Am. Orig. Pet. at 14.
Texas law defines defamation as "a defamatory statement orally communicated or published to a third person without legal excuse." Halbert v. City of Sherman, 33 F.3d 526, 530 (5th Cir. 1994); Randall's Food Markets, Inc. v. Johnson, 891 S.W.2d 640, 646 (Tex. 1995). In order to prevail on a defamation claim, the plaintiff must show that the person publishing the allegedly defamatory statement knew or should have known that the statement was false. See Foster v. Laredo Newspapers, Inc., 541 S.W.2d 809, 819 (Tex. 1976), cert. denied, 429 U.S. 1123 (1977). Whether the statements are capable of the defamatory meaning alleged is a question of law for the court. See Musser v. Smith Protective Serv., Inc., 723 S.W.2d 653, 654-655 (Tex. 1987). In reaching its conclusion, the court must construe the statements as a whole, in light of surrounding circumstances based upon how a person of ordinary intelligence would perceive the entire statement. See Carr v. Brasher, 776 S.W.2d 567, 570 (Tex. 1989).
Defendants argue that the statement "loading them up with merchandise that doesn't sell," is ambiguous, and is nothing more than one person's subjective assessment of Porter's conduct as a sales representative, or an assessment of the company's product. Br. in Supp. of Defs.'s 12(b)(6) Mot. at 10. However, "an opinion that implies false statements of objective fact is slander." Marshall v. Mahaffey, 974 S.W.2d 942, 950 (Tex.App.-Beaumont 1998, no writ). Equally, a statement that tends to injure a person's reputation, exposing her to public hatred, contempt, ridicule, or financial injury is sufficient to constitute defamation. Campbell v. Salazar, 960 S.W.2d 719, 725 (Tex.App. — El Paso 1997, writ denied) (citations omitted). A statement is also defamatory if it tends to impeach that person's honesty, integrity, or virtue. Abbott v. Pollock, 946 S.W.2d 513, 519 (Tex.App.-Austin 1997, writ denied) (citing Free v. American Home Assurance Co., 902 S.W.2d 51, 54 (Tex.App.-Houston 1995, no writ)). The Court here finds that the statement alleged to have been made by Dumar, as set forth in Plaintiffs Amended Original Petition, is capable of defamatory meaning since it does brings into question Mrs. Porter's honesty, integrity, and virtue, and was allegedly published to third persons who understood its defamatory import and further understood the statements referred to Plaintiff.
Because Defendants must prove absolutely no possibility that Plaintiff will be able to establish a cause of action against Dumar in state court and because the Court must resolve "all disputed questions of fact and all ambiguities in the controlling state law in favor of the plaintiff," Sid Richardson, 99 F.3d at 751, the Court must remand the case to state court in light of Texas law. The Court need not consider whether Plaintiff will actually or even probably prevail at trial, but must only decide whether there is a possibility it may do so. In this case, Defendants have failed to show that there is "absolutely no possibility" or "no arguably reasonable basis" that state law might not impose liability against Dumar. Accordingly, Defendants fail to meet their fraudulent joinder burden, and no diversity jurisdiction exists.
B. Joinder of Non-Diverse Party
Alternatively, even if this were not a case of fraudulent joinder, but instead is considered an attempt to add a non-diverse party post-removal that would destroy diversity jurisdiction, for the reasons stated above, the Court would allow amendment to join Defendant Dumar and would remand this action pursuant to 28 U.S.C. § 1447 (e).
28 U.S.C. § 1447 (e) (2001) provides that if a court permits the joinder of an additional defendant whose joinder would destroy subject matter jurisdiction, the court may "permit joinder and remand the action to State court." Id. The court must balance the original defendant's interest in maintaining a federal forum with the competing interest in not having parallel lawsuits. See Hensgens v. Deere Co., 833 F.2d 1179, 1182 (5th Cir. 1987). In this determination, the court examines (1) the extent to which the purpose of the amendment is to defeat federal jurisdiction; (2) whether plaintiff has been dilatory in asking for amendment; (3) whether plaintiff will be significantly injured if amendment is not allowed; and (4) any other factors bearing on the equities. See Id.; see also Cannon v. Hartford Insurance Co. of the Midwest, No. CIV. A. 3:97-CV-1912-D, 1997 WL 760500 at *1 (N.D. Tex. Nov. 19, 1997) (Fitzwater, J.); Sanders v. GMC, No. 3:01-CV-1579-M, 2001 WL 1297443 at *1 (N.D. Tex. Oct. 10, 2001) (Lynn, J.).
The first and second factors to be considered are whether Porter sought to add Dumar as a party to defeat federal jurisdiction and whether such request was dilatory. As was previously noted by the Court, Plaintiff amended her petition to add a slander claim against Dumar, a resident of the State of Texas, only three days after filing her original petition in state court and one day after Brietling USA, Inc. filed its own declaratory action in federal court. Although the timing of the filing of Plaintiffs amended complaint can be characterized as suspicious, it is true that Porter added her claims against Dumar well before the Removal Defendants filed their Notice of Removal with this Court on December 18, 2001. Moreover, the Court is not persuaded that Defendants could not have obtained a certified copy of the amended complaint from the state court clerk after its filing on November 21, 2001. Thus, the Court finds that factors one and two favor Porter.
The third factor considers whether Porter will be significantly injured if the motion is denied. The Court discerns no significant injury, although the Court explains below why it is preferable for Plaintiff to be allowed to pursue its claims against all Defendants in one suit in state court. Thus, the court deems this factor to be neutral.
Finally, the fourth factor asks the court to consider whether any other factors bear on the equities. As it is more fully explained throughout this order, there are common issues of fact and law between the claims brought by Plaintiff against Dumar and those brought against the other Defendants, specifically the alleged making of defamatory statements by both Dumar and Bodman following her termination. Therefore, the Court finds that these claims should be litigated together as the equities weigh in favor of allowing Porter to join Dumar as a party-defendant. As such, the plain language of § 1447(e) requires a remand in the event the court permits a non-diverse party to be joined.
C. Supplemental Jurisdiction
Alternatively, Defendants argue that remand is improper here because federal subject matter jurisdiction exists over Brietling USA, Inc.'s claim against Porter brought under the Declaratory Judgment Act, 28 U.S.C. § 2201, and as such the Court may exercise supplementary jurisdiction over Plaintiffs tort law, conspiracy, and employment-based claims pursuant to 28 U.S.C. § 1367 (a). See Def.'s Resp. to Pl.'s Mot. to Remand at 7-8. Defendants, however, ignore the well established authority that the federal Declaratory Judgment Act does not confer independent subject matter jurisdiction on this Court. See Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 69-672 (1950); see also Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1, 14-18 (1983) (noting that federal defenses to state law actions do not "arise under" federal law for the purpose of federal question jurisdiction even when asserted in a declaratory judgment complaint). Having already found a lack of complete diversity between the parties, and Defendants' inability to identify an independent federal question cause of action, the Court cannot exercise its supplemental jurisdiction over Plaintiffs non-diverse state law claims pursuant to 28 U.S.C. § 1367 (a).
Moreover, in its statement of jurisdiction, Brietling USA, Inc. noted that the court had jurisdiction over the subject matter of its Declaratory Judgment action by virtue of the diversity of citizenship of the parties and the minimal amount in controversy exceeded $75,000. Pl.'s Compl. at 1-2.
II. Declaratory Judgment Action
The Declaratory Judgment Act permits federal courts to "declare the rights and other legal relations of any interested party seeking such declaration. . . ." 28 U.S.C. § 2201 (a) (2001). This section provides an authorization, but not a command, for jurisdiction. See Public Affairs Assoc., Inc. v. Rickover, 369 U.S. 111, 112 (1962). Therefore, a federal district court has broad discretion in determining whether and when to entertain an action for declaratory judgment. Wilton v. Seven Falls Co., 515 U.S. 277, 282 (1995) (citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 495 (1942)). However, district courts cannot decline to entertain such an action as a matter of whim or personal disinclination. Public Affairs Assoc., 369 U.S. at 112.
The relevant factors that a court must consider when deciding whether to stay or dismiss a declaratory judgment action in favor of a pending action in another forum include: (1) whether there is another pending action in which all of the matters in controversy may be fully litigated; (2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant; (3) whether the plaintiff engaged in forum shopping in bringing the suit; (4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist; (5) whether this court is a convenient forum for the parties and witnesses; and (6) whether retaining the lawsuit would serve the purposes of judicial economy. See Travelers Ins. Co. v. La. Farm Bureau Fed'n, 996 F.2d 774, 778 (5th Cir. 1993); see also Dallas Semiconductor Corp. v. Credit Suisse First Boston Corp., No. Civ. A. *3:01-CV-0851-P, 2001 WL 1142643 at *3 (N.D. Tex. Sept. 26, 2001) (Solis, J.). Each of these factors shall be considered in turn.
With respect to the first factor, this Court finds that following remand of Porter's case to the 134th Judicial District, Dallas County, Texas, there will be a nearly identical and more comprehensive suit pending in state court in which the parties may adjudicate their claims. As Defendants themselves acknowledged in their Amended Notice of Removal, "the case and controversy between the parties in [the Declaratory Judgment action] is similar to the dispute in [Plaintiffs] state case for which removal [was sought]." See Am. Notice of Removal at 5. In addition, the scope of the parallel state court action is broader than that of the present action in federal court since the additional claims of slander against the non-diverse Mr. Dumar cannot be added to the federal declaratory action, as previously stated in this Order. See Granite State Ins. Co. v. Honeywell, Inc., No. Civ.A. 3:98-CV-1362-P, 1999 WL 68646 at *3 (N.D. Tex. Feb. 4, 1999) (Solis, J.) (finding the same).
As for the second and third factors, in light of the facts before the Court, there appears to be little doubt that both Porter and Brietling USA, Inc.'s filed their respective suits in an apparent attempt to gain an alternative forum to adjudicate their dispute. In fact, it was only two days after Porter filed her suit in state court that Brietling filed its own suit in federal court seeking to resolve an issue identical to what was before the state court: what liability, if any, did Brietling have to Porter under the Sabine Pilot doctrine. Such suits are generally disfavored because they are simply considered evidence of forum-shopping. See Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599, 602 n. 3 (5th Cir. 1983). "Using a declaratory judgment action to race to res judicata or to change forums is thoroughly inconsistent with the purposes of the [Declaratory Judgment] Act and should not be countenanced." First Health Strategies (TPA), Inc. v. Security Life of Denver Ins. Co., 998 F. Supp. 712, 716 (N.D. Tex. 1997) (Solis, J.). In any event, factors two and three are neutral in determining whether to stay or dismiss Brietling USA, Inc.'s declaratory action in favor of Porter's state court action.
Factor four under Travelers also appears to favor resolution of this dispute in the state court because by allowing Defendant to proceed with its declaratory judgment action, the Court would be inequitably denying Porter her choice of forum and unnecessarily delaying the adjudication of all her claims against the Defendants. See PAJ, Inc. v. Yurman Design, Inc., No. Civ. A. 3:98-CV-2847-P, 1999 WL 6851 at *3 (ND. Tex. Feb. 9, 1999) (Solis, J.) (holding that the misuse of the Declaratory Judgment Act to gain a procedural advantage and preempt the forum choice of the [true] plaintiff in the coercive action militates in favor of dismissing the declaratory judgment action).
Factor number five does not weigh either in favor or against keeping the federal declaratory action here since both of these suits would be heard within Dallas County, with no further inconvenience either to the parties or to any witnesses.
Finally, as for factor number six, dealing with the interests of judicial economy, the Court holds that it does not favor resolution of Brietling's declaratory action in federal court. As a practical matter, resolution of the state court proceedings will likely resolve the issues raised in the federal complaint. As the Supreme Court has cautioned, "it would be uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties." Brillhart v. Excess Ins. Co. of Am., 316 U.S. 491, 495 (1942). Thus, allowing the federal suit to continue would be inconsistent with the purpose of the Declaratory Judgment Act, which is to avoid multiplicity of suits and circuity of actions. United Nat'l Ins. Co. v. Bradleys Elec. Inc., Civ.A. No. H-94-0349, 1995 U.S. Dist. LEXIS 19685, at *11 (S.D. Tex. Mar. 21, 1995).
After a review of the law and facts surrounding the declaratory judgment action, this Court, in the exercise of its discretion, finds it most appropriate to STAY this action in deference to the remanded state court suit brought by Plaintiff Lisa Marie Porter against Defendants Brietling USA, Inc., Brietling, S.A., Marie Bowman, and Robert Dumar on November 21, 2001.
CONCLUSION
Having considered Texas law and the parties' arguments, the Court finds that there exists a possibility that a cause of action can be maintained against Defendant Dumar under the facts as alleged. As a result, the Court finds that Porter's Motion to Amend the Court's January 21, 2001 Order of Consolidation and Porter's Motion to Remand shall and are hereby GRANTED. The Court is further of the opinion that Defendant Brietling USA, Inc.'s Declaratory Judgment action should be STAYED pending resolution of Plaintiffs state case.
ACCORDINGLY, this case is hereby REMANDED to the 134th Judicial District, in Dallas County, Texas.
So Ordered.