Opinion
Civil Action No: 01-3757 Section: "R" (3)
March 7, 2002
ORDER AND REASONS
Before the Court are plaintiff Davidson S. Ehle, III and co-defendant Kevin Boshea's motions to remand this case to state court. For the following reasons, plaintiff and co-defendant's motions are granted.
I. Background
On November 14, 2001, Davidson S. Ehle, III, an attorney, brought suit in Louisiana state court against Williams Boshea, L.L.C., James A. Williams, president of Williams Boshea, and Kevin Boshea, vice-president of Williams Boshea. Ehle alleged that defendants failed to compensate him as they agreed. In addition, plaintiff asserted a right to penalty wages, attorney fees and court costs under La. Rev. Stat. 23:631 and 23:632, as well as liquidated damages under the Fair Labor Standard Act ("FLSA"), 29 U.S.C. § 201, et. seq. Williams Boshea, L.L.C. and Williams ("Williams defendants") removed the case to federal district court, asserting federal question jurisdiction under the FLSA. Boshea did not join in this petition. In their removal petition, the Williams defendants asserted that Boshea's consent was not required because Boshea was fraudulently joined. (Pet. for Removal, VII.)
Ehle now moves to have the case remanded to state court, arguing that removal was defective because Boshea had not consented to removal. Boshea has also filed a motion to remand based on his non-consent to removal. (Rec. Doc. 5.) The Williams defendants oppose the motion on the grounds that Boshea was fraudulently joined and therefore his consent was not a prerequisite to removal.
II. Analysis
A. Whether FLSA is a proper basis for removal
As an initial matter, the Court notes that neither the Supreme Court nor the Fifth Circuit has decided whether FLSA suits may be removed. See Baldwin v. Sears, Roebuck and Co., 667 F.2d 458, 461 (5th Cir. 1982) ("The question of removability of FLSA actions is not before us, and we do not attempt to address that issue.") While plaintiff has not asserted this argument in its motion to remand, the Court will nonetheless decide this issue since the parties cannot, by consent, confer jurisdiction on a court. See, e.g., Sosna v. Iowa, 419 U.S. 393, 398, 95 S. Ct. 553. 556 (1975).
The central issue here is whether section 216(b) of the FLSA constitutes an express bar to removal because it provides that a party has the option to "maintain" a FLSA action in state court or federal court. Section 216(b) provides in pertinent part:
An action to recover the liability prescribed in either of the preceding sentences may be maintained against any employer (including a public agency) in any Federal or State court of competent jurisdiction . . .
28 U.S.C. § 216(b). The question is whether when Congress gave plaintiffs the option to "maintain" a FLSA action in state court, it expressly prohibited removal for the purposes of Section 1441(a). Section 1441(a) states:
Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant . . . to the district court . . .28 U.S.C. § 1441 (a).
In Cosme Nieves v. Deshler, 786 F.2d 445, 451 (1st Cir. 1986), the First Circuit found that cases brought under the FLSA were removable. The court found that the plain language of 28 U.S.C. § 1441 (a), as amended in 1948, permitted removal under the FLSA. The court interpreted the term "expressly provided" as meaning that an "explicit statutory directive by Congress" was required in order to abrogate the right to remove. Id. Finding that the "may be maintained" in "state court" language did not constitute such an express provision, the Court held that FLSA suits were removable. Id. ("But Congress has made it plain that the right of removal is to stand absent an express provision to the contrary, and it is the responsibility of Congress, not the courts, to speak on the matter if it wishes to foreclose removal of FLSA cases."). See also Emrich v. Touche Ross Co, 846 F.2d 1190, 1196 (9th Cir. 1988) (in dicta); Roseman v. Best Buy, 140 F. Supp.2d 1332 (S.D. Ga. 2001) (providing a thorough analysis of the circuit and district court opinions as well as the legislative history); Winebarger v. Logan Aluminum, Inc., 839 F. Supp. 17, 18 (W.D. Ky. 1993); Ramos v. H.E. Butt Grocery Co., 632 F. Supp. 342 (S.D. Tex. 1986).
Other courts have disagreed with that interpretation and have found that Congress intended to bar the removal of cases arising under the FLSA. See, e.g., Johnson v. Butler Bros., 162 F.2d 87 (8th Cir. 1947) (interpreting the pre-1948 removal statute which did not contain the language "[e]xcept as otherwise expressly provided by Act of Congress. . . ."); Lopez v. Wal-Mart Stores, Inc., 111 F. Supp.2d 865, 866 (S.D. Tex. 2000) (citing cases); Esquival v. St. Andrews Construction, 999 F. Supp. 863, 865 (N.D. Tex. 1998); Pauly v. Eagle Point Software Co., Inc., 958 F. Supp. 437, 439 (N.D. Iowa 1997). In Lopez, the court interpreted the phrase "may be maintained" to mean that plaintiff had "the right to both institute a suit in state court, and also carry that suit to its conclusion." Lopez, 111 F. Supp.2d at 866 ("If Congress merely meant that a plaintiff may institute a suit in state court, there is far more apt language available to express that intention."). Accordingly, the court found that the section 216(b) constituted the type of "express bar" required by section 1441 to preclude removal and remanded the case to state court. Id.
This Court is more persuaded by the reasoning of First Circuit in Cosme Nieve. The Court agrees with the First Circuit that the statement that a FLSA action may be "maintained" in state court is too ambiguous to constitute an express provision barring removal under section 1441(a). The Court also notes that the Fifth Circuit has found that section 1441(a) "creates a broad right of removal." Baldwin, 667 F.2d at 459 (5th Cir. 1982). Further, the Court points to the Fifth Circuit's decision in Baldwin, in which the Fifth Circuit found that similar language found in the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 626 (c) (1), did not constitute an express bar against removal. Id. at 461 (finding ADEA's statement that parties "may bring a civil action in any court of competent jurisdiction" does not permit plaintiff to prosecute the suit to final judgment in state court). See also Ramos, 632 F. Supp. at 343. Accordingly, the Court finds that FLSA suits are removable under section 1441(b).
B. Fraudulent Joinder
Plaintiff asserts that removal in this case was procedurally defective because Boshea did not consent to removal. In general, consent of all defendants is required to remove a case from state to federal court. Doe v. Kerwood, 969 F.2d 165, 167-68 (5th Cir. 1992). A defendant alleging fraudulent joinder, however, is not required to obtain consent of co-defendants before removing case. See Jernigan v. Ashland Oil, Inc., 989 F.3d 812, 815 (5th Cir. 1993) ("In a case involving alleged improper or fraudulent joinder of parties, however, application of this requirement (of consent of all parties] would be nonsensical, as removal in those cases is based on the contention that no other proper defendant exists.").
Once a case has been removed, the party seeking to invoke the Court's jurisdiction bears the burden of establishing its appropriateness. Stafford v. Mobile Oil Corp., 945 F.2d 803, 804 (5th Cir. 1991). To establish that Boshea was fraudulently joined, the Williams defendants bear the heavy burden of showing that there is no possibility that plaintiff could establish a cause of action against Boshea, or that there has been outright fraud in plaintiff's recitation of the jurisdictional facts. See Burden v. General Dynamics Corp., 60 F.3d 213, 217 (5th Cir. 1995); B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981). In evaluating defendants' assertion of fraudulent joinder, the Court must consider all of the factual allegations in the light most favorable to the plaintiff and resolve all of the contested issues of fact in favor of the plaintiff. See Burden, 60 F.3d at 217. The Court may pierce the pleadings to determine fraudulent joinder, and, even though the petition may state a claim against the disputed defendant, the case may be removed if the defendant shows by evidence outside the pleadings that there is no reasonable basis to predict that plaintiff could establish a claim against the disputed defendant. Badon v. R J R Nabisco, Inc., 224 F.3d 382, 389, 394 (5th Cir.) (Badon I), op. after certified question declined, 236 F.3d 282 (5th Cir. 2000) ( Badon II) (there is no controversy to be construed in favor of nonremoving party when it submits no evidence of contradictory facts in response to the evidence of the removing party). See also B., Inc., 663 F.2d at 549. Furthermore, the Court must resolve any uncertainties as to the current state of controlling substantive law in favor of the plaintiff. B., Inc., 663 F.2d at 549. Thus, defendants must show, as a matter of law, that "there is no reasonable basis for predicting that the plaintiff might establish liability on [his] claim against [Boshea]." Badon I, 224 F.3d at 390. See also Burden, 60 F.3d at 216 (District courts "do not determine whether the plaintiff will actually or even probably prevail on the merits of the claim, but look only for a possibility that the plaintiff might do so").
1. State Law Claim
In their motion opposing plaintiff's motion to remand, the Williams defendants argue that Ehle cannot state a claim against Boshea under La. Rev. Stat. 23:631 and 23:632 and the FLSA. Defendants also argue that Boshea has no personal liability because he was a member of "Williams Boshea, L.L.C." In reviewing the complaint, the Court finds, however, that Ehle asserts a claim for recovery of agreed-upon compensation in addition to alleging a claim for penalty wages, attorneys fees and court costs under La. Rev. 23:631 and 23:632 and liquidated damages under FLSA. (Compl., ¶ 9.) In his complaint, plaintiff states that "at the time petitioner's employment with defendants concluded, defendant failed to compensate petitioner for [his] unpaid fee split for the fourth quarter 2000, first quarter 2001, and second quarter 2001." (Compl., ¶ 5.) Plaintiff seeks "the full amount due ($20,336.65), the full amount due under LSA-R.S. 23:631 and 23:632 plus the full amount due under the Fair Labor Standards Act $40,673.30." ( Id., ¶ 9.)
In this case, the Court finds that the Williams defendants have not negated the possibility that personal liability attaches to Boshea under state law. In his affidavit, Ehle asserts that on January 29, 2000, he negotiated the terms of a partnership agreement with Williams and Boshea at Boshea's office in New Orleans. (Suppl. Mem. Supp. Mot. to Remand, Ex. A., Aff. Ehle, ¶ 2.) Under the terms of the agreement, the three men would form a firm called "Williams, Boshea Ehle, L.L.C." ( Id., ¶ IV.) As compensation, Ehle would receive $75,000 and one-third share of the business he generated. (Compl., ¶ 3.)
Ehle asserts that "Williams, Boshea, Ehle, L.L.C." was never registered with the State of Louisiana as a limited liability company, and therefore was never formed. La. Rev. Stat. § 12:1304 governs the formation of a limited liability company and provides:
A. Two or more persons capable of contracting may form a limited liability company by filing the articles of organization, or a multiple original thereof, and the initial report with the secretary of state. . . .
B. Upon the issuance of the certificate of organization, the limited liability company shall be duly organized, and it separate existence shall begin as of the time of filing of the articles of organization, or multiple original thereof, with the secretary of state. . . .
La. Rev. Stat. § 12:1304(A) and (D). In support of his assertion, Ehle submits a list of businesses listed with the Louisiana Secretary of State and "Williams, Boshea Ehle, L.L.C." is not listed as a business registered with the state. (Supp. Mem. Supp. Mot. to Remand, Ex. C.) Nevertheless, Ehle asserts that he provided services under the terms of the Agreement: He alleges that he was never paid the one-third share of business he generated, which now forms the basis of his claim against defendants.
The Williams defendants argue that Ehle can only state a claim against "Williams Boshea, L.L.C.," and not against Boshea or Williams in their individual capacities. The Court disagrees. In his affidavit, Ehle denies that he was ever employed by "Williams Boshea, L.L.C." (Suppl. Mem. Supp. Not. to Remand, Ex. A, Aff. Ehle, ¶ III.) In support, Ehle submits his miscellaneous income tax forms from 2000 which show that he was paid by "Williams, Boshea Ehle, L.L.C." and "James A. Williams, L.L.C." ( Id., Ex. B.) Ehle was never paid by "Williams Boshea, L.L.C." Indeed, that Ehle was paid by "Williams, Boshea, Ehle, L.L.C." bolsters Ehle's assertion that-the parties intended to form such an L.L.C.
In addition, the facts arguably show that when Ehle met with Williams and Boshea, Ehle was dealing with them as individuals-that is, as potential business associates with whom to form a new L.L.C. — rather than as the entity of "Williams Boshea, L.L.C." Under these circumstances, the Court cannot say that Ehle would be unable to state a claim against Boshea under Louisiana state law, since the new entity never achieved a separate existence from the individuals who allegedly would become its members. Accordingly, because Boshea did not consent to removal, the Court finds that the removal petition is defective and remands the case to state court.
III. Conclusion
For the foregoing reasons, the Court grants the motions to remand filed by plaintiff and co-defendant.