Gentle v. Lamb-Weston, Inc.

• Decision Date: 07 July 1969
• Docket Number: Civ. No. 1761.
• Citation: 302 F. Supp. 161
• Parties: Arthur GENTLE and Warren Gentle d/b/a Gentle & Sons, et al., Plaintiffs, v. LAMB-WESTON, INC., an Oregon corporation, Defendant.
• Court: U.S. District Court — District of Maine

302 F. Supp. 161

Arthur GENTLE and Warren Gentle d/b/a Gentle & Sons, et al., Plaintiffs, v. LAMB-WESTON, INC., an Oregon corporation, Defendant.

Civ. No. 1761.

United States District Court D. Maine, N. D.

July 7, 1969.

Roger A. Putnam, Howard H. Dana, Jr., Portland, Me., Lynwood E. Hand, Houlton, Me., for plaintiffs.

Daniel T. Drummond, Jr., Paul A. Wescott, Hugh G. E. MacMahon, Portland, Me., for defendant.

OPINION AND ORDER OF THE COURT

GIGNOUX, District Judge.

This matter is before the Court on plaintiffs' motion for remand to the Aroostook County, Maine Superior Court. The pertinent facts may be briefly stated. On September 30, 1968, nine plaintiffs, all Maine citizens and potato farmers residing in Aroostook County, commenced an action for breach of contract in the Aroostook County Superior Court against Snow Flake Canning Co., a Maine corporation engaged in the canning and processing of various foods. Several months prior thereto, unbeknownst to plaintiffs' counsel, Snow Flake had merged with Lamb-Weston, Inc., an Oregon corporation, the latter surviving. Upon being appraised of this, plaintiffs' counsel brought the present action in the same court on December 23, 1968 naming Lamb-Weston as defendant. The second action seeks the same relief and differs only in that there are three additional plaintiffs, one of whom is George O. Tamblyn, an Oregon citizen. Shortly before the filing of the second action, Tamblyn, who was a law school classmate of an attorney in the law firm representing plaintiffs, took an assignment of 1/100 of each plaintiff's claim.¹ It is undisputed that Tamblyn had no previous interest in the litigation and agreed to take the assignments at the request of, and as an accommodation to, his classmate.² The conceded purpose of the assignments was to defeat an anticipated removal to this Court by defendant under 28 U.S.C. § 1441(a) (1964) by destroying the complete diversity of citizenship required for federal jurisdiction under 28 U.S.C. § 1332(a) (1) (1964). See Hyde v. Ruble, 104 U.S. 407, 26 L.Ed. 823 (1882)³. Nevertheless, on January 13, 1969 defendant removed the action to this Court, and on February 3, 1969 plaintiffs filed the pending motion for remand, on the ground that this Court lacks subject matter jurisdiction "in that George O. Tamblyn, plaintiff and Lamb-Weston, Inc., defendant, are both citizens of the State of Oregon. * * *"

Through this cynical device, plaintiffs seek to benefit from whatever local prejudice a trial against a foreign corporation before an Aroostook County jury might afford them. The central issue⁴ then is whether this Court is powerless to protect its jurisdiction and the constitutional (Art. III, § 2, cl. 1) and statutory (28 U.S.C. § 1332 (1964)) right of a defendant of diverse citizenship to have a federal forum free from the potentiality of local bias.⁵ The Court concludes that it is not.

Congress has provided that a federal district court shall not have jurisdiction of an action in which a party has been "improperly or collusively made or joined" for the purpose of creating federal jurisdiction. 28 U.S.C. § 1359 (1964)⁶. There is no similar statutory provision, however, barring collusive action to defeat federal jurisdiction. While conceding that remedial legislation is called for, plaintiffs say it is for Congress, and not the courts, to correct this evil, and that controlling authority has sanctioned the type of arrangement present in this case.

In support of their position plaintiffs place principal reliance on Provident Savings Life Assurance Society v. Ford, 114 U.S. 635, 5 S.Ct. 1104, 29 L.Ed. 261 (1885) and Mecom v. Fitzsimmons Drilling Co., 284 U.S. 183, 52 S.Ct. 84, 76 L.Ed. 233 (1931). Provident was a case in which a judgment was assigned to plaintiff for the purpose of preventing removal from the state to the federal court. The Supreme Court affirmed the state court's refusal to grant removal, observing:

It, may, perhaps, be a good defence to an action in a state court to show that a colorable assignment has been made to deprive the United States court of jurisdiction; but, as before said, it would be a defence to the action, and not a ground of removing that cause into the federal court.

114 U.S. at 641, 5 S.Ct. at 1107. Accord, Oakley v. Goodnow, 118 U.S. 43, 6 S.Ct. 944, 30 L.Ed. 61 (1886); Leather Manufacturers' Bank v. Cooper, 120 U.S. 778, 7 S.Ct. 777, 30 L.Ed. 816 (1887); Carson v. Dunham, 121 U.S. 421, 7 S.Ct. 1030, 30 L.Ed. 992 (1887).

In Mecom an administrator was selected for the sole purpose of defeating diversity jurisdiction. The Supreme Court there held that the administrator's motion to remand to the state court should have been granted, stating:

It is clear that the motive or purpose that actuated any or all of these parties in procuring a lawful and valid appointment is immaterial upon the question of identity or diversity of citizenship. To go behind the decree of the probate court would be collaterally to attack it, not for lack of jurisdiction of the subject-matter or absence of jurisdictional facts, but to inquire into purposes and motives of the parties before that court when, confessedly, they practiced no fraud upon it. * * * It has been uniformly held that, where there is a prima facie joint liability, averment and proof that resident and nonresident tortfeasors are jointly sued for the purpose of preventing removal does not amount to an allegation that the joinder was fraudulent, and will not justify a removal from the state court (citations omitted). The facts disclosed in this record fall far short of proof of actual fraud such as was held sufficient to justify removal in * * * (citations omitted).

284 U.S. at 189-190, 52 S.Ct. at 87.

Plaintiffs assert that in light of the Provident line of cases and of Mecom, federal courts must unquestioningly honor the most colorable attempts to deprive them of their jurisdiction, at least until Congress provides otherwise. However, Provident and its progeny all involved assignments of entire claims, not partial assignments. As defendant aptly points out, "It is one thing to say that diversity may be destroyed by an assignment of the assignor's entire claim and quite another to say that diversity may be destroyed by the assignment of a mere one per cent of a claim." The Supreme Court has never spoken on the effectiveness of a partial assignment to destroy diversity. And a fractional assignment, where the assignor remains a party for the purpose of profiting from local prejudice, is manifestly less defensible. Nor is Mecom compelling authority for plaintiffs' position. That case involved, not a colorable assignment, but the appointment of an administrator for the purpose of defeating removal. The Court was quite obviously reluctant to permit a collateral attack on the lawful and valid decree of the state court which appointed the administrator. See Wright, Federal Courts 88 (1963). In Kramer v. Caribbean Mills, Inc., supra, the Supreme Court itself has recognized the distinction between cases of appointment and cases of assignment:

Cases involving representatives vary in several respects from those in which jurisdiction is based on assignments: (1) in the former situation, some representative must be appointed before suit can be brought, while in the latter the assignor normally is himself capable of suing in state court; (2) under state law, different kinds of guardians and administrators may possess discrete sorts of powers; and (3) all such representatives owe their appointment to the decree of a state court, rather than solely to an action of the parties.

394 U.S. at 827, 89 S.Ct. at 1490. See also Ferrara v. Philadelphia Laboratories, Inc., 272 F.Supp. 1000, 1015-1016 n. 7 (D.Vt.1967), aff'd mem., 393 F.2d 934 (2d Cir. 1968).

In assessing the present weight of Supreme Court precedent, it must be borne in mind that the Court has not spoken on the effectiveness of assignments to destroy diversity jurisdiction since 1887 and that it has never spoken on the effectiveness of partial assignments to destroy diversity. Moreover, in the years since 1887 the Court has condemned similar practices in a way which makes it clear that the federal courts should be alert to protect their jurisdiction against cleverly-designed maneuvers designed by ingenious counsel to defeat it. Thus, in Ex parte Nebraska, 209 U.S. 436, 28 S.Ct. 581, 52 L.Ed. 876 (1908), the Court refused to accept the appearance of the State of Nebraska as a party plaintiff and its allegation of an interest in the action as conclusive. Instead, the Court held that the federal circuit court properly refused to remand the case to the state court because, on an examination of the entire record, it was apparent that the State of Nebraska was a mere nominal party plaintiff with no substantial interest in the controversy. Likewise, in Wecker v. National Enameling and Stamping Co., 204 U.S. 176, 27 S.Ct. 184, 51 L.Ed. 430 (1907), the plaintiff, in a tort action, joined a co-defendant for the express purpose of destroying diversity. Since the sham was apparent (because the codefendant could not conceivably have been liable), the Supreme Court affirmed the circuit court's refusal to remand to the state court. The Court concludes its opinion with the following words of admonition, applicable here:

While the plaintiff, in good faith, may proceed in the state courts upon a cause of action which he alleges to be joint, it is equally true that the Federal courts should not sanction devices intended to prevent a removal to a Federal court where one has that right, and should be equally vigilant to protect the right to proceed in the Federal court as to permit the state courts, in proper cases, to retain their own jurisdiction.

204 U.S. at 185-186, 27 S.Ct. at 188 (emphasis added). Accord, Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 42 S.Ct. 35, 66 L.Ed. 144 (1921)⁷. See also Pullman Co. v. Jenkins, 305...