Interstate Serv. Provider, Inc. v. Jordan

• Decision Date: 09 June 2021
• Docket Number: Civil Action No. 4:21-cv-267
• Parties: INTERSTATE SERVICE PROVIDER, INC., Plaintiff, v. WAYNE JORDAN, ET AL., Defendants.
• Court: U.S. District Court — Eastern District of Texas

INTERSTATE SERVICE PROVIDER, INC., Plaintiff, v. WAYNE JORDAN, ET AL., Defendants.

Civil Action No. 4:21-cv-267

United States District Court EASTERN DISTRICT OF TEXAS SHERMAN DIVISION

June 9, 2021

Judge Mazzant

MEMORANDUM OPINION AND ORDER

Pending before the Court are Defendants' Motion to Stay the Action Pending a Ruling from the Judicial Panel of Multidistrict Litigation (Dkt. #12) and Plaintiff's Motion to Remand (Dkt. #14). After considering the Motions and the relevant pleadings, the Court finds that the Motions should be denied and granted, respectively.

BACKGROUND

Plaintiff Independent Service Provider, Inc. ("ISP") is a Texas corporation which, as a carrier, "engag[es] in the business of receiving, hauling, and delivering multiple classes of freight throughout the United States" (Dkt. #1, Exhibit 2 at p. 59). Defendants in this action include: (1) commercial truck drivers formerly associated with ISP ("Drivers"); (2) Lanter Delivery Systems, LLC ("LDS"), which is a broker; and (3) White Line Systems, LLC ("WLS"), which is a rival carrier ISP alleges to have been created "to directly convert . . . Drivers away from" ISP (Dkt. #1, Exhibit 2 at pp. 59-60). Briefly, ISP alleges that Defendants "hatched a scheme," under which (1) a new company—WLS—would be formed; (2) the Drivers would begin "driving the same routes, using the same trucks, and using the same equipment" for WLS as they had for ISP; and (3) both LDS and WLS would compensate the Drivers and shield them "from legal consequences coming from [ISP] or Regulatory Agencies for any violations" (Dkt. #1, Exhibit 2 at p. 64). This scheme allegedly began "[o]n, or within hours or days within August 22nd, 2020," and has continued ever since (Dkt. #1, Exhibit 2 at pp. 64-65). Based on these allegations, ISP filed suit against Defendants (see Dkt. #1, Exhibit 2 at pp. 65-66).

ISP initially brought this action on February 16, 2021, in the 362nd Judicial District Court of Denton County, Texas (see Dkt. #1, Exhibit 2 at pp. 14-23). ISP subsequently filed an amended complaint in state court on March 12, 2021 (see Dkt. #1, Exhibit 2 at pp. 46-71). On March 31, 2021, WLS filed its notice of removal¹ (Dkt. #1). On April 29, 2021, Defendants filed their Motion to Stay the Action Pending a Ruling from the Judicial Panel of Multidistrict Litigation (Dkt. #12), currently before the Court, requesting the Court stay the proceedings until the Judicial Panel on Multidistrict Litigation ("JPML") rules on the pending motion for transfer and consolidation involving this case (Dkt. #12 at pp. 2-3). See Defs.' Mem. in Supp. of Mot. for Transfer and Consolidation of Related Actions Pursuant to 28 U.S.C. § 1407, In re: Indep. Driver Litig., No. 3008 (J.P.M.L. Apr. 27, 2021), ECF No. 1-1. Then on May 6, 2021, ISP filed its Motion to Remand (Dkt. #14), also currently before the Court. On May 20, 2021, Defendants collectively filed their response to the remand motion (Dkt. #22). On May 24, 2021, ISP filed its reply in support of remand (Dkt. #25). And on June 1, 2021, Defendants filed their sur-reply opposing remand (Dkt. #28).

LEGAL STANDARD

I. Motion to Stay Proceedings Pending MDL Decision

"The authority to stay proceedings is 'incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.'" Huddleston v. FBI, No. 4:20-CV-447, 2021 WL 327510, at *1 (E.D. Tex. Feb. 1, 2021) (quoting Landis v. N. Am. Co., 299 U.S. 248, 254 (1936)). Because stays are "an 'intrusion into the ordinary processes of administration and judicial review,'" Nken v. Holder, 556 U.S. 418, 427 (2009) (quoting Va. Petroleum Jobbers Ass'n v. FPC, 259 F.2d 921, 925 (D.C. Cir. 1958) (per curiam)), they are "not a matter of right, even if irreparable injury might otherwise result," Virginian R. Co. v. United States, 272 U.S. 658, 672 (1926). Instead, stays are "an exercise of judicial discretion." Ind. State Police Pension Tr. v. Chrysler LLC, 556 U.S. 960, 961 (2009) (per curiam).

The orders, pretrial proceedings, and jurisdiction of a transferor court are unaffected when a party petitions the JPML for transfer and consolidation. J.P.M.L. R.P. 2.1(d); see Morales v. Am. Home Prods. Corp., 214 F. Supp. 2d 723, 725 (S.D. Tex. 2002). "In other words, a district judge should not automatically stay discovery, postpone rulings on pending motions, or generally suspend further rulings upon a parties' motion to the MDL Panel for transfer and consolidation." Rivers v. Walt Disney Co., 980 F. Supp. 1358, 1360 (C.D. Cal. 1997). Nevertheless, MDL procedure is a useful "tool for saving precious judge time," Brotherhood of Locomotive Firemen & Enginemen v. Cent. of Ga. Ry. Co., 411 F.2d 320, 326 n.12 (5th Cir. 1969), as "[t]ransfer under § 1407 aims to 'eliminate duplication in discovery, avoid conflicting rulings and schedules, reduce litigation cost, and save the time and effort of the parties, the attorneys, the witnesses, and the courts,'" Gelboim v. Bank of Am. Corp., 574 U.S. 405, 410 (2015) (quoting MANUAL FORCOMPLEX LITIGATION § 20.131 (4th ed. 2004)). See In re: Bank of N.Y. Mellon Corp. Foreign Exch. Transactions Litig., 857 F. Supp. 2d 1371, 1373 (J.P.M.L. 2012) ("Centralization will avoid duplicative discovery, eliminate the risk of inconsistent pretrial rulings, and conserve the resources of the parties, their counsel, and the judiciary."). Accordingly, deciding not to stay a case pending a § 1407 motion must be carefully considered.

"In determining whether to grant a stay, the Court 'weighs competing interests and balances competing hardships.'" Schabbing v. Teva Pharm. USA, Inc., No. 4:20-CV-761, 2020 WL 7396526, at *1 (E.D. Tex. Dec. 17, 2020) (quoting Nguyen v. BP Expl. & Prod., Inc., No. CIV.A. H-10-2484, 2010 WL 3169316, at *1 (S.D. Tex. Aug. 9, 2010)). The three factors courts generally examine to make this determination while the JPML considers a § 1407 motion are: "(1) potential prejudice to the nonmovant; (2) hardship and inequity to the movant if the action is not stayed; and (3) the judicial resources to be saved by avoiding duplicative litigation if the cases are consolidated." Curtis v. BP Am., Inc., 808 F. Supp. 2d 976, 979 (S.D. Tex. 2011). And, "[a]t all times, the applicant for a stay 'bears the burden of establishing its need.'" Earl v. Boeing Co., No. 4:19-CV-507, 2021 WL 1080689, at *3 (E.D. Tex. Mar. 18, 2021) (quoting Clinton v. Jones, 520 U.S. 681, 708 (1997)).

II. Motion to Remand

"Federal courts are not courts of general jurisdiction" and can adjudicate only those matters "authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto." Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986); see Pidgeon v. Parker, 46 F. Supp. 3d 692, 697 (S.D. Tex. 2014) ("These limits, based on respect both for other branches of government and for the state courts, must be respected."). "A defendant sued in state court may remove the suit to federal court so long as the federal tribunal would have had original jurisdictionover the action." Grace Ranch, L.L.C. v. BP Am. Prod. Co., 989 F.3d 301, 307 (5th Cir. 2021) (citing 28 U.S.C. § 1441(a)). As such, district courts are duty-bound "to ensure the existence of subject matter jurisdiction before reaching the merits of a case." Small v. Zarvona Energy LLC, No. CV H-20-1572, 2020 WL 2771188, at *1 (S.D. Tex. May 28, 2020); see Humphrey v. Tex. Gas Serv., No. 1:14-cv-485, 2014 WL 12687831, at *2 (E.D. Tex. Dec. 11, 2014) ("In an action that has been removed to federal court, a district court is required to remand the case to state court if, at any time before final judgment, it determines that it lacks subject matter jurisdiction."). "Courts 'must presume that a suit lies outside its limited jurisdiction,' and 'any ambiguities are construed against removal and in favor of remand to state court.'" Lamar Cnty. Elec. Coop. Ass'n v. McInnis Bros. Constr., Inc., No. 4:20-CV-930, 2021 WL 1061188, at *2 (E.D. Tex. Mar. 19, 2021) (brackets omitted) (first quoting Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001); and then quoting Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 397 (5th Cir. 2013)). "When considering a motion to remand, 'the removing party bears the burden of showing that federal jurisdiction exists and that removal was proper.'" Humphrey, 2014 WL 12687831, at *2 (brackets omitted) (quoting Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002)).

ANALYSIS

I. Motion to Stay Proceedings Pending MDL Decision

Defendants seek to stay these proceedings pending the JPML's transfer decision (Dkt. #12 at p. 6). They support their position with arguments organized under the three MDL-stay considerations (see Dkt. #12 at pp. 4-6). After examining their arguments, and given the Court's discretion here, the Court declines to stay the proceedings.

Before engaging Defendants' proffered reasoning, the Court notes its own concerns regarding subject matter jurisdiction in the context of this motion to stay.² Despite their unique nature, MDL proceedings are federal-court actions; as such, they remain subject to the same jurisdictional practices as non-MDL proceedings. City of Holly Springs v. Johnson & Johnson, 477 F. Supp. 3d 547, 549 (N.D. Miss. 2020); see Lockerty v. Phillips, 319 U.S. 182, 187 (1943). Courts cannot exercise the judicial power in any action, including MDL proceedings, absent subject matter jurisdiction. In re Methyl Tertiary Butyl Ether ("MTBE") Prods. Liab. Litig., 175 F. Supp. 2d 593, 603 n.9 (S.D.N.Y. 2001); see In re Depuy Orthopaedics, Inc., 870 F.3d 345, 348 (5th Cir. 2017); see also Richard A. Nagareda, Turning from Tort to Administration, 94 MICH. L. REV. 899, 917 (1996) ("[C]onsolidation mechanisms like the MDL Panel can reach only litigation within the subject matter jurisdiction of the federal courts."). In no way do the MDL procedure and process...