Lerma v. Univision Communications, Inc., 99-C-447.

Citation52 F.Supp.2d 1011
Decision Date11 June 1999
Docket NumberNo. 99-C-447.,99-C-447.
PartiesRamon LERMA d/b/a Blue Screen Advertising, Robert Monteagudo, Delta Morales, Mario Omar d/b/a Biei Advertising, Yvette Velasquez d/b/a Mufflers for Less, and W46AR Channel 46, Plaintiffs, v. UNIVISION COMMUNICATIONS, INC., Defendant.
CourtUnited States District Courts. 7th Circuit. United States District Court of Eastern District of Wisconsin

Scott W. Hansen, Milwaukee, WI, for Plaintiffs.

Thomas L. Shriner, Milwaukee, WI, for Defendant.


ADELMAN, District Judge.

Issues of fraudulent joinder and antitrust coalesce in this case involving the decision of the sole provider of Spanish-language television programming in the Milwaukee area to switch from over-the-air broadcasting to a direct cable feed.


Plaintiffs filed this lawsuit and a motion for a temporary restraining order on Wednesday, April 28, 1999, seeking to prevent defendant Univision Communications, Inc. from terminating plaintiff W46AR Channel 46's over-the-air broadcast of Univision's Spanish-language network programming. Channel 46's contractual right to broadcast Univision programming was due to expire on April 30.

Plaintiffs filed the case in Milwaukee County Circuit Court and waited in the courtroom of the assigned judge, Lee Wells,1 for an opportunity to address the TRO request. When the case was called, Judge Wells telephoned defendant's general counsel, located in Los Angeles, California, who then conferenced in outside counsel, also located in California. The court and parties discussed the matter and then scheduled an expedited hearing for the next day, Thursday, April 29, at 2:00 p.m. At the end of the telephone conference, however, Judge Wells stated as follows:

Here's what I'm going to do, though, so that the status quo is retained until we have our hearing tomorrow, and that is as follows:

That is, I am verbally ordering that the status quo procedure remain now and intact until such time as at the conclusion of tomorrow's hearing, at which time I'll take some action one way or the other, and that is that Channel 46 must remain in business. They must continue to be able to transmit programming through — provided by Univision in the same manner that they are right now, not being on cable but being regular television programming without Cable TV, and that will be the order at least until tomorrow until I can make some decision on what I hear tomorrow; and tomorrow I'll make a new order one way or the other, one way on this aspect as well as the other aspects requested by the plaintiff or the defendant or both.

(Tr. of 4/28/99 at 36.) Upon an objection by Univision's attorneys because the "order is unnecessary ... because the contract doesn't expire until the 30th," the judge indicated: "I know. But the reason I'm doing this is I wouldn't want somebody down there in your office to haphazardly decide to cancel tomorrow and, therefore, claim we're not retaining the status quo; and that's why I'm doing it to protect the status quo." (Id. at 36-37.)

At 1:23 p.m. the next day, Univision removed the case to federal court, where it was assigned to me. Counsel for Univision attended the state court's hearing at 2:00 p.m. but made no formal appearance, instead informing Judge Wells of the removal. Noting that removal prevented him from doing anything further in the case, Judge Wells nevertheless noted that

because of ... the needs of the community to have the benefit of ongoing free television for Hispanics and Latinos in this community, I did order a temporary restraining order on the record, and that order remains intact and in place until there's further order of this Court. Since I cannot make further order of this Court, it remains intact unless otherwise changed or altered or removed by some other Court of appropriate jurisdiction.

(Tr. of 4/29/99 at 4-5.)

On Friday, April 30, my chambers contacted the parties' attorneys to arrange a TRO hearing and further proceedings in the case. Also on April 30, plaintiffs filed a motion to remand the case to state court. Upon the setting of an in-person status conference for the following Tuesday, May 4, Univision's counsel questioned the validity of Judge Wells's order but agreed to abide by it until the status conference could be held.

Defendants removed this case under 28 U.S.C. § 1332 based on diversity jurisdiction. It is undisputed that more than $75,000 is involved. But according to the complaint and notice of removal, plaintiffs Ramon Lerma and Mario Omar are citizens of California, and defendant Univision Communications, Inc. has its principal place of business in California. Lerma, Omar and Univision thus are citizens of the same state, which ordinarily defeats federal court subject matter jurisdiction. Hoosier Energy Rural Elec. Co-op., Inc. v. Amoco Tax Leasing IV Corp., 34 F.3d 1310, 1314-15 (7th Cir.1994) (diversity must be "complete," meaning that no plaintiff may be a citizen of the same state as any defendant). Whether the case should remain in this court therefore was a serious question.

At the May 4 status conference I indicated that I would address the motion to remand before dealing with the TRO because of my belief that in the absence of federal subject matter jurisdiction, the decision on the TRO should be handled by the state court. The parties agreed to a briefing schedule for the remand motion and Univision agreed to continue supplying Channel 46 with broadcasting until I could issue a decision. On May 24, 1999, I heard oral argument on the remand motion.

Since then Univision filed a motion to dismiss. Plaintiffs in turn moved to stay briefing on and consideration of the motion to dismiss until the remand issue is decided.


While diversity ordinarily must be complete for federal court subject matter jurisdiction to exist, plaintiff cannot avoid diversity jurisdiction by fraudulently joining nondiverse parties. Id. at 1315. Thus, if Univision can show that the joinder of Lerma and Omar was fraudulent, as it alleged in its notice of removal, removal will nevertheless be allowed. See Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 66 L.Ed. 144 (1921); Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir.1992).

Joinder is fraudulent when there are false allegations of jurisdictional fact, or more commonly and as is alleged here, when the claim against the nondiverse defendant has no possible chance of success in state court. Hoosier Energy, 34 F.3d at 1315. Even though plaintiffs filed the motion to remand, the removing party bears the burden of proving fraudulent joinder, see Wilson, 257 U.S. at 97, 42 S.Ct. 35, and the burden is a heavy one. The removing party must show that, after resolving all issues of fact and law in favor of the plaintiffs, the nondiverse plaintiffs cannot establish a cause of action against the defendant. Poulos, 959 F.2d at 73. If there is any reasonable possibility that a state court would rule against the nondiverse defendant, then joinder is not fraudulent. Id. If there is any doubt as to the right of removal, ambiguities are to be resolved against removal. Tom's Quality Millwork. Inc. v. Delle Vedove USA, Inc., 10 F.Supp.2d 1042, 1044 (E.D.Wis.1998).

When analyzing whether Lerma and Omar can establish a cause of action against Univision I look at the allegations in the complaint. See Poulos, 959 F.2d at 74 ("only present allegations count"); Lynch Ford. Inc. v. Ford Motor Co., 934 F.Supp. 1005, 1007 (1996) (where plaintiff alleged additional facts in support of its theory in motion to remand, "[t]hose factual allegations will be ignored .... [T]he Court's inquiry is limited to the factual assertions of [the] complaint."). Jurisdiction depends on the situation at the time of removal. Id.

As a result, I must analyze the claims made by Lerma and Omar as pled in the complaint to determine whether there is a reasonable possibility that Lerma and Omar could prevail. The inquiry is similar to an analysis under Federal Rule of Civil Procedure 12(b)(6).

A. General Allegations in the Complaint

According to the complaint, Univision is the largest and most dominant Spanish-language broadcast network in the United States, with 90 percent of the national market for Spanish-language television and 100 percent of the Milwaukee area market. (Compl. ¶¶ 1 & 12.) The only other Spanish-language broadcast network in the country, Telemundo, has no presence in Milwaukee. (Compl. ¶ 15.)

For over nine years Univision has broadcast its programming in the Milwaukee area over W46AR Channel 46, which supplies the Milwaukee area with free, over-the-air broadcasting. (Compl.¶ 1.) Channel 46 is the only station in the Milwaukee area that currently broadcasts Spanish-language programming. (Compl.¶ 5.) Univision now plans to withdraw its programming from Channel 46 and make it available only through cable television. (Compl.¶ 3.) Univision's switch to a direct-feed on cable thus will deprive persons in the Milwaukee area of the free broadcast of any Spanish-language programming. (Compl.¶ 16.)

More than half of the 19,000 Milwaukee area Hispanic households currently do not have cable television. (Compl. ¶¶ 2 & 13.) Many of these households depend exclusively or primarily upon Spanish-language television programming for news, entertainment, sports, and other local and national information. Most of these families— those who do not or cannot purchase cable packages — have access to Univision's programming only through Channel 46. (Compl.¶ 14.)2

Plaintiff Ramon Lerma is a California resident who runs an advertising agency called Blue Screen Advertising. Plaintiff Mario Omar owns an advertising agency located in California, called BIEI Advertising. Both Blue Screen and BIEI buy and sell advertising time for broadcast in Hispanic communities. (Compl. ¶¶ 9 & 10.) Blue Screen and BIEI need access to local advertising time to reach Hispanic communities within certain areas....

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