Midwestern Distribution v. Paris Motor Freight Lines

• Decision Date: 26 April 1983
• Docket Number: No. LR-C-81-875.,LR-C-81-875.
• Citation: 563 F. Supp. 489
• Parties: MIDWESTERN DISTRIBUTION, INC., Plaintiff, v. PARIS MOTOR FREIGHT LINES, INC. & Clarence E. Herdison, Defendants.
• Court: U.S. District Court — Eastern District of Arkansas

563 F. Supp. 489

MIDWESTERN DISTRIBUTION, INC., Plaintiff, v. PARIS MOTOR FREIGHT LINES, INC. & Clarence E. Herdison, Defendants.

No. LR-C-81-875.

United States District Court, E.D. Arkansas, W.D.

April 26, 1983.

Frank S. Hamlin, Little Rock, Ark., for plaintiff.

Robert E. Hornberger, Fort Smith, Ark., for defendants.

Laura Hensley, Little Rock, Ark., for intervenor.

MEMORANDUM AND ORDER

EISELE, Chief Judge.

Defendants removed this case from the Circuit Court of Faulkner County, Arkansas, on December 18, 1981. In their Petition for Removal, the defendants asserted that the Court had subject matter jurisdiction because diversity of citizenship existed between the parties and the amount in controversy exceeded $10,000.00. The plaintiff now asserts that the removal was improper because the defendants, as citizens of the forum state, are precluded under the plain language of 28 U.S.C. § 1441(b) (1976) from removing the case to federal district court. Because the Court finds that the defendants improperly removed the case and that the plaintiff has not waived its right to seek remand, the Court remands the case to the Circuit Court of Faulkner County.

I. FACTS

This case stems from a collision between two tractor-trailers on February 1, 1981, near Mayflower, Arkansas. The plaintiff, Midwestern Distribution, Inc., is a citizen of the State of Kansas. The two defendants, Paris Motor Freight Lines, Inc., and Clarence E. Herdison, who is employed as a driver for Paris Motor Freight Lines, are citizens of the State of Arkansas. The collision involved one tractor-trailer driven by Jeffrey D. Frankel and another driven by defendant Herdison. The plaintiff owned the trailer being pulled by Frankel's tractor and, by virtue of a subrogation agreement, has purportedly acquired title to the tractor. It filed suit in the Circuit Court of Faulkner County, Arkansas, on November 21, 1981, for greater than $10,000 in compensatory and punitive damages allegedly sustained in the collision.

On December 18, 1981, the defendants removed the case to the Eastern District of Arkansas. Five days later they filed their Answer and Counterclaim, in which they contended that the plaintiff was liable for physical damage caused to Paris Motor Freight Lines' tractor-trailer and for personal injuries sustained by Herdison. The plaintiff filed its reply to the defendants' counterclaim on January 8, 1982.

On January 14, 1982, Liberty Mutual Insurance Company, the workers' compensation insurance carrier for defendant Paris Motor Freight Lines, filed a Motion to Intervene in the action. Liberty Mutual contended that since it had paid workers' compensation benefits and medical benefits to defendant, Herdison, it was entitled to intervene pursuant to Ark.Stat.Ann. § 81-1340 (Repl.1976) to attempt to recover its payments. Plaintiff did not object and the Court granted the motion on January 27, 1982. After Liberty Mutual filed its complaint in intervention on March 1, 1982, both the plaintiff and the defendants filed separate answers.

The parties took no further action on the case until June 23, 1982, when the plaintiff filed the pending Petition for Remand. The plaintiff contends that the case has been improperly removed because the two defendants are citizens of the State of Arkansas in whose court the case was originally filed. In its July 6, 1982, response, the defendants apparently concede that the removal was not proper. They contend, however, that due to the diversity of citizenship between the plaintiff and the defendants, this was a case that could have been brought in the federal district court. The defendants argue that by filing answers to the defendants' counterclaim and the intervenor's complaint and by waiting six months before filing its motion to remand, the plaintiff has effectively waived its right to seek remand.

II. APPLICABLE LAW

The right to remove a state civil action to federal court under § 1441 is premised upon the existence of proper federal subject matter jurisdiction. American Fire & Casualty Co. v. Finn, 341 U.S. 6, 18, 71 S.Ct. 534, 542, 95 L.Ed. 702 (1951); First National Bank in Little Rock v. Johnson & Johnson, 455 F.Supp. 361, 363 (E.D.Ark. 1978). Section 1441(a) provides:

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 or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.

The Court recognizes that diversity of citizenship existed when the complaint was filed and when the defendants removed the case to federal court. See Kellam v. Keith, 144 U.S. 568, 569, 12 S.Ct. 922, 36 L.Ed. 544 (1892). Furthermore, the amount in controversy exceeds $10,000. Therefore, this is a case that could have been brought in federal district court pursuant to 28 U.S.C. § 1332 (1976). See Stevens v. Nichols, 130 U.S. 230, 231, 32 L.Ed. 914 (1889); New England Explosives Corp. v. Maine Ledge Blasting Specialist, Inc., 542 F.Supp. 1343, 1347 (D.Me.1982). Cf. First National Bank, 455 F.Supp. at 363 (remand mandatory where no diversity jurisdiction).

In addition to the subject matter jurisdiction requirement, a defendant seeking to remove a case under § 1441 must cross several other hurdles. For purposes of this case, the most critical is that created by § 1441(b):

Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

(emphasis added). Thus, where subject matter jurisdiction is based solely on diversity, the case may be properly removed only if none of the defendants is a citizen of the forum state. See Thornton v. Allstate Insurance Co., 492 F.Supp. 645, 648 (E.D.Mich. 1980); First National Bank, 455 F.Supp. at 363; American Oil Co. v. Egan, 357 F.Supp. 610, 613 (D.Minn.1973).

This limitation on the right to remove rests on sound public policy. The courts have recognized that, barring some jurisdictional infirmity, a plaintiff's choice of forum should rarely be disturbed. See, e.g., Parks v. New York Times Co., 308 F.2d 474, 478 (5th Cir.1962); Manas y Pineiro v. Chase Manhattan Bank, 443 F.Supp. 418, 421 (S.D.N.Y.1978); Maybruck v. Haim, 290 F.Supp. 721, 724 (S.D.N.Y.1968). Congress' statutory exception to this rule under § 1441 stems from the somewhat anachronistic concern that foreign defendants may receive fairer treatment in federal court than in state court.¹See Lewis v. Time, Inc., 83 F.R.D. 455, 461 (E.D.Cal.1979); Browne v. Hartford Fire Insurance Co., 168 F.Supp. 796, 797 (N.D.Ill.1959). Such a concern for local prejudice loses all justification where an in-state defendant seeks removal: Although a foreign defendant might conceivably incur the dangers of parochialism in a diversity suit, citizens of the forum state face no similar threat.

Congress apparently recognized this fact and consequently circumscribed the § 1441 removal power in diversity cases. In their attempt to carry out the congressional intent, the courts have guarded against unintended conferrals of removal jurisdiction by strictly construing § 1441. See Anderson v. Union Pacific Coal Co., 332 F.Supp. 605, 608 (D.Wyo.1971); Viles v. Sharp, 248 F.Supp. 1019, 1021 (W.D.Mo.1965). See also Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S.Ct. 868, 872, 85 L.Ed. 1214 (1941). This Court embraces the same view.

The defendants in this case have failed to clear the § 1441(b) hurdle. As citizens of Arkansas, they may not properly remove a case based upon diversity jurisdiction from an Arkansas state court. See Egan, 357 F.Supp. at 613. Since the defendants have done so, however, the Court must still determine whether, under all of the circumstances, the case should now be remanded.

III. WAIVER DOCTRINE

As a preliminary matter, the Court notes that failure to comply with § 1441(b) is not jurisdictional. Id. See also Grubbs v. General Electric Credit Corp., 405 U.S. 699, 702-05, 92 S.Ct. 1344, 1347-49, 31 L.Ed.2d 612 (1972). Cf. Finn, 341 U.S. at 16-18, 71 S.Ct. at 541-42 (lack of subject matter jurisdiction requires remand); Insurance Corp. of Ireland v. Campagnie des Bauxites, 456 U.S. 694, 102 S.Ct. 2099, 2104, 72 L.Ed.2d 492 (1982) (discussing waiver of jurisdictional defects). Under certain circumstances, the right to seek remand of an improperly removed case can be waived.

The clearest case for such waiver occurs where the party seeking remand has explicitly agreed to the removal. See, e.g., Traylor v. Black, Sivalls & Bryson, Inc., 189 F.2d 213, 214 (8th Cir.1951); Handley-Mack Co. v. Godchaux Sugar Co., 2 F.2d 435, 437 (6th Cir.1924). In such cases, the party's clear assent may vitiate the need to defer to the original choice of forum.²

The more troubling case arises where the removing party contends only that the right to remand has been implicitly waived. Such a case proves difficult because it forces the court to ascertain whether, through actions or inaction after removal, a party has waived or lost his right to object to the improper removal.

Courts addressing the issue have frequently emphasized two inquiries: whether the party seeking remand has acted in a timely fashion as well as whether it has sought "affirmative relief" from the federal court. See, e.g., Monaco v. Carey Canadian Mines, Ltd., 514 F.Supp. 357, 358 (E.D.Pa. 1981); Green v. Zuck, 133 F.Supp. 436, 438 (S.D.N.Y.1955); Fisher v. Exico Co., 13 F.R.D. 195 (E.D.N.Y.1952).

IV. PROPOSED ANALYTICAL FRAMEWORK

Although this set of inquiries offers...