Nancy Doty, Inc. v. Fox Head, Inc., Case No. 3:19-cv-0405-Sl
| Decision Date | 06 September 2019 |
| Docket Number | Case No. 3:19-cv-0405-Sl |
| Parties | NANCY DOTY, INC., Guardian Ad Litem/Special Fiduciary for MINOR ANTONIO MIRANDA-SOTO, Plaintiff, v. FOX HEAD, INC., a foreign corporation; CYCLE GEAR, INC., a foreign corporation; WYLDER PROMOTIONS LLC, an Oregon limited liability company; and MOTOCROSS NORTHWEST, INC., an Oregon corporation, Defendants. |
| Court | U.S. District Court — District of Oregon |
J. Randolph Pickett, R. Brendan Dummigan, Kimberly O. Weingart, PICKETT DUMMIGAN MCCALL LLP, 210 SW Morrison Street, Centennial Block, Fourth Floor, Portland, OR 97204. Of Attorneys for Plaintiff.
Patrick C. Wylie and Jonathan Henderson, DAVIS ROTHWELL EARLE & XÓCHIHUA P.C., 200 SW Market Street, Suite 1800, Portland, Oregon 97201. Of Attorneys for Defendant Fox Head, Inc.
Katie L. Smith and Karlek S. Johnson, LORBER GREENFIELD & POLITO, LLC, 610 SW Alder Street, Suite 315, Portland, OR 97205. Of Attorneys for Defendant Cycle Gear, Inc.
David Matthew Merryman and Julie Bardacke Haddon, GORDON & REES SCULLY MANSUKHANI LLP, 121 SW Morrision Street, Suite 1575, Portland, OR 97204. Of Attorneys for Defendant Wylder Promotions LLC.
Plaintiff filed this case in the Circuit Court for the State of Oregon for the County of Multomah ("Multnomah County Circuit Court") on April 20, 2018. On March 18, 2019, nearly one year later, Defendant Fox Head, Inc. ("Fox Head") removed the case to this Court. Fox Head removed based on diversity jurisdiction, relying on email correspondence from counsel for Oregon Defendant Wylder Promotions LLC ("Wylder") relating to a settlement between it and Plaintiff. If Wylder was no longer a defendant in the case, then there would be diversity between the parties, because Oregon Defendant Motocross Northwest, Inc. was dismissed from the case while it was being litigated Multnomah County Circuit Court.
On April 17, 2019, Plaintiff moved to remand, asserting that the removal is defective. Plaintiff argues that the email correspondence relied on by Fox Head is insufficient "other paper" on which to base removal. For the following reasons, the Court agrees with Plaintiff and remands this case to Multnomah County Circuit Court.
A civil action generally may be removed from state court to federal court if the federal district court would have had original, subject matter jurisdiction over the case. 28 U.S.C. § 1441(a). Subject matter jurisdiction may be based on either diversity jurisdiction or federal question jurisdiction. 28 U.S.C. §§ 1331, 1332. Diversity jurisdiction exists over civil actions when the amount in controversy exceeds $75,000 and there is complete diversity among all plaintiffs and defendants. 28 U.S.C. § 1332(a)(1). "[D]iversity jurisdiction does not exist unless each defendant is a citizen of a different State from each plaintiff." Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978) (emphasis in original).
When removal is based on diversity jurisdiction, "[a] case may not be removed . . . more than 1 year after commencement of the action, unless the district court finds that the plaintiff hasacted in bad faith in order to prevent a defendant from removing the action." 28 U.S.C. § 1446(c)(1). If the case as stated in the four corners of the initial pleading is not removable, "a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable." 28 U.S.C. § 1446(b)(3).
A motion to remand is the proper procedure for a plaintiff to use when challenging removal. 28 U.S.C. § 1447; see also Moore-Thomas v. Ala. Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009). The party seeking removal bears the burden of establishing by a preponderance of the evidence that removal is proper. Moore-Thomas, 553 F.3d at 1244. "This burden is particularly stringent for removing defendants because '[t]he removal statute is strictly construed, and any doubt about the right of removal requires resolution in favor of remand.'" Corral v. Select Portfolio Servicing, Inc., 878 F.3d 770, 773-74 (9th Cir. 2017) (quoting Moore-Thomas, 553 F.3d at 1244); see also Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) ().
Fox Head removed this case based on an assertion that the case became removable because of the settlement between Plaintiff and Wylder, which created diversity jurisdiction with the loss of the only remaining Oregon defendant. Fox Head solely relies on an email it received from Wylder's counsel as "other paper" that shows that the case became removable. Plaintiff responds that the email is insufficient to show that removal is proper because diversity jurisdiction must exist as of the time of removal and the settlement was not final enough on March 18, 2019, and at that time Wylder was still a party to the case. Plaintiff argues that this email shows no more than that Plaintiff and Wylder were expecting to finalize the details of theirsettlement. Plaintiff also notes that if the settlement is finalized within the next few months as expected and Wylder is dismissed from this case, because of the one-year deadline for removal based on diversity jurisdiction any potential future removal after Wylder is dismissed would be time barred.
This Court has discussed Coury v. Air & Liquid Sys. Corp., 2018 WL 702685, at *5 (D. Or. Feb. 2, 2018). Coury involved settlement communications from Plaintiff's counsel that suggested an intent to bring claims of asbestos exposure on U.S. Navy vessels, thereby potentially triggering removal under the federal officer removal statute, 28 U.S.C. § 1442(a)(1), which unlike § 1441, is construed broadly in favor of removal. Id. at *6-7. The Court also noted other contexts in which settlement communications from plaintiffs have been found to constitute "other paper," generally to establish the amount in controversy. Id. at *4-5.
"[R]emovability is governed by the 'voluntary/involuntary rule.'" People of State of Cal. By & Through Lungren v. Keating, 986 F.2d 346, 348 (9th Cir. 1993). This "rule provides that a suit which, at the time of filing, could not have been brought in federal court must 'remain in state court unless a "voluntary" act of the plaintiff brings about a change that renders the case removable.'" Id. (quoting Self v. General Motors, 588 F.2d 655, 657 (9th Cir. 1978)). Courts have found that receipt of a signed, notarized settlement agreement between a plaintiff and the nondiverse defendant constitutes both a voluntary act of a plaintiff and "other paper" sufficient to put the diverse defendant on notice that a case has become removable. See Fernando Garcia v. MVT Servs., Inc., 589 F. Supp. 2d 797, 803-04 (W.D. Tex. 2008) ().
Fox Head, however, relies on a February 20, 2019 email from counsel for Wylder that stated in its entirety:
Our client has settled with Plaintiff and [we] are working on the details. Plaintiff has withdrawn the RFP, but has asked that we provide documents responsive to RFPs 1 and 2. We are happy to provide copies to you, as well and to gather and provide anything else you need—so please let me know. Because Rick (and potentially others who work for him) is still a witness, we will not close our file and I will remain involved to shepherd whatever is necessary. Please continue to keep me in the loop on everything. I am happy to discuss further anytime.
ECF 1-2. Fox Head asserts that because settlement-related documents have been found, including by this Court, to constitute "other paper," this email suffices to support the Notice of Removal. Notably, less formal settlement-related documents have generally been found to constitute "other paper" for identifying the amount in controversy. Fox Head cites no authority finding that an email from counsel for a nondiverse defendant discussing reaching settlement but still "working on the details," without suggesting any agreement had been signed or letters exchanged, was found to constitute "other paper" sufficient to support a finding of diversity jurisdiction.
Fox Head does argue that formal dismissal of Wylder is not required, and the Court agrees. Fox Head also asserts that a settlement between a plaintiff and a nondiverse defendant is a voluntary act by the plaintiff that does not trigger a bar from the voluntary/involuntary rule, and again the Court agrees. Fox Head cites numerous cases, however, that involve settlements that had some form of written agreement or where the court concluded that the settlement was"final enough" to support a finding that the nondiverse defendant was no longer in the case. See Chohlis v. Cessna Aircraft Co., 760 F.2d 901 (8th Cir. 1985) (); Hanahan v. John Hancock Life Ins. Co. (USA), 518 F. Supp. 2d 780, 785 (D.S.C. 2007) (Consent Order); Adams v. Estate of Keck, 210 F. Supp. 2d 863, 864 (W.D. Ky. 2002) (settlement agreement); Ratcliff v. Fibreboard Corp., 819 F. Supp. 584, 585 (W.D. Tex. 1992) (letter agreements); Lesher by Lesher v. Andreozzi, 647 F. Supp. 920, 922 (M.D. Pa. 1986) (settlement agreement);...
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