Racca v. EFG Gen. Partner Corp.
| Docket Number | Civil Action 1:22-CV-142 |
| Decision Date | 09 June 2023 |
| Parties | RONDA RACCA, Plaintiff, v. EFG GENERAL PARTNER CORP., EDUCATION FUTURES MANAGEMENT, COMPANY, EDUCATION FUTURES GROUP, LLC, COMPUTER CAREER CENTER, L.P. d/b/a Vista College, and JIM TOLBERT, Defendants, JIM TOLBERT, Defendant/Third-Party Plaintiff, v. PROSPECT PARTNERS, LLC, Third-Party Defendant. |
| Court | U.S. District Court — Eastern District of Texas |
Pending before the court is Plaintiff Ronda Racca's (“Racca”) Opposed Renewed Motion to Remand (#72) wherein she contends that this court lacks subject matter jurisdiction over her claims against Defendants EFG General Partner Corp.; Education Futures Management, Company Education Futures Group, LLC; Computer Career Center, L.P. d/b/a Vista College (“Vista”); and Jim Tolbert (“Tolbert”) (collectively “Defendants”). Racca argues that this court no longer has subject matter jurisdiction under the Class Action Fairness Act (“CAFA”), 28 U.S.C. §§ 1332(d), 1453, 1711-1715, and, therefore, the case should be remanded to state court because her operative complaint deleted her prior class action allegations and abandoned her claims against diverse defendants, leaving only Texas citizens as parties. Defendants and Third-Party Defendant Prospect Partners, LLC (“Prospect”) filed a response in opposition (#74). Having considered the pending motion, the submissions of the parties, the pleadings, and the applicable law, the court is of the opinion that Racca's motion should be denied.
Vista formerly operated as a private, post-secondary educational institution, with its headquarters located in Richardson, Texas. The Richardson location was licensed to provide online education to students located in twenty-eight other states. Vista operated five Texas campuses that provided in-person education, located in Beaumont, College Station, Killeen, El Paso, and Longview. Vista also maintained campuses outside of Texas-in Las Cruces, New Mexico, and Fort Smith, Arkansas. In August 2021, Vista announced that it planned to stop enrolling new students at its in-person campuses but that it would continue enrolling students in its online programs. At that time, Vista promised its existing students in an email that “[w]e will continue to offer the courses you need to graduate from your programs.” On October 8, 2021, however, Vista ceased all operations without prior notice to its students, citing “unforeseen events.” Racca was a student at Vista's Beaumont campus at the time of the closure.
On October 12, 2021, Racca, individually and on behalf of similarly situated persons, filed this class action lawsuit in the 136th District Court of Jefferson County, Texas, against Defendants. Racca also asserted claims against Prospect, Michael McInerney (“McInerney”), and Louis Kenter (“Kenter”) in her original class action petition. On April 7, 2021, Prospect, McInerney, and Kenter removed the action to this court. Racca then filed her original Opposed Motion to Remand (#12), arguing that the case should be remanded to state court because the local controversy exception and the local single event exclusion to CAFA both required that the court decline to exercise jurisdiction. The court denied Racca's motion in a Memorandum and Order (#28) dated July 7, 2022, holding that Racca had failed to establish that either the local controversy exception or the local single event exclusion to CAFA jurisdiction applied in this case.
Subsequently, Racca filed a series of amended complaints. Importantly, her Third Amended Complaint (#60), filed on September 27, 2022, deleted all class action allegations and removed earlier language referencing “others who are similarly situated.”[1] Racca's Fourth Amended Complaint (#66), filed on October 13, 2022, then omitted Prospect, McInerney, and Kenter from the pleadings, leaving no diverse defendants.[2] On February 15, 2023, Racca filed the pending motion to remand.[3]
“Federal courts are courts of limited jurisdiction.” Gunn v. Minton, 568 U.S. 251, 256 (2013) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)); accord Badgerow v. Walters, ___ U.S.___, 142 S.Ct. 1310, 1316 (2022) (citing Kokkonen, 511 U.S. at 377); Cleartrac, L.L.C. v. Lanrick Contractors, L.L.C., 53 F.4th 361, 364 (5th Cir. 2022); Williams v. Homeland Ins. Co. of N.Y., 18 F.4th 806, 816 (5th Cir. 2021). “They possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree.” Kokkonen, 511 U.S. at 377 (citations omitted). The court “must presume that a suit lies outside this limited jurisdiction, and the burden of establishing federal jurisdiction rests on the party seeking the federal forum.” Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir.) (citing Kokkonen, 511 U.S. at 377), cert. denied, 534 U.S. 993 (2001); accord Hertz Corp. v. Friend, 559 U.S. 77, 96 (2010); McMahon v. Fenves, 946 F.3d 266, 270 (5th Cir.), cert. denied sub nom. McMahon v. Hartzell, 141 S.Ct. 363 (2020); Settlement Funding, L.L.C., 851 F.3d at 537; Clayton v. Conoco Phillips Co., 722 F.3d 279, 290 (5th Cir. 2013), cert. denied, 571 U.S. 1156 (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. See 28 U.S.C. § 1447(c); Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 638 (2009); Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 571 (2004); Green Valley Special Util. Dist. v. City of Schertz, 969 F.3d 460, 468 (5th Cir. 2020); Spear Mktg., Inc. v. BancorpSouth Bank, 791 F.3d 586, 592 (5th Cir. 2015); Afr. Methodist Episcopal Church v. Lucien, 756 F.3d 788, 793 (5th Cir. 2014).
When considering a motion to remand, “[t]he removing party bears the burden of showing that federal jurisdiction exists and that removal was proper.” Barker v. Hercules Offshore Inc., 713 F.3d 208, 212 (5th Cir. 2013) (quoting Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002)); accord Mauldin v. Allstate Ins. Co., 757 Fed.Appx. 304, 309 (5th Cir. 2018), cert. denied, 140 S.Ct. 138 (2019); Afr. Methodist Episcopal Church, 756 F.3d at 793; see 13E CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 3602.1 (3d ed. 2013). “This extends not only to demonstrating a jurisdictional basis for removal, but also necessary compliance with the requirements of the removal statute.” Roth v. Kiewit Offshore Servs., Ltd., 625 F.Supp.2d 376, 382 (S.D. Tex. 2008) (quoting Albonetti v. GAF Corp.-Chem. Grp., 520 F.Supp. 825, 827 (S.D. Tex. 1981)); accord Esquivel v. LA Carrier, 578 F.Supp.3d 841, 843 (W.D. Tex. 2022); Crossroads of Tex., L.L.C. v. Great-W. Life & Annuity Ins. Co., 467 F.Supp.2d 705, 708 (S.D. Tex. 2006). “Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant.” Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987) (citing 28 U.S.C. § 1441(a)); see Williams, 18 F.4th at 811.
“The removal statute ties the propriety of removal to the original jurisdiction of the federal district courts.” Frank v. Bear Stearns & Co., 128 F.3d 919, 922 (5th Cir. 1997); see 28 U.S.C. § 1441(a); Camsoft Data Sys., Inc. v. S. Elec. Supply, Inc., 756 F.3d 327, 333 (5th Cir. 2014), cert. denied, 574 U.S. 1122 (2015); Barker, 713 F.3d at 228. Because removal raises significant federalism concerns, the removal statutes are strictly and narrowly construed, with any doubt resolved against removal and in favor of remand. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); Settlement Funding, L.L.C., 851 F.3d at 536; Afr. Methodist Episcopal Church, 756 F.3d at 793; Barker, 713 F.3d at 212. In short, any “doubts regarding whether removal jurisdiction is proper should be resolved against federal jurisdiction.” Vantage Drilling Co. v. Hsin-Chi Su, 741 F.3d 535, 537 (5th Cir. 2014) (quoting Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th Cir.), cert. denied, 530 U.S. 1229 (2000)); accord Afr. Methodist Episcopal Church, 756 F.3d at 793; Barker, 713 F.3d at 212.
“Courts will, however, typically look beyond the face of the complaint to determine whether removal is proper.” Frank, 128 F.3d at 922 (citing Villarreal v. Brown Express, Inc., 529 F.2d 1219, 1221 (5th Cir. 1976)); see Aquafaith Shipping, Ltd. v. Jarillas, 963 F.2d 806, 808 (5th Cir.), cert. denied, 506 U.S. 955 (1992); Rivera v. Orion Marine Grp. Inc., 509 F.Supp.3d 926, 933 (S.D. Tex. 2020) (citing Baccus v. Parrish, 45 F.3d 958, 960-61 (5th Cir. 1995)). It is well-settled that the removability of an action cannot be defeated by artful or disguised pleading. See Aaron v. Nat'l Union Fire Ins. Co., 876 F.2d 1157, 1161 (5th Cir. 1989), cert. denied, 493 U.S. 1074 (1990); see also Rivet v. Regions Bank of La., 522 U.S. 470, 475 (1998).
Enacted by Congress in 2005, CAFA greatly expands federal jurisdiction over interstate class action lawsuits. Arbuckle Mountain Ranch of Tex., Inc. v. Chesapeake Energy Corp., 810 F.3d 335, 341 (5th Cir.), cert denied, 579 U.S. 930 (2016); see Dart Cherokee Basin Operating Co., LLC v. Owens (“Dart”), 574 U.S. 81, 87 (2014); Hollinger v. Home State Mut. Ins. Co., 654 F.3d 564, 570-71 (5th Cir. 2011); In re Katrina Canal Litig. Breaches, 524 F.3d 700, 711 n.47 (5th Cir. 2008); Preston v. Tenet Healthsys. Mem'l Med. Ctr., Inc. (“Preston II”), 485 F.3d 804, 810 (5th Cir. 2007). “Because interstate class actions typically involve more people, more money, and more interstate commerce ramifications than any other type of...
To continue reading
Request your trial