Regal Stone Ltd. v. Longs Drug Stores California, L.L.C.
| Decision Date | 02 March 2012 |
| Docket Number | Case No. 11-4540 SC |
| Parties | REGAL STONE LIMITED and FLEET MANAGEMENT LTD, Plaintiffs, v. LONGS DRUG STORES CALIFORNIA, L.L.C., a California limited liability company, LONGS DRUG STORES, L.L.C., a Maryland limited liability company, LONGS DRUG STORES CORPORATION, a California corporation, CVS CAREMARK CORPORATION, a Delaware corporation, LOUIE CHESTER, an individual, and DOES 1-20, Defendants. |
| Court | U.S. District Court — Northern District of California |
ORDER DENYING PLAINTIFFS'
This case arises from a well-publicized November 7, 2007 incident in which the Cosco Busan, a 900-foot long container ship, struck the San Francisco-Oakland Bay Bridge while under the command of a registered bay pilot, John Cota ("Cota"). Plaintiffs Regal Stone Limited and Fleet Management Ltd. ("Plaintiffs") are, respectively, the owners and technical manager of the Cosco Busan. Both are foreign business entities incorporated in Hong Kong. They bring three state law claims against Defendants Longs Drug Stores California, L.L.C., Longs Drug Stores, L.L.C., Longs Drug StoresCorporation (collectively, "Longs"), CVS Caremark Corporation ("CVS"), and Louie Chester ("Chester").1 Plaintiffs identify CVS as the corporate parent of Longs, a pharmacy business. Chester is a Longs pharmacist. Plaintiffs' theory of recovery, in brief, is that Defendants' negligence in providing prescription medicine to Cota contributed to the bridge collision.
Though this case originated in dramatic events, the instant motion concerns a relatively mundane procedural matter, Plaintiffs' motion to remand the case to state court. ECF No. 13 ("Mot.").2 The parties fully briefed the Motion, and also responded to an Order for supplemental briefing. ECF Nos. 22 ("Opp'n"), 24 ("Reply"), 35 ("CVS's Supp. Brief"), 36 ( ). The Motion is suitable for determination without oral argument. Civ. L. R. 7-1(b). For the reasons set forth below, the Court DENIES Plaintiffs' Motion to Remand.
Plaintiffs originally filed this action in California state court on January 31, 2011. Plaintiffs amended their complaint on March 9, 2011. Both the initial and amended complaint were filed under seal because Cota has claimed a protected privacy interest inmedical information they contain. In California state court, purportedly confidential documents are filed along with a motion to seal, and the documents remain under conditional seal pending hearing. See Cal. R. Ct. 2.550, 2.551. Plaintiffs did not attempt to serve the complaint on any defendant because Plaintiffs were waiting for the state court to rule on the motion to seal and issue guidance on how to treat Cota's medical information. ECF No. 20-1 ("Walsh Decl.") ¶ 6. Consequently, even though this litigation began more than a year ago and the parties have met and conferred numerous times, Defendants have seen only the publicly available versions of the complaint.
The publicly available version of the First Amended Complaint is heavily redacted. It contains little more than the names of the legal theories under which Plaintiffs have brought their claims
(negligence; negligence per se; and contribution and indemnity), a general description of the bridge collision, and Plaintiffs' prayer for relief. Nineteen of the First Amended Complaint's twenty-four pages are blank, including the pages which normally would assert claims and allege supporting facts.
Following Plaintiffs' March 9, 2011 filing of the First Amended Complaint and the related motion to seal, the state court set a hearing on April 28, 2011. When that date arrived, the state court continued the hearing to August, apparently on its own motion. In July, Plaintiffs requested and received a continuance to October. On September 7, Plaintiffs asked for leave to file a Second Amended Complaint, and, as they had previously, lodged their amended pleading under conditional seal. On September 13, more than seven months after the case began, CVS removed to this Court.
CVS then moved to relate this case to others brought before this Court by federal, state, and local governments in connection with the Cosco Busan incident. ECF No. 9. The Court denied the motion to relate. ECF No. 11. Plaintiffs then filed the instant motion to remand, arguing that CVS had improperly availed itself of this Court's removal jurisdiction. CVS strenuously contests this point. To provide context for the dispute, the Court will briefly review the basics of removal jurisdiction.
This Court may exercise removal jurisdiction over cases for which it has original jurisdiction. See 28 U.S.C. § 1441(a).3 The Court exercises original jurisdiction over cases arising under federal law, § 1331 ("federal question jurisdiction"), and cases between parties of completely diverse citizenship when the amount in controversy exceeds $75,000, § 1332 ("diversity jurisdiction"). Section 1332(a)(2) provides for original jurisdiction where, as here, a foreign entity is a party. Therefore, a foreign plaintiff can always opt to sue in federal court under the court's diversity jurisdiction. Here, Plaintiffs are both foreign entities.
When a plaintiff can sue in federal court but opts instead to sue in state court, a defendant may remove to federal court simply by filing a notice of removal. See § 1446. The procedure for challenging the propriety of removal is a motion to remand the case back to state court. Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009). The federal court may remand for lack of jurisdiction and for any defect in the removal procedure. See § 1447(c); Tengler v. Spare, No. C-95-33421 SI, 1995 WL 705142, at *2 (N.D. Cal. Nov. 15, 1995). Because removal from state tofederal court implicates significant federalism concerns, courts construe the removal statute strictly, resolving any doubts about removal in favor of remand and placing on defendants the burden of establishing that removal was proper. Takeda v. Northwestern Nat. Life Ins. Co., 765 F.2d 815, 818 (9th Cir. 1985) (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941)).
It has often been remarked that Congress authorized removal to protect out-of-state defendants from having to defend in a plaintiff's (presumably sympathetic) local courts. E.g., Charles Alan Wright & Arthur R. Miller, 14B Fed'l Prac. & Proc. § 3721 (3d ed. 1998 & Supp. 2011). Consistent with this principle, the forum defendant rule, codified at § 1441(b)(2), bars removal when a defendant who has been "properly joined and served" is a citizen of the state in whose court the action originated.4 This rule embodies the notion that a defendant cannot complain of being haled before the courts of his or her own state.
In this case, Chester is a California citizen and Plaintiffs originally sued in a California court.5 It is undisputed that if Chester had been served before CVS removed, the forum defendant rule would bar removal of this case. However, as Plaintiffs acknowledge, they have served neither Chester nor any other defendant. Still, they assert that Chester's presence in the casemakes removal improper. They rely on § 1446, which provides in pertinent part: "The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based . . . ." § 1446(b)(1). Plaintiffs argue that this language creates a thirty-day window within which removal is proper. Plaintiffs say the removal window opens upon service; before service, removal is premature. CVS urges the Court to follow § 1441, which provides that removal is proper unless a forum defendant already has been "properly joined and served." § 1441(b)(2) (emphasis added). The instant Motion to Remand turns on these provisions. The question before the Court is: may a defendant remove to federal court when a forum defendant has been properly joined6 but not served?
As the Court observed in its January 17, 2011 Order requiring supplemental briefing, both parties initially premised their arguments on the proposition that the relevant removal statutes, §§ 1441 and 1446, are clear and unambiguous. ECF No. 34 ("Order") at 3. The parties could do little else, given that the federal courts uniformly have treated them as such. See id.; see also Jordan Bailey, Comment, "Giving State Courts the Ol' Slip: Should a Defendant Be Allowed to Remove an Otherwise Irremovable Case to Federal Court Solely Because Removal Was Made Before Any DefendantIs Served?," 42 Tex. Tech L. Rev. 181 (2009) ("Bailey Comment") (collecting cases). In the absence of appellate decisions addressing the precise issue presented in this case, district courts have disagreed about the proper application of the removal statute's "properly joined and served" language when a forum defendant is joined but not served. The courts divide into two camps, one favoring removal, the other remand. The pro-removal courts hold that the clear and unambiguous language of the statute only prohibits removal after a properly joined forum defendant has been served. This district follows that approach. E.g., Republic W. Ins. Co. v. Int'l Ins. Co., 765 F. Supp. 628, 629 (N.D. Cal. 1991), City of Ann Arbor Emp. Ret. Sys. v. Gecht, C-06-7453 EMC, 2007 WL 760568, at *8 (N.D. Cal. Mar. 9, 2007).
The pro-remand courts also read the removal statutes to be clear and unambiguous, but they have held that courts must look past the statutes' plain language to effectuate congressional intent. See Bailey Comment, 42 Tex. Tech L. Rev. at 187, 189-93. These courts regard the "properly joined and served" language as a limit on plaintiffs' ability to evade federal jurisdiction by improperly joining forum defendants against whom they do not intend to proceed. E.g., Holmstrom v. Harad, No. 05 C...
To continue reading
Request your trial