Shamrock Grp. v. Base, Inc.
| Decision Date | 10 August 2020 |
| Docket Number | Case No. 19-cv-12407-DJC |
| Parties | THE SHAMROCK GROUP, SHAMROCK FISHERIES, LLC, KINEO FISHERIES, LLC, MARINER FISHERIES, LLC, SEAFARER FISHERIES, LLC, CYNBEL FISHERIES, LLC, TORBAY FISHERIES, LLC, GALWAY FISHERIES, LLC, AND BILL & EILEEN, LLC, Plaintiffs, v. BASE, INC., Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Plaintiffs The Shamrock Group, Shamrock Fisheries, LLC, Kineo Fisheries, LLC, Mariner Fisheries, LLC, Seafarer Fisheries, LLC, Cynbel Fisheries, LLC, Torbay Fisheries, LLC, Galway Fisheries, LLC, and Bill & Eileen, LLC (collectively, "Plaintiffs") originally filed this lawsuit in Suffolk Superior Court against Defendant Base, Inc. ("Base") seeking declaratory and injunctive relief that they are not required to submit to arbitration. D. 1-3. Base removed the case to this Court under 28 U.S.C. § 1331. D. 1. Plaintiffs now seek to have this Court dismiss the complaint for lack of subject matter jurisdiction and remand to the Suffolk Superior Court. D. 9. Base has moved to compel arbitration and stay the proceedings pending arbitration. D. 17; D. 18. For the reasons stated below, the Court ALLOWS Plaintiffs' motion to remand, D. 9, and DENIES Base's motion to compel arbitration and stay proceedings pending arbitration as moot. D. 17, D. 18.
A defendant can remove a civil action presenting a claim or right "arising under the Constitution, laws, or treaties of the United States" to federal district court. 28 U.S.C. §§ 1331, 1441(a). Upon the filing of a motion to remand, the Court must assess whether it "would have had original jurisdiction of the case had it been filed in [this] court." BIW Deceived v. Local S6, Indus. Union of Marine & Shipbuilding Workers of Am., IAMAW Dist. Lodge 4, 132 F.3d 824, 832 (1st Cir. 1997) (quoting Grubbs v. General Elec. Credit Corp., 405 U.S. 699, 702 (1972)) (internal quotation marks omitted). Generally, a plaintiff is the master of his claims and has "the prerogative to rely on state law alone although both federal and state law may provide a cause of action." Danca v. Private Health Care Sys., Inc., 185 F.3d 1, 4 (1st Cir. 1999) (citing Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987)). "When a plaintiff files an action in state court and the defendant responds by invoking federal jurisdiction through removal, the defendant has the burden of establishing that removal to the district court is proper." Barbosa v. Wells Fargo Bank, N.A., No. 12-cv-12236-DJC, 2013 WL 4056180, at *3 (D. Mass. Aug. 13, 2013) (citing Danca, 185 F.3d at 4). To meet its burden, a defendant "must . . . make a 'colorable' showing that a basis for federal jurisdiction exists." Danca, 185 F.3d at 4 (quoting BIW Deceived, 132 F.3d at 832). "Doubts about the propriety of removing an action should be resolved in favor of remand." Giannetti v. Mahoney, 218 F. Supp. 2d 8, 10 (D. Mass. 2002).
In 2016, the Office of General Counsel for the National Oceanic and Atmospheric Administration ("NOAA") initiated a civil enforcement action against non-party Carlos Rafael.D. 1-3 ¶ 49. Carlos Rafael and his affiliated entities (collectively, "the Rafaels" were engaged in commercial fishing. See D. 1-3 ¶¶ 48, 50. On August 19, 2019, the Rafaels reached a settlement agreement with NOAA regarding the civil enforcement action that required them to divest themselves of all their commercial fishing vessels and permits by December 31, 2020 in a sale (or sales) required to be approved by NOAA. D. 1-3 ¶¶ 59-60.
The Rafaels were members of sector seven, a group of federal limited access groundfish permit holders located in New Bedford, Massachusetts. D. 1 ¶ 7-8, 13. Permit holders enrolled in sector seven are parties to a Membership Agreement and an Operations Plan, which contain a right of first refusal ("ROFR") for sales in favor of other sector seven members. D. 1 ¶ 16. Initially, the Rafaels provided notice of the sale of "the Rafael Assets" to sector seven. D. 1 ¶ 18. In September 2019, however, the Rafaels withdrew their ROFR notice and informed the sector seven board of directors that they intended to sell their vessels and permits to companies owned and controlled by Charles and Michael Quinn (the "Quinns").1 D. 1 at 2; D. 1-3 ¶ 74. The Rafaels argued that they could do so under an exemption provision of the Membership Agreement that allowed for the transfer of fishing vessels and permits to members of the local fishing community. D. 1-3 ¶ 75.
On September 11, 2019, Base, a member of sector seven, sued the Rafaels in state court seeking arbitration, injunctive and declaratory relief to sell the vessels and permits in compliance with the ROFR pursuant to the Membership Agreement and Operations Plan, as well as damages under Mass. Gen. L. c. 93A § 11. D. 1-3 at 231-33. Base also filed an ex parte motion for a temporary restraining order ("TRO") to prevent the Rafaels from selling the vessels and permitsto the Quinns. D. 1-3 ¶ 92. The state court granted Base's TRO, enjoining the purchase and sale of the vessels and permits to the Quinns. Id. Two days later, however, after a preliminary injunction hearing, the court held that Base did not have a strong likelihood of success on the merits of its claims. D. 1-3 ¶ 94; D. 1-3 at 216-17. Accordingly, the state court vacated the TRO. D. 1-3 ¶ 95; D. 1-3 at 217.
On September 18, 2019, Base initiated an arbitration action against the Rafaels, which is presently before the American Arbitration Association, contending that it is the sector seven board of directors, not the Rafaels, that must determine who falls into the local fishing community exception of the ROFR. D. 1 ¶ 22-23. On September 24, 2019, the Quinns and Rafaels closed on the purchase and sale of the vessels and permits. D. 1-3 ¶ 96. The arbitration panel, comprised of three arbitrators, found that Base had a likelihood of success on the merits for its claim that it was wrongfully deprived of the ROFR to purchase the Rafael Assets on the same terms as Plaintiffs. D. 1 ¶ 23. Base amended its arbitration demand, adding Plaintiffs as parties, alleging that they wrongfully acquired the Rafael Assets during the pending arbitration. D. 1 ¶ 24. Plaintiffs then filed the complaint in this matter in the Suffolk Superior Court (Business Litigation Session) seeking declaratory and injunctive relief declaring that they were not obligated to arbitrate their claims and staying the arbitration proceedings. D. 1 ¶ 25; see D. 1-3 at 30. Base removed the case to this Court. D. 1. Plaintiffs now move to remand the case to the Suffolk Superior Court, D. 9, and Base moves to compel arbitration and stay the proceedings pending such arbitration. D. 17, 18. The Court heard the parties on the pending motions and took the matters under advisement. D. 43.
Base contends that this Court has subject matter jurisdiction under 28 U.S.C. § 1331 for federal question jurisdiction because the complaint "is seeking to prevent BASE's prosecution of its rights under federal law, to wit: its right to compel Plaintiffs to arbitrate pursuant to federal law requiring Plaintiffs to be bound by the Membership Agreement and Operations Plan." D. 1 ¶¶ 27, 31.
"Ordinarily, determining whether a particular case arises under federal law turns on the 'well-pleaded complaint' rule." Aetna Health Inc. v. Davila, 542 U.S. 200, 207 (2004) (quoting Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 9-10 (1983)); see Rossello-Gonzalez v. Calderon-Serra, 398 F.3d 1, 10 (1st Cir. 2004) (quoting Hernandez-Agosto v. Romero-Barcelo, 748 F.2d 1, 2 (1st Cir. 1984)). Here, the state court complaint does not allege any federal claim. See D. 1-3 at 28-30. Instead, it seeks declaratory and injunctive relief that Plaintiffs are not parties to the sector seven contract and thus are not required to submit to arbitration. See id. The complaint, therefore, on its face does not present a federal question. See Kiely v. Canty, 102 F. Supp. 3d 359, 364-65 (D. Mass. 2015) ().
Generally, under the well-pled complaint rule, the Court may not consider potential defenses that a defendant may raise in evaluating whether it has subject matter jurisdiction. See Weiner v. Wampanoag Aquinnah Shellfish Hatchery Corp., 223 F. Supp. 2d 346, 351 (D. Mass. 2002). In a declaratory judgment action, however, "the familiar well-pleaded complaint rule askswhether there would necessarily be federal jurisdiction if the declaratory judgment defendant brought a coercive action [corresponding to the declaration sought] to enforce its rights." Kiely, 102 F. Supp. 3d at 365 (quoting Great Clips, Inc. v. Hair Cuttery of Greater Boston, L.L.C., 591 F.3d 32, 35 (1st Cir. 2010) (internal quotations omitted)); see Colonial Penn Group, Inc. v. Colonial Deposit Co., 834 F.2d 229, 232-33 (1st Cir. 1987) () (internal citations omitted). Moreover, where, as here, "a party seeks to compel or enjoin an arbitration proceeding, the proper inquiry is to look beyond the pleading to the underlying controversy to determine whether it is predicated on an action that arises under federal law." Kiely, 102 F. Supp. 3d at 365 ().
The proper inquiry here, therefore, is...
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