Sea World, LLC v. Seafarers, Inc.

• Decision Date: 10 June 2016
• Docket Number: Civil Case. NO. 16-1382 (PG)
• Citation: 191 F.Supp.3d 167
• Parties: SEA WORLD, LLC, Plaintiff, v. SEAFARERS, INC., et al., Defendants.
• Court: U.S. District Court — District of Puerto Rico

191 F.Supp.3d 167

SEA WORLD, LLC, Plaintiff,

v.SEAFARERS, INC., et al., Defendants.

Civil Case. NO. 16-1382 (PG)

United States District Court, D. Puerto Rico.

Signed June 10, 2016

Hector J. Orejuela-Davila, Jairo A. Mellado-Villarreal, Tessie Leal-Garabis, Mellado & Mellado-Villareal, San Juan, PR, for Plaintiff.

Ricardo F. Casellas, Natalia Del Mar Morales-Echeverria, Casellas, Alcover & Burgos PSC, Eric Perez-Ochoa, Fabian Rodriguez-Torres, Adsuar Muniz Goyco Seda & Perez-Ochoa, PSC, San Juan, PR, for Defendants.

OPINION AND ORDER

JUAN M. PÉREZ-GIMÉNEZ, SENIOR UNITED STATES DISTRICT JUDGE

Pending before the court is plaintiff Sea World LLC's ("Sea World" or "Plaintiff") motion to remand (Docket No. 7). In its motion, Plaintiff requests this court remand the above-captioned complaint back to state court on two grounds: that the notice of removal is procedurally defective and that no diversity jurisdiction exists. For the reasons set forth below, this court DENIES Sea World's request.

I. FACTUAL AND PROCEDURAL BACKGROUND

On February 2, 2016, Sea World filed the original complaint before the Puerto Rico Court of First Instance against Seafarers, Inc. ("Seafarers") and Aza Food Corp., Inc. ("Aza") requesting damages and injunctive relief. In short, Plaintiff alleges that Seafarers unilaterally terminated their exclusive distribution agreement in violation of the Puerto Rico Dealer's Act, also known as Puerto Rico Law 75, P. R. LAWS ANN. tit. 10, § 278. See Docket No. 18-1. According to Plaintiff, Aza unlawfully and intentionally interfered with the contractual distribution relation between Seafarers and Sea World. Aza's appropriation of the distribution of Seafarers' products in Puerto Rico caused Sea World damages, as alleged, in violation of Puerto Rico's general tort statute, Article 1802 of the Civil Code, 31 P. R. STAT. ANN. § 5141. Id.

On March 4, 2016, Seafarers removed the case to this court on the basis of diversity jurisdiction pursuant to 28. U.S.C. § 1332(a).¹ Seafarers is a corporation organized under Florida law whereas Sea World is a Puerto Rico corporation. See Docket No. 1, 3, 18. Seafarers argues that Sea World fraudulently joined Aza, a Puerto Rico corporation, in the state court action by adding a meritless tortious interference claim against the latter with the sole purpose of defeating federal jurisdiction. Id. On March 8, 2016, Aza filed an informative motion notifying the court of its consent to Seafarers' request for removal, see Docket No. 10.

In its motion to remand, Sea World now argues that removal was procedurally improper because Aza did not join the request within 30 days of being served as required by 28 U.S.C. § 1446(b). See Docket No. 7. Sea World also claims that the doctrine of fraudulent joinder is inapplicable to the case at hand because it properly pleaded a claim against Aza for tortious interference with its exclusive dealership contract with Seafarers. Id.

Seafarers opposed Sea World's motion to remand to state court. It first argues that Aza's joinder to its request for removal cured the procedural defect. See Docket No. 24. Second, Seafarers reasserts its claim for removal on the grounds that the Plaintiff failed to allege that the purported distribution agreement was exclusive and thus entitled to protection under Law No. 75. As such, the agreement could not be subject to tortious interference. Id.

Sea World subsequently replied opposing the arguments set forth in Seafarers' response. See Docket No. 41.

II. LEGAL STANDARD

"The district courts of the United States are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute." In re Olympic Mills Corp., 477 F.3d 1, 6 (1st Cir.2007) (citing Kokkonen v. Guardian Life Ins. Co. o f Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) ). "A cause of action may be maintained in federal court only if it involves a question of federal law, or if the controversy is between citizens of different states and the amount in controversy exceeds $75,000." Hall v. Curran, 599 F.3d 70, 71 (1st Cir.2010) (citing 28 U.S.C. §§ 1331, 1332 ).

Pursuant to 28 U.S.C. § 1441(a), "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." 28 U.S.C. § 1441(a). "[T]he defendants may remove the action to federal court ... provided that no defendant ‘is a citizen of the State in which such action is brought.’ " Universal Truck & Equip. Co. v. Southworth – Milton, Inc., 765 F.3d 103, 107–108 (1st Cir.2014) (citing 28 U.S.C. § 1441(b)(2) ).

"[R]emoval statutes are strictly construed ... and defendants have the burden of showing the federal court's jurisdiction." Danca v. Private Health Care Systems, 185 F.3d 1, 4 (1st Cir.1999) (internal citations omitted). "When plaintiff and defendant clash about jurisdiction, uncertainties are construed in favor of remand." Asociacion de Detallistas de Gasolina v. Shell, 380 F.Supp.2d 40, 43 (D.P.R.2005) (citing Burns v. Windsor Ins. Co., 31 F.3d 1092, 1097 (11th Cir.1994) ).

III. DISCUSSION

A. Unanimity Requirement

Sea World's first objection to the removal is grounded on co-defendant Aza's untimely consent to the removal of the action from state court. Pursuant to the applicable statute, "[d]efendants must file their notice of removal within 30 days after the receipt by the defendant ... of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based ...." Universal Truck, 765 F.3d at 108 (citing 28 U.S.C. § 1446(b)(1) ). According to Sea World, however, Aza was served with the complaint on February 4, 2016, but joined Seafarers' notice of removal over thirty days later on March 8, 2016 (Docket No. 10).

Relying on the First Circuit's holding in Esposito v. Home Depot U.S.A., Inc., 590 F.3d 72 (1st Cir.2009), Seafarers argues that despite its delay, the procedural defect was cured upon Aza's subsequent consent. In Esposito, the First Circuit stated that "[w]here the action involves multiple defendants, however, the right of removal is subject to the so-called ‘unanimity requirement.’ " Id. at 75 (citing Chicago, Rock Island & Pac. Ry. Co. v. Martin, 178 U.S. 245, 247–48, 20 S.Ct. 854, 44 L.Ed. 1055 (1900) ). The Court further stated that "[t]he defect in the removal process resulting from a failure of unanimity is not considered to be a jurisdictional defect, and unless a party moves to remand based on this defect, the defect is waived and the action may proceed in federal court." Esposito, 590 F.3d at 75 (internal citations omitted).

Here, the defect was not waived as Sea World moves to remand on the purported defect, among other grounds. But despite being mindful of the principle that removal statutes are to be narrowly construed, the Court in Esposito refused to "establish a wooden rule" as to the way in which the unanimity requirement may be satisfied. Id. at 76–77. The Court then held that even if co-defendant Home Depot failed to explicitly consent to removal within the statutorily prescribed thirty-day period, "resulting in a technical defect in the removal process, the defect was subsequently cured when Home Depot opposed Esposito's remand motion, thereby clearly communicating its desire to be in federal court." Id. at 77. To hold otherwise "would place form before function." Id.

In light of the First Circuit's conclusions in Esposito, this court also finds that granting Sea World's motion to remand based on Aza's two-day delay would not serve the purposes of the unanimity requirement or the interests of justice.² Although it would have been preferable that Aza had timely joined the notice of removal, we hold that its subsequent written consent suffices to cure the defect stemming from its belatedness. Therefore, Sea World's motion to remand on those grounds is hereby DENIED .

B. Fraudulent Joinder

"Fraudulent joinder is a judicially created doctrine that provides an exception to diversity requirements." Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir.1998). This doctrine "is meant to prevent plaintiffs from joining non-diverse parties in an effort to defeat federal jurisdiction." Figueroa Berrios v. BASF Corp., No. 05–1317, 2006 WL 2456407, at *1 (D.P.R. August 22, 2006) (citingBriarpatch Limited, L.P. v. Phoenix Pictures, Inc., 373 F.3d 296, 302 (2d Cir.2004) ). Thus, "[w]hen a plaintiff names a non-diverse defendant solely in order to defeat federal diversity jurisdiction, the district court must ignore the presence of the non-diverse defendant and deny any motion to remand the matter back to state court." Id. See also Polyplastics, 713 F.2d at 877 (1st Cir.1983) (finding that a party fraudulently joined is disregarded in determining diversity of citizenship); Chesapeake & O. R. Co. v. Cockrell, 232 U.S. 146, 152, 34 S.Ct. 278, 58 L.Ed. 544 (1914) ("A civil case, at law or in equity, presenting a controversy between citizens of different states, and involving the requisite jurisdictional amount, is one which may be removed by the defendant, if not a resident of the state in which the case is brought; and this right of removal cannot be defeated by a fraudulent joinder of a resident defendant having no real connection with the controversy.").

When a resident defendant is joined, "the joinder, although fair upon its face, may be shown by a petition for removal to be only a sham or fraudulent device to prevent a removal; but the showing must consist of a statement of facts rightly leading to that conclusion apart from the pleader's deductions." Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 66 L.Ed. 144 (1921). To that effect, the First Circuit has held that "a finding of fraudulent joinder bears an implicit finding that the plaintiff has failed to state a...