Xianmin Guan v. Changkun Bi

• Decision Date: 06 March 2014
• Docket Number: Case No. 13-cv-05537-WHO
• Court: U.S. District Court — Northern District of California
• Parties: XIANMIN GUAN, et al., Plaintiffs, v. CHANGKUN BI, et al., Defendants.

XIANMIN GUAN, et al., Plaintiffs, v. CHANGKUN BI, et al., Defendants.

Case No. 13-cv-05537-WHO

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

Dated: March 6, 2014

ORDER GRANTING PLAINTIFFS'

MOTION TO REMAND AND DENYING

REQUEST FOR ATTORNEY'S FEES

AND COSTS

Re: Dkt. No. 12

INTRODUCTION

Plaintiffs Xianmin Guan, a citizen of the People Republic of China ("PRC"), and Wang Ying, a United States citizen living in Fremont, California, brought this action against defendants Changkun Bi, Zheng Bi, Xiuxia Xiao, Xuetao Zhao, and Deshun Sun—all citizens of the PRC— and the Dalian Customs Anti-Smuggling Bureau, a local governmental department of the PRC. Zheng Bi, who lives in Oakland, California, is only defendant who has appeared. He removed the action to this Court and the plaintiffs move to remand. I am asked to decide whether I have jurisdiction over this case either on diversity grounds or under the Foreign Sovereign Immunities Act of 1976 ("FSIA"). Because none of the defendants is a United States citizen, there is no diversity, and because the Dalian Customs Anti-Smuggling Bureau has not appeared nor sought removal, the FSIA does not apply. For those reasons, the motion to remand is GRANTED.¹

BACKGROUND

I. FACTUAL BACKGROUND

The First Amended Complaint ("FAC") alleges that the defendants conspired to extortmillions of dollars from the plaintiffs using "threats of death, physical harm, financial ruin, harassment, kidnapping, torture, false imprisonment, assault, battery and false prosecution." FAC (Dkt. No 1) ¶ 1. The FAC's allegations are quite spectacular, but they will not be recounted here since they do not bear on the motion to remand. The critical jurisdictional facts alleged by the plaintiffs are as follows.

Plaintiff Guan Xianmin ("Guan") is a citizen of the PRC and currently lives in the United States. FAC ¶ 10. Guan owns businesses in both the United States and China. FAC ¶ 10. Plaintiff Wang Ying ("Wang"), Guan's wife, is a United States citizen. FAC ¶ 11. Both currently live in Fremont, California, and also in Newark, Delaware. FAC ¶¶ 10, 11.

Defendant Changkun Bi currently lives in Dalian Province, PRC. FAC ¶ 12. Changkun Bi's son, defendant Zheng Bi ("Bi"), currently lives in Oakland, California, and, on information and belief, resides in the United States through a student visa for his studies at California State University, East Bay. FAC ¶ 13. Defendant Xiuxia Xiao is a Chinese national currently living in the PRC and Guan's ex-employee. FAC ¶ 14. Defendant Dalian Customs Anti-Smuggling Bureau ("DCAB") is a local governmental department of the PRC. FAC ¶ 18. Defendant Deshun Sun currently lives in the PRC and is the Deputy Director of the DCAB. FAC ¶ 16. Defendant Xuetao Zhao is a DCAB official, Chinese national, and currently lives in the PRC. FAC ¶ 15. Several unnamed DCAB officials and Chinese nationals, upon information and belief, are co-conspirators. FAC ¶¶ 19-22.

The plaintiffs filed their Complaint in the Superior Court of California, County of Alameda, on August 16, 2013, and filed the FAC on September 10, 2013. FAC 1, 24. The plaintiffs served Bi on October 30, 2013. Chao Decl. (Dkt. No. 13) ¶ 3. None of the other defendants have been served or appeared.² Bi removed the action to federal court on November 28, 2013. Notice of Removal (Dkt. No. 1) 1-2. On December 30, 2013, the plaintiffs filed thismotion to remand. Dkt. No. 12.

LEGAL STANDARD

A plaintiff may bring a motion to remand to challenge removal of an action to federal court either for lack of subject matter jurisdiction or a defect in the removal procedure. 28 U.S.C. § 1447(c). "The removal statute is strictly construed, and any doubt about the right of removal requires resolution in favor of remand." Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009); see also Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 109 (1941) (noting that "federal courts [must] scrupulously confine their own jurisdiction to the precise limits which the statute has defined") (citation and internal quotation marks omitted). "An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal." 28 U.S.C. § 1447(c).

DISCUSSION

Bi removed this action from state court to federal court pursuant to 28 U.S.C. section 1441, which allows removal of actions that could have been filed in federal court.³ See Notice of Removal 1-2. Bi's Notice of Removal asserts that removal is proper under sections 1332(a), the diversity jurisdiction statute, and 1446(b). Id. After removing the action, Bi also argued that I have jurisdiction pursuant to both FSIA, specifically section 1330(a), and section 1441(a). See Opp'n (Dkt. No. 16) 4.⁴

In their motion to remand, plaintiffs argue that under recent amendments to section 1332 and Ninth Circuit precedent there is no diversity jurisdiction where, as here, an action involves an alien and a United States citizen on one side, and all aliens on the other side, even if the alien on the same side as the United States citizen is a permanent resident of the United States. Br. (Dkt. No. 12) 6. Bi, in contrast, argues that the amendments are inapplicable here because the lone United States citizen (Wang) is on the same side as the lone permanent resident alien (Guan), andtheir suit is against all aliens that are not permanent residents of the United States. Opp'n 3.⁵ In addition, the plaintiffs argue that removal based on a combination of section 1441(a) and the FSIA is improper because section 1441(d) is the exclusive means to remove an action against a foreign state to federal court, and only the foreign state itself may remove using section 1441(d). Br. 7-9. Because no statute provides me with subject matter jurisdiction for this case, the plaintiffs' motion to remand to state court is GRANTED.

I. SUBJECT MATTER JURISDICTION

A. Diversity Jurisdiction

United States district courts have original jurisdiction over all civil actions in which the amount in controversy requirement is satisfied and the case is between "citizens of a State and citizens or subjects of a foreign state." 28 U.S.C. § 1332(a)(2). Complete diversity is required, meaning that the diversity statute "applies only to cases in which the citizenship of each plaintiff is diverse from the citizenship of each defendant." Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). To provide context for the issues raised by this motion, I will review the history of the diversity jurisdiction statute and its amendments.

1. The 2011 Amendment to Section 1332

Before 1988, the diversity statute provided jurisdiction over a suit between a foreign citizen living abroad and a United States citizen. See § 1332(a)(2). However, foreign citizens who resided in the United States did not qualify as United States citizens for diversity purposes, leading to "the odd situation that a [federal] court would have jurisdiction over a suit between a United States citizen and a foreign citizen residing in the same state." See H.K. Huilin Int'l Trade Co., Ltd. v. Kevin Multiline Polymer Inc., 907 F. Supp. 2d 284, 286 (E.D.N.Y. 2012). This was often referred to as the "suits between neighbors" problem. Id.

To address the "suits among neighbors" problem, Congress amended section 1332(a) in 1988 to add the following proviso: "For the purposes of this section . . . an alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which such alien is domiciled." Judicial Improvements and Access to Justice Act of 1988, § 203(a), Pub. L. 100-702, 102 Stat. 4642 ("1988 amendment"). The purpose of this addition was to destroy diversity of citizenship where American citizens and permanent resident aliens domiciled in the same state are adverse parties. See 13E CHARLES ALAN WRIGHT, ET AL., FEDERAL PRACTICE AND PROCEDURE § 3604 (3d ed. 2013); see also Van Der Steen v. Sygen Int'l, PLC, 464 F. Supp. 2d 931, 935 (N.D. Cal. 2006) (Breyer, J.) (stating that "courts have concluded that the only indication of congressional purpose in the legislative history is that Congress' intent in passing the 1988 Amendment was to eliminate so-called 'suits between neighbors'").

The United States Constitution provides that the judicial power of federal courts extends to cases and controversies between United States citizens "and foreign states, citizens or subjects." U.S. CONST., art. III, § 2. Article III places limits on Congress' power to confer jurisdiction based on diversity of citizenship. See Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 496 (1983) (citing Mossman v. Higginson, 4 U.S. 12, 14 (1800), for the proposition that "a statute purporting to confer jurisdiction over actions 'where an alien is a party' would exceed the scope of Article III if construed to allow an action solely between two aliens"). Thus, "the legislative power of conferring jurisdiction to the federal Courts is . . . confined to suits between citizens and foreigners." Mossman, 4 U.S. at 14; see also Hodgson v. Bowerbank, 9 U.S. (5 Cranch) 303 (1809) (deciding that Congress would go beyond the permissible bounds of Article III if it gave federal courts jurisdiction "in all suits in which an alien is a party") (citation omitted). By implication, an alien may not sue another alien in federal court. See Singh v. Daimler-Benz AG, 9 F.3d 303, 305 (3d Cir. 1993) ("the statute now does not expressly provide that one alien may sue another in federal court"); Lloyds Bank PLC v. Norkin, 817 F. Supp. 414, 416 (S.D.N.Y. 1993).

A literal reading of the 1988 amendment could unconstitutionally create federal diversity jurisdiction over a lawsuit brought by one alien against another alien without a United States citizen on either side of the litigation. See Saadeh v. Farouki, 107 F.3d 52, 58 (D.C. Cir. 1997);Lloyds Bank, 817 F. Supp. at 416. So read, an alien residing in one state would be able to sue an alien residing in...