Yassan v. J.P. Morgan Chase & Co.

• Decision Date: 28 February 2013
• Docket Number: No. 12–2313.,12–2313.
• Citation: 708 F.3d 963
• Parties: Farrokh YASSAN, Plaintiff–Appellant, v. J.P. MORGAN CHASE AND COMPANY, et al., Defendants–Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

708 F.3d 963

Farrokh YASSAN, Plaintiff–Appellant,

v.J.P. MORGAN CHASE AND COMPANY, et al., Defendants–Appellees.

No. 12–2313.

United States Court of Appeals, Seventh Circuit.

Argued Oct. 26, 2012.

Decided Feb. 28, 2013.

Michael S. Welsh, Attorney, Welsh Law, Haddonfield, NJ, for Plaintiff–Appellant.

Peter Petrakis, Attorney, Anneliese Wermuth, Attorney, Meckler Bulger Tilson Marick & Pearson LLP, Chicago, IL, for Defendants–Appellees.

Before EASTERBROOK, Chief Judge, and CUDAHY and TINDER, Circuit Judges.

TINDER, Circuit Judge.

Farrokh Yassan brought suit in the Cook County Circuit Court against his former employer, J.P. Morgan Chase & Co. (hereinafter, Chase), approximately nineteen months after the termination of his employment. In his complaint, Yassan alleged that Chase had terminated him in violation of both the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq., and public policy. Yassan further alleged that Chase had committed fraud against him by inducing him to sign a severance agreement through “explicit and false representation[s].”

Shortly after filing suit—but before Chase's deadline to answer the complaint—Yassan's counsel failed to appear at a status hearing. As a result, the Cook County Circuit Court judge dismissed the case for want of prosecution. Unaware of this dismissal, Chase filed a notice to remove the case to federal district court the following day. The parties brought this potential removal problem to the district court's attention, but the district court concluded that the removal after dismissal constituted a procedural defect that had been waived by Yassan's failure to object within thirty days. The district court then granted Chase's motion to dismiss under Fed.R.Civ.P. 12(b)(6), finding that Yassan had failed to state a claim. Yassan filed a timely appeal with our court, arguing that the district court's dismissal was improper. Although Chase's removal after dismissal for want of prosecution creates a jurisdictional question a little more complicated than the district court recognized, we ultimately find that removal of the case to federal court was properly accomplished. With jurisdiction before both the district court and our court secure, we affirm the decision of the district court.

I

Because the district court decided this case on a Fed.R.Civ.P. 12(b)(6) motion to dismiss, we review Yassan's complaint de novo, construing it in the light most favorable to Yassan. Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir.2008). At the time of his termination, Yassan was employed by Chase on an at-will basis as a Field Operation Technician. Admittedly, Yassan's termination on May 14, 2010 was not wholly unexpected; Yassan acknowledges in his complaint that he began receiving negative performance reviews as early as 2008 (although he argues that these negative reviews were an unmerited “response to [Yassan's] practice of calling management's attention to the unfair workplace practices engaged in by [his] management team”). Still, Yassan alleges in his complaint that Chase told him his “position was being eliminated for a lack of work.” Under the impression that his termination was not personal, but simply due to lack of work, Yassan agreed to sign a release in exchange for twenty-five weeks of severance pay from Chase.

The terms of the release discharged Chase from “all liability for any claims or potential claims relating to [Yassan's] employment,” including (but not limited to) “any claims under ... the Age Discrimination in Employment Act of 1967 ... [and] any claims under ... tort (including ... wrongful or abusive discharge ... [and] fraud).” The release explicitly defined the term “claims” to include “claims I know about and claims I do not know about, as well as the continuing effects of anything that happened before I sign below.” Certainly, the release drafted by Chase was broad, but Chase allowed Yassan forty-five calendar days to evaluate it, consult an attorney (if desired), and decide whether to sign it. Moreover, the terms of the release permitted Yassan to change his mind, allowing Yassan to revoke the release within seven calendar days of signing it.

Yassan signed the release on May 13, 2010, forty-three calendar days after Chase gave it to him, and never attempted to revoke the agreement thereafter. (Yassan now asserts that “he is ready, willing, and able to [revoke and] tender the full amount of the severance settlement” back to Chase.) Two months after signing the release, however, Yassan learned that another Chase employee, Spiro Maros, had been offered Yassan's former job. This discovery angered Yassan; while his termination from Chase initially appeared to be simply part of a reduction in force, it now seemed much more personal—that is, discriminatory and retaliatory. As a result, Yassan filed the present suit in Cook County Circuit Court on December 15, 2011. Chase was served with Yassan's complaint on January 25, 2012, which gave Chase until February 23, 2012 to respond.

On February 8, 2012, Yassan's attorney did not appear for a status hearing, leading the Cook County Circuit Court judge to dismiss Yassan's case for want of prosecution on February 22, 2012—the day before Chase's deadline to respond. On the day of Chase's deadline, unaware that Yassan's case had been dismissed for want of prosecution, Chase filed a notice of removal in federal district court. Only later did the parties learn that the dismissal order and the notice of removal had “crossed in the mail.” The parties pointed out this timing issue, which they referred to as a potential removal defect, to the district court judge, but the district court judge characterized the situation as a mere “procedural defect.” Furthermore, since “neither party object[ed] to the case proceeding”in federal district court, and since the “state court dismissal d[id] not affect [the federal court's] subject matter jurisdiction, which [wa]s supplied by 28 U.S.C. § 1331 based on the ADEA claim,” the district court deemed this “procedural defect” waived under 28 U.S.C. § 1447(c). Finding that it had jurisdiction to adjudicate Yassan's case, the district court turned to Chase's motion to dismiss, which Chase had filed on March 1, 2012. On May 3, 2012, the district court dismissed the case for failure to state a claim under Fed.R.Civ.P. 12(b)(6) because it found that Yassan, by signing the release, had discharged Chase from all ADEA, wrongful discharge, and fraud liability related to Yassan's employment. ¹ Even if Chase had disingenuously represented that Yassan's termination was due to “lack of work,” the district court found that such a representation fell squarely under the terms of the release signed by Yassan. Citing New York law—which, according to the release's choice-of-law provision (and both parties agree), governs this case—the district court pointed out:

A party that settles a claim of fraudulent inducement cannot revisit that settlement by asserting that the alleged defrauding party did not make a full disclosure of its own fraud. This is so even if the defrauding party has an independent duty to disclose, and even when the release was executed without knowledge of certain specific frauds.

Nycal Corp. v. Inoco PLC, 988 F.Supp. 296, 306 (S.D.N.Y.1997) (citations omitted), aff'd, No. 98–7058, 166 F.3d 1201 (2d Cir. Dec. 9, 1998).

After the district court's dismissal for failure to state a claim, Yassan filed a timely appeal with this court. We review de novo the district court's determination that it had subject matter jurisdiction over Yassan's case. Village of DePue, Ill. v. Exxon Mobil Corp., 537 F.3d 775, 782 (7th Cir.2008). Because we conclude in the next section that the district court did indeed have jurisdiction, we review Yassan's case on the merits de novo as well, construing Yassan's complaint in the light most favorable to him, accepting all well-pleaded facts as true, and drawing all inferences in his favor. Tamayo, 526 F.3d at 1081.

II

We are obliged to inquire into the existence of federal jurisdiction whenever any concerns arise. Tylka v. Gerber Prods. Co., 211 F.3d 445, 447 (7th Cir.2000). The parties were apparently unconcerned about the existence of federal court jurisdiction when the matter came to us on appeal, but at oral argument, we raised questions about it upon reviewing the case's procedural posture. In particular, two concerns trouble us, so we must satisfy ourselves that these two concerns are unsubstantiated before addressing the merits of Yassan's case.

First, we are concerned that the jurisdictional requirements of 28 U.S.C. § 1441, the removal statute, prohibit the federal court from hearing this case. Defendants may remove a “civil action” from state court to the federal district court located in “the place where such action is pending,” as long as the federal district court had “original jurisdiction” over the case. 28 U.S.C. § 1441(a). Here, there is no question that the federal district court had original jurisdiction over Yassan's case: 28 U.S.C. § 1331 supplied subject matter jurisdiction over Yassan's ADEA claim, while 28 U.S.C. § 1367(a) supplied jurisdiction over his fraud and wrongful termination claims. But the removal of Yassan's case runs into problems with other parts of 28 U.S.C. § 1441(a): namely, the requirement that his case was “pending” at the time of removal. Removal of Yassan's case was only permissible if a case dismissed for want of prosecution on the previous day in state court can still be considered “pending” there.

Second, even if this case was “pending” at the time of removal, we are concerned that the jurisdictional requirements of the U.S. Constitution prohibit the federal court from hearing this case. Regardless of how a case ends up in federal court, U.S. Const. art. III only allows federal courts to adjudicate live cases or controversies. See, e.g., Allen v. Wright, 468 U.S. 737, 750, 104 S.Ct. 3315, 82...