Yellen v. Teledne Cont'l Motors, Inc., CIVIL ACTIONO. 11-3325N

• Decision Date: 06 December 2011
• Docket Number: CIVIL ACTIONO. 11-3325N
• Parties: JACK YELLEN, et al. v. TELEDNE CONTINENTAL MOTORS, INC., et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

JACK YELLEN, et al.

v.TELEDNE CONTINENTAL MOTORS, INC., et al.

CIVIL ACTIONO. 11-3325N

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

December 6, 2011

MEMORANDUM

Dalzell, J.

This action arises from an aviation accident that killed Mark Yellen and Paula Moffett (collectively, the "decedents") on May 10, 2010 when they were flying in a privately owned aircraft. The plaintiffs, on behalf of their decedents -- both apparently citizens of Tennessee¹ -- commenced this wrongful death and survivor action in the Court of Common Pleas of Philadelphia County, Pennsylvania, docketed at May Term 2011, No. 000285 (hereinafter, the "state action").

Plaintiffs, as heirs to, or administrators of, the decedents' respective estates, alleged state law claims of strict liability, negligence, and breaches of express and implied warranties against eight defendants: (1) Teledyne ContinentalMotors, Inc. f/k/a Teledyne Continental Motors ("TCM, Inc."),² (2) Teledyne Technologies, Inc., (3) TDY Industries, Inc. a/k/a Teledyne Industries, Inc., (4) Allegheny Technologies Inc., (5) Allegheny Teledyne, Inc., (6) Cirrus Design Corp., (7) Cirrus Aircraft Corp., and (8) Cirrus Industries.³ We will refer to defendants one through five as the "Teledyne defendants." Within this subgroup, defendants three through five are herein referred to as the "Pennsylvania defendants." Defendants six through eight comprise the "Cirrus defendants." One plaintiff, Paula Moffett's daughter -- said to be a citizen of Virginia -- asserts a personal claim of negligent infliction of emotional distress against all of the defendants.

On May 20, 2011, the Teledyne defendants, with the consent of the Cirrus defendants, filed a Notice of Removal pursuant to 28 U.S.C. § 1446 invoking our federal questionjurisdiction. Alternatively, those defendants also asserted that we have diversity of citizenship jurisdiction and contended that the Pennsylvania defendants were "fraudulently joined" to improperly trigger § 1441(b)'s prohibition against removal where at least one named defendant is a citizen of the forum state (the "forum defendant rule").

Pursuant to 28 U.S.C. § 1447(c), plaintiffs filed their motion to remand this litigation to the Court of Common Pleas of Philadelphia County. They contend that removal was improper because this Court lacks federal question jurisdiction and the forum defendant rule proscribes removal because the Pennsylvania defendants were not fraudulently joined. Also under § 1447(c), plaintiffs seek costs and fees incurred as a result of defendants' removal. Defendants oppose remand.

For the reasons detailed at length below, we will grant plaintiffs' motion to remand and award plaintiffs' their costs and fees reasonably incurred as a result of defendants' removal.

I. Factual Background

In ruling on a motion to remand premised on alleged jurisdictional defects, "the district court must focus on the plaintiff's complaint at the time the petition for removal wasfiled ... [and] must assume as true all factual allegations of the complaint." Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987) (citations omitted). Thus, we begin by reviewing the facts pertinent to our jurisdictional analysis as they are presented in the original complaint.⁴

Plaintiffs allege that: "[a]t all times material [to the allegations set forth in the Complaint,] [the Pennsylvania defendants were] the Successor[s] and Real Part[ies] in Interest to the manufacturer of certain engine assemblies in the accident aircraft and, as such, assumed all responsibility for providing overhaul, repair, replacement, inspection, and other information with respect to the engine assembly." Pls.' Compl. ¶¶ 8-10. Plaintiffs also identify the Pennsylvania defendants as among "the designers" of the engine assemblies on the accident aircraft. Id. ¶ 11. The Pennsylvania defendants are alleged tomaintain their principal places of business at 1000 Six PPG Place, Pittsburgh, Pennsylvania 15222. Id. ¶¶ 8-10.

Plaintiffs contend that Allegheny Technologies, Inc. and/or Allegheny Teledyne, Inc. (collectively the "Allegheny corporations") were formed as the result of a merger of Teledyne, Inc. (a predecessor corporation to the modern entities) and another Pennsylvania company. Id. ¶ 15. Plaintiffs assert that the Allegheny corporations owned Teledyne Industries, Inc. which, until 1999, included the then-unincorporated engine manufacturing division called Teledyne Continental Motors. Id. In 1999, the Allegheny corporations spun off Teledyne Continental Motors putatively to shed itself of Teledyne Continental Motors's liabilities given the Allegheny corporations' alleged knowledge of defects in the engines Teledyne Continental Motors manufactured. Id. Furthermore, the Allegheny corporations allegedly "concealed its knowledge of defects in the accident model engine and other substantially similar engines from regulatory authorities, the public, and Plaintiffs. As a result, the then existing engine defects perpetuated into subsequent manufactured engines." Id.

Plaintiffs further allege that the Pennsylvania defendants and the rest of the Teledyne defendants' "disregard ofthe corporate formalities, the co-mingling of corporate funds and resources, the disregard of corporate independence, and the joint venture nature of the Teledyne defendants' activities," renders them collectively liable for the tortious activities alleged in the Complaint. Id. ¶ 18.

Each of the four counts of the Complaint that apply to the Pennsylvania defendants⁵ sounds in common law claims arising under the laws of the Commonwealth of Pennsylvania. The first count claims strict products liability against the Pennsylvania defendants as sellers and manufacturers of the allegedly defective engines. Id. ¶¶ 54-68. In count two, plaintiffs claim that the Pennsylvania defendants were negligent for, inter alia, designing the aircraft engine and its fuel delivery system and other components. Id. ¶¶ 69-74. The third count asserts that the Pennsylvania defendants breached express and implied warranties of the aircraft engines and its fuel delivery system as well as its other systems. In the seventh count, the daughter of one of the decedents asserts a claim of negligent infliction of emotional distress against all the named defendants, includingthe Pennsylvania defendants. Id. ¶¶ 119-127.

II. Analysis

The federal removal statute, 28 U.S.C. § 1441(b), provides:

Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

We have already referred to this last sentence of the removal statute as the forum defendant rule. Section 1332(c)(1)'s definition of "citizen" is incorporated by reference into section 1441(b), and a corporation is a citizen "of any State by which it has been incorporated and of the State where it has its principal place of business." 28 U.S.C. § 1332(c)(1).

Our Court of Appeals teaches that "[t]he removal statutes 'are to be strictly construed against removal and all doubts should be resolved in favor of remand.'" Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990) (quoting Steel Valley Auth., 809 F.2d at 1010). Generally speaking, a party"who urges jurisdiction on a federal court bears the burden of proving that jurisdiction exists." Id.

With this burden allocation in mind, we analyze the propriety of defendants' removal and so must first determine whether a removing defendant has carried its burden of showing that we indeed have federal question jurisdiction. If a defendant meets its burden, then we would have subject matter jurisdiction and removal would be proper.⁶ If, however, we were to find no federal question jurisdiction, we would then ask if any of the "parties in interest properly joined and served as defendants . . . [are] citizen[s] of the State in which such action is brought[,]" § 1441(b) (quoting the forum defendant rule). If there are no properly joined and served forum defendants, then removal would be proper. If there are properly joined and served forum defendants, however, then removal would be improper and we must remand.⁷ Thus, if even one defendantnamed in an action is a citizen of the forum state in which the action was initiated, the forum defendant rule mandates remand to state court. Korea Exch. Bank, N.Y. Branch v. Trackwise Sales Corp., 66 F.3d 46, 48 (3d Cir. 1995) (holding (1) operation of forum defendant rule waivable as procedural defect; and (2) action was not removable because defendants were citizens of New Jersey and case was originally filed in New Jersey state court).⁸ Although our Court of Appeals has not yet extended the "fraudulent joinder" doctrine to alleged misuse of the forum defendant rule, the parties argue, and our foregoing reasoningfinds infra section II.B.1, that the doctrine of fraudulent joinder may apply to block the forum defendant rule's operation.

Lastly, only if we find that there is neither a federal question nor a forum defendant would we be obliged to inquire into whether a defendant has met its burden of establishing diversity jurisdiction under 28 U.S.C. § 1332. In that case, if we were to find complete diversity, we would retain jurisdiction. But if we were to find incomplete diversity as to plaintiffs and all defendants, then we must remand unless the removing party can establish that a defendant was "fraudulently joined" so as to break complete diversity and deprive diverse parties of a federal forum. Our Court of Appeals has explicitly recognized fraudulent joinder in this diversity-breaking context. In re Briscoe, 448 F.3d 201 (3d Cir. ...