IN THE UNITED STATES DISTRICT COURT FOR THE X DISTRICT OF ALABAMA X DIVISION

Transcription

1 IN THE UNITED STATES DISTRICT COURT FOR THE X DISTRICT OF ALABAMA X DIVISION 1 ZEUS, HERA, and HESTIA, ) ) Plaintiffs, ) ) v. ) Case No. 09-xxx ) OLYMPILOANS, INC., ARTEMIS, ) and FICTITIOUS PARTIES 1-10, ) being those persons, firms, corporations, ) or other legal entities who committed the ) acts complained of herein, and whose ) identities are unknown to Plaintiffs ) but will be added by amendment when ) ascertained, ) ) Defendants. ) PLAINTIFFS' MOTION TO REMAND MAY IT PLEASE THE COURT: Pursuant to 28 U.S.C. 1447(c), Plaintiffs hereby move the Court to remand this action to the Circuit Court of Mt. Olympus, Alabama, for further proceedings. Defendant Olympiloans, Inc., removed the case from state court, alleging that this Names, addresses, and other identifying information have been redacted 1 to protect privacy.

2 Court has subject-matter jurisdiction based on diversity of citizenship pursuant to 28 U.S.C However, Plaintiffs Zeus and Hera and Defendant Artemis are all citizens of the State of Alabama. Since Artemis was not fraudulently joined in order to defeat diversity, there is not complete diversity between all of the Plaintiffs and all of the Defendants. As such, the Court does not have subject-matter jurisdiction, and the case must be remanded to state court. Pursuant to 28 U.S.C. 1447(c), Plaintiffs also move the Court to order Olympiloans to pay Plaintiffs' costs and actual expenses, including attorney's fees, incurred as a result of the wrongful removal. Plaintiffs reserve the right to supplement the record to provide an accurate accounting of all such fees, costs, and expenses incurred once this Court's remand order is filed of record. This Motion is further premised on the argument made in the Brief in Support of Plaintiffs' Motion to Remand filed herewith. Respectfully submitted, FIRM Attorneys for Plaintiffs By: Attorney Name, Esquire Alabama Bar No. Address Telephone Facsimile 2

3 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing document was served upon the following attorneys of record by U.S. mail, first-class postage prepaid, on the day of, 2009: Opposing Counsel Name, Esquire Address Attorney Name, Esquire

4 IN THE UNITED STATES DISTRICT COURT FOR THE X DISTRICT OF ALABAMA X DIVISION ZEUS, HERA, and HESTIA, ) ) Plaintiffs, ) ) v. ) Case No. 09-xxx ) OLYMPILOANS, INC., ARTEMIS, ) and FICTITIOUS PARTIES 1-10, ) being those persons, firms, corporations, ) or other legal entities who committed the ) acts complained of herein, and whose ) identities are unknown to Plaintiffs ) but will be added by amendment when ) ascertained, ) ) Defendants. ) BRIEF IN SUPPORT OF PLAINTIFFS' MOTION TO REMAND INTRODUCTION AND STANDARD OF REVIEW Federal courts are courts of limited jurisdiction. Kokkoken v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). As such, they have the power to hear only those cases that they have been authorized to hear by Congress or by the Constitution. Id.; Thibodeaux v. Paccar, Inc., 592 F. Supp. 2d 1377, 1379 (M.D. Ala. 2009). It is

5 to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction. Kokkoken, 511 U.S. at 377; see also Leonard v. Enter. Rent a Car, 279 F.3d 967, 972 (11th Cir. 2002) ("A removing defendant bears the burden of proving proper federal jurisdiction."); Abrams v. Olin Corp., 248 F.R.D. 283, 287 (S.D. Ala. 2007) (the party asserting diversity jurisdiction bears the burden of proving its existence). This burden is especially "heavy" where, as here, the defendant alleges fraudulent joinder as a basis for removal. See Abrams, 248 F.R.D. at 288. Because removal infringes upon state sovereignty and implicates central concepts of federalism, the federal removal statutes are construed strictly, with all doubts about jurisdiction resolved in favor of remand. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, (1941); Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999); Abrams, 248 F.R.D. at 286. Pursuant to the removal statutes, a state court action may be removed only if it could have been brought originally in a federal court i.e., if it arises under federal law or is between citizens of different states. See 28 U.S.C. 1441(a), (b); Rivet v. Regions Bank of La., 522 U.S. 470, 474 (1998); see also 28 U.S.C. 1447(c) (the case must be remanded to state court if it appears at any time that the district court lacks subjectmatter jurisdiction). In this case, the Plaintiffs have alleged only claims arising under 2

6 state law. As such, the only possible basis for federal removal jurisdiction here is diversity of citizenship. See 28 U.S.C. 1332(a). In order for a federal court to assert removal jurisdiction on the basis of diversity of citizenship, there must be complete diversity between all plaintiffs and all defendants. See Wis. Dep't of Corrs. v. Schacht, 524 U.S. 381, 388 (1998) ("A case falls within the federal district court's 'original' diversity 'jurisdiction' only if diversity of citizenship among the parties is complete, i.e., only if there is no plaintiff and no defendant who are citizens of the same State."); Florence v. Crescent Res., LLC, 484 F.3d 1293, 1297 (11th Cir. 2007); Abrams, 248 F.R.D. at 287. Here, Plaintiffs Zeus and Hera are citizens of the State of Alabama, while Plaintiff Hestia is a Florida citizen. (Compl. 1-3.) Defendant Olympiloans, Inc., is a Delaware corporation registered to do business as a foreign corporation in Alabama but having its principal place of business in South Carolina (according to Olympiloans). (Compl. 4; Notice of Removal 15.) However, Defendant Artemis is a resident and citizen of Alabama. (Compl. 8.) Accordingly, on the face of the Complaint, there is no diversity of citizenship and, thus, no basis for federal removal jurisdiction here. Nevertheless, Olympiloans removed the case to this Court, alleging that Artemis was fraudulently joined in order to defeat diversity in that no cause of action has actually been stated against her. To prove that nondiverse parties have been fraudulently joined to defeat diversity, the removing party must demonstrate either 3

7 (1) outright fraud in the plaintiff's pleading of jurisdictional facts, or (2) that there is no possibility that the plaintiff would be able to establish a cause of action against the resident defendant in state court. See Henderson v. Wash. Nat'l Ins. Co., 454 F.3d 1278, 1281 (11th Cir. 2006); Bowen v. Am. Med. Sec., Inc., No. Civ. A. 3:05CV487- CWO, 2005 WL , at *2 (M.D. Ala. Aug. 19, 2005). Since Olympiloans does not allege outright fraud, only the second type of fraudulent joinder is relevant here. A finding of fraudulent joinder is appropriate "only if 'there is no possibility the plaintiff can establish a cause of action against the resident defendant.... The defendant must make such a showing by clear and convincing evidence.'" Abrams, 248 F.R.D. at 287 (quoting Henderson, 454 F.3d at 1281); see also Florence, 484 F.3d at 1299 ("[I]f there is any possibility that the state law might impose liability on a resident defendant under the circumstances alleged in the complaint, the federal court cannot find that joinder of the resident defendant was fraudulent, and remand is necessary."). As the Eleventh Circuit has explained, "[t]he plaintiff need not have a winning case against the allegedly fraudulent defendant; he need only have a possibility of stating a valid cause of action in order for the joinder to be legitimate." Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998) (emphasis added). In deciding whether the removing defendant can carry his or her heavy burden of showing that no possibility exists that the plaintiff has stated a claim against the resident defendant, the court must "evaluate the parties' factual allegations 4

8 in the light most favorable to the plaintiff and resolve all uncertainties about state substantive law in favor of the plaintiff." Williams v. CNH Am., LLC, 542 F. Supp. 2d 1261, 1264 (M.D. Ala. 2008). ARGUMENT I. OLYMPILOANS HAS NOT CARRIED ITS HEAVY BURDEN OF ESTABLISHING THAT ARTEMIS WAS FRAUDULENTLY JOINED AS A DEFENDANT IN THIS MATTER. In this case, Olympiloans does not even attempt to argue that there is no possibility that Alabama law might impose liability on Artemis under the circumstances stated in the Complaint. Rather, Olympiloans argues only that the Plaintiffs have not, in fact, asserted a cause of action against Artemis in the Complaint. Olympiloans supports this assertion with a bizarre and tortured reading that blatantly ignores entire sections of the Complaint. The essence of Olympiloans' desperate argument in favor of federal jurisdiction (for whatever reason) is that, while [t]he caption of the Complaint lists Artemis as a defendant,... her name appears in the body of the Complaint only to allege that she is a "resident" of Mt. Olympus, Alabama (Complaint 5), and that she engaged in certain conduct which purportedly subjects Olympiloans and/or the fictitious defendants to liability. No claims of any kind are asserted against Artemis. As such, she is simply not a party defendant to this action. 5

9 (Notice of Removal 20.) However, even the most cursory reading of the actual allegations made by the Plaintiffs in their Complaint is sufficient to show that this argument is blatantly wrong. For example, the "narrative facts" supporting all of the causes of actions asserted by the Plaintiffs set forth the following allegations concerning Artemis's "conduct" giving rise to this suit: 7. Each Plaintiff had in the past been a customer of Defendant Olympiloans[.] 8. Each Plaintiff had in the past provided confidential information to Defendant Olympiloans..., including Social Security numbers and bank account numbers. 9. Defendant Artemis, while engaged in the activities material to this lawsuit, was an employee of Defendant Olympiloans... at an office located in Mt. Olympus, Alabama. 10. Defendant Artemis accessed the confidential information of each Plaintiff which had previously been obtained by Defendant Olympiloans[.] 11. Defendant Artemis used the Social Security number and bank account number of each Plaintiff to make fraudulent loans to herself from Defendant Olympiloans[.] 12. Defendant Artemis forged the signatures of Plaintiffs on counter checks and used the forged checks to obtain the fraudulent loans. (Compl ) Thus, Artemis's misconduct plainly forms the basis for each of the causes of action asserted in counts one through four of the Complaint. 6

10 Olympiloans nevertheless strains to argue that because each of the counts further alleges that Olympiloans acted both "independently and by and through Defendant Artemis" to commit certain tortious behavior (see Compl. 15, 19, 23, 29), the "Plaintiffs' assertions of liability and claims for damages are directed only against Olympiloans" and not against Artemis (Notice of Removal 24). However, this allegation recognizes only that some of the claims are asserted directly against Olympiloans for its own independent misconduct e.g., in negligently and/or wantonly hiring, training, and supervising Artemis (Compl. 15(a), (b), (c)) while other claims are based on Olympiloans' vicarious liability for Artemis's misconduct e.g., using Plaintiffs' confidential information to make fraudulent loans to herself and stealing the Plaintiffs' identities (Compl. 15(h), 23). As to the vicarious liability type of claim, surely Olympiloans must be aware of the black-letter principles of corporate law that, while a corporation can be held liable for the actions of its employees committed in the scope of their employment, see, e.g., Defoor v. Evesque, 694 So. 2d 1302, 1304 (Ala. 1997), the employees themselves remain liable for their own tortious conduct, see, e.g., Consol. Constr. Co. of Ala. v. Metal Bldg. Components, L.P., 961 So. 2d 820, 824 (Ala. 2007) ("'In Alabama, the general rule is that officers or employees of a corporation are liable for torts in which they have personally participated, irrespective of whether they were acting in a corporate capacity.'" (quoting Ex parte Charles Bell 7

11 Pontiac-Buick-Cadillac-GMC, Inc., 496 So. 2d 774, 775 (Ala. 1986))). It is also axiomatic that a corporation, being an artificial legal entity, can act only through its agents or employees. See, e.g., Townsend Ford, Inc. v. Auto-Owners Ins. Co., 656 So. 2d 360, 363 (Ala. 1995). Thus, the allegation that Olympiloans committed some of the torts asserted by the Plaintiffs "by and through" Artemis (as opposed to those torts committed "independently" by Olympiloans) does nothing more than recognize the uncontroversial idea that Artemis and Olympiloans can both be held jointly and severally liable for misconduct committed by Artemis while employed by Olympiloans. These principles are plainly reflected in the Plaintiffs' pleading of their causes of action against the Defendants. Thus, the ad damnum clauses at the end of each of the counts clearly demand judgment against and seek relief from the "Defendants, jointly and severally, for compensatory and punitive damages" based on the actions of both Artemis and Olympiloans. These provisions, read together with the remainder 2 of the Complaint as a whole, belie Olympiloans' outrageous assertion that "Plaintiffs 2 (See, e.g., Compl. 16 (listing injuries and damages Plaintiffs suffered as a result of "Defendants' negligence and/or wantonness"), 17 (claiming punitive damages "of Defendants due to Defendants' wanton conduct"), 20 (listing injuries and damages Plaintiffs suffered as a result of "Defendants' breach of fiduciary duty"), 21 (claiming punitive damages "of Defendants due to Defendants' breach of fiduciary duty"), (claiming damages and attorney's fees and costs under the Alabama Consumer Identity Protection Act "against the Defendants" based on "the actions of Defendant Artemis" resulting in the "Defendants' theft of the Plaintiffs' identities"), (listing injuries and damages Plaintiffs suffered as a result of "Defendant 8

12 do not assert a cause of action against or seek relief from Artemis" (Notice of Removal 29) and amply demonstrate that the Plaintiffs are indeed seeking relief from Artemis as well as from Olympiloans. Under these circumstances, Olympiloans cannot even come close to carrying its heavy burden of demonstrating that there is no possibility that the Plaintiffs have asserted valid causes of action against Artemis. Cf. Triggs, 154 F.3d at 1288 (case remanded to Alabama state court where joinder of defendant who was argued to have been fraudulently joined fit comfortably within Federal Rule of Civil Procedure 20, which permits all persons to be joined in one action as defendants if any right to relief is asserted against them jointly, severally, or in the alternative, with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences, and any question of law or fact common to all defendants will arise in the action). As such, this case must be remanded to the Alabama state court in which it was originally commenced for further proceedings. Artemis's fraud" that was ratified by Olympiloans).) 9

13 II. THE COURT SHOULD AWARD PLAINTIFFS THEIR COSTS AND ACTUAL EXPENSES, INCLUDING ATTORNEY'S FEES, INCURRED AS A RESULT OF OLYMPILOANS' IMPROPER REMOVAL OF THIS ACTION. The federal removal statute provides, in pertinent part, that "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a 3 result of the removal." 28 U.S.C. 1447(c). A court may award attorney's fees under 1447(c) "where the removing party lacked an objectively reasonable basis for seeking removal." Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005); accord Abrams, 248 F.R.D. at 292. The Eleventh Circuit has explained that [this] reasonableness standard was ultimately the result of balancing "the desire to deter removals sought for the purpose of prolonging litigation 3 Although the language of the statute may suggest that an award of costs and fees should be included in the remand order, all of the circuit courts of appeal that have considered the question have concluded that because an award of costs and fees pursuant to 1447(c) is collateral to the decision to remand, the district court retains jurisdiction after the remand to enter a separate order with regard to costs and fees. See, e.g., Bryant v. Britt, 420 F.3d 161, (2d Cir. 2005) (collecting cases); Wisconsin v. Hotline Indus., 236 F.3d 363, 365 (7th Cir. 2000) (same); Stallworth v. Greater Cleveland Reg'l Transit Auth., 105 F.3d 252, 257 (6th Cir. 1997); Mints v. Educ. Testing Serv., 99 F.3d 1253, (3d Cir. 1996); Moore v. Permanente Med. Group, Inc., 981 F.2d 443, 445 (9th Cir. 1992). Accordingly, once the Court's remand order is filed, the Plaintiffs can be permitted to file a fee application supplementing the record to provide an accurate accounting of the fees, costs, and expenses they incurred as part of their efforts to secure remand. See Stallworth, 105 F.3d at

14 and imposing costs on the opposing party, while not undermining Congress' basic decision to afford defendants a right to remove as a general matter, when the statutory criteria are satisfied." Bauknight v. Monroe County, Fla., 446 F.3d 1327, 1329 (11th Cir. 2006) (quoting Martin, 546 U.S. at 141). Pursuant to 28 U.S.C. 1441, "a defendant has reasonable grounds to remove a civil action originally filed in a state court to the federal district court when the district court has original jurisdiction to consider the case." Lost Mountain Homeowners Ass'n, Inc. v. Rice, 248 F. App'x 114, 115 (11th Cir. 2007). As noted above, "[o]riginal jurisdiction requires diversity of the parties or the existence of a federal question." Id. at Here, Olympiloans argues only that the parties are diverse based solely on the purported fraudulent joinder of Artemis. In deciding whether a defendant had reasonable grounds to remove an action, the court may take into account the heavy burden borne by the defendant in trying to establish that the plaintiff fraudulently joined nondiverse defendants to defeat diversity jurisdiction. See Gonzalez v. J.C. Penney Corp., 209 F. App'x 867, 869 (11th Cir. 2006). Here, as demonstrated above, Olympiloans has not made an objectively reasonable argument that Artemis was fraudulently joined to defeat diversity. Instead, Olympiloans has done nothing more than play word games (and badly at that), which "is just the sort of dilatory argument that [the Eleventh Circuit has] cited as meriting attorney's fees" under 1447(c). Rice, 248 F. App'x at 116 (affirming 11

15 award of attorney's fees where defendant had not shown, and the record did not otherwise demonstrate, that the parties were diverse; "Rather, the crux of Rice's claim is that the Plaintiffs left out a word in the case style for their pleadings."); see also Gonzalez, 209 F. App'x at (affirming award of attorney's fees where defendants did not carry their heavy burden of establishing fraudulent joinder based on their argument that only one of the named defendants was the "real defendant" in the action). Like the defendants in Rice and Gonzalez, Olympiloans has not actually argued that there is no possibility that the Plaintiffs can state a viable cause of action under Alabama law against Artemis based on her conduct described in the Complaint, as required to establish fraudulent joinder. Rather, Olympiloans incredibly asserts only that Artemis is not really a party defendant in this action, despite the obvious evidence to the contrary. Olympiloans' argument in this regard is so insubstantial that one can only conclude it was advanced solely to prolong litigation and impose costs. Olympiloans will undoubtedly argue that it had a reasonable basis for removing this action in light of McReynolds v. Cotton States Ins., No. 2:05 CV 232 MEF, 2005 WL (M.D. Ala. Aug. 31, 2005). (See Notice of Removal 21, 25.) However, that case is so easily distinguishable from this one as to make the Plaintiffs' argument for attorney's fees for them. In McReynolds, the plaintiffs' complaint listed the following individuals in the caption: Cotton States Insurance Agency, Bill 12

16 Phillips, Tom Bengston, Danny Strock, Lewis Mallory, Mike Herzberg, and Paulette Ellington. Outside of the caption, however, there was a "complete omission of multiple parties from the body of the Complaint." Id. at *2. Thus, while the second count mentioned Strock in the facts leading up to the plaintiffs' allegations, "the actual claim for relief specifically alleges a cause of action only against Cotton States and Phillips." Id. In particular, the ad damnum clause quoted by the court stated as follows: "WHEREFORE as a result of Defendant Cotton States Insurance Company and Defendant Bill Phillips [sic] wanton indifference, Plaintiff Barry McReynolds makes demand on Defendant Cotton States Insurance Company in the amount of $10,000, compensatory and $10,000, punitive damages." Id. at *2 n.2. In other words, the plaintiffs named eight defendants in the caption but mentioned only two of them in the ad damnum clause and specifically demanded judgment only against Cotton States. Here, by contrast, Artemis was named as a Defendant both in the caption and in the body of the Complaint. (See Compl. 5.) In addition, Artemis's tortious conduct, which underlies all of the Plaintiffs' claims in this action, was specified in the body of the Complaint in the paragraphs quoted in argument I above. (See Compl ) Moreover, the Plaintiffs' Complaint in this action specifically includes Artemis, both individually by name and as one of the named "Defendants," in each of the four causes of action alleged. (See Compl , 19-21, 23-25, 27, 13

17 29, 30, 32, 34.) Finally, in stark contrast to McReynolds, the Complaint in this case most assuredly does include Artemis as one of the "Defendants" against whom relief is sought by the Plaintiffs in the ad damnum clauses set forth at the end of each of the counts alleged in the Complaint. 4 In short, McReynolds is so easily distinguishable from this case that it provides no support whatsoever, much less a reasonable basis, for Olympiloans' removal of 5 this action. Accordingly, Olympiloans' removal of this action was not objectively 4 For the most part, each of the ad damnum clauses states: "WHEREFORE, Plaintiffs demand judgment against Defendants, jointly and severally, for compensatory and punitive damages in excess of the minimum jurisdictional limit of this Court in an amount to be determined by struck jury." Count Two adds a claim for equitable relief, while Count Three adds a claim for treble damages and attorney's fees and court costs under the Alabama Consumer Identity Protection Act. The final paragraph of Count Three also specifically states that, pursuant to Alabama Code 13A-8-199, Plaintiffs claim against the Defendants the following: a) Five thousand dollars ($5,000.00) for each incident, or three times the actual damages, whichever is greater. b) Reasonable attorney's fees and court costs. (Compl. 27.) 5 The other cases cited by Olympiloans are even less convincing. For example, Olympiloans quotes the following language from Storr Office Supply Division v. Radar Business Systems-Raleigh, Inc., 832 F. Supp. 154, 156 (E.D.N.C. 1993): "'The key factor in determining whether joinder is fraudulent is whether the plaintiff intended to obtain a judgment against the defendant alleged to be fraudulently joined.'" (Notice of Removal 28.) Here, the Complaint obviously demonstrates that the Plaintiffs have every intention of obtaining a judgment against Artemis, as well 14

18 reasonable, and the Court should award the Plaintiffs their costs and actual expenses, including attorney's fees, incurred in securing the remand of this case to state court. CONCLUSION For the reasons stated, the Court should grant the Plaintiffs' Motion to Remand and remand this case to the Circuit Court of Mt. Olympus, Alabama, for further proceedings. In addition, the Court should order Olympiloans to pay Plaintiffs' costs and actual expenses, including attorney's fees, incurred as a result of the improper removal of this case. Once the Court's remand order is filed, Plaintiffs will supplement the record to provide an accurate accounting of all such fees, costs, and expenses incurred as part of their efforts to secure remand. Respectfully submitted, FIRM Attorneys for Plaintiffs By: Attorney Name, Esquire Alabama Bar No. Address Telephone Facsimile as against Olympiloans, since both "Defendants" are included in each of the prayers for relief. See supra note 4. 15

19 CERTIFICATE OF SERVICE I hereby certify that a copy of the foregoing document was served upon the following attorneys of record by U.S. mail, first-class postage prepaid, on the day of 2009: Opposing Counsel Name, Esquire Address Attorney Name, Esquire