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Dillard v. Silvercote, LLC

United States District Court, E.D. Missouri, Eastern Division

May 24, 2018

TERRY DILLARD, Plaintiff,
v.
SILVERCOTE, LLC, et al., Defendants.

          MEMORANDUM AND ORDER

          CHARLES A. SHAW UNITED STATES DISTRICT JUDGE

         This matter is before the Court on its own motion. Defendants Silvercote, LLC (“Silvercote”) and Steve Davis removed this case from state court on August 25, 2017. Plaintiff did not move to remand. The Court examined the Notice of Removal and petition and found that questions exist as to whether federal subject matter jurisdiction exists in this case. The Court ordered that defendants show cause, in writing, as to why jurisdiction exists in this case, and plaintiff was given the opportunity to respond. After reviewing the parties' memoranda, the Court finds it does not have subject matter jurisdiction to hear this case. The Court will remand the case to state court.

         Background

         Plaintiff filed suit on August 26, 2016, in the Circuit Court of Warren County, Missouri. The petition asserts that plaintiff was employed by Silvercote at its Wright City, Missouri location. Plaintiff alleges in his petition that he worked for Silvercote or its predecessor for 22 years. Plaintiff alleges that defendants requested that he train a younger employee to perform the tasks he performed. According to the petition, on June 29, 2015, plaintiff's supervisor, defendant Steve Davis, terminated his employment. Plainitff alleges that despite favorable performance evaluations, he was discharged and was replaced by a younger employee. Plaintiff alleges that he was over 40 years old at the time and a member of a protected class under the Missouri Human Rights Act (“MHRA”), Mo. Rev. Stat. § 213.055 (2010). Plaintiff alleges that both Silvercote and defendant Davis are employers within the meaning of the MHRA. Plaintiff claims that both defendants discharged and discriminated against him because of his age in violation of the MHRA.

         On August 25, 2017, one day shy of a year after this case was originally filed, defendants removed the action to this Court pursuant to 28 U.S.C. §§ 1332 and 1441. Defendants maintain that this Court has federal diversity jurisdiction over the case because the parties are citizens of different states, and the amount in controversy exceeds $75, 000.00. Defendants assert that plaintiff is a citizen of Missouri, and Silvercote is a citizen of Delaware and Indiana.[1] As for defendant Davis, defendants admit he is a citizen of Missouri, which would break diversity, but argue that his citizenship should be disregarded because he was fraudulently joined to defeat diversity jurisdiction.[2] In support of their argument for fraudulent joinder, defendants do not assert that plaintiff failed to state a colorable claim against defendant Davis in his petition. Rather, defendants state that following the completion of written discovery, they took plaintiff's deposition, at which time plaintiff made several admissions that establish defendant Davis is not an employer within the meaning of the MHRA and, therefore, cannot be held liable under the statute. Defendants argue that based on plaintiff's own admissions, it is evident defendant Davis did not directly oversee and was not actively involved in the alleged discriminatory conduct. According to defendants, plaintiff has no reasonable basis in fact or law to support a MHRA claim against defendant Davis, and thus it is clear he was fraudulently joined in this suit to defeat diversity jurisdiction.[3]

         Plaintiff responds that removal was not proper because defendants are asking the Court to review substantive evidence obtained during discovery and make a determination on the merits. Plaintiff argues that even if the Court were to review the evidence, defendants have not established that defendant Davis was fraudulently joined. Plaintiff contends that there remain issues of fact as to his MHRA claim against defendant Davis. Plaintiff avers that the defendants have misconstrued his deposition testimony, and states there is evidence in the record, albeit not direct evidence, establishing defendant Davis discriminated against plaintiff in violation of the MHRA.

         Discussion

         “In every federal case the court must be satisfied that it has jurisdiction before it turns to the merits of other legal arguments.” Carlson v. Arrowhead Concrete Works, Inc., 445 F.3d 1046, 1050 (8th Cir. 2006). The Eighth Circuit has admonished district courts to “be attentive to a satisfaction of jurisdictional requirements in all cases.” Sanders v. Clemco Indus., 823 F.2d 214, 216 (8th Cir. 1987). A defendant may remove an action originally filed in state court only if the case originally could have been filed in federal court. See 28 U.S.C. § 1441(a); Sheehan v. Gustafson, 967 F.2d 1214, 1215 (8th Cir. 1992). The defendant, as the party invoking jurisdiction, bears the burden of proving that all prerequisites to jurisdiction are satisfied. Green v. Ameritrade, Inc., 279 F.3d 590, 596 (8th Cir. 2002). Removal statutes are strictly construed, In re Business Men's Assurance Co. of America, 992 F.2d 181, 183 (8th Cir. 1993), and any doubts about the propriety of removal are to be resolved in favor of remand. Central Ia. Power Coop. v. Midwest Indep. Transmission Sys. Operator, Inc., 561 F.3d 904, 912 (8th Cir. 2009).

         For diversity jurisdiction to exist under 28 U.S.C. § 1332(a)(1) there must be complete diversity of citizenship between plaintiff and defendants. Buckley v. Control Data Corp., 923 F.2d 96, 97, n.6 (8th Cir. 1991). “It is settled, of course, that absent complete diversity a case is not removable because the district court would lack original jurisdiction.” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 564 (2005) (cited case omitted). “In the case of a removed action, diversity [of citizenship] must exist both when the state petition is filed and when the petition for removal is filed.” Ryan ex rel. Ryan v. Schneider Nat'l Carriers, Inc., 263 F.3d 816, 819 (8th Cir. 2001) (citing Koenigsberger v. Richmond Silver Mining Co., 158 U.S. 41, 49-50 (1895)). Where complete diversity of citizenship does not exist, 28 U.S.C. § 1447(c) requires a district court to remand the case to state court for lack of subject matter jurisdiction.

         This action is not removable on its face because it presents no federal question, and defendant Davis is a Missouri citizen. Defendants argue the case is removable because defendant Davis was fraudulently joined. Fraudulent joinder is an exception to the rule that complete diversity of citizenship must exist both when the state petition is filed and when the notice for removal is filed. Knudson v. Sys. Painters, Inc., 634 F.3d 968, 975 (8th Cir. 2011). A defendant seeking removal on the basis of fraudulent joinder bears the burden of proving “that the plaintiff's claim against the diversity-destroying defendant has ‘no reasonable basis in fact and law.'” Id. at 980 (quoting Filla v. Norfolk S. Railway Co., 336 F.3d 806, 810 (8th Cir. 2003)). Under this standard, “if it is clear under governing state law that the complaint does not state a cause of action against the non-diverse defendant, the joinder is fraudulent and federal jurisdiction of the case should be retained.” Filla, 336 F.3d at 810. Joinder of the diversity-destroying defendant is not fraudulent where “there is arguably a reasonable basis for predicting that the state law might impose liability based upon the facts involved.” Id. at 811. The Eighth Circuit has further instructed that in ruling on the issue of fraudulent joinder, a district court does not have the power to decide the merits of a case. Id.

         Here, defendants did not remove the case when it was originally filed in state court, and they are not asking the Court to determine whether plaintiff's petition states a claim against defendant Davis, such that there is “a reasonable basis for predicting” that Missouri law might impose liability against him. Id. In fact, there appears to be no dispute that plaintiff stated a claim in his petition against his supervisor, defendant Davis.[4]

         While the case was pending in state court, defendant Davis answered plaintiff's petition and did not file a motion to dismiss. Instead the parties engaged in discovery, and only after plaintiff's deposition did defendants remove the case to federal court. In support of their assertion that federal jurisdiction exists in this case under the doctrine of fraudulent joinder, defendants ask the Court to review portions of plaintiff's deposition transcript, in addition to affidavits of Silvercote employees, including Mr. Davis, regarding who was plaintiff's supervisor, and who made the decision to terminate his employment. They ask the Court to make a determination, based on this evidence, that plaintiff cannot establish a claim against defendant Davis. Essentially, defendants are asking the Court to make a summary judgment ruling. They urge the Court to find there are no disputes of material fact, and that defendant Davis is entitled to judgment as a matter of law. This is wellbeyond the scope of what is allowed and appropiate under Eighth Circuit precedent.

         The Eighth Circuit has held that “[f]raudulent joinder exists if, on the face of plaintiff's state court pleadings, no cause of action lies against the resident defendant.” Anderson v. Home Ins. Co., 724 F.2d 82, 84 (8th Cir. 1983); see also Filla, 336 F.3d at 810 (fraudulent joinder exists “if it is clear under governing state law that the complaint does not state a cause of action against the non-diverse defendant”). The Eighth Circuit has held that this standard is even less stringent than the dismissal standard under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Knudson, 634 F.3d at 972 (rejecting the defendant's argument that the Rule 12(b)(6) standard should apply to the doctrine of fraudulent joinder, holding Filla established the proper standard). Here, defendants are asking the Court to go well beyond even the Rule 12(b)(6) standard - they are asking the Court to review evidence and make a merits determination. Defendants cite no controlling authority in which the reviewing court applied the doctrine of fraudulent joinder doctrine by considering evidence outside the pleadings to determine there was no claim against the diversity-destroying defendant.[5]

         In their response to the Court's order to show cause, defendants make much of the fact that this case was removed pursuant to 28 U.S.C. § 1446(b)(3). Defendants argue that the Filla - whether the plaintiff has alleged in the complaint a colorable claim against the non-diverse defendant - does not apply in cases removed pursuant to this subsection. In Knudson, however, the case was removed pursuant to § 1446(b)(3), and there the Eighth Circuit held that Filla applies. Knudson, 634 F.3d at 980 (reversing the district court's finding that the doctrine of fraudulent joinder applied; the court found “there is arguably a reasonable basis for predicting that the state law might impose liability based upon the facts involved” because the motion to dismiss might be reversed on appeal) (citing Filla, 336 F.3d at 810). Other district courts in this Circuit have employed the Filla standard when ruling on the issue of fraudulent joinder for cases removed pursuant to § 1446(b)(3). See, e.g., Housley ex rel. v. Dial Corp., ...


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