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Davis v. Palumbo

United States District Court, W.D. Missouri, Western Division

December 19, 2019

MIKE DAVIS, Plaintiff,
v.
RENNY PALUMBO, et al., Defendants.

          ORDER

          ROSEANN A. KETCHMARK, JUDGE.

         Before the Court is Plaintiff's Motion to Remand. (Doc. 12.) The motion is now fully briefed. (Doc. 12, 12-1, 14, 16.) After careful consideration, the motion is GRANTED and the case is REMANDED to the Circuit Court of Jackson County, Missouri.

         Background

         As way of procedural background, this case was originally filed in state court on May 10, 2018. (Doc. 1-2.) In that complaint, Plaintiff alleged claims against four defendants (First Data Corporation; CardConnect, Corporation; CardConnect, L.L.C.; and Renny Palumbo) for equitable disgorgement, defamation, violations of the Missouri Service Letter Statute, violations of the Kansas Statutory Employee Protection Act, violations of Missouri's Statutory Action for underpayment of wages, and a claim pursuant to Mo. Rev. Stat. § 290.110. (Id.) Defendant Renny Palumbo (“Palumbo”) is one of the original named defendants. (Id.) At the time the original complaint was filed, both Plaintiff and Palumbo were citizens of Missouri. In May 2019, Palumbo moved to Illinois. (Doc. 1.) Plaintiff then filed an amended Complaint on July 30, 2019. (Id.) The amended Complaint added an additional party, FISERV, Inc. (“FISERV”), and four additional counts. (Id.) Defendant FISERV was added as a defendant because they acquired an original defendant, First Data Corporation (“First Data”). (Id.; Doc. 12.) Three of the additional counts were added by way of uncoupling the individual statutory provisions of the Kansas Statutory Protection Act. (Id.) The amended complaint only added one new claim, a claim for the tort of outrage, which consisted of a single paragraph. Defendants then removed the action to this Court on August 29, 2019, on the basis of diversity. (Doc. 1.)

         Legal Standard

         “[F]ederal courts are courts of limited jurisdiction.” Ark. Blue Cross & Blue Shield v. Little Rock Cardiology Clinic, P.A., 551 F.3d 812, 816 (8th Cir. 2009). “[F]ederal courts have an independent obligation to ensure that they do not exceed the scope of their jurisdiction[.]” Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 434 (2011). A party may remove an action to federal court if there is complete diversity of the parties and the amount in controversy exceeds $75, 000. 28 U.S.C. §§ 1332(a) and 1441(a). Jurisdiction is determined based “upon the state of things at the time the action [is] brought.” Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 570 (2004). Even if all parties are diverse, the “forum defendant rule” provides that the action cannot be removed to federal court if any of the properly joined and served defendants are citizens of the state in which the action is brought. See 28 U.S.C. § 1441(b); Horton v. Conklin, 431 F.3d 602, 605 (8th Cir. 2005). In the Eighth Circuit, violation of the forum defendant rule is a jurisdictional defect and cannot be waived. Id. Therefore, if the forum defendant rule is violated, the court must remand the case to the state court from which is was removed. 28 U.S.C. § 1447(c).

         However, a case cannot be removed to federal court based on diversity of citizenship “more than one year after commencement of the action.” 28 U.S.C. § 1446(b). See Lindsay v. Dillard's, Inc., 306 F.3d 596, 600 (8th Cir. 2002) (the “[f]ailure of a party to remove within the one year limit precludes any further removal based on diversity”); Jackson v. C.R. Bard, Inc., 2017 WL 2021087, at *3 (E.D. Mo. May 12, 2017) (the rationale behind the one-year limitation is that a suit filed in state court should remain in state court if the case has been using state resources for over a year).

         A party seeking removal and opposing remand carries the burden of establishing federal subject-matter jurisdiction by a preponderance of the evidence. In re Prempro Prods. Liab. Litig., 591 F.3d 613, 620 (8th Cir. 2010). Furthermore, any doubts about the propriety of removal should be resolved in favor of remand. In re Bus. Men's Assurance Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993) (per curiam).

         Discussion

         This case was removed to this Court based on 28 U.S.C. §§ 1332(a) and 1441. For removal to be proper under § 1332(a), two requirements must be satisfied: the amount in controversy exceeds $75, 000 and complete diversity of citizenship exists. Here, the parties do not contest the amount in controversy exceeds $75, 000. The question the Court must then determine is whether complete diversity of citizenship exists. As mentioned above, citizenship of the parties is determined at the time of filing. Grupo Dataflux, 541 U.S. at 570-71. At the time the initial complaint was filed, both Plaintiff and Palumbo were citizens of Missouri. Therefore, federal jurisdiction is lacking because diversity of citizenship is destroyed and the forum defendant rule is violated. Federal jurisdiction is also lacking because the one-year rule has been violated as the case was originally filed in 2018 and was not remanded until October 2019. (See Doc. 1.) Defendants make four arguments as to why the Court should disregard the citizenship of Palumbo at the time the original complaint was filed, and find federal jurisdiction proper. Defendants argue Palumbo was fraudulently misjoined, fraudulently joined, the revival doctrine supports removal, and Palumbo's citizenship should be determined at the time of the First Amended Complaint. (Id.) The arguments are without merit and the Court will address each in turn.

         I. Palumbo was not Misjoined or Fraudulently Misjoined

         Fraudulent misjoinder applies “when a plaintiff sues a diverse defendant in state court and joins a viable claim involving a nondiverse party . . . even though the plaintiff has no reasonable procedural basis to join them in one action because the claims bear no relation to each other.” In re Prempro Prods. Liab. Litig., 591 F.3d 613, 620 (8th Cir. 2010) (quoting Ronald A. Parsons, Should the Eighth Circuit Recognize Procedural Misjoinder?, 53 S.D. L. Rev. 52, 57 (2008)). The fraudulent misjoinder rule is an exception to the complete diversity rule that has been accepted by some courts. Id. The Eleventh Circuit has warned in their articulation of this doctrine that mere misjoinder is not fraudulent misjoinder. Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1360 (11th Cir. 1996). “In Prempro the Eighth Circuit neither ‘adopt[ed] [n]or reject[ed] the fraudulent misjoinder doctrine.'” Graham v. Mentor World Wide LLC, No. 4:19-CV-01637, 2019 WL 3253185, at *4 (E.D. Mo. July 19, 2019) (citing Lafoy v. Volkswagen Group of America, Inc., 2016 WL 2733161 at *3 (E.D. Mo. May. 11, 2016)). Rather, the Eighth Circuit, looking at Rule 20, found the claims of unrelated plaintiffs were “‘not so egregious as to constitute fraudulent misjoinder' and was ‘likely to contain common questions of law and fact.'” Id. (citing Lafoy, 2016 WL 2733161 at *3 (E.D. Mo. May. 11, 2016)); Prempro, 591, F.3d at 622-23.

         Rule 20 addresses the permissive joinder of defendants. Joinder under Rule 20 requires: (1) a claim for relief asserting joint, several, or alternative liability arising from the same transaction, occurrence, or series of transactions or occurrences, and (2) a common question of law or fact. Fed.R.Civ.P. 20(a). The Eight Circuit has stated “that the transaction/occurrence requirement prescribed by Rule 20(a) is not a rigid test and is meant to be ‘read as broadly as possible whenever doing so is likely to promote judicial economy.'” Prempro, 591 F.3d at 622 (8th Cir. 2010) (citations omitted). This prescribed flexibility does not depend “so much upon the immediateness of their connection as upon their logical relationship." Id. at 622. Further, “the majority of courts demand more than simply the presence of nondiverse, misjoined parties, but rather a showing that the misjoinder reflects an egregious or bad faith intent on the part of the plaintiffs to thwart removal.” Prempro, 591 F.3d at 623.

         Defendant relies upon the doctrine of fraudulent misjoinder to oppose remand, asserting that Plaintiff's joinder of his claims against Palumbo, along with his claims against the other Defendants, is intended only to defeat diversity because the claims do not “arise out of the same transaction, occurrence, or series of transactions or occurrences.” (Doc. 1, p. 7). However, Defendant has failed to establish a factual basis that Plaintiff's claims were grossly and egregiously misjoined intending to avoid diversity jurisdiction, reaching beyond mere misjoinder to the level of fraudulent misjoinder. Here, Plaintiff's claims all arise out of a series of interactions among employees within a shared workplace and are logically related to one another due to the alleged factual circumstances under which they arose. See Horne v. Tex. DOT, No. 4:19-CV-405-KPJ, 2019 U.S. Dist. LEXIS 185979, at *11 (E.D. Tex. Oct. 28, 2019) (finding that in an employment context, a series of transactions or occurrences is logically connected when the transactions or occurrences take place in the same workplace location, during the same timeframe, under the same supervisory regime). Further, Plaintiff alleges the slanderous ...


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