Scott v. Crescent Marine Towing, Inc ( 2022 )

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA JOSHUA SCOTT et al. CIVIL ACTION VERSUS CASE NO. 22-3181 CRESCENT MARINE TOWING, INC. et al. SECTION: “G”(5) ORDER AND REASONS Before the Court is Plaintiffs Joshua Scott and Jarred Scott’s (collectively, “Plaintiffs”) “Motion to Remand.”1 After initially filing an opposition,2 Defendant Cargill Inc. (“Cargill”) filed a supplemental memorandum stating that it no longer opposes the instant motion given the Fifth Circuit’s October 26, 2022 ruling in In re Levy.3 Having considered the motion, the memorandum in support, the record, and the applicable law, the Court grants Plaintiffs’ motion to remand. I. Background Plaintiffs originally filed an action in the Twenty-Fourth Judicial District Court for the Parish of Jefferson against Cargill and Defendant Crescent Marine Towing, Inc. (“Crescent”) (collectively, “Defendants”) for damages.4 On September 8, 2022, Cargill removed the case from the Twenty-Fourth Judicial District Court for the Parish of Jefferson to this Court pursuant to 28 U.S.C. §§ 1332, 1441(b)(2).5 In the Notice of Removal, Cargill alleges that Plaintiffs are 1 Rec. Doc. 3. 2 Rec. Doc. 4. 3 Rec. Doc. 8 (citing In re Levy, 52 F.4th 244, 2022 WL 14732482 (5th Cir. Oct. 26, 2022) (per curiam)). 4 Rec. Doc. 1-1. 5 Rec. Doc. 1. The diversity statute, 28 U.S.C. § 1332, is satisfied upon a showing of (1) diversity between the parties; and (2) an amount in controversy in excess of $75,000, exclusive of interest and costs. 28 U.S.C. § 1332. The removal statute, 28 U.S.C. § 1441, states in pertinent part that a civil action removable solely on the basis of domiciled in Louisiana, Cargill is domiciled in Minnesota and Delaware, and Crescent is domiciled in Louisiana for purposes of diversity jurisdiction.6 At the time, Cargill argued that removal was proper despite a lack of complete diversity between the parties because Crescent “had not [been] properly joined and served” at the time Cargill filed the Notice of Removal and because the Fifth Circuit held in Texas Brine Co. v. American Arbitration Association, Inc.,7 that a non-forum defendant may remove a case even when a named defendant who has yet to be “properly joined and served” is a citizen of the forum state.8 On October 5, 2022, Plaintiffs filed the instant “Motion to Remand.”9 On October 25, 2022, Cargill filed an opposition to the instant motion;10 however, on November 2, 2022, Cargill filed a supplemental memorandum to its opposition stating that it no longer opposes remand.11 II. Parties’ Arguments A. Plaintiffs’ Arguments in Support of the Motion to Remand In support of the motion, Plaintiffs argue that the case should be remanded because “snap” removal prior to the service of the forum defendant, as allowed under Texas Brine, still requires complete diversity between the parties pursuant to 28 U.S.C. § 1441(b)(2).12 Specifically, diversity “may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C. § 1441(b)(2). 6 The federal diversity jurisdiction statute provides that a corporation is a citizen of its state-of-incorporation and “of the State where it has its principal place of business.” 28 U.S.C. § 1332(c)(1). 7 955 F.3d 492 (5th Cir. 2020). 8 Rec. Doc. 1 at 3. 9 Rec. Dec. 3 at 1. 10 Rec. Doc. 4. 11 Rec. Doc. 8. 12 Rec. Doc. 3-1 at 2. Plaintiffs argue that Texas Brine did not overrule the Fifth Circuit’s controlling decision in New York Life Insurance Company v. Deshotel,13 which held that “a non-resident defendant cannot remove an action if the citizenship of any co-defendant, joined by the plaintiff in good faith, destroys complete diversity regardless of service or non-service upon the co-defendant.”14 Thus, Plaintiffs conclude that, because Plaintiffs and Crescent are citizens of Louisiana, complete diversity between the parties does not exist and so Cargill’s removal of this case pursuant to 28 U.S.C. § 1332 was improper.15 B. Cargill’s Memorandum Regarding the Motion to Remand On October 25, 2022, Cargill filed an opposition to the instant motion, in which it argued that the issue of whether, under 28 U.S.C. § 1441(b)(2), the citizenship of a defendant can serve as a bar to removal if that defendant has not been properly served was currently pending before the Fifth Circuit.16 Thus, Cargill asked the Court to defer ruling on the instant motion until the Fifth Circuit issued its ruling.17 On November 2, 2022, Cargill filed a supplemental memorandum to its opposition stating that it no longer opposed the instant motion because the Fifth Circuit had issued “a ruling holding a ‘defendant’s ‘non-diverse-citizenship cannot be ignored simply because he was an unserved defendant.’”18 13 142 F.3d 873 (5th Cir. 1998). 14 Id. at 2–3 (quoting Deshotel, 142 F.3d at 883) (emphasis omitted). 15 See id. at 4. 16 Rec. Doc. 4 at 6. 17 Id. 18 Rec. Doc. 8 (quoting In re Levy, 52 F.4th 244, 2022 WL 14732482, at *3 (5th Cir. Oct. 26, 2022) (per curiam)). III. Legal Standard “Federal courts are courts of limited jurisdiction. They possess only the power authorized by Constitution and statute, which is not to be expanded by judicial decree.”19 A defendant may remove a civil state court action to federal court if the federal court has original jurisdiction over the action.20 Remand to state court is appropriate if the federal court lacks subject matter jurisdiction.21 A federal court has subject matter jurisdiction over an action pursuant to 28 U.S.C. § 1332 “where the matter in controversy exceeds the sum or value of $75,000” and the action “is between citizens of different states.”22 “When removal is based on diversity of citizenship, diversity must exist at the time of removal.”23 The removing party bears the burden of demonstrating that federal jurisdiction exists by a preponderance of the evidence.24 Moreover, the removal statute must be strictly construed, and “any doubt about the propriety of removal must be resolved in favor of remand.”25 Pursuant to 28 U.S.C. § 1441, an action that is otherwise removable based solely on diversity “may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.”26 This limitation is often 19 Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (internal citations omitted). 20 28 U.S.C. § 1441(a); Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 34 (2002). 21 Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th Cir. 2000) (citing Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988)). 22 28 U.S.C. § 1332(a)(1). 23 Texas Beef Grp. v. Winfrey, 201 F.3d 680, 686 (5th Cir. 2000) (citing 14B Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper, Federal Practice and Procedure § 3723 (1998 ed.)). 24 See Allen v. R&H Oil & Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995). 25 Gasch v. Hartford Acc. & Indem. Co., 491 F.3d 278, 281 (5th Cir. 2007) (internal citation omitted); see also Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). 26 28 U.S.C. § 1441(b)(2). referred to as the “forum defendant rule.”27 A violation of the forum defendant rule renders removal procedurally defective.28 Nevertheless, “[a] non-forum defendant may remove an otherwise removable case even when a named defendant who has yet to be ‘properly joined and served’ is a citizen of the forum state.”29 This practice, commonly called “snap removal,” has been sanctioned by the United States Court of Appeals for the Fifth Circuit.30 However, the Fifth Circuit has explained that “complete diversity is still required” for snap removal.31 IV. Analysis Plaintiffs argue that the case should be remanded because “snap” removal prior to the service of the forum defendant, as allowed under Texas Brine, still requires complete diversity between the parties pursuant to 28 U.S.C. § 1441(b)(2).32 Cargill does not oppose the motion in light of the Fifth Circuit’s October 26, 2022 ruling in In re Levy.33 This Court has authority to grant a motion as unopposed, although it is not required to do so.34 In Levy, the Fifth Circuit clearly stated that the complete diversity requirement to properly assert jurisdiction under 28 U.S.C. § 1332 “is absolute and admits of no exceptions.”35 Thus, the Fifth Circuit found that the federal district court lacked jurisdiction where a foreign insurance 27 See In re 1994 Exxon Fire Chem. Fire, 558 F.3d 378, 391 (5th Cir. 2009). 28 Id. at 392–94. 29 Texas Brine Co., L.L.C. v. Am. Arbitration Ass'n, Inc., 955 F.3d 482, 487 (5th Cir. 2020). 30 Id. 31 In re Levy, 52 F.4th 244, 2022 WL 14732482, at *3 (5th Cir. Oct. 26, 2022) (per curiam). 32 Rec. Doc. 3-1 at 2. 33 Rec. Doc. 8. 34 Edward H. Bohlin Co., Inc. v. Banning Co., Inc., 6 F.3d 350, 356 (5th Cir. 1993). 35 In re Levy, 2022 WL 14732482, at *3. company, the only defendant to receive service of process, removed the case based on diversity jurisdiction even though the plaintiff and an unserved defendant were both citizens of Louisiana.*° The Fifth Circuit explained that the federal district court lacked jurisdiction “[b]ecause the only basis for removal in this case was diversity jurisdiction, and complete diversity [was] lacking.”>’ Likewise, foreign defendant Cargill removed this action before Crescent had been served solely on the basis of diversity jurisdiction even though Plaintiffs and Crescent are citizens of Louisiana.*® Thus, as in Levy, this Court lacks subject matter jurisdiction because complete diversity is lacking. Accordingly, IT IS HEREBY ORDERED that Plaintiffs’ “Motion to Remand”*? is GRANTED. IT IS FURTHER ORDERED that the case is hereby remanded to the Twenty-Fourth Judicial District Court for the Parish of Jefferson for further proceedings. NEW ORLEANS, LOUISIANA, this 28th day of November, 2022. Creeltt □□□□□ ) "eset \oburitte □□ CHIEF JUDGE UNITED STATES DISTRICT COURT 36 Td at *1, *3. 37 Td. at *3. 38 See Rec. Doc. 1. 9 Rec. Doe. 3.