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Nancy Doty, Inc. v. Fox Head, Inc.

United States District Court, D. Oregon

September 6, 2019

NANCY DOTY, INC., Guardian Ad Litem/Special Fiduciary for MINOR ANTONIO MIRANDA-SOTO, Plaintiff,
v.
FOX HEAD, INC., a foreign corporation; CYCLE GEAR, INC., a foreign corporation; WYLDER PROMOTIONS LLC, an Oregon limited liability company; and MOTOCROSS NORTHWEST, INC., an Oregon corporation, Defendants.

          J. Randolph Pickett, R. Brendan Dummigan, Kimberly O. Weingart, Pickett Dummigan McCall LLP, Of Attorneys for Plaintiff.

          Patrick C. Wylie and Jonathan Henderson, Davis Rothwell Earle & Xóchihua P.C., . Of Attorneys for Defendant Fox Head, Inc.

          Katie L. Smith and Karlek S. Johnson, Lorber Greenfield & Polito, LLC, Of Attorneys for Defendant Cycle Gear, Inc.

          David Matthew Merryman and Julie Bardacke Haddon, Gordon & Rees Scully Mansukhani LLP, Of Attorneys for Defendant Wylder Promotions LLC.

          OPINION AND ORDER

          MICHAEL H. SIMON UNITED STATES DISTRICT JUDGE

         Plaintiff filed this case in the Circuit Court for the State of Oregon for the County of Multomah (“Multnomah County Circuit Court”) on April 20, 2018. On March 18, 2019, nearly one year later, Defendant Fox Head, Inc. (“Fox Head”) removed the case to this Court. Fox Head removed based on diversity jurisdiction, relying on email correspondence from counsel for Oregon Defendant Wylder Promotions LLC (“Wylder”) relating to a settlement between it and Plaintiff. If Wylder was no longer a defendant in the case, then there would be diversity between the parties, because Oregon Defendant Motocross Northwest, Inc. was dismissed from the case while it was being litigated Multnomah County Circuit Court.

         On April 17, 2019, Plaintiff moved to remand, asserting that the removal is defective. Plaintiff argues that the email correspondence relied on by Fox Head is insufficient “other paper” on which to base removal. For the following reasons, the Court agrees with Plaintiff and remands this case to Multnomah County Circuit Court.

         STANDARDS

         A civil action generally may be removed from state court to federal court if the federal district court would have had original, subject matter jurisdiction over the case. 28 U.S.C. § 1441(a). Subject matter jurisdiction may be based on either diversity jurisdiction or federal question jurisdiction. 28 U.S.C. §§ 1331, 1332. Diversity jurisdiction exists over civil actions when the amount in controversy exceeds $75, 000 and there is complete diversity among all plaintiffs and defendants. 28 U.S.C. § 1332(a)(1). “[D]iversity jurisdiction does not exist unless each defendant is a citizen of a different State from each plaintiff.” Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978) (emphasis in original).

         When removal is based on diversity jurisdiction, “[a] case may not be removed . . . more than 1 year after commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.” 28 U.S.C. § 1446(c)(1). If the case as stated in the four corners of the initial pleading is not removable, “a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.” 28 U.S.C. § 1446(b)(3).

         A motion to remand is the proper procedure for a plaintiff to use when challenging removal. 28 U.S.C. § 1447; see also Moore-Thomas v. Ala. Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009). The party seeking removal bears the burden of establishing by a preponderance of the evidence that removal is proper. Moore-Thomas, 553 F.3d at 1244. “This burden is particularly stringent for removing defendants because ‘[t]he removal statute is strictly construed, and any doubt about the right of removal requires resolution in favor of remand.'” Corral v. Select Portfolio Servicing, Inc., 878 F.3d 770, 773-74 (9th Cir. 2017) (quoting Moore-Thomas, 553 F.3d at 1244); see also Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (noting the “strong presumption” against removal jurisdiction).

         DISCUSSION

         Fox Head removed this case based on an assertion that the case became removable because of the settlement between Plaintiff and Wylder, which created diversity jurisdiction with the loss of the only remaining Oregon defendant. Fox Head solely relies on an email it received from Wylder's counsel as “other paper” that shows that the case became removable. Plaintiff responds that the email is insufficient to show that removal is proper because diversity jurisdiction must exist as of the time of removal and the settlement was not final enough on March 18, 2019, and at that time Wylder was still a party to the case. Plaintiff argues that this email shows no more than that Plaintiff and Wylder were expecting to finalize the details of their settlement. Plaintiff also notes that if the settlement is finalized within the next few months as expected and Wylder is dismissed from this case, because of the one-year deadline for removal based on diversity jurisdiction any potential future removal after Wylder is dismissed would be time barred.

         This Court has discussed “that a settlement-related letter or email may constitute ‘other paper' under 28 U.S.C. 1446(b)(3). To the extent that such a communication brings to light new facts or claims that make a case removable, it restarts a defendant's 30-day clock for removal under 28 U.S.C. § 1446.” Coury v. Air & Liquid Sys. Corp., 2018 WL 702685, at *5 (D. Or. Feb. 2, 2018). Coury involved settlement communications from Plaintiffs counsel that suggested an intent to bring claims of asbestos exposure on U.S. Navy vessels, thereby potentially triggering removal under the federal officer removal statute, 28 U.S.C. § 1442(a)(1), which unlike § 1441, is construed broadly in favor of removal. Id. at *6-7. The Court ...


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