Schiewe et al v. Cessna Aircraft Company et al
OPINION AND ORDER by Judge James H Payne ; remanding case (terminates case) ; granting 14 Motion to Remand; denying 16 Motion to Dismiss Party; denying 18 Motion to Remand; denying 19 Motion for Miscellaneous Relief (pll, Dpty Clk)
IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF OKLAHOMA
(1) JADE P. SCHIEWE and,
(2) ZACHARY PFAFF
(1) CESSNA AIRCRAFT COMPANY
and (2) SPARTAN AVIATION
Case No. 11-CV-560-JHP-FHM
OPINION AND ORDER
Before the Court are Plaintiffs’ Motion for Remand and Brief in Support (Motion for
Remand),1 Alternative Motion of the Defendant Cessna Aircraft Company to Dismiss the Claim of
Plaintiff Schiewe Against Spartan Aviation Industries, Inc.(Motion to Dismiss),2 Defendant Cessna
Aircraft Company’s Motion to Sever Plaintiff Schiewe’s Claim Against Spartan Aviation Industries
Inc. and to Remand That Claim Only (Motion to Sever),3 and Defendant Cessna Aircraft Company’s
Alternative Motion to Realign Spartan Aviation Industries as a Party Plaintiff (Motion to Realign).4
For the reasons detailed below, Plaintiffs’ Motion for Remand is GRANTED.5
This case arises out of a September 28, 2010 airplane crash in which Plaintiff Schiewe, a
Docket No. 14.
Docket No. 16.
Docket No. 17.
Docket No. 19.
Docket No. 14.
flight instructor for the aviation college of Defendant Spartan Aviation Industries, Inc. (Spartan),
was flying a Cessna 172RG over Tulsa when a fire broke out in the engine compartment and spread
into the cockpit of the aircraft.6 At the time of the accident, Schiewe was providing instruction to
Plaintiff Pfaff, a Spartan student.7
On August 29, 2011, Schiewe and Pfaff filed this action in Tulsa County District Court
alleging claims against Defendant Cessna Aircraft Company (Cessna) for manufacturers’ products
liability, negligent manufacture and/or design, and negligent installation/maintenance instructions.8
Schiewe further asserted a declaratory judgment action against Spartan for determination of its
subrogation rights under Oklahoma workmen’s compensation law.9 The case was timely removed
by Cessna from Tulsa County District Court to the Northern District of Oklahoma on September 6,
2011.10 Cessna cited that Spartan, a non-diverse party, was improperly joined to the action, and
therefore Federal jurisdiction existed under 28 U.S.C. §1332.11
Plaintiffs filed their Motion to Remand on October 5, 2011.12 Defendant Cessna responded,
claiming the action was properly removed because Plaintiff Schiewe failed to state an actionable
Plaintiff’s Motion for Remand at 5, Docket No. 14.
Id. at 6.
Docket No. 2.
Id. at 2.
See Docket No. 14.
claim against Spartan and alternatively, that Spartan should be realigned as a party plaintiff.13 Cessna
then filed a series of motions in an attempt to preserve removal, consisting of a motion to dismiss;14
a motion to sever;15 and a motion to realign Spartan as a party plaintiff.16 Defendant Spartan
answered Plaintiffs’ Petition in this Court on December 23, 2011.17 Each of the motions has been
fully briefed by both Plaintiffs and Defendant Cessna. Defendant Spartan has not responded to the
Generally civil actions brought in state court are removable to federal court if the action
could have originally been filed in federal court.18 Under § 1441(b), however, a non-federal question
case “shall be removable only if none of the parties in interest properly joined and served as
defendants is a citizen of the State in which the action is brought.” “Because federal courts are
courts of limited jurisdiction, there is a presumption against [federal] jurisdiction, and the party
invoking federal jurisdiction bears the burden of proof.”19 Because of the presumption against
jurisdiction, the Court strictly construes the removal statute and as a general matter, must resolve
See Docket No. 15.
Motion to Dismiss, Docket No. 16.
Defendant Cessna Aircraft Company’s Motion to Sever Plaintiff Schiewe’s Claim
Against Spartan Aviation Industries Inc. and to Remand That Claim Only, Docket No. 17.
Defendant Cessna Aircraft company’s Alternative Motion to Realign Spartan Aviation
Industries as a Party Plaintiff, Docket No. 19.
Docket No. 35.
28 U.S.C. § 1441(a).
See Basso v. Utah Power & Light, Co., 495 F.2d 906, 909 (10th Cir.1974) (citation
all doubts against removal.20
Defendant Cessna removed this case based on diversity jurisdiction under 28 U.S.C. § 1332,
which provides that federal district courts “have original jurisdiction of all civil actions where the
matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is
between-[ ] citizens of different States.” Diversity of citizenship does not exist unless all of the
plaintiffs named in a case are diverse from all the defendants named in the case.21
Diversity does not exist on the face of Plaintiffs’ Petition because although Defendant Cessna
is incorporated under the laws of Kansas with its principal place of business in Kansas, both Plaintiff
Schiewe and Defendant Spartan are citizens of Oklahoma.22 However, Defendant Cessna argues that
non-diverse Defendant Spartan was fraudulently joined.23 If the Court should find that Spartan was
not fraudulently joined, Cessna alternatively requests the Court realign Spartan as a party plaintiff
or that the Court sever Plaintiff Schiewe’s claim against Defendant Spartan and remand that claim
alone to the state court in order to create diversity.24 The Court looks first to Cessna’s claim of
fraudulent joinder in conjunction with its motion to dismiss Plaintiff Schiewe’s claims against
See Fajen v. Found. Reserve Ins. Co., Inc., 683 F.2d 331, 333 (10th Cir.1982).
See e.g., Depex Reina 9 Partnership v. Texas Intern. Petroleum Corp., 897 F .2d 461,
463 (10th Cir.1990).
See Notice of Removal at 1, Docket No. 2 (Defendant Cessna is incorporated under the
laws of Kansas, with its principal place of business in Wichita, Kansas). Defendant Spartan is an
Oklahoma corporation, doing business in Tulsa, Oklahoma. See Answer at 1, ¶ 2, Docket No. 35;
Petition at 1, ¶ 4, Docket No. 2-1.
Notice of Removal at 1-2, Docket No. 2.
See Motion to Sever, Docket No. 17; Motion to Realign, Docket No. 19.
A. Fraudulent Joinder/ Motion to Dismiss
Both Defendant Cessna’s Notice of Removal and its Motion to Dismiss claim that Schiewe’s
declaratory action against Defendant Spartan is improperly or fraudulently joined. If the Court finds
Plaintiff Schiewe’s claims against Spartan are improperly or fraudulently joined, then Cessna’s
removal is proper. If the claim against Spartan is properly joined, then there is not complete diversity
as required by 28 U.S.C. §1332, and this Court lacks subject-matter jurisdiction to hear this matter.
For this reason, fraudulent joinder analysis is a jurisdictional inquiry.25
To establish that a party was joined fraudulently, Cessna must demonstrate either fraud in
the recitation of jurisdictional facts or the absence of any possibility that the party has stated a claim
against him in state court.26 In cases where fraudulent joinder is claimed, the Court must “pierce the
pleadings, consider the entire record and determine the basis of joinder by any means available.”27
There has been no allegation of fraud in the recitation of jurisdictional facts. Therefore, to prove an
allegation of fraudulent joinder, Cessna must demonstrate that there is no possibility Plaintiffs would
be able to establish a cause of action against Spartan in Tulsa County District Court.28 In determining
whether or not such a possibility exists, the Court must resolve all disputed questions of fact and
See Albert v. Smith's Food & Drug Ctrs., Inc., 356 F.3d 1242, 1247 (10th Cir.2004).
Kansas State University v. Prince, 673 F.Supp.2d 1287, 1295 (D.Kan.2009) (citing
Dodd v. Fawcett Publ'ns, Inc., 329 F.2d 82, 85 (10th Cir.1964); Montano v. Allstate Indemnity,
211 F.3d 1278 (Table), 2000 WL 525592, 1–2 (10th Cir.2000); Rodriguez v. Sabatino, 120 F.3d
589, 591 (5th Cir.1997), cert. denied, 523 U.S. 1072, 118 S.Ct. 1511, 140 L.Ed.2d 665 (1998)).
Dodd v. Fawcett Publ'ns, Inc., 329 F.2d 82, 85 (10th Cir.1964) (citations omitted).
Montano v. Allstate Indemnity, 211 F.3d 1278 (Table), 2000 WL 525592,*1-*2 (10th
Cir. 2000) (citing Hart v. Bayer Corp., 199 F.3d 239, 246 (5th Cir.2000).
ambiguities in the controlling law in favor of the Plaintiffs.29
Defendant Cessna argues in both its response to Plaintiffs’ Motion for Remand and in its
companion Motion to Dismiss that there is no possibility that Plaintiff Schiewe can establish a cause
of action against Spartan in the state court. Specifically, Cessna argues that Plaintiff Schiewe’s
action for declaratory judgment against Spartan is not yet ripe, because Spartan has no subrogation
rights in the absence of a judgment against Cessna.30 The Court disagrees.
An action for declaratory judgment is ripe if the plaintiff presents the Court with a suit based
on an “actual controversy.”31 The Supreme Court has repeatedly equated this “actual controversy”
requirement to the Constitution's case-or-controversy requirement.32 “[T]he question in each case
is whether the facts alleged, under all the circumstances, show that there is a substantial controversy,
between parties having adverse legal interests, of sufficient immediacy and reality to warrant the
issuance of a declaratory judgment.”33
The first inquiry is therefore whether there is a substantial controversy between parties with
adverse legal interests. It is uncontested that the amount in controversy, at a minimum, exceeds
$75,000, which certainly qualifies it as substantial. Further, Schiewe and Spartan currently have
adverse interests in regard to Schiewe’s workmen’s compensation claim. Additionally, it is
See Defendant’s Response in Opposition to Plaintiffs’ Motion for Remand at 3-14,
Docket No. 15; Motion to Dismiss at 2, Docket No. 16.
Surefoot LC v. Sure Foot Corp., 531 F.3d 1236, 1240 (10th Cir.2008). See also Okla.
Stat. tit. 12, §1651 (2011).
Maryland Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 85 L.Ed.
uncontested that Spartan has a subrogation interest in any recovery Schiewe receives from
Defendant Cessna. A fact which is reiterated in Spartan’s Answer to Plaintiffs’ claims filed in this
Court.34 This interest stems from Oklahoma workmen’s compensation laws.35
From this alone, the Court can surmise that Spartan has an interest in minimizing Schiewe’s
damages with regard to Cessna in an effort to protect itself from increased liability under Oklahoma
workmen’s compensation laws. For example, should Schiewe fail to recover against Cessna,
evidence discovered in the course of this action as to the nature and extent of Schiewe’s injuries
could prove financially detrimental to Spartan in subsequent workmen’s compensation proceedings.
The Court also recognizes Plaintiffs’ argument that while it is in Schiewe’s interest to
recover as much as possible from Cessna, Spartan is, at best, disinterested in any amount over and
above its subrogation interest. While perhaps not diametrically adverse to one another, Schiewe’s
interest in the amount of recovery is likely incompatible with that of Spartan. This positioning would
be readily apparent in settlement negotiations, where it would be in Spartan’s best interest to settle
quickly for an amount near its estimated subrogation interest in order to minimize legal fees, while
it would be in Schiewe’s best interest to maximize his recovery against Cessna. Considering these
facts, the Court finds that, in regard to the declaratory action against Spartan, there is a substantial
controversy between adverse parties.
See Docket No. 35. Defendant Cessna argues Defendant Spartan’s insurer, rather than
Spartan, is the actual party in interest to Spartan’s subrogation claim. Defendant’s Response in
Opposition to Plaintiffs’ Motion for Remand at 2, Docket No. 15. The parties have not presented
evidence of a third-party insurer, and Spartan’s Answer has no mention of an insurer. Therefore,
the Court proceeds under the assumption that Spartan is the actual party in interest.
See White Motor Corp. v. Stewart, 465 F.2d 1085, 1091 (10th Cir.1972) (“Under
Oklahoma law, the payer of the workmen's compensation benefits is subrogated to the claim of
the injured workman against the tortfeasor.”)
Next the Court moves to the “sufficient reality and immediacy” prong. Spartan has paid, and
continues to pay, workmen’s compensation benefits to Plaintiff Schiewe.36 Further, Defendant
Spartan has now answered Plaintiff Schiewe’s Petition in this Court, praying for recovery to the full
extent of its subrogation rights.37 The fact that workmen’s compensation proceedings in this matter
have commenced, combined with Spartan’s answer in this Court to Plaintiff Schiewe’s claims,
evidence to this Court that both Schiewe and Spartan believe that the subrogation issue is both real
and immediate. The Court agrees with this assessment.
Finally, although the Court finds that Plaintiff Schiewe’s declaratory action meets the “actual
controversy” requirement, the court recognizes that the ripeness question may actually hinge on
resolving the apparent ambiguity under Oklahoma law as to when Spartan’s subrogation interest
accrues. The Court necessarily resolves this ambiguity in favor of Plaintiff Schiewe.38
Plaintiff Schiewe’s claim against Spartan presents a substantial controversy, between parties
having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a
declaratory judgment, thus meeting the “actual controversy” requirement of declaratory actions
under both federal and Oklahoma law.39 Consequently, Schiewe’s prospects for establishing a cause
Plaintiffs’ Reply to Defendant’s Response to Plaintiffs’ Motion for Remand at 7,
Docket No. 20.
See Answer at 4, Docket No. 35.
C.f. Montano, 211 F.3d 1278, (Table), 2000 WL 525592, *1–*2 (10th Cir. 2000) (citing
Hart v. Bayer Corp., 199 F.3d 239, 246 (5th Cir.2000).
See Okla. Stat. tit. 12, §1651 (2011) (“District courts may, in cases of actual
controversy, determine rights, status, or other legal relations”). The Court notes that Plaintiff
Schiewe’s claim requests that this Court determine Defendant Spartan’s subrogation rights, and
is not a claim “for compensation alleged to be due under workers' compensation laws for injuries
to persons” that would be prohibited from declaratory determination under the Oklahoma statute.
of action in state court far exceed the mere possibility required to defeat Defendant Cessna’s claims
of fraudulent joinder. Because an actual controversy between Schiewe and Spartan exists, Defendant
Spartan has not been fraudulently joined. Defendant Cessna’s Motion to Dismiss is DENIED.
B. Motion to Realign the Parties
In the alternative, Defendant Cessna has moved that Defendant Spartan be realigned as a
party Plaintiff so as to create complete diversity as required by 28 U.S.C. §1332. In determining
whether realignment is appropriate the Court must “scrutinize the interests of the parties in order to
determine if their positions as plaintiffs and defendants conform to the real interests.”40 “Only when
the parties are aligned to match the actual interests can the court determine whether § 1332 is
As the Court has discussed at length above, Plaintiff Schiewe and Defendant Spartan hold
clearly adverse interests in this proceeding. The Court also points out Defendant Cessna’s filing,
and almost instant dismissal, of a cross-claim against Spartan for indemnification based in contract.42
Defendant Cessna’s allegations in this cross-claim indicate to the Court that Schiewe’s recovery may
more appropriately depend on the apportionment of liability between Defendants Cessna and
Spartan. Although the cross-claim remains dismissed, it demonstrates another, albeit potential, issue
in which Plaintiff Schiewe and Defendant Spartan would hold distinctly adverse positions. Because
Plaintiff Schiewe and Defendant Spartan have both real and potential adverse interests, realignment
is improper. Defendant Cessna’s Motion to Realign the Parties is DENIED.
Farmers Alliance Mut. Ins. Co. v. Jones, 570 F.2d 1384, 1387 (10th Cir.1978).
Symes v. Harris, 472 F.3d 754, 761 (10th Cir.2006).
See Docket No.’s 12 and 13 filed on October 3, 2011 and October 4, 2011 respectively.
C. Motion to Sever
In its final alternative motion, Defendant Cessna asks that Plaintiff Schiewe’s claim against
Defendant Spartan be severed from this case pursuant to Federal Rule of Civil Procedure 21 and be
separately remanded to the state court.43 The Court recognizes that Rule 21 invests this Court with
the authority to sever dispensable, non-diverse parties at any time, even after judgment has been
rendered.44 Further, issues arising under Rule 21 are within the broad discretion of the trial court.45
After reviewing the case law submitted by the parties as to the severability of Spartan, the Court
finds that the ultimate question regarding severability is whether the party to be severed is
According to long held Supreme Court precedent, if a separate decree without prejudice to
Spartan’s rights can be made, then Spartan is dispensable, and the Court should retain jurisdiction
and sever the suit as to Spartan.47 However, if judgment by this Court in the absence of Spartan
might prejudice Spartan or the other parties, severance may be improper. Therefore, the
indispensability question hinges on whether any of the parties may be prejudiced by severing
Motion to Realign at 1, Docket No. 17.
Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832, 104 L.Ed.2d 893,109 S.Ct.
2218 (1989) (citation omitted).
See Morris v. Northrop Grumman Corp., 37 F.Supp.2d 556, 580 (E.D.N.Y.,1999)
(citing New York v. Hendrickson Bros., Inc., 840 F.2d 1065 (2d Cir.1988), cert. denied, 488 U.S.
848, 109 S.Ct. 128, 102 L.Ed.2d 101 (1988)); In re iBasis, Inc. Derivative Litig., 551 F.Supp.2d
122, 127 (D.Mass.2008) (citing 7 Wright, Miller & Kane, Fed. Prac. & Proc. Civ.3d § 1688)).
Newman-Green, Inc., 490 U.S. at 835. But see In re High Fructose Corn Syrup
Antitrust Litigation, 293 F.Supp.2d 854, 862 (C.D.Ill.2003) (applying five part test to a motion
Id. (citing Horn v. Lockhart, 17 Wall. 570, 21 L.Ed. 657 (1873)).
Plaintiff Schiewe’s claims against Spartan. The approach is further supported by other courts’
application of the Federal Rule of Civil Procedure 19(b)’s indispensability framework which focuses
on prejudice.48 Rule 19(b) provides in pertinent part:
[T]he court must determine whether, in equity and good conscience, the action
should proceed among the existing parties or should be dismissed. The factors for the
court to consider include:
(1) the extent to which a judgment rendered in the person's absence might
prejudice that person or the existing parties;
(2) the extent to which any prejudice can be lessened or avoided by:
(A) protective provisions in the judgment;
(B) shaping the relief; or
(C) other measures;
(3) whether a judgment rendered in the person's absence will be adequate;
(4) whether the plaintiff would have an adequate remedy if the action were
dismissed for non-joinder.
The first step is assessing the extent to which a judgment rendered on the other claims in
Spartan’s absence would prejudice Spartan or the other parties. The Court notes that all of these
claims arise out of the same occurrence. This creates an environment where there are both existing
and potential claims by the Plaintiffs against both Cessna and Spartan and by Cessna against
Spartan. Any decision on Schiewe’s claims against Cessna, in the absence of Spartan, may in fact
greatly prejudice Spartan. For instance, Cessna’s dismissed claim against Spartan demonstrates that
See Carden v. Klucznik, 775 F.Supp.2d 247, 251 (D.Mass.2011) (citing H.D. Corp. of
P.R. v. Ford Motor Co., 791 F.2d 987, 992 (1st Cir.1986) (citation omitted); DCC Operating,
Inc. v. Siaca (In re Olympic Mills Corp.), 477 F.3d 1, 8–9 (1st Cir.2007) (citation omitted)).
Spartan may be prejudiced in subsequent contractual litigation by any judgment this Court may
render against Cessna. Considering the very real potential for indemnification claims by Cessna
against Spartan, Spartan has a vested interest in limiting any judgment against Cessna. Spartan’s
absence from this litigation would prejudice its ability to pursue this interest. Spartan has a further
interest in settling Plaintiffs’ claims against Cessna quickly in order to end all pending litigation,
receive any monies due in subrogation, and minimize overall legal costs in these matters. As a nonparty, Spartan would be unable to pursue these interests, creating further prejudice.
Questions of judicial economy aside, Cessna itself is prejudiced to some degree by severing
Spartan and saving any possible indemnification claims it may have for another costly proceeding.
Further, Plaintiff Schiewe has similar financial interest in resolving this action in two proceedings
rather than the three that would be created by severance. Finally, there is the question of Plaintiff
Pfaff who may ultimately have claims against both Cessna and Spartan. Pfaff’s case may be
similarly prejudiced by removing Spartan from this litigation.
At this juncture, the Court can conceive of no workable solution, either by protective
provisions or shaping the relief, that would resolve all of these issues. Although Schiewe’s
declaratory action against Spartan is somewhat secondary to the main thrust of this products
litigation, the Court finds that a judgment in the absence of Spartan would likely not be adequate to
settle this dispute between all of the parties involved. Plaintiff Schiewe may have an adequate
remedy should Spartan be severed, but the Court cannot clearly find that to be the case for the other
parties involved, including Spartan itself. Considering all of this, the Court finds Spartan to be an
indispensable party to this case, therefore severing Plaintiff Schiewe’s declaratory action against
Spartan is improper. Defendant Cessna’s Motion to Sever is DENIED.
Because Plaintiff Schiewe’s claim against Spartan presents an actual controversy, and
because both realignment and severance of the claim against Spartan are improper, Defendant
Spartan is a proper party to this suit. As both Plaintiff Schiewe and Defendant Spartan are citizens
of Oklahoma, there is not complete diversity of parties as is required by 28 U.S.C. §1332. As a
result, this Court lacks subject-matter jurisdiction to hear this case, therefore Plaintiffs’ Motion for
Remand is GRANTED.49 The Alternative Motion of the Defendant Cessna Aircraft Company to
Dismiss the Claim of Plaintiff Schiewe Against Spartan Aviation Industries, Inc.,50 Defendant
Cessna Aircraft Company’s Motion to Sever Plaintiff Schiewe’s Claim Against Spartan Aviation
Industries Inc. and to Remand That Claim Only,51 and Defendant Cessna Aircraft Company’s
Alternative Motion to Realign Spartan Aviation Industries as a Party Plaintiff are all necessarily
IT IS SO ORDERED this 5th day of March, 2012.
Docket No. 14. Because the Court is granting Plaintiffs’ Motion for Remand on other
grounds, the Court need not reach the argument of whether or not Defendant Spartan’s
subrogation rights “arise under” the workmen’s compensation laws of Oklahoma and are
therefore non-removable pursuant to 28 U.S.C. §1445(c).
Docket No. 16.
Docket No. 17.
Docket No. 19.