Jane Doe #1 v. Matt Blair
Filing
PUBLISHED AUTHORED OPINION filed. Motion disposition in opinion granting Motion to amend/correct [999563708-2]. Originating case number: 5:14-cv-23501. [999778081]. [15-1211]
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1211
JANE DOE #1, a minor, by her next friends and guardians, Ben
and
Kelly
Houdersheldt;
BEN
HOUDERSHELDT;
KELLY
HOUDERSHELDT; JANE DOE #2, a minor, by her next friends and
guardians, Ben and Kelly Houdersheldt,
Plaintiffs - Appellees,
v.
MATT BLAIR,
company,
an
individual;
RES-CARE,
INC.,
a
foreign
Defendants - Appellants.
Appeal from the United States District Court for the Southern
District of West Virginia, at Beckley.
Irene C. Berger,
District Judge. (5:14-cv-23501)
Argued:
January 28, 2016
Decided:
March 21, 2016
Before SHEDD and FLOYD, Circuit Judges, and Loretta C. BIGGS,
United States District Judge for the Middle District of North
Carolina, sitting by designation.
Reversed and remanded by published opinion.
Judge Floyd wrote
the opinion, in which Judge Shedd and Judge Biggs joined.
ARGUED:
Edward
Taylor
George,
MACCORKLE
LAVENDER,
PLLC,
Charleston, West Virginia, for Appellants.
Erwin Leon Conrad,
CONRAD & CONRAD, PLLC, Fayetteville, West Virginia, for
Appellees.
ON BRIEF: Michael E. Mullins, MACCORKLE LAVENDER,
PLLC, Charleston, West Virginia, for Appellant Matt Blair. John
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P. Fuller, Suleiman O. Oko-ogua, BAILEY & WYANT, PLLC,
Charleston, West Virginia, for Appellant Res-Care, Inc. Jamison
T. Conrad, CONRAD & CONRAD, PLLC, Fayetteville, West Virginia;
Thomas A. Rist, RIST LAW OFFICES, Fayetteville, West Virginia,
for Appellees.
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FLOYD, Circuit Judge:
This
order
remanding
district
had
appeal
not
court
challenges
the
district
established
that
court’s
case
underlying
determined
been
the
state
to
federal
because
sponte
court.
diversity
the
sua
removing
The
jurisdiction
defendant—a
corporation—failed to allege its principal place of business.
Defendants argue that the district court did not have authority
to remand the case.
Plaintiffs contend that we do not have
jurisdiction to review the remand order.
court
based
its
remand
order
on
a
Because the district
procedural
defect
in
the
removal notice, we conclude both that we have jurisdiction to
review the remand order and that the district court did not have
authority to issue the remand order sua sponte.
Accordingly, we
reverse the district court’s remand order and remand this case
to the district court for further proceedings.
I.
On March 27, 2014, Jane Doe #1, through her next friends
and guardians Ben and Kelly Houdersheldt, filed a complaint in
West Virginia state court against Matt Blair (Blair) and ResCare, Inc. (Res-Care).
case
to
federal
court,
On July 14, 2014, Res-Care removed the
asserting
based on diversity of citizenship.
subject
matter
jurisdiction
In the removal notice, Res-
Care alleged that Jane Doe #1 was a West Virginia resident,
3
Appeal: 15-1211
Blair
Doc: 44
was
Kentucky.
a
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Virginia
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resident,
and
it
was
incorporated
in
However, Res-Care did not allege the state in which
it had its principal place of business.
An amended complaint
subsequently added Jane Doe #2 and the Houdersheldts—all West
Virginia residents—as plaintiffs.
On January 20, 2015, 191 days after Res-Care removed the
case, the district court sua sponte remanded the case to state
court
because
“federal
established.”
diversity
J.A. 54.
jurisdiction
has
not
been
The court determined that “[a]bsent
some assertion from either party as to ResCare’s principal place
of business, th[e] Court lacks jurisdiction.”
J.A. 56.
Blair
filed a motion to alter or amend under Federal Rule of Civil
Procedure 59(e) and for reconsideration under Rule 60, which
Res-Care joined.
Blair noted in his motion that no party had
challenged the court’s jurisdiction and that the parties were
able to determine that Res-Care’s principal place of business is
Louisville, Kentucky.
The
district
court
Plaintiffs did not oppose the motion.
denied
the
motion
and
Res-Care
and
Blair
whether
we
have
timely appealed.
II.
A.
At
the
jurisdiction
outset,
to
review
we
must
the
determine
district
4
court’s
remand
order.
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“Congress has placed broad restrictions on the power of federal
appellate
removed
courts
cases
to
to
review
state
district
court.”
court
Things
Petrarca, 516 U.S. 124, 127 (1995).
orders
remanding
Remembered,
Inc.
v.
Title 28 U.S.C. § 1447(d)
provides that remand orders are generally “not reviewable on
appeal
or
“interpreted
suggest.”
otherwise.”
§
1447(d)
However,
to
cover
the
less
Supreme
than
its
Court
words
has
alone
Powerex Corp. v. Reliant Energy Servs., Inc., 551
U.S. 224, 229 (2007).
As we have previously noted, § 1447(d)
is tightly circumscribed to cover only remand orders
within the scope of 28 U.S.C. § 1447(c), based on (1)
a district court’s lack of subject matter jurisdiction
or (2) a defect in removal other than lack of subject
matter jurisdiction that was raised by the motion of a
party within 30 days after the notice of removal was
filed.
Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192, 196
(4th Cir. 2008) (citing 28 U.S.C. § 1447(c)) (internal quotation
marks omitted);
see
also
Things
Remembered,
516
U.S.
at
127
(“[O]nly remands based on grounds specified in § 1447(c) are
immune from review under § 1447(d).” (citation omitted)).
Under this statutory scheme, a district court may remand a
case sua sponte for lack of subject matter jurisdiction at any
time, 28 U.S.C. § 1447(c), and such an order is not reviewable,
id. § 1447(d).
However, “a remand based on a defect other than
lack of subject matter jurisdiction must be effected by granting
a timely filed motion”; if such an order is “entered without a
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motion at all,” § 1447(d) does not bar our review.
Ellenburg,
519 F.3d at 197; see also Corp. Mgmt. Advisors, Inc. v. Artjen
Complexus, Inc., 561 F.3d 1294, 1296 (11th Cir. 2009) (“[W]e
have jurisdiction to review whether the district court exceeded
its authority under § 1447(c) by remanding this case because of
a perceived procedural defect in the removal process without
waiting for a party’s motion.” (citation and internal quotation
marks omitted)).
“[A]
district
court’s
mere
citation
to
§
1447(c)
is
insufficient to bring a remand order within the purview of that
provision.”
576,
584
In re Blackwater Sec. Consulting, LLC, 460 F.3d
(4th
Cir.
2006).
“We
must
instead
look
to
the
substantive reasoning behind the order to determine whether it
was issued based upon the district court’s perception that it
lacked subject matter jurisdiction.”
Id.
Our jurisdiction to
review the district court’s remand order here depends on whether
the order was based on lack of subject matter jurisdiction or a
procedural defect in the removal process.
B.
Three
other
circuits
have
considered
the
precise
issue
here: whether a failure to establish a party’s citizenship at
the time of removal is a procedural or jurisdictional defect.
All
three
circuits
determined
6
that
such
a
failure
is
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“procedural, rather than jurisdictional.”
In re Allstate Ins.
Co., 8 F.3d 219, 221 (5th Cir. 1993); see also Artjen, 561 F.3d
at 1296; Harmon v. OKI Sys., 115 F.3d 477, 479 (7th Cir. 1997).
In Allstate, the Fifth Circuit held that a procedural defect
within the meaning of § 1447(c) refers to “any defect that does
not go to the question of whether the case originally could have
been
brought
in
federal
district
court.”
(citation and quotation marks omitted).
that
the
defendant’s
failure
to
8
F.3d
at
221
The court determined
allege
the
plaintiff’s
citizenship in its notice of removal was merely a procedural
error because “although [the defendant] failed conclusively to
demonstrate diversity, the record discloses no dispute that it
in fact existed.”
Id. (emphasis in original).
Because the
failure to allege citizenship was a procedural defect, the Fifth
Circuit determined that it had jurisdiction to review the remand
order.
Id. at 223-24.
The Eleventh Circuit relied on Allstate
in reaching the same conclusion.
Artjen, 561 F.3d at 1297.
Our decision in Ellenburg is also instructive.
There, the
complaint filed in state court stated no dollar amount for the
value of the damages claimed.
Ellenburg, 519 F.3d at 194.
The
notice of removal, which was based on diversity jurisdiction,
stated that the amount in controversy exceeded $75,000.
194–95.
Id. at
The district court sua sponte considered whether to
remand the case to state court.
Id. at 197.
7
First, it “recited
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the well-established principles” of subject matter jurisdiction.
Id.
of
The court then determined that the defendants’ allegation
diversity
Notice
of
jurisdiction
Removal
was
failed
“‘inadequate’
‘to
establish
and
that
the
controversy exceeds the jurisdictional amount.’”
district
court).
The
district
court
that
their
amount
in
Id. (quoting
concluded
that
“‘the
removing party ha[d] not presented a sufficient factual basis
for the Court to make an informed decision’ as to the amount in
controversy.”
Id.
district court).
(emphasis
by
Fourth
Circuit)
(quoting
Within days, the defendants filed a Rule 59(e)
motion with facts supporting their allegation of the amount in
controversy.
relying
on
Id. at 198.
its
earlier
The district court denied the motion,
ruling
that
defendants
had
failed
include the factual basis in the removal notice itself.
to
Id.
On appeal, we determined that § 1447(d) did not bar our
review because the district court’s remand order was not based
on finding a lack of subject matter jurisdiction, but rather on
the procedural insufficiency of the removal notice.
Id. at 198.
We noted that even when the defendants presented the district
court with evidence (in their Rule 59(e) motion) that it may
indeed
have
nonetheless
motion.
subject
relied
matter
on
its
jurisdiction,
procedural
Id.
8
the
ruling
district
and
court
denied
the
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C.
The district court here proceeded in much the same way as
the district court in Ellenburg.
case
to
state
court,
the
In its order remanding the
court
recited
the
principles of subject matter jurisdiction.
well-established
It then determined
that “federal diversity jurisdiction has not been established”
because “neither party has alleged Defendant ResCare’s principal
place
of
business.”
J.A.
54–55.
Accordingly,
remanded the case to West Virginia state court.
the
court
The court later
denied Blair’s Rule 59(e) motion despite the fact that Blair
provided evidence of Res-Care’s principal place of business.
The
order
at
district
issue
court’s
in
remand
Ellenburg
order
in
one
does
differ
respect.
from
the
Whereas
the
district court in Ellenburg “never reached the conclusion that
it lacked subject matter jurisdiction,” 519 F.3d at 197, the
district court here stated at the end of its order that it
“lacks jurisdiction.”
J.A. 56.
We must, however, look at the
“substantive reasoning behind the order.”
at 584.
Blackwater, 460 F.3d
Here, it is clear to us that the court based its
decision on the fact that the removal notice did not present a
factual
basis
whether
subject
sufficient
matter
to
permit
jurisdiction
the
court
existed.
to
determine
The
district
court, in the first line of its opinion, observed that “federal
diversity
jurisdiction
has
not
9
been
established.”
J.A.
54
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(emphasis added).
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And the court’s conclusion that it lacked
jurisdiction was based on the inadequacy of the removal notice:
“Absent
some
assertion
of
from
business,
either
this
party
Court
as
lacks
to
ResCare’s
principal
place
jurisdiction.”
J.A. 56.
As was the case in Allstate, however, “although [Res-
Care] failed conclusively to demonstrate diversity, the record
discloses no dispute that it in fact existed.”
8 F.3d at 221
(emphasis in original).
We conclude that the district court’s remand order was not
based on a lack of subject matter jurisdiction, but rather on
the procedural insufficiency of the removal notice.
See Artjen,
561 F.3d at 1296-97 (finding that “a perceived lack of subject
matter jurisdiction” based on a failure to establish citizenship
did not prevent appellate review of the remand order).
Because
no party filed a motion raising this procedural deficiency, the
order falls outside the scope of § 1447(c) and, therefore, our
review is not barred by § 1447(d).
III.
As
in
Ellenburg,
“[o]ur
conclusion
that
we
have
jurisdiction to review the district court’s remand order also
tends to forecast our ruling on the outcome of that review.”
519 F.3d at 198.
In other words, the fact that we can review
the district court’s remand order because it fell outside the
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scope of § 1447(c) leads to the conclusion that the order fell
outside the district court’s authority to order remand.
Id.
“Section
the
1447(c)
responsibility
effectively
of
assigns
policing
to
the
parties
non-jurisdictional
questions
regarding the propriety of removal, permitting them to assert a
procedural
defect
remain
the
in
or
to
federal
waive
the
forum.”
defect
Id.
if
(emphasis
they
in
choose
to
original).
Therefore, a district court exceeds its statutory authority when
it remands a case sua sponte based on a procedural defect absent
a motion from a party.
Because
authority
by
the
Id. (collecting cases).
district
remanding
court
this
case
here
sua
exceeded
sponte,
its
we
statutory
reverse
the
court’s remand order and remand this case to district court for
further proceedings.
Additionally, we grant Res-Care’s motion
to amend its removal notice pursuant to 28 U.S.C. § 1653, which
provides that “[d]efective allegations of jurisdiction may be
amended, upon terms, in the trial or appellate courts.”
REVERSED AND REMANDED
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