IOW LLC v. Breus et al

Filing 37

ORDER re: 34 Plaintiffs motion to remand is denied. Signed by Senior Judge David G Campbell on 8/31/2018. (TCA)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9

IOW LLC; and When Enterprises
Corporation,

10

Plaintiffs,

11
12
13

No. CV-18-01649-PHX-DGC
ORDER

v.
Michael Breus and Lauren Breus, husband
and wife,

14

Defendants.

15
16

This case was removed from Maricopa County Superior Court on May 31, 2018,

17

by former defendants Hachette Book Group Incorporated and Little, Brown and

18

Company (collectively, the “Hachette Defendants”) with the consent of the remaining

19

defendants Michael and Lauren Breus (collectively, the “Breus Defendants”). Doc. 1.

20

On August 1, 2018, the Hachette Defendants were dismissed by stipulation. Doc. 28.

21

Plaintiffs now move to remand this case back to state court. Doc. 34. The Breus

22

Defendants oppose the motion. Doc. 36. Because Plaintiffs cite no authority for remand

23

under these circumstances, the Court will deny the motion.

24

I.

Background.

25

Plaintiff IOW originally filed suit against only the Breus Defendants in state court

26

in December 2016. See Doc. 1-2; IOW, LLC v. Breus, No. CV2016-010236 (Maricopa

27

Cty. Superior Ct. Dec. 21, 2016). In February 2018, based on facts uncovered during

28

discovery, IOW sought leave to amend its complaint to add the Hachette Defendants and

1

Plaintiff When Enterprises Corporation. Doc. 1-3 at 279-85. The state court granted the

2

motion, and the amended complaint was filed May 7, 2018. Doc. 1-4 at 72-86.

3

On May 31, 2018, the Hachette Defendants filed a notice of removal. Doc. 1. The

4

notice states that removal is based on federal question jurisdiction, 28 U.S.C. § 1331,

5

because Plaintiffs’ amended complaint asserts a claim under the Lanham Act, 15 U.S.C.

6

§ 1051 et seq. Id. at 3. The notice further asserts that the Court has jurisdiction over the

7

state-law unfair competition claim pursuant to 28 U.S.C. §§ 1338(b), 1367(a). Id. The

8

notice does not specifically address the additional state-law claims asserted solely against

9

the Breus Defendants, see Doc. 1-4 at 80-82 (asserting claims for breach of contract,

10

breach of the implied covenant of good faith and fair dealing, misappropriation of trade

11

secrets, and unjust enrichment), but Plaintiffs do not dispute that the Court has

12

supplemental jurisdiction over these claims.

13

II.

Discussion.

14

Plaintiffs argue that the Court should remand this case because the Breus

15

Defendants “waived their right to remove this case, and thus can no longer avail

16

themselves of the jurisdiction of this Court now that the removing [Hachette] Defendants

17

have been dismissed.” Doc. 34 at 2. Plaintiffs stress that the Breus Defendants could

18

have removed the case based on diversity or federal question jurisdiction, but they

19

allowed the 30-day deadline to pass without removing and instead chose to litigate in

20

state court. Therefore, Plaintiffs argue, the Breus Defendants cannot benefit from the

21

Hachette Defendants’ removal now that the Hachette Defendants have been dismissed.

22

The Court does not agree. The Ninth Circuit has held that a party which waives its

23

right to remove a case, and yet which ends up in federal court upon removal by a newly

24

added defendant, may remain in federal court even after the removing defendant is

25

dismissed. See Brockman v. Merabank, 40 F.3d 1013, 1017 (9th Cir. 1994) (“Although

26

the RTC waived its right to seek removal, it did not waive its right to a federal forum.”).

27

The Fifth Circuit has reached the same conclusion. See Buchner v. FDIC, 981 F.2d 816,

28

819-21 (5th Cir. 1993).

-2-

1

Plaintiffs cite cases discussing the “first-served” rule, which held that once “the

2

right to removal is waived, it is generally waived for all time (and for all defendants),

3

regardless of subsequent changes in the case.” Doc. 34 at 6 (quoting Dunn v. Gaiam,

4

Inc., 166 F. Supp. 2d 1273, 1278-79 (C.D. Cal. 2001)). As the Breus Defendants

5

correctly point out, the Ninth Circuit rejected the first-served rule in 2011, and Congress

6

amended the removal statute to reject it shortly thereafter. See Doc. 36 at 6-7 (citing 28

7

U.S.C. § 1446(b)(2)(C) (“If defendants are served at different times, and a later-served

8

defendant files a notice of removal, any earlier-served defendant may consent to the

9

removal even though that earlier-served defendant did not previously initiate or consent

10

to removal”); Destfino v. Reiswig, 630 F.3d 952, 956 (9th Cir. 2011) (“There is no reason

11

to lock an earlier-served defendant out of the federal forum, if he later chooses to

12

consent.”)).

13

Plaintiffs have identified no defect in removal, and they admit that the Court has

14

original subject matter jurisdiction over the case. The Court has no basis for remand.1

15

IT IS ORDERED that Plaintiffs’ motion to remand (Doc. 34) is denied.

16

Dated this 31st day of August, 2018.

17
18
19
20
21
22
23
24
25
26
27
1

28

The Breus Defendants also argue that Plaintiffs waived the right to seek remand
because they failed to do so within 30 days of removal. Doc. 36 at 4-5. The Court need
not address this argument because it finds that remand is inappropriate.
-3-