Theodore Moody et al v. Armstrong International, Inc., et al

Filing 22

MINUTES (IN CHAMBERS) re: Plaintiffs' Ex Parte Application for an Order Remanding this Matter to Los Angeles Superior Court and for Costs and Fees Pursuant to 28 U.S.C. § 1447 [Dkt. 9] by Judge George H. King granting 9 EX PARTE APPLI CATION to Remand Case to State Court: In light of the foregoing, we hereby GRANT Plaintiffs' Application, and REMAND this action to the state court from which it was removed. The clerk shall effectuate such remand forthwith. (see document for further details) MD JS-6. Case Terminated. (bm)

E-FILED:
01/04/2016
JS-6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-9491-GHK (FFMx)

Title

Theodore Moody, et al. v. Armstrong International, Inc., et al.

Presiding: The Honorable

Date

January 4, 2016

GEORGE H. KING, CHIEF U.S. DISTRICT JUDGE

Beatrice Herrera

N/A

N/A

Deputy Clerk

Court Reporter / Recorder

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

None

None

Proceedings:

(In Chambers) Order re: Plaintiffs’ Ex Parte Application for an Order
Remanding this Matter to Los Angeles Superior Court and for Costs and Fees
Pursuant to 28 U.S.C. § 1447 [Dkt. 9]

This matter is before us on the above-captioned Ex Parte Application (“Application”) filed by
Plaintiffs Theodore Moody and Loretta Moody (“Plaintiffs”). [Dkt. 9.] We have considered the papers
filed in support of and in opposition to the Application and deem this matter appropriate for resolution
without oral argument. L.R. 7-15. As the Parties are familiar with the facts, we will repeat them only as
necessary. Accordingly, we rule as follows:
As a court of limited jurisdiction, see Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375,
377 (1994), we must determine the issue of subject matter jurisdiction before reaching the merits of a
case. See Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998). In light of the “strong
presumption against removal jurisdiction,” a defendant “always has the burden of establishing that
removal is proper.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (internal quotations omitted).
We “strictly construe the removal statute against removal jurisdiction,” id., and “[w]here doubt
regarding the right to removal exists, a case should be remanded to state court.” Matheson v.
Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003); see also 28 U.S.C. § 1447(c).
A defendant can remove a case from state to federal court only if the case originally could have
been filed in federal court. 28 U.S.C. § 1441(a); Caterpillar Inc. v. Williams, 482 U.S. 386, 393 (1987).
Removing Defendant Owens-Illinois, Inc. (“Owens-Illinois”) premises removal on diversity jurisdiction
pursuant to 28 U.S.C. § 1332. (See Notice of Removal (“NOR”) ¶ 11.) “Jurisdiction founded on 28
U.S.C. § 1332 requires that the parties be in complete diversity and the amount in controversy exceed
$75,000.” Matheson, 319 F.3d at 1090; see also 28 U.S.C. § 1332(a). In order to show complete
diversity, a plaintiff must establish that “the citizenship of each plaintiff is diverse from the citizenship
of each defendant.” Caterpillar Inc. v. Lewis, 519 U.S. 61, 62 (1996). “[A] corporation shall be deemed
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CIVIL MINUTES - GENERAL

Page 1 of 3

E-FILED:
01/04/2016
JS-6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-9491-GHK (FFMx)

Date

Title

January 4, 2016

Theodore Moody, et al. v. Armstrong International, Inc., et al.

to be a citizen of every State and foreign state by which it has been incorporated and of the State or
foreign state where it has its principal place of business . . . .” 28 U.S.C. § 1332(c)(1).
Plaintiffs contend that complete diversity is lacking in this action because Defendant Hill
Brothers Chemical Company (“Hill Brothers”) has not been dismissed from the action and is also not
diverse from Plaintiff Theodore Moody, as both Parties are California citizens.1 Owens-Illinois asserts
that Hill Brothers’s citizenship should not defeat removal because Hill Brothers “resolved this case on
or around November 17, 2015,” and thus, even if not formally dismissed, should not be considered for
removal purposes.2 (Opp’n at 6.)
District courts within the Ninth Circuit have concluded that the citizenship of a defendant who
has settled a California action, but has not yet been formally dismissed from that action, can defeat
removal jurisdiction. See Clark v. BHP Copper, Inc., 2010 WL 1266392, at *2 (N.D. Cal. Mar. 30,
2010) (remanding a case for lack of diversity jurisdiction where a non-diverse defendant had “reached
agreement on terms of settlement,” but had “not been dismissed by Plaintiffs”); Dunkin v. A.W.
Chesterson Co., 2010 WL 1038200 (N.D. Cal. Mar. 19, 2010) (“A settlement with a non-diverse party
does not establish diversity jurisdiction unless and until that party is dismissed from the action.”);
Mertan v. E.R. Squibb & Sons, Inc., 581 F. Supp. 751, 752-53 (C.D. Cal. 1980) (finding diversity
jurisdiction lacking where a non-diverse defendant settled in open court but was not formally dismissed
by the state court); see also Rider v. Sears Roebuck & Co., 2011 WL 2222171, at *5 (C.D. Cal. June 7,
2011) (“Where a defendant is not fraudulently joined, the defendant’s citizenship remains relevant until
the defendant is actually dismissed from the case.”). Defendant cites several cases—mostly from out-

1

Plaintiffs assert that Hill Brothers maintains its principal place of business in California. (See
Application at 5; Tashjian Decl., Ex. I.) Owens-Illinois does not dispute this assertion. Owens-Illinois
also does not contest that Plaintiff Theodore Moody is a California citizen.
2

Owens-Illinois also asserts that we should preclude Plaintiffs, under the doctrine of judicial
estoppel, from arguing that Hill Brothers is a remaining Defendant in this action because Plaintiffs
purportedly informed the state court on December 8, 2015, that Owens-Illinois was the only remaining
Defendant in the case. (Opp’n at 2.) But, because subject matter jurisdiction “involves a court’s power
to hear a case,” it can “never be forfeited or waived.” Arbaugh v. Y&H Corp., 546 U.S. 500, 514
(2006). Thus, Plaintiffs should not be estopped from challenging the existence of subject matter
jurisdiction, regardless of their prior representations to the state court. See Hill v. Potter, 2010 WL
4450405, at *5 (C.D. Cal. Oct. 29, 2010) (declining to apply judicial estoppel to preclude a party from
arguing that the court lacked subject matter jurisdiction); see also Ins. Corp. of Ir., Ltd. v. Compagnie
des Bauxites de Guinee, 456 U.S. 694, 702 (1982) (noting that “no action of the parties can confer
subject-matter jurisdiction upon a federal court,” which means that “principles of estoppel do not apply”
to subject matter jurisdiction issues). Accordingly, we decline to apply judicial estoppel to any of
Plaintiffs’ subject-matter jurisdiction arguments.
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E-FILED:
01/04/2016
JS-6
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-9491-GHK (FFMx)

Date

Title

January 4, 2016

Theodore Moody, et al. v. Armstrong International, Inc., et al.

of-circuit courts—that it claims establish that a settlement does not defeat complete diversity for
removal, even where a formal dismissal order has not been entered. (Opp’n at 6-7.) However, we find
such cases unpersuasive. In any event, we are not bound by these cases and choose to not follow them.
Because Hill Brothers has not been formally dismissed from this action, its citizenship should
not be disregarded for purposes of determining if complete diversity of citizenship exists between the
Parties such that removal is proper. Because both Hill Brothers and Plaintiff Theodore Moody are
California citizens, complete diversity does not exist, making removal improper.
In light of the foregoing, we hereby GRANT Plaintiffs’ Application, and REMAND this action
to the state court from which it was removed.3 The clerk shall effectuate such remand forthwith.

IT IS SO ORDERED.
:
Initials of Deputy Clerk

Bea

3

Plaintiff’s request for fees and costs is DENIED, as we find Defendant did not lack an
objectively reasonable basis for seeking removal. See 28 U.S.C. § 1447(c).
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