Lara, et al v. Bandit Industries, Inc.

Filing 14

ORDER signed by Chief Judge Morrison C. England, Jr on 3/14/13 GRANTING 11 Motion to Remand and REMANDING CASE to Superior Court of California for the County of Nevada. Copy of remand order sent to other court. CASE CLOSED. (Meuleman, A)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

EASTERN DISTRICT OF CALIFORNIA

10
11

HERLINDA LARA, et al.,

12

Plaintiffs,

13
14

No. 2:12-cv-02459-MCE-AC

v.

MEMORANDUM AND ORDER

BANDIT INDUSTRIES, INC.,

15

Defendant.

16
17

Through this action, Plaintiffs Herlinda Lara, Richard Lara, and Martin Lara, Jr.

18

(“Plaintiffs”) seek redress from Defendant Bandit Industries, Inc. (“Defendant”) and Does

19

1-100 based on four causes of action: negligence, strict liability, negligence – product

20

liability and breach of express and implied warranty. Presently before the Court is

21

Plaintiffs’ Motion for Leave to Amend and to Remand to State Court (“Plaintiffs’ Motion”).

22

(ECF No. 11.) Defendant filed a timely opposition to Plaintiffs’ Motion. (ECF No. 12.)

23

For the reasons set forth below, the Court grants Plaintiffs’ Motion.1

24

///

25

///

26

///

27
28

1

The Court ordered this matter submitted on the briefs because oral argument will not be of
material assistance. E.D. Cal. Local R. 230(g).

1

BACKGROUND2

1
2
3

On January 12, 2012, Martin Lara was decapitated and died while using a wood

4

chipping machine that Defendant allegedly manufactured. (Pls.’ Compl., ECF No. 1, at

5

9.) Lara was using the machine in the course of his employment in Nevada City,

6

California. (Id.) Plaintiffs, the wife and children of Lara, are California residents. (Id. at

7

8.)

8

On August 20, 2012, Plaintiffs filed a complaint in the Superior Court of California

9

for the County of Nevada. (Id.) Defendant, a Michigan corporation with its principal

10

place of business in Remus, Michigan, was the only defendant named in Plaintiffs’

11

original complaint. (ECF No. 1, at 2, 8.) On September 28, 2012, Defendant removed to

12

this Court based on diversity jurisdiction. (Id. at 2.)

13

Plaintiffs filed the present Motion on January 10, 2013. (ECF No. 11.) Plaintiffs’

14

Motion requests leave to file an amended complaint that will add two defendants:

15

Cal-Line Equipment, Inc. (“Cal-Line”), a California corporation, and LOR Manufacturing

16

Company, Inc., a Michigan corporation. (Id. at 2.) Defendant opposes only the addition

17

of Cal-Line, (ECF No. 12 at 2 n.1), whose joinder would destroy diversity and require

18

remand under 28 U.S.C. § 1447(c).

19
20

ANALYSIS

21
22

In support of their Motion for Leave to Amend, Plaintiffs rely on Federal Rule of

23

Civil Procedure 15(a)3 and 28 U.S.C. § 1447(e). Rule 15(a) provides that courts “should

24

freely give leave [to amend] when justice so requires.” Fed. R. Civ. P. 15(a)(2).

25

///

26

///

27
28

2
3

Page references will be to the Court’s ECF pagination.
All further references to “Rule” or “Rules” are to the Federal Rules of Civil Procedure.

2

1

Section 1447(e) states: “If after removal the plaintiff seeks to join additional defendants

2

whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or

3

permit joinder and remand the action to the State court.” 28 U.S.C. § 1447(e).

4

Defendant contends that Rule 15(a) is not applicable and that only Section

5

1447(e) governs Plaintiffs’ Motion. While the Ninth Circuit has not addressed the issue,

6

several district courts have determined that “the proper standard for deciding whether to

7

allow post-removal joinder of a diversity-destroying defendant is set forth in 28 U.S.C.

8

§ 1447(e).” Boon v. Allstate Ins. Co., 229 F. Supp. 2d 1016, 1019 n.2 (C.D. Cal. 2002)

9

(citations omitted); see also Hardin v. Wal-Mart Stores, Inc., 813 F. Supp. 2d 1167, 1173

10

(E.D. Cal. 2011) (“Plaintiffs may not circumvent 28 U.S.C. § 1447(e) by relying on

11

Fed. R. Civ. P. 15(a) to join non-diverse parties.”).

12

Section 1447(e) is “couched in permissive terms” and “clearly gives” district courts

13

discretion in deciding whether to permit or deny joinder of a non-diverse defendant.

14

Newcombe v. Adolf Coors Co., 157 F.3d 686, 691 (9th Cir. 1998); see also IBC Aviation

15

Serv., Inc. v. Compania Mexicana de Aviacion, S.A. de C.V., 125 F. Supp. 2d 1008,

16

1011 (N.D. Cal. 2000) (“Under § 1447, whether to permit joinder of a party that will

17

destroy diversity remains in the sound discretion of the court.”). In deciding whether to

18

deny or permit joinder under § 1447(e), courts typically analyze the following six factors:

19

23

(1) [W]hether the party sought to be joined is needed for just
adjudication and would be joined under Federal Rule of Civil
Procedure 19(a); (2) whether the statute of limitations would
preclude an original action against the new defendants in
state court; (3) whether there has been unexplained delay in
requesting joinder; (4) whether joinder is intended solely to
defeat federal jurisdiction; (5) whether the claims against the
new defendant appear valid; and (6) whether denial of joinder
will prejudice the plaintiff.

24

IBC Aviation, 125 F. Supp. 2d at 1011 (internal citations omitted). The Court will address

25

each of these factors below.

26

///

27

///

28

///

20
21
22

3

1

A.

Just Adjudication and Rule 19(a)

2
3

Rule 19 “requires joinder of persons whose absence would preclude the grant of

4

complete relief, or whose absence would impede their ability to protect their interests or

5

would subject any of the parties to the danger of inconsistent obligations.” Clinco v.

6

Roberts, 41 F. Supp. 2d 1080, 1082 (C.D. Cal. 1999) (citing Fed. R. Civ. P. 19(a)). This

7

standard is generally met when “failure to join will lead to separate and redundant

8

actions.” IBC Aviation, 125 F. Supp. 2d at 1011. “Although courts consider whether a

9

party would meet [Rule] 19’s standard for a necessary party, amendment under

10

§ 1447(e) is a less restrictive standard than for joinder under [Rule] 19.” Id. at 1011-12

11

(citations omitted).

12

Here, Defendant implicitly concedes that denying Plaintiffs’ Motion may lead to a

13

separate and redundant action. (See ECF No. 12, at 8, 11.) However, Defendant

14

argues that, under the Supreme Court’s decision in Temple v. Synthes Corp., LTD,

15

498 U.S. 5, 7 (1990),“it is not necessary for all joint tortfeasors to be named as

16

defendants in a single lawsuit.” (ECF No. 12, at 7.) Defendant’s contention is not

17

persuasive. In Temple, the Court found that Rule 19 did not prohibit a plaintiff’s litigation

18

strategy of suing one defendant in federal court and other defendants in state court,

19

even though the claims arose from a single occurrence. 498 U.S. at 7. Since the

20

standard under Section 1447(e) is less restrictive than Rule 19’s standard,” IBC Aviation,

21

125 F. Supp. 2d at 1011-12, Temple does not preclude this Court’s finding that joinder of

22

Cal-Line is necessary for just adjudication the purposes of Section 1447(e). Accordingly,

23

the Court finds that this factor weighs in favor of granting Plaintiffs’ Motion.

24

///

25

///

26

///

27

///

28

///
4

1

B.

Statute of Limitations

2
3

The parties agree that the statute of limitations would not bar Plaintiffs from

4

bringing suit against Cal-Line in a separate action, as California has a two-year statute of

5

limitations on actions for death by wrongful act. See Cal. Civ. Proc. Code § 335.1.4

6

Thus, the second factor favors denying Plaintiffs’ Motion. See Clinco, 41 F. Supp. 2d at

7

1083 (“[Plaintiff] does not argue that a new action against [the proposed defendant]

8

would be time-barred. Therefore, this factor does not support amendment.”).

9
10

C.

Unexplained Delay

11
12

“When determining whether to allow amendment to add a nondiverse party,

13

courts consider whether the amendment was attempted in a timely fashion.” Id. There

14

are no well-developed guidelines for evaluating the timeliness of Plaintiffs’ Motion.

15

Generally, courts find delays of over six months after removal to be untimely. See, e.g.,

16

Lopez v. General Motors Corp., 697 F.2d 1328, 1332 (9th Cir. 1983). However, district

17

courts in this circuit have found delays of less than six months to be reasonable. See,

18

e.g., Aqua Connect, Inc. v. Code Rebel, LLC, 2012 WL 1535769, at *2 (C.D. Cal.

19

Apr. 27, 2012) (five-month delay between filing of a complaint and request for leave to

20

amend is not unreasonable); Boon, 229 F. Supp. 2d at 1023 (motion filed ten weeks

21

after the filing of the initial complaint is timely); Clinco, 41 F. Supp. 2d at 1083 (motion to

22

amend filed six weeks after filing of the initial complaint is timely). Additionally, even in

23

cases of considerable delays, courts do not give this factor much weight if the “case is in

24

its early stages and the delay does not appear to be prejudicial.”

25

///

26

///

27
28

4

Since Lara died on January 12, 2012, Plaintiffs would still have several months to bring suit
against Cal-Line in state court.

5

1

Dollens v. Target Corp., 2011 WL 6033014, at *2 (N.D. Cal. Dec. 5, 2011); see also

2

Yang v. Swissport USA, Inc., 2010 WL 2680800, at *4 (N.D. Cal. 2010) (granting

3

plaintiffs’ motion to amend filed nine months after removal where “no dispositive motions

4

have been filed, and the discovery completed thus far [would] be relevant whether the

5

case is litigated in [federal] court or state court”).

6

Here, Plaintiffs filed the instant motion five months after filing the initial complaint

7

and three months after the removal. Such delay is not unreasonable under this circuit’s

8

precedents. Additionally, this case is still in its early stages, the parties have not filed

9

dispositive motions, and it does not appear that the parties have completed any

10

substantial discovery. Although Defendant claims that it has been diligently pursuing

11

discovery and thus will be prejudiced if the case is removed to state court, (see ECF

12

No. 12, at 9), the Court fails to see why Defendant would not be able to use the obtained

13

discovery in state court. Accordingly, the third factor favors granting Plaintiffs’ Motion.

14
15

D.

Plaintiffs’ Motive

16
17

Relying on Clinco v. Roberts, 41 F. Supp. 2d 1080 (C.D. Cal. 1999), Defendant

18

argues that the Court should deny Plaintiffs’ Motion because Plaintiffs’ motive is to

19

defeat federal subject matter jurisdiction. (ECF No. 12, at 9-10.) In Clinco, the district

20

court for the Central District of California viewed the plaintiff’s post-removal attempt to

21

join a non-diverse defendant with suspicion and explained that “one could justifiably

22

suspect that [plaintiff’s] amendment of the complaint was caused by the removal rather

23

than evolution of his case.” 41 F. Supp. 2d at 1083. However, “[s]uspicion of diversity

24

destroying amendments is not as important now that § 1447(e) gives courts more

25

flexibility in dealing with the addition of such defendants.”

26

///

27

///

28

///
6

1

IBC Aviation, 125 F. Supp. 2d at 1012; see also Trotman v. United Parcel Serv.,

2

1996 WL 428333, at *1 (N.D. Cal. July 16, 1996) (“The legislative history to § 1447(e)

3

also suggests that it was intended to undermine the doctrine employed by some courts

4

that amendments which destroyed diversity were to be viewed with suspicion.”).

5

In sum, while “one could justifiably suspect” that Plaintiffs’ Motion “was caused by

6

the removal rather than evolution” of the case, see Clinco, 41 F. Supp. 2d at 1083, the

7

Court declines to impute an improper motive to Plaintiffs simply because Plaintiffs seek

8

to add a non-diverse defendant post-removal. Because the Court does not construe

9

Plaintiffs’ preference for state court any more negatively than Defendants’ preference for

10

federal court, see Taylor v. Honeywell Corp., 2010 WL 1881459, at *3 (N.D. Cal. May 10,

11

2010), this factor is neutral or weighs in favor of granting Plaintiffs’ Motion.

12
13

E.

Apparent Validity of Plaintiffs’ Claims

14
15
16

“The existence of a facially legitimate claim against the putative defendant weighs
in favor of permitting joinder under section 1447(e).” Id. at *3.

17

In the proposed amended complaint, Plaintiffs allege claims of negligence, strict

18

liability, negligence – product liability and breach of express and implied warranty

19

against Cal-Line. (ECF No. 11 Ex. 1.) According to Defendant, “Cal-Line is the only

20

authorized dealer for Bandit Industries, Inc., in Northern California.” (Morey Decl., ECF

21

No. 12-2, at 2.) Under California law, “a retailer engaged in the business of distributing

22

goods to the public[] . . . is strictly liable in tort for personal injuries caused by defects” in

23

the goods that the retailer sells. Vandermark v. Ford Motor Co., 61 Cal. 2d 256, 263

24

(1964). Thus, Plaintiffs’ proposed amended complaint presents a viable claim against

25

Cal-Line. Accordingly, this factor favors granting Plaintiffs’ Motion.

26

///

27

///

28

///
7

1

F.

Whether Denial of Joinder Will Prejudice Plaintiffs

2
3

Defendant claims that the Court’s denial of Plaintiffs’ Motion would not prejudice

4

Plaintiffs because: (1) Defendant can fully satisfy the relief that Plaintiffs seek; (2) the

5

Court can subpoena Cal-Line to testify at trial; and (3) Plaintiffs can pursue claims

6

against Cal-Line in a separate action in state court. (ECF No. 12, at 11.) Defendant’s

7

contentions here bear a striking resemblance to the argument that the district court for

8

the Northern District of California recently rejected in Taylor v. Honeywell Corp, 2010 WL

9

1881459, at *4 (N.D. Cal. May 10, 2010). Specifically, the Taylor court explained that

10

defendant’s “alleged present ability to satisfy a judgment does not guarantee that it will,

11

in fact, have the ability to do so if and when a judgment is entered.” Id. The court also

12

found that denying the plaintiffs’ motion would be “unduly prejudicial to Plaintiffs because

13

it would require them either to abandon the potential claims [they have] against [the

14

proposed defendant] or litigate the same legal issues and facts as this case in state

15

court.” Id. Because such duplicative and redundant litigation would “result in a waste of

16

judicial and the Plaintiffs’ resources, as well as risk inconsistent results,” the Taylor court

17

found that the final factor favored granting plaintiff’s motion to amend and to remand. Id.

18

This Court similarly finds that precluding Plaintiffs from joining Cal-Line would

19

prejudice Plaintiffs because they would be required either to abandon a viable claim

20

against Cal-Line or to initiate a duplicative litigation in state court. Thus, this factor

21

favors granting Plaintiffs’ Motion.

22

In sum, five of the six factors favor permitting Plaintiffs to amend their complaint to

23

add Cal-Line as a defendant. Accordingly, the Court grants Plaintiffs’ Motion for Leave

24

to Amend. Plaintiffs’ First Amended Complaint, which is attached to Plaintiffs’ Motion as

25

Exhibit 1, is hereby deemed filed. In light of the joinder of Cal-Line as a defendant, there

26

is no longer complete diversity between the parties as required under 28 U.S.C. § 1332.

27

///

28

///
8

1

Because remand is required if “at any time before final judgment it appears that the

2

district court lacks subject matter jurisdiction,” 28 U.S.C. § 1447(c), this case should be

3

remanded to state court.

4
5

CONCLUSION

6
7

For the reasons stated above, Plaintiffs’ Motion For Leave to Amend and to

8

Remand (ECF No. 11) is GRANTED. The Clerk of the Court is directed to remand this

9

case to the Superior Court of California for the County of Nevada and to close the file.

10
11

IT IS SO ORDERED.
DATED: March 14, 2013

12
13
14

___________________________________________
MORRISON C. ENGLAND, JR., CHIEF JUDGE
UNITED STATES DISTRICT JUDGE

15
16
17
18
19
20
21
22
23
24
25
26
27
28
9