Brennerman et al v. Guardian News & Media Limited et al

Filing 62

REPORT AND RECOMMENDATIONS- denying 17 MOTION to Remand, granting 22 MOTION to Dismiss, granting 20 Cross MOTION to Strike 17 MOTION to Remand, denying as moot 25 MOTION to Dismiss. Please note that when filing Objections p ursuant to Federal Rule of Civil Procedure 72(b)(2), briefing consists solely of the Objections (no longer than ten (10) pages) and the Response to the Objections (no longer than ten (10) pages). No further briefing shall be permitted with respect to objections without leave of the Court. Objections to R&R due by 1/15/2016. Signed by Judge Sherry R. Fallon on 12/29/2015. (lih)

IN THE UNITED STATES DISTR;ICT COURT
FOR THE DISTRICT OF DELAWARE

RAHEEM JEFFERSON BRENNERMAN )
and BLACKSANDS PACIFIC ENERGY )
CORPORATION, INC.,
)
)
Plaintiffs,
)
)
v.
)
)
GUARDIAN NEWS & MEDIA LIMITED, )
GUARDIAN NEWS & MEDIA LLC, and )
CENTER FOR PUBLIC INTEGRITY d/b/a )
International Consortium ofInvestigative )
Journalists,
)
Defendants.
)

Civ. No. 1:14-cv-00188-SLR-SRF

REPORT AND RECOMMENDATION
I.

INTRODUCTION
Plaintiffs Raheem Jefferson Brennerman ("Brennerman") and Blacksands Pacific Energy

Corporation, Inc. ("Blacksands") (collectively "Plaintiffs"), filed an action for defamation
against Defendants Guardian News & Media Limited d/b/a The Guardian ("Guardian Ltd.
(UK)") and Center for Public Integrity d/b/a International Consortium ofInvestigative

Journalists ("CPI") (collectively "Original Defendants"), which was removed to this court on the
basis of diversity jurisdiction. Following removal, Plaintiffs filed the First Amended Complaint
(the "FAC"), adding Defendant Guardian News & Media, LLC ("Guardian LLC (US)") as a
defendant. Presently before the court are:
1) Plaintiffs' Motion to Remand to State Court ("Motion to Remand") (D.I. 17);
2) Original Defendants' Cross Motion to Strike Plaintiffs' FAC or, in the alternative, to
Deny Joinder ("Motion to Deny Joinder") (D.I. 20);

1

3) Original Defendants' Motion to Dismiss 1 (D.I. 22); and
4) Guardian LLC (US)'s Motion to Dismiss. (D.I. 25)
For the following reasons, I recommend that the court DENY Plaintiffs' Motion to
. Remand, GRANT Original Defendants' Motion to Deny Joinder, and GRANT Original
Defendants' Motion to Dismiss. Guardian LLC (US)'s Motion to Dismiss is rendered moot, and
the court will not address these arguments.

II.

BACKGROUND
On November 26, 2012, Guardian Ltd. (UK) published two articles in the United

Kingdom (the "U.K.") to its U.K. website as part of a series based on a global investigation into
offshore tax havens. (D.I. 1, Ex. 1 at if 1) The articles were titled: "How Secret Offshore Firms

. Feed London's Property Boom" and "Revealed: The Real Identities Behind Britain's Secret
Property Deals." (Id.) On the same day, CPI published an artide to its website titled: "Who's
Buying Britain? Probe Reveals Real Estate Speculators Hidden by Offshore Alchemy." (Id.)
Three Guardian Ltd. (UK) employees wrote all three articles in London. (D.I. 27 at if 4; D.I. 29
at if 4) The articles state that Brennerman used bank loans to buy properties in the U.K., that he
was the beneficiary of an offshore trust related to the subject real estate investments, and that he
moved to New York in 2009 where he works as a trader for Blacksands. (D.I. 1, Ex. 1atif15)
Blacksands, a Delaware corporation, was not mentioned anywhere else in the articles. 2 The

1

Original Defendants bring the Motion to Dismiss based on lack of jurisdiction over the person
and improper venue, failure to state a claim, or alternatively to dismiss under anti-SLAPP
statutes and to stay discovery.
2
In their opposition to Plaintiffs' Motion to Remand, Original Defendants also allege that
Blacksands should be discounted from the jurisdictional analysis because it is a nominal party.
(D .I. 23 at 2) The court need not reach the merits of this argument as the personal jurisdiction
analysis is dispositive:
2

articles further state that property owners identified in the articles have been taking advantage of
tax loopholes related to their U .K. properties. (Id. at ~ 16)
On January 10, 2014, Plaintiffs filed a complaint in the Superior Court of the State of
Delaware alleging, inter alia, that the articles were false and defamatory. (Id. at if 1) On
February 12, 2014, Original Defendants removed the action to this court. (D.I. 1) The parties
filed three different stipulations extending the time to answer or respond, partially dependent
upon whether Plaintiffs were going to file the FAC. (D.I. 5; D.I. 13; D.I. 14)
Plaintiffs filed the FAC on March 28, 2014 against Original Defendants, joining
Guardian LLC (US) as a third defendant (collectively "Defendants"). 3 (D.I. 16) Guardian LLC
(US) is a wholly owned subsidiary of Guardian Ltd. (UK). (D.I. 27 at if 2) Guardian LLC (US)
hires journalists to report on stories in America for publication by Guardian Ltd. (UK) in the
U.K. newspaper and onthe U.K. website. (Id.) The Guardian website is published by Guardian
Ltd. (UK), even though Guardian LLC (US) sometimes contributes to the articles. (Id. at if 5)
The authors of the articles in issue were employees of Guardian Ltd. (UK), and not the American
company. (Id. at if~ 3--4)
On April 15, 2014, Plaintiffs filed a Motion to Remand for lack of subject matter
jurisdiction, asserting that their addition of Guardian LLC (US)-a Delaware corporation-to the
FAC destroyed jurisdiction based on diversity of citizenship in that both Blacksands and
Guardian LLC (US) are Delaware residents. (D.I. 17 at~ 6) Original Defendants oppose
Plaintiffs' Motion to Remand, contending that Guardian LLC (US) was joined ~olely for the
purpose of destroying diversity jurisdiction. (D.I. 21 at 2) Therefore, on May 2, 2014, Original

3

The F AC was identical in all respects relevant to the pending motions except for the addition of
Guardian LLC (US) as a defendant. (D.I. 1, Ex. 1; D.I. 16)
3

Defendants filed their Motion to Deny Joinder pursuant to 28 U.S.C. ,§ 1447(e). (D.I. 20) They
ask the court to strike the F AC-leaving the original complaint in its place-or to deny joinder
of Guardian LLC (US) as a party to the FAC. (D.I. 21)
Original Defendants also filed a Motion to Dismiss in part for lack of personal
jurisdiction. (D.I. 22) The same day, Guardian LLC (US) filed a separate Motion to Dismiss.
(D.I. 25) The court will first tum to Plaintiffs' Motion to Remand. (D.I. 17)

III.

STANDARDS OF REVIEW

A. Motion to Remand
A party may remove a case from state court to federal court under 28 U.S. C. § 1441 if the
matter is one over which the federal court has original jurisdiction. If jurisdiction is based on
diversity of citizenship, complete diversity must exist and the amount in controversy must
exceed $75,000. 28 U.S.C. § 1332(a). Ifjurisdiction no longer exists at any time after a case has
J

been removed, the federal court shall remand the case back to state court. 28 U.S.C. § 1447(c).
When the addition of a non-diverse defendant destroys diversity jurisdiction, the district
court will remand the case back to state court unless the removing defendant can show that the
non-diverse party was fraudulently joined. Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d
Cir. 1992). The defendant bears a "heavy burden of persuasion" in· asserting this allegation. Id.
(quoting Steel Valley Author v. Union Switch & Signal Div., 809 F.2d 1006, 1012 n. 6 (3d Cir.
1987)).
Fraudulent joinder occurs "'where there is no reasonable basis in fact or colorable ground
supporting the claim against the joined defendant. ... '" Id. (quoting Boyer v. Snap-On Tools,

Corp., 913 F.2d 108, 111 (3d Cir. 1990), cert. denied, 498 U.S. 1085 (1991)). This entails a

4

finding that claims against the non-diverse defendant are '"wholly insubstantial and frivolous,'"
and recovery is a legally impossibility. In re Briscoe, 448 F .3d 201, 218 (3d Cir. 2006) (quoting

Batoff, 977 F.2d at 852); see also Kallman v. Aronchick, 981 F. Supp. 2d 372, 380 (E.D. Pa.·
2013) (the court will only find fraudulentjoinder where the plaintiffs clams are "wholly
insubstantial and frivolous").
In making this determination, the district court must consider the plaintiffs complaint at

the time of removal, assuming all factual allegations as true. Batoff, 977 F .2d at 851-2 (quoting

Steel Valley, 809 F.2d at 1010). If a state court could find that the plaintiffs allegation is
plausible, the district court must remand the case to state court. Id. On the other hand, if the
district court does make a finding of fraudulent joinder, the court may deny joinder and retain
jurisdiction. See, e.g., Raggio v. McElroy, Deutsch, Mulvaney & Carpenter, 415 F. App'x 432,
433 (3d Cir. 2011) (denying a motion to remand where the court made a finding of fraudulent
joinder).
The initial jurisdictional inquiry should be evaluated separately from a motion to dismiss.

Batoff, 977 F .2d at 851. The court may not base the remand analysis on the merits of a claim
asserted against a non-diverse defendant. See id. at 852 (finding that the district court "erred in
converting its jurisdictional inquiry into a motion to dismiss"). Therefore, sufficient allegations
concerning the defendant, which are supported by recent authority, will defeat diversity
jurisdiction. In re Briscoe, 448 F.3d 201, 218-19 (3d Cir. 2006).
Courts in the Third Circuit have also recognized an equitable standard to determine
whether a case should be remanded following joinder of a non-diverse defendant. See, e.g.,

Stewart v. Wal-Mart Distrib. Ctr., Civil Action No. 12-4958, 2013 WL 1482217, at *2 (E.D. Pa.
Apr. 11, 2010); Cnty. ofNorthampton v. RAM Const. Servs. of Cleveland, LLC, Civil Action No.
5

12-5958, 2013 WL 878887, at *3

(E~D.

Pa. Mar.11; 2013). Underthis flexible approach, the

court conducts an inquiry into the Hensgens factors, a test arising from the Fifth Circuit. See
Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987).

Th~

Hensgens factors include:

1) Whether plaintiff's purpose in seeking to add a new, non-diverse defendant is solely to
defeat federal jurisdiction;
2) Whether the plaintiff was dilatory in seeking to add the new defendant;
3) Whether the plaintiff will be injured ifthe motion is not allowed; and
4) Any other equitable factors.
Id.

The parties disagree as to whether fraudulent joinder or the Hensgens test is the correct
standard to apply in analyzing Plaintiffs' Motion to Remand. Original Defendants urge this
court to consider the Hensgens factors, while Plaintiffs argue for a more stringent fraudulent
joinder analysis. (D.I. 21 at 10; D.I. 41 at 5) The Third Circuit has not yet resolved this dispute,
although it has recognized the Hensgens factors when ruling on a motion to permit joinder of
non-diverse defendants. See Hayden v. Westfield Ins. Co., 586 F. App'x 835, 840 (3d Cir. 2014).
District courts within the Third Circuit have distinguished between situations where the court has
discretion to permitjoinder, and those like this, wherein the complaint is amended as a matter <Jf
right. See, e.g., 0 'Keefe v. Hess Corp., Civil Action No. 10-2598 (WJM), 2010 WL 3522088, at
*8 (D.N.L Sept. 1, 2010), report and recommendation adopted, 2010 WL 4102848 (D.N.J. Oct.
15, 2010) (finding that defendants properly focused their argument on fraudulent joinder where

6

the complaint was amended as a matter of right). 4 . Those courts have determined that when a
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pleading is amended as a matter of right, the court does not consider the merits of the
amendment; rather, the argument should be focused solely on fraudulent joinder. See, e.g.,
O'Keefe, 2010 WL 3522088, at *8. Original Defendants·assert that there is precedent in the
District of Delaware that applies the Hensgens factors over the fraudulent joinder analysis in this
type of situation. (D.I. 43 at 3) However, Original Defendants broadly extend the holding of
Transamerica Corp. v. Reliance Ins. Co. ofIllinois, as Judge Robinson did not make a specific
finding as to the applicability of one test over the other where there was no evidence that the
plaintiffs were attempting to circumvent jurisdiction beyond the moving defendants' unsupported
allegations. 884 F. Supp. 133, 137-39 (D. Del. 1995).
This court need not resolve the dispute as to which test to apply to Plaintiffs' Motion to
Remand, as the result limited to the facts of this case would be the same under either analysis.
See Neuner v. Samost, Civil No. 12-CV-2420 (RMB-AMD), 2012 WL 5944143, at *2 n. 2
(D.N.J. Nov. 26, 2012) ("In this Court's view, because the fraudulent joinder analysis permeates
the ordinary four factor analysis, it is difficult to imagine a scenario where a finding of
fraudulent joinder would not compel dismissal under section 1447(e). ").
B. Personal Jurisdiction

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See also City ofPerth Amboy v. Safeco Ins. Co. ofAm., 539 F. Supp. 2d 742, 754 n. 2 (D.N.J.
2008) ("Had Plaintiff simply filed an amended pleading including claims against [newly joined
Defendant], the appropriate analysis would be one of fraudulentjoinder"); Confessore v. AGCO
Corp., Civ. No. 14-7262 (FLW), 2015 WL 4430472, at *4 n. 4 (D.N.J. July 20, 2015) (applying
the Hensgens factors but noting that the fraudulent joinder analysis "applies in circumstances
when a party has already been joined to an action"); Montalvo v. John Doe I, Civ. No. 10-2617,
2010 WL 3928536, at *2-3 (E.D. Pa. Oct. 5, 2010) (applying a fraudulentjoinder approach to a
joinder analysis and the Hensgens factors to a ruling on a motion to amend the pleadings).
7

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Once subjectmatterjurisdiction is determined, the court considers whether to dfamissthe
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suit for lackofpersonaljuri~diction pursuantto the Federal Rules of Civil Procedure. Fed. R.
Civ. P. 12(b)(2). A "federal district court may assert personal jurisdiction over a nonresident of
the state in which the court sits to the extent authorized by the law of that state." Bell Helicopter

Textron, Inc. v. C & C Helicopter Sales, Inc., 295 F. Supp. 2d 400, 403 (D. Del. 2002) (citing
Fed. R. Civ: P. 4(e)). Accordingly, personal jurisdiction may be found over nonresidents
pursuant to the Delaware long-arm statute. Id. (citing Del. Code Ann. tit. 10, § 3104(c) (West
2008)). The exercise of jurisdiction must also comport with the requirements of Due Process.

Id. (citing Int'! Shoe Co. v. Washington, 326 U.S. 310 (1945)). However, ifthere is no basis for
jurisdiction under any prong of the long-arm statute, the court need not consider the
Constitutional analysis.
Because Original Defendants raise respective jurisdictional defenses, Plaintiffs bear the
burden of establishing general or specific jurisdiction, which they may show through affidavits
or other evidence. Parker v. Learn Skills Corp., 530 F. Supp. 2d 661, 670 (D. Del 2008).
Specific jurisdiction exists where the cause of action arises from the defendant's activities in the
forum, and general jurisdiction arises from the defendant's continuous contact with the forum.

Id.
IV.

DISCUSSION
Before this court addresses the case dispositive motions, the court must determine

whether it has jurisdiction to do so. See Minker v. HSB Indus. Risk Insurers, No. Civ.A. 99-494
(SLR), 2000 WL 291542, at *2 (D. Del. Mar. 14, 2000). In turning to the jurisdictional analysis,
for the reasons set forth below, the court recommends that Plaintiffs' Motion to Remand be
denied. Because Guardian LLC (US) is a :fraudulently joined defendant, and the Hensgens
8

. factors favor dismissal of the non-diverse defendant, this court retains jurisdiction to consider the ·
motions to dismiss.
A. Diversity of the Parties at the Time of Removal
It is undisputed that the parties were diverse at the time of removal. Diversity existed, as
PlaintiffBrennerman was a resident of Nevada, (D.I. I;Ex. 1 at if 6), PlaintiffBlacksands is
considered a resident of Delaware and California, (Id. at if 7), Defendant CPI is a resident of
Washington, D.C., (Id. at if 8), and Guardian Ltd. (UK) is a resident of the U.K. (D.I. 21 at 5) 28
U.S.C. 1332(c).
Having determined that the parties were of diverse citizenship at the outset, this court
must next assess whether the addition of Guardian LLC (US) would defeat diversity and, if it
would, whether Guardian LLC (US) should be dismissed under 28 U.S.C. § 1447(e), or whether
the case should be remanded to state court.

B. Fraudulent Joinder
This court finds that Plaintiffs fraudulently joined Guardian LLC (US)-a Delaware
resident-to this action for the sole purpose of destroying diversity jurisdiction. For the court to
deny Plaintiffs' Motion to Remand, Original Defendants must establish that there is "no
reasonable basis in fact" or "colorable ground" to support the claim against Guardian LLC (US),
or no good faith intention to prosecute the action against Guardian LLC (US). Abels v. State
Farm Fire & Cas. Co., 770 F.2d 26, 32 (3d Cir. 1985). The court is aware that "removal statutes
are to be strictly construed against removal and all doubts should be resolved in favor of
remand." Steel Valley v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d. Cir. 1987).
However, the court finds Plaintiffs' claims against Guardian LLC (US) to be "wholly
insubstantial and frivolous." Batojf v. State Farm Ins. Co., 977 F.2d 848, 852 (3d Cir. 1992).
9

Therefor~,

the court recommends granting Original Defendants' Motion to Deny J oinder and

denying Plaintiffs' Motion for Remand.
Plaintiffs have provided no "reasonable basis" for their amendment and joinder of
Defendant Guardian LLC (US) to the FAC. Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111
(3d Cir. 1990). Although it is not the court's role to determine the merits of Plaintiffs'
defamation claim against Guardian LLC (US), see Batojf, 977 F.2d at 852, even ifthe court takes
a "limited look outside the pleadings," as is authorized by the Third Circuit in analyzing a
fraudulent joinder claim, there is no evidence to support Plaintiffs' allegations. 5 In re Briscoe,
448 F.3d 201, 219-20 (3d Cir. 2006).
Plaintiffs base their defamation claim against Guardian LLC (US) on the fact that the
allegedly defamatory statements on Guardian Ltd. (UK)' s website could be accessed through
Guardian LLC (US)'s website. (D.I. 41 at 8) They assert that they were not aware of this fact
until after filing the initial complaint. (1114/15 Tr. at 22) The dilatoriness of the joinder is a
factor considered in the Hensgens analysis. More importantly, no legal claim arises from mere
access through a link to an allegedly defamatory article published elsewhere. See DiMeo v. Max,
248 F. App'x 280, 282 (3d Cir. 2007) (finding that a defendant website owner was not a
publisher where the defendant did not author the allegedly defamatory material on his website);
Neuner v. Samost, Civil No. 12-CV-2420 (RMB-AMD), 2012 WL 5247773, at *2 (D.N.J. Oct.

5

The Third Circuit has held that it is proper to look to more than just the pleadings to identify
indicia of fraudulentjoinder. In re Briscoe, 448 F.3d 201, 219-20 (3d Cir. 2006). However a
district court must not step "from the threshold jurisdictional issue into a decision on the merits."
Id. (quoting Boyer, 913 F.2d at 112). The district court must accept any well-pleaded
allegations as true, and resolve uncertainty in the law governing the limitations bar in plaintiffs
favor, however, it may be proper to conduct a "limited consideration of reliable evidence that the
defendant may proffer to support the removal. Such evidence may be found .. .in other relevant
matters that are properly subject to judicial notice." Id. This limited look outside the pleadings
does not constitute an improper decision on the merits. Id.
10

"'

•.

24, 2012) (defendant was fraudulently joined were plaintiff failed to articulate a legal theory
giving rise to liability on the facts alleged). 6 Therefore, Plaintiffs have no reasonable basis to
believe that Guardian LLC (US) is amendable to suit, and the court finds that Defendant
Guardian LLC (US) was fraudulently joined. See Brown v. Jevic, 575 F.3d 322, 327 (3d Cir.
2009) (defendant was fraudulently joined where plaintiff had no reasonable basis to believe
defendant was amenable to suit after defendant filed for bankruptcy). 7

C. Hensgens Factors
The Third Circuit has also applied the Hensgens factors when ruling on a motion to
remand following a post removal amendment. See Hayden v. Westfield Ins. Co., 586 F. App'x
835, 840-41 (3d Cir. 2014) (the court did not address the correct analytical approach to§
1447(e), but it applied the Hensgens factors when faced with a motion to amend a pleading
adding a new non-diverse defendant after removal); see also City ofPerth Amboy v. Safeco Ins.
Co. ofAm., 539 F. Supp. 2d 742, 746 (D.N.J. 2008) (noting that district courts within the Third ·
Circuit have adopted the Hensgens approach). Even if fraudulent joinder is treated as only one
relevant factor to consider among the four§ 1447(e) factors, dismissal of Guardian LLC (US) is
warranted in this instance.
In Hensgens, the court instructed that when "faced with an amended pleading naming a
new nondiverse defendant in a removed case," the court should determine (1) the extent to which
the purpose of the amendment is to defeat federal jurisdiction; (2) whether the plaintiff has been

6

See also 47 U.S.C.A § 230(c)(l), (e)(3) (''No provider ... of an interactive computer service shall
be treated as the publisher ... of any information provided by another information content
provider ... No cause of action may be brought and no liability may be imposed under any State or
local law that is inconsistent with this section.").
7
The court noted that although the issue on appeal was not plaintiffs fraudulent j oinder of a
non-diverse defendant, the court still applied the fraudulent joinder principles laid out in In re
Briscoe, 448 F.3d 201 (3d Cir. 2006) to the case. Brown, 575 F.3d at 327.
11

dilatory in asking for amendment; (3) whether plaintiff will be significantly injured if
amendment is not allowed; and (4) any other factors bearing on the equities. Hayden, 586 F.
App'x at 840-41 (quoting Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987)). The
court will examine each of these factors in tum. For the reasons discussed below, this court finds
that the Hensgens factors weigh in favor of dismissing the non-diverse defendant and retaining
jurisdiction pursuant to 28 U.S.C. § 1447(e).

1. Purpose of the amendment
Given this court's finding as to fraudulentjoinder, the sole purpose of the amendment
appears to be intended to defeat federal jurisdiction. Original Defendants contend that timing
alone "makes clear that [Plaintiffs'] only purpose was to join Guardian LLC (US) to defeat
diversity." (D.I. 21 at 11) They further assert that Plaintiffs have not alleged facts to support a
plausible claim against Guardian LLC (US). (Id. at 13) As discussed under the fraudulent
joinder standard supra, Plaintiffs have not shown that there is a colorable claim against Guardian
LLC (US). Even ifthe court does not inquire into the actual merits of Plaintiffs' claim, see

Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir. 1992), there is no legal basis to support
Plaintiffs' claim of defamation against Guardian LLC

(U~).

The timing of the post removal joinder along with Plaintiffs' knowledge of the nondiverse defendant at the time the suit was originally brought demonstrate a purpose to destroy
diversity. See Salamone v. Carter's Retail, Inc., Civil Action No. 09-5856 (GEB), 2010 WL
762192, at *2 (D.N.J. Mar. 5, 2010). In Salamone, the court found that because the plaintiff
knew of the defendant's alleged wrongful acts before filing her complaint, but did not seek to
join the defendant's claim until after the case was removed to federal court, that the evidence
weighed against allowing the amendment. Id. Conversely, in Castle Cheese, Inc. v. Blue Valley
12

Foods, Inc., the court did not find the plaintiffs reasons for adding the non-diverse defendant to
be "invidious" when there was no practical reason to name the non-diverse defendant at the time
of the initial filing. Civil Action No. 08-1158, 2008 WL 4890851, at *3 (W.D. Pa. Nov. 12,
2008).
As in Salamone, Plaintiffs in the instant case were aware of Guardian LLC (US) at the
time the original complaint was filed. See Salamone, 2010 WL 762192, at_ *2. In fact, Guardian
LLC (US) is identified in the original complaint. (D.I. 1, Ex. 1 at if 9) Plaintiffs contend that
they did not know one could access the allegedly defamatory remarks through Guardian LLC
(US)'s website until after the case was removed. (1/14/15 Tr. at 22:1-7) However, referencing
the entity in the initial complaint indicates Plaintiffs' knowledge of Guardian LLC (US).
Therefore, it follows that Plaintiffs were on notice of some connection between the two Guardian
entities, but they made an election not to sue the U.S. entity at that time. Moreover, Plaintiffs'
claimed reason for failure to pursue a potential claim against the known party in this instance is
late discovery of its alleged involvement in the claims, not that it would have been impractical to
bring a claim against it sooner. Cf Castle Cheese, 2008 WL 4890851, at *3. Plaintiffs'
explanation does not support a showing of a "newly discovered" fact that they could not have
known at the time of the original filing, had they accessed the Guardian LLC (US) website at that
time. Acc.ordingly, this factor weighs in favor of dismissing Guardian LLC (US) and denying
the Motion to Remand.

2. Whether plaintiffs have been dilatory in asking for amendment
The court finds that Plaintiffs have been dilatory in making their amendment. Dilatory
conduct under the Hensgens analysis takes into consideration the length and nature of the delay.

City ofPerth Amboy v. Safeco Ins. Co. ofAm., 539 F. Supp. 2d 742, 748 (D.N.J. 2008). In
13

Salamone, the court held that the plaintiffs actions were dilatory after he waited thirty-seven

days after removal to file a motion to amend the complaint. 2010 WL 762192, at *2. The
Salmone court relied on the fact that the plaintiff had been aware of the defendants.' .acts prior to

the original filing of the first complaint. Id. Additionally, in Hayden v. Westfield Ins. Co., the
Third Circuit denied joinder where the motion came after the close of discovery and briefing of
dispositive motions. 586 F. App'x 835, 841 (3d Cir. 2014). On the other hand, in City ofPerth
Amboy v. Safeco Ins. Co. ofAm., the court found no delay where discovery had not yet occurred

in the case. 539 F. Supp. 2d at 754. There, the court emphasized that the passage of time alone
did not indicate undue delay. Id. Therefore, filing the motion to amend sixteen days after the
defendant filed an answer and counterclaims was not dilatory. Id.
The original complaint in this case was filed on January 10, 2014, and the Notice of
Removal was filed on February 12, 2014. (D.I. 1) The parties stipulated to extend time for
Original Defendants to respond to the complaint until March 17, 2014 and March 24, 2014,
respectively. (D.I. 5; D.I. 13) On March 21, 2014, the parties filed another stipulation providing
that Original Defendants would have until May 2, 2014 to respond to the FAC if Plaintiffs chose
to file one. (D.I. 14) On March 28, 2014, Plaintiffs filed the FAC. (D.I. 16)
Notwithstanding stipulations to extend the deadlines, Plaintiffs filed the FAC seventyseven days after the initial complaint, and forty-five days after this case was removed. (D.I. 5;
D.I. 12) Like Salamone, Plaintiffs, here, were aware of Guardian LLC (US)'s involvement prior
to removal, as it was mentioned in the initial complaint. 2010 WL 762192, at *2; (D.I. 1, Ex. 1
at if 9) Although the passage of time alone does not indicate undue delay, there is no reason why
Plaintiffs could not have explored the potential claim prior to filing the FAC seventy-seven days
after the original complaint. See City ofPerth Amboy v. Safeco Ins. Co. ofAm., 539 F. Supp. 2d
14

742, 754 (D.N.J. 2008). Leaming that the articles could be accessed through Guardian LLC
(US)'s website is not a new fact sufficient to warrant amendment; rather, the fact existed whether
or not Plaintiffs chose to investigate it. No new information led Plaintiffs to decide to pursue the
claim; rather, Plaintiffs only decided to investigate Guardian LLC (US) after removal.
Accordingly, this court concludes that Plaintiffs were dilatory in filing the FAC.

3. Whether plaintiffs will be significantly injured without amendment
Given this court's finding as to fraudulent joinder, Plaintiffs will not suffer injury by
denying joinder of Guardian LLC (US) because Plaintiffs do not appear to have any claims
against it. Original Defendants contend that the court should strike the FAC or deny joinder, as
Plaintiffs will not be injured because (1) Plaintiffs have no viable claim against Guardian LLC
(US), (2) Guardian LLC (US) is not a necessary party, and (3) joinder of the subsidiary company
would not alter any potential recovery. (D .I. 21 at 16-17) Plaintiffs do not address this
argument; however, courts have noted that a plaintiff may be injured by losing out on his or her
choice of forum. See, e.g., Int'! Primate Prat. League v. Adm 'rs a/Tulane Educ. Fund, 500 U.S.
72, 77 (1991). 8

8

While considering standing in the context of a motion to remand after removal, the Supreme
Court held:
Petitioner's injury is clear, for they have lost the right to sue in [state] court-the
forum of their choice. This injury "fairly can be traced to the challenged action of
defendants," since it directly results from NIH's removal of the case. And the
injury is "likely to be redressed" if petitioners prevail on their claim because, if
removal is found to have been improper under§ 1442(a)(l), the federal courts
will lose subject matter jurisdiction and the "case shall be remanded." Therefore,
petitioners clearly have standing to challenge the removal.

Id (citations omitted).
15

Given the court's conclusion as to :fraudulentjoinder, there can be no finding of
significant injury here. See Neuner v. Samost, Civil No. 12-CV-2420, 2012 WL 5944143, at *3
(D.N.J. Nov. 26, 2012). Plaintiffs cannot suffer injury where the outcome of any potential claim
or recovery is not affected by the addition of the non-diverse defendant. Id. Accordingly, this
factor weighs in Original Defendants' favor.

4. Equitable factors
Lastly, it would be inequitable to permit Plaintiffs to defeat diversity jurisdiction by
:fraudulently joining Guardian LLC (US). See id. As discussed, supra, there is no reasonable
explanation for why Plaintiffs did not allege defamation claims against Guardian LLC (US) prior
to removal. 9 Therefore, equity favors denying joinder and the Motion to Remand. Having
decided that the court retains subject matter jurisdiction over Original Defendants, the court will
next tum to the Motions to Dismiss.

D. Personal Jurisdiction
The originally named Defendants move to dismiss the action on threshold grounds of
lack of personal jurisdiction over CPI and Guardian Ltd. (UK). (D.I. 22) CPI and Guardian Ltd.
(UK) contend that Plaintiffs have not established jurisdiction under the Delaware long-arm
statute or the Due Process Clause. (Id. at 2) Plaintiffs respond that the court has specific
jurisdiction because Original Defendants directed the allegedly defamatory articles into
Delaware, and the publications were a result of Original Defendants transacting and contracting
in Delaware. (D.I. 48 at 2) Plaintiffs further allege that Original Defendants engaged in

9

See Jordan v. AlliedBarton Sec. Servs., where the court concluded that the fourth Hens gens
factor weighed against amendment when the plaintiff chose not to name known defendants at the
time of the first filing. Civ. No. 10-3011 (GEB), 2010 WL 4687934, at *5 (D.N.J. Nov. 9,
2010).
16

-a
•.

systematic contacts with Delaware by circulating the articles, advertising, soliciting donations,
and deriving revenue in Delaware. (Id.)
The Delaware long-arm statute provides in relevant part that personal jurisdiction is
proper over any nonresident who:
1) Transacts business or performs work or services in Delaware;
2) Contracts to supply services or things in Delaware;
3) Causes tortious injury in Delaware by an act or omission in Delaware; or
4) Causes tortious injury by an act or omission outside Delaware, if the person regularly
does business, engages in persistent conduct, or derives substantial revenue from
services, or things used or consumed in Delaware.
Del. Code Ann. tit. 10, § 3104(c) (West 2008).
In briefing, Plaintiffs explain that jurisdiction arises under the first three prongs of§ 3104(c),
which relate to specific jurisdiction. (D.I. 48 at 3) However, at oral argument, Plaintiffs
conflated these points with the fourth factor, § 3104(c)(4), which is the general jurisdiction prong
of the statute. (Tr. at 43-48)
Plaintiffs assert that the long-arm statute confers jurisdiction over both Guardian Ltd.
(UK) and CPI because both transact their publishing businesses in Delaware, contract to supply
content to Delaware residents, and caused tortious injury in Delaware by publishing allegedly
defamatory articles in Delaware. (Id. at 3-14) Specifically,.they allege Guardian Ltd. (UK)
published the articles to Delaware residents, receives web traffic from the U.S., targets Delaware
by having a Delaware webpage with Delaware specific articles, receives advertising revenue
from Delaware residents, and offers a subscription service to U.S. residents. (Id. at4-7)
Guardian Ltd. (UK) also contracts to do business with its subsidiary, Guardian LLC (US), a

17

•A

•.

Delaware company. (Id. at 7-8) Plaintiffs further argue that CPI published allegedly defamatory
articles to Delaware residents and that it solicits donations from them. (Id. at 9-11) At oral
argument, Plaintiffs blended specific and general jurisdiction arguments under the relevant four
prongs of§ 3104(c). (Tr. at 43-48)
Original Defendants counter that Guardian Ltd. (UK) did not transact business in
Delaware because publishing articles online in the U.K., regardless of global presence or
readership, does not satisfy the long-arm statute or show that Guardian Ltd. (UK) "purposefully
availed itself of the privileges and benefits of Delaware law" in connection with the particular
articles. (D.I. 55 at 3-4) Similarly, Original Defendants assert that there is no "requisite nexus"
between CPI's contact and the defamation claim so as to create personal jurisdiction. (Id. at 6-7)
Specific jurisdiction requires "a nexus between the cause of action and the conduct used
as the basis for jurisdiction." Parker v. Learn Skills Corp., 530 F. Supp. 2d 661, 672 (D. Del.
2008). Plaintiffs' claims do not arise out of Guardian Ltd. (UK)'s operation of the subsidiary
company in Delaware; rather, the articles were written and published by Guardian Ltd. (UK) in
the U .K. There is nothing to indicate that the U .K. company performed work within the state of
Delaware. Cf Kabba} v. Simpson, 547 F. App'x 84, 87 (3d Cir. 2013) (no systematic
continuous contact between the defendant, who did business through a Delaware company, and
Delaware). That the articles can be accessed through the Delaware subsidiary's website in
Delaware does not mean that the U .K. company purposefully availed itself of doing business in
Delaware. Similarly, CPI's publishing of articles to a global audience does not indicate that CPI
transacted or performed work within the state of Delaware. To find otherwise would amount to
broadly conferring jurisdiction in Delaware over any person who posts content on the internet in
his or her home state or country, if such content is reviewed on the internet by a person in
18

Delaware. This notion conflicts with Due Process, and therefore cannot be the intention of the
Delaware long-arm statute. See id. at 88; see also Kloth v. S. Christian Univ., 494 F. Supp. 2d
273, 280 (D. Del. 2007), aff'd, 320 F. App'x 113 (3d Cir. 2008) ("Such nationwide jurisdiction is
not consistent with personal jurisdiction case law."). As such, §. 3104(c)(1) provides no basis for
personal jurisdiction.
Additionally, the F AC does not allege an injury arising out of any contract between
Plaintiffs and Original Defendants; thus, Plaintiffs do not assert jurisdictional facts that satisfy ·
the nexus requirement for specific jurisdiction under § 3104(c)(2). See Parker, 530 F. Supp. 2d
at 672-73. When pressed on this issue at oral argument, Plaintiffs seemed to concede this point.
(Tr. at 44:16-23) Therefore, there is no personal jurisdiction under§ 3104(c)(2) of the long-arm
statute.
Likewise, there is no evidence that Original Defendants performed an act or omission in
the state of Delaware, as required by the third prong of the long-arm statute, when it is
undisputed that three journalists in London working for the U.K. company wrote the articles.
(D.I. 27 at if 4; D.I. 29 at if 4) See Kabbaj, 547 F. App'x at 88 (no jurisdiction under§ 3104(c)(3)
when the defendant did not make the defamatory electronic postings while present in Delaware).
Therefore, the court finds that § 3104(c)(3) cannot provide a basis for personal jurisdiction.
Plaintiffs' arguments are couched towards demonstrating general jurisdiction under·§
3104(c)(4). When deciding questions of general jurisdiction, it is the "quality of commercial
activity that is relevant." Kloth, 494 F. Supp. 2d at 281. Although the companies may have
some Delaware readers, and they may make a small amount of revenue through advertising on
their webpages, the only real contact between Original Defendants and Delaware is that one can
view their webpages in the forum. (D.I. 31; D.I.·28) Nothing suggests that Guardian Ltd. (UK)
19

or CPI make regular sales, earn substantial revenue, or have continuous and systematic contacts
with Delaware that would permit the exercise of general jurisdiction. 10 See Kabbaj, 547 F.
App'x at 87. (D.I. 31; D.I. 28) Therefore, there is no basis for subjecting Original Defendants,
Guardian Ltd. (UK) and CPI, to personal jurisdiction of this court, whether specific or general,
under the long-arm statute. As such, there is no need to conduct the constitutional analysis, and I
recommend that Original Defendants' Motion to Dismiss be granted. 11

V.

CONCLUSION
Under both the fraudulentjoinder standard and the Hensgens factors, the court is satisfied

that Original Defendants have shown that joinder was fraudulent and inequitable, so the court
retains subject matter jurisdiction over the case. However, the court finds that there is no
personal jurisdiction over Original Defendants.
For the foregoing reasons, I recommend that the court DENY Plaintiffs' Motion to
Remand and GRANT Original Defendants' Cross Motion to Deny Joinder. As such, Defendant

10

Plaintiffs submit no substantive jurisdictional facts in their proffered declarations to counter
the numerous facts averred in Original Defendants' declarations, which exhibit a lack of contact
with the Delaware forum. Plaintiffs' declarations include screen shot images of the Guardian's
and CPI' s websites showing that the articles at issue can be accessed through those websites.
(D.I. 42; D.I. 50) The images also depict Delaware related articles and indicate that a user could
subscribe to content or donate to the entities through the websites. (D.I. 42; D.I. 50) However,
the images do not substantiate the notion that Guardian Ltd. (UK) or CPI regularly conduct
business, engage in persistent conduct, or derive substantial revenue from services in Delaware
as required by§ 3104(c)(4). The images show at best that it is possible for one to see some
Delaware related content on those websites. Additionally, the images do not rebut Original
Defendants' assertions that they do not directly target the Delaware market. (D.I. 32; D.I. 28)
Further, although the images show that one can donate or subscribe through these websites,
Plaintiffs do not contradict Original Defendants' evidence that those donations and subscriptions
in Delaware are de minimis, if present at all. (D.I. 32; D.I. 28).
11
Because there is adequate grounds for dismissing GuardianLLC (US) based on fraudulent or
inequitable joinder, and there is no personal jurisdiction over the remaining Defendants, there is
no need to address additional grounds raised by Defendants in support of dismissal.
20

Guardiaµ LLC (US) should be DISMISSED. Furthermore, Guardian Ltd. (UK) and CPI's
Motion to Dismiss should be GRANTED for lack of personal jurisdiction. Guardian LLC (US)' s
Motion to Dismiss is moot.
This Report and Recommendation is filed pursuant to 28 U.S.C. § 636(b)(1 )(B), Fed. R.
Civ. P. 72(b)(l), and D. Del. LR 72.1. The parties may serve and file specific written objections
within fourteen (14) days after being served with a copy of this Report and Recommendation.
Fed. R. Civ. P. 72(b)(2). The objections and responses to the objections are limited to ten (10)
pages each. The failure of a party to object to legal conclusions may result in the loss of the right
to- de novo review in the District Court. See Sincavage v. Barnhart, 171 F. App 'x. 924, 925 n.1
(3d Cir. 2006); Henderson v. Carlson, 812 F.2d 874, 878-79 (3d Cir. 1987).
The parties are directed to the court's Standing Order For Objections Filed Under Fed. R.
Civ. P. 72, dated October 9, 2013, a copy of which is available on the court's website,
http://www.ded.uscourts.gov.
Dated: December 1:.1_, 2015

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