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
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