Douvris v. Puna Geothermal Venture

Filing 24

ORDER GRANTING PLAINTIFFS' MOTION FOR JOINDER OF NON-DIVERSE DEFENDANT AND REMAND UNDER 28 U.S.C. 1447(e) re 9 - Signed by MAGISTRATE JUDGE BARRY M. KURREN on 12/12/2016. (emt, )CERTIFICATE OF SERVICE Participants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII

GEORGE DOUVRIS, ET AL.,

)
)
Plaintiffs,
)
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vs.
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PUNA GEOTHERMAL VENTURE, )
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Defendant.
)
)
______________________________ )

CIV. NO. 16-00472 BMK

ORDER GRANTING PLAINTIFFS’
MOTION FOR JOINDER OF
NON-DIVERSE DEFENDANT AND
REMAND UNDER 28 U.S.C. 1447(e)

ORDER GRANTING PLAINTIFFS’ MOTION FOR JOINDER OF
NON-DIVERSE DEFENDANT AND REMAND UNDER 28 U.S.C. 1447(e)
Before the Court is Plaintiffs’1 Motion for Joinder of Non-Diverse
Defendant and Remand Under 28 U.S.C. 1447(e) (Doc. 9). The Court heard this
Motion on November 17, 2016. After careful consideration of the Motion, the
supporting and opposing memoranda, and the arguments of counsel, the Court
GRANTS the Motion and remands this action to state court.
BACKGROUND
On August 5, 2016, Plaintiffs filed a class action Complaint in state
court against Defendant Puna Geothermal Venture (“PGV”), regarding the August

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Plaintiffs seek to represent a class, which consists of “hundreds of residents of lower Puna from
August 7, 2014 to the present and is so numerous that joinder of all individual plaintiffs would be
impractical.” (Complaint at 3.)

2014 release of hydrogen sulfide and other noxious gases into the atmosphere during
Hurricane Iselle. (Complaint at 1, 3-4.) The Complaint asserts claims against
PGV for negligence, strict liability, trespass, nuisance, and negligent and intentional
infliction of emotional distress. (Id. at 6-11.) Plaintiffs pray for injunctive relief
and general, special, consequential, and punitive damages. (Id. at 12.)
After filing the Complaint in state court, Plaintiffs did not serve the
Complaint on PGV because they were evaluating potential claims against Hawaii
Electric Light Company (“HELCO”), which allegedly asked PGV to stay in
operation during Hurricane Iselle. (Motion at 2, 5.) However, before being served
with the Complaint, PGV became aware of the lawsuit and removed the case to
federal court on August 25, 2016 on the basis of diversity jurisdiction. (Id. at 2, 5.)
Plaintiffs now move to join HELCO as a Defendant under 28 U.S.C.
§ 1447(e), which authorizes joinder of defendants who would destroy jurisdiction.
(Id. at 5.) In this case, because HELCO is a Hawaii corporation, it would destroy
diversity jurisdiction and its joinder would require remand of this case to state court.
(Id.) As discussed below, the parties dispute whether joinder of HELCO is
appropriate.

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DISCUSSION
Plaintiffs seek leave to assert claims against HELCO and remand this
action to state court. (Motion at 5.) Inasmuch as HELCO’s joinder will destroy
this Court’s diversity jurisdiction, the parties agree that this Court must analyze
HELCO’s joinder under 28 U.S.C. § 1447(e), which provides: “If after removal the
plaintiff seeks to join additional defendants whose joinder would destroy subject
matter jurisdiction, the court may deny joinder, or permit joinder and remand the
action to the State court.” The decision to allow joinder under Section 1447(e) is
discretionary. Newcombe v. Adolf Coors Co., 157 F.3d 686, 691 (9th Cir. 1998).
In deciding whether to allow the joinder of a non-diverse defendant
under § 1447(e), courts balance the following factors:
(1) whether the new defendants should be joined under Federal
Rule of Civil Procedure 19(a) as “needed for just adjudication”;
(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.
Ansagay v. Dow Agrosciences LLC, Civ. No. 15-00184 SOM-RLP, 2015 WL
9412856, at *3 (D. Haw. Dec. 3, 2015).
At the hearing on this Motion and in their Reply brief, Plaintiffs
concede the first two factors – whether joinder is mandatory under Rule 19(a) and
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whether the statute of limitations bars claims against HELCO in state court – weigh
against joining HELCO. However, Plaintiffs argue that the remaining factors
support HELCO’s joinder and remand of this case.
PGV argues that Plaintiffs’ motive in joining HELCO is the most
important factor to consider. (Opp. at 2.) Although Plaintiffs readily admit that
they “would prefer to return to state court” (Reply at 4), the Court finds that
defeating diversity jurisdiction is not their sole motive for joining HELCO. See
Ansagay, 2015 WL 9412856, at *3. Indeed, Plaintiffs contemplated suing HELCO
prior to filing the Complaint and informed HELCO of their intent in a demand letter.
(Ex. 1 attached to Opposition.) Both the demand letter and Plaintiffs’ proposed
First Amended Complaint specify HELCO’s conduct as it relates to the release of
noxious gas by PGV. Plaintiffs’ First Amended Complaint asserts claims against
HELCO for negligence, negligence and intentional infliction of emotional distress,
breach of contract, breach of the implied duty of good faith and fair dealing, and
unfair and deceptive trade practices. (Ex. 1 attached to Motion.) In light of
Plaintiffs’ prior intention to hold HELCO liable for its conduct, the Court finds that
Plaintiffs’ request to join HELCO is not solely motivated to defeat diversity
jurisdiction. See Ansagay, 2015 WL 9412856, at *3. Consequently, this factor
weighs in Plaintiffs’ favor.

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With respect to whether there has been unexplained delay in requesting
HELCO’s joinder, Plaintiffs explain that they did not name HELCO in the original
Complaint because they were evaluating claims against HELCO and ultimately
decided “to file the PGV complaint to avoid any statutory problems and hold off
service so that Plaintiffs’ counsel could make a final decision on whether to allege
contract and UDAP claims against HELCO that had no similar statute of
limitations.” (Reply at 5.) Plaintiffs anticipated that they could add claims against
HELCO as a matter of course pursuant to Rule 15(a) prior to serving the Complaint
on PGV, but Plaintiffs were unable to amend under Rule 15(a) once the case was
removed. Further, the Court notes that any delay in seeking HELCO’s joinder was
minimal insofar as Plaintiffs’ request was made thirty days of removal. The Court
finds that Plaintiffs provide an adequate explanation for delaying the present request
to add HELCO and, therefore, this factor weighs in favor of joining HELCO as a
Defendant.
This Court must also consider whether the new claims against HELCO
“appear valid.” Ansagay, 2015 WL 9412856, at *3. Plaintiffs “need only state
one valid claim for purposes of” § 1447(e). McDonald v. Forest Labs., Inc., Civ.
No. 13-00819 YGR, 2013 WL 1949349, at *2 (N.D. Cal. May 9, 2013). One of the
claims Plaintiffs assert against HELCO (and PGV) is for unfair and deceptive trade

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practices under Hawaii Revised Statutes § 480-2, which makes unfair and deceptive
practices in the conduct of any trade or commerce unlawful. Plaintiffs allege that
HELCO and PGV engage in “trade or commerce” by selling electricity. (Ex. 1
attached to Motion.) Plaintiffs further allege that HELCO and PGV misrepresented
geothermal energy as safe renewable energy and failed to disclose the hazards and
risks associated with the release of toxic gases into the atmosphere. (Ex. 1 attached
to Motion.) To the extent Plaintiffs allege that HELCO and PGV mislead
consumers about the safety of geothermal electricity, Plaintiffs’ claim under Hawaii
Revised Statutes § 480-2 “appears valid.” See Ansagay, 2015 WL 9412856, at *3.
Given the apparent validity this claim, the Court need not consider Plaintiffs’ other
claims and finds that this factor weighs in favor of allowing HELCO to be joined in
this case. Stout v. Int’l Bus. Machines Corp., Civ. No. 16-4914 FMO-AJWx, 2016
WL 4528958, at *9 (C.D. Cal. Aug. 30, 2016) (“Given the court’s determination that
[the plaintiff] has alleged at least one valid claim against Mullaney for false
imprisonment, the court need not evaluate the validity of the other claims.”);
Ruscigno v. Hillstone Restaurant Group Inc., Civ. No. 09-05766 JF-PVT, 2010 WL
934265, at *3 (N.D. Cal. March 15, 2010) (“the apparent validity of the first claim
favors for allowing joinder and remand”).

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Lastly, the Court considers whether denying HELCO’s joinder will
prejudice Plaintiffs. If joinder is denied, Plaintiffs will have to pursue two separate
lawsuits on two different islands – one in federal court in Honolulu, Oahu against
PGV and one in state court in Hilo, Big Island against HELCO. Each lawsuit arises
from the same events, and witnesses and evidence – all of which are located on the
Big Island – will overlap between the cases. The cost and delay of pursuing
duplicative litigation in separate forums, as well as the risk of inconsistent
adjudications, would prejudice Plaintiffs’ ability to effectively prosecute their
claims.2 On the other hand, PGV will not be prejudiced by joining HELCO and
remanding this case because this case is in its early stages and nothing substantive
has happened yet.
In balancing the foregoing factors, the Court finds that they weigh in
favor of joining HELCO as a Defendant in this case. Although Plaintiffs concede
the first two factors, the balance of the remaining factors tilt in Plaintiffs’ favor to
join HELCO. Indeed, Plaintiffs sufficiently explained the delay in adding HELCO,
Plaintiffs’ motive in joining HELCO is not solely to defeat diversity jurisdiction, the
UDAP claim against HELCO appears to be valid, and denial of HELCO’s joinder
2

At the hearing on this Motion, defense counsel offered to hold trial and hearings in the state court
facilities located in Hilo, Big Island. However, this Court has only one place of sitting and, by
statute, “Court shall be held at Honolulu.” 28 U.S.C. § 91. While it is true that the Court travels
to neighbor islands for minor National Park cases, substantial cases like this one are heard only in
Honolulu.
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will likely prejudice Plaintiffs. Accordingly, the Court exercises its discretion in
permitting HELCO’s joinder as a Defendant in this case pursuant to 28 U.S.C.
§ 1447(e). It is undisputed that HELCO destroys this Court’s diversity jurisdiction
and that this case must be remanded to state court. Consequently, this Court
GRANTS Plaintiffs’ Motion, permits the joinder of HELCO, and remands this case
to state court.
CONCLUSION
For the foregoing reasons, the Court GRANTS Plaintiffs’ Motion for
Joinder of Non-Diverse Defendant and Remand Under 28 U.S.C. 1447(e) (Doc. 9).
The Clerk of Court is directed to remand this action to state court.

IT IS SO ORDERED.
DATED: Honolulu, Hawaii, December 12, 2016.

George Douvris, et al. v. Puna Geothermal Venture, CIV. NO. 16-00472 BMK, ORDER
GRANTING PLAINTIFFS’ MOTION FOR JOINDER OF NON-DIVERSE DEFENDANT AND
REMAND UNDER 28 U.S.C. 1447(e).
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