Chomko v. Cottrell Inc et al
Filing
51
ORDER granting 48 Motion to Remand. The motion to remand is GRANTED. The Court directs the Clerk to remand this matter to the Circuit Court for Madison County, Illinois. All remaining motions are DENIED as MOOT. Signed by Judge David R. Herndon on 12/21/2015. (dsw)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
SHANE CHOMKO,
Plaintiff,
v.
COTTRELL, INC., et al.;
Defendants.
No. 15-cv-373-DRH-DGW
ORDER
HERNDON, District Judge:
I.
INTRODUCTION
Now before the Court is plaintiff’s motion to remand (Doc. 48). Defendant
Cotrell, Inc. filed an opposition to the motion and plaintiff filed a reply (Docs. 49
& 50). Also pending are two of the defendants’ motions to dismiss (Doc. 21 and
Doc. 34) and plaintiff’s motion to strike (Doc. 44).
Plaintiff incorporates his
responses to the pending motions to dismiss to the subject motion. Based on the
following, the Court GRANTS the motion to remand (Doc. 48). All remaining
motions are DENIED as moot.
II.
BACKGROUND
The following facts, taken primarily from the complaint, are assumed true
at this stage of the proceeding.
On February 24, 2015, Shane Chomko (“Chomko”), an Illinois citizen, filed
a ten count complaint against Cottrell, Inc. (“Cottrell”); Cassens Corporation; and
A.C. Leasing Company (“A.C. Leasing”) in the Madison County, Illinois Circuit
Court (Doc. 1–1). Chomko’s claims arise from a February 26, 2013 incident
wherein he was operating a trailer and was injured during the operation of the
rear loading skid.
At the time of the accident, Chomko was employed by Cassens Transport
Company (“CTC”). CTC is not a party to this action. Both CTC and A.C. Leasing
are subsidiaries of Cassens Corporation.
Additionally, at the time of the accident, Chomko was a union member and
his union was party to a collective bargaining agreement with his employer, CTC.
Cassens Corporation, in its capacity as a parent corporation, is a signatory to
numerous CBAs, including the CBA in question.
Chomko alleges causes of action against Cassens Corporation, an Illinois
citizen, for Negligence (Count IV); Negligence-Direct liability (Count V); Breach of
Contract (Count VI); Consumer Fraud (Count VII); Promissory Estoppel
(mislabeled equitable estoppel) (Count VIII), and Fraud (Count IX). Liability as to
Cassens Corporation is premised, among other things, on the following: (1)
Cassens Corporation is more than a mere holding company for its subsidiaries;
(2) Cassens Corporation participated in the manufacture, marketing, and
distribution of the subject product; (3) Cassens Corporation derived economic
benefit from placing the subject product in the stream of commerce; and/or (4)
Cassens Corporation was in a position to eliminate the unsafe character of the
subject product and/or to exert influence with regard to the safety of the subject
product. With regard to the direct liability claim directed against Cassens
Corporation, Chomko states he does not seek to pierce the corporate veil between
Cassens Corporation and CTC.
Chomko alleges product liability claims (Counts I-III) against A.C. Leasing,
also an Illinois citizen, on the grounds that A.C. Leasing is the owner, lessor
and/or distributor of the car hauler trailer on which Chomko was injured.
Chomko alleges product liability claims (Counts I – III) against Cottrell, a
Georgia citizen, on the grounds that it manufactured the car hauler trailer on
which Chomko was injured.
On April 3, 2015, Cottrell removed the case to this Court pursuant to 28
U.S.C. §§ 1331, 1332, 1441, and 1446; 29 U.S.C. §185 and The Labor
Management Relations Act (29 U.S.C. § 141, et. seq.) (Doc. 1).
Although Chomko and defendants Cassens Corporation and A.C. Leasing
are citizens of Illinois, Cottrell argues diversity exists because the non-diverse
defendants were fraudulently joined. Additionally, although the complaint
contains no claim for relief based on federal law, Cottrell argues federal question
jurisdiction
exists.
Cottrell
contends
Chomko’s
claims
against
Cassens
Corporation are, in reality, claims under § 301 of the Labor-Management
Relations Act (“LMRA”), 29 U.S.C. § 185(a). This is so, Cottrell argues, because
Chomko’s complaint implicates the bargained-for working conditions of the CBA
and implicates duties arising out of the CBA and/or requiring interpretation of the
CBA.
III.
REMOVAL STANDARD
A defendant may remove a case only if a federal district court would have
original jurisdiction over the action. See 28 U.S.C. § 1441; Caterpillar Inc. v.
Williams, 482 U.S. 386, 392 (1987). Statutes providing for removal are construed
narrowly, and doubts about removal are resolved in favor of remand. Doe v.
Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993). “The party seeking removal
has the burden of establishing federal jurisdiction, and federal courts should
interpret the removal statute narrowly, resolving any doubt in favor of the
plaintiff's choice of forum in state court.” Schur v. L.A. Weight Loss Ctrs., Inc.,
577 F.3d 752, 758 (7th Cir.2009). (citing Doe v. Allied-Signal, Inc., 985 F.2d
908, 911 (7th Cir.1993)).
IV.
FEDERAL QUESTION JURISDICTION
A. Legal Authority
In general, district courts have “original jurisdiction of all civil actions
arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. §
1331. The usual test of whether an action arises under federal law for purposes of
Section 1331 is the “well-pleaded complaint” rule, which provides generally that a
case arises under federal law within the meaning of the statute only when federal
law appears on the face of a plaintiff’s complaint.
See Caterpillar Inc. v.
Williams, 482 U.S. 386, 392 (1987); Vorhees v. Naper Aero Club, Inc., 272 F.3d
398, 402 (7th Cir. 2001). In other words, “a claim ‘arises under’ the law that
creates the cause of action.” Bennett v. Southwest Airlines Co., 484 F.3d 907,
909 (7th Cir. 2007) (citing American Well Works Co. v. Layne & Bowler Co., 241
U.S. 257 (1916)). In a limited class of cases, however, an action may arise under
federal law within the meaning of Section 1331, even if the complaint in the case
asserts no claim for relief under federal law, where state law is “completely
preempted” by federal law. Complete preemption occurs when “the preemptive
force of a statute is so extraordinary that it converts an ordinary state commonlaw complaint into one stating a federal claim for purposes of the well-pleaded
complaint rule.” Nelson v. Stewart, 422 F.3d 463, 466-67 (7th Cir. 2005)
(internal quotations omitted). “Once an area of state law has been completely preempted, any claim purportedly based on that pre-empted state law is considered,
from its inception, a federal claim, and therefore arises under federal law. In such
situations, the federal statute . . . not only preempt[s] state law but also
authorize[s] removal of actions that sought relief only under state law.” Id.
(citation omitted).
The LMRA is one of the few federal statutes that completely preempts state
law so as to permit removal of state-law claims to federal court. See Avco Corp.
v. Aero Lodge No. 735 Int’l Ass’n of Machinists & Aerospace Workers, 390 U.S.
557, 559-60 (1968). Section 301 of the LMRA (also known as the Taft-Hartley
Act), 29 U.S.C. § 185(a) provides as follows:
Suits for violation of contracts between an employer and a labor
organization representing employees in an industry affecting
commerce as defined in this chapter, or between any such labor
organizations, may be brought in any district court of the United
States having jurisdiction of the parties, without respect to the
amount in controversy or without regard to the citizenship of the
parties.
29 U.S.C. § 185(a). Although a state law cause of action completely preempted by
§ 301 of the LMRA need not be for breach of contract, it must be “inextricably
intertwined with consideration of the terms of the labor contract.” Allis–Chalmers
Corp. v. Lueck, 471 U.S. 202, 213, 105 S.Ct. 1904, 85 L.Ed.2d 206 (1985). A
claim is not completely preempted if it simply “relates in some way to a provision
in a collective-bargaining agreement, or more generally to the parties to such an
agreement.” Id. at 220. Instead, “for preemption to exist, resolution of a claim
must require interpretation of a CBA, not a mere glance at it.” In re Bentz Metal
Prods. Co., 253 F.3d 283, 289 (7th Cir.2001) (en banc). Determining whether a
claim requires interpretation of a CBA necessitates a “case-by-case analysis of the
state-law claim as it relates to the CBA.” Id.
B. Analysis
As noted above, Chomko was a member of a union at the time of his
accident and his union was a party to a collective bargaining agreement with his
employer, CTC. Cassens Corporation, in its capacity as a parent corporation, is a
signatory to numerous CBAs, including the CBA in question. Nothing in the
complaint references the CBA or any basis for federal jurisdiction. Nonetheless,
Cottrell asserts, the claims brought against Cassens Corporation are, in reality,
claims under § 301 of the LMRA.
In support of its position, Cottrell frequently cites to Schuring v. Cottrell,
2014 WL 585295 (N.D. Ill. Feb. 14, 2014) (J., Kendall). 1 In Schuring, the district
court concluded the plaintiff’s allegations against Cassens Corporation indicated it
had breached duties created by the CBA. Accordingly, the district court treated
the plaintiff’s state-law claims as federal claims and found that removal was
appropriate.
First, the Court notes that Schuring is not controlling here. Second, the
Court agrees with Chomko in that Schuring is distinguishable. Here, Chomko’s
counts against Cassens Corporation all reference Cassens Corporation’s Loss
Control Program. Nothing in the complaint indicates that the Loss Control
Program is tied to the CBA or that assessing Cassens Corporation’s duties in
relation to the Loss Control Program require interpretation of the CBA. Third, the
Schuring decision is questionable as the court’s preemption decision appears to
be based on a need to consult the CBA to determine its applicability to Cassens
Corporation. 2 Indeed, after concluding that federal question jurisdiction existed,
1
In Schuring, the plaintiff’s employer was a subsidiary of Cassens Corporation. Cassens
Corporation was a signatory, in its capacity as a parent corporation, to the CBA between the
plaintiff’s union and the plaintiff’s employer. The plaintiff’s employer was not a party to the suit.
2
The district court states that preemption is warranted because determining whether certain CBA
provisions apply to Cassens will require “interpretation and application of the CBA.” However, the
court seems to be referring to the mere need to consult the CBA rather than the need to interpret
it.
the Schuring court declined to dismiss claims against Cassens Corporation on the
basis of complete preemption stating that “legal and factual determinations”
remained regarding whether the CBA applied to Cassens Corporation. As noted
above, reviewing or consulting a CBA for the purpose of deciding preemption is
not in itself “interpretation” warranting preemption; preemption is only warranted
when resolution of a state-law claim depends on an interpretation of the CBA. See
Foy v. Pratt Whitney Group, 127 F.3d 229, 234 (2d Cir. 1997). 3
Chomko argues that, since 2012, courts have rejected Cottrell’s complete
preemption argument on at least thirty occasions. See Docs. 48-1 through 48-27,
48-34, and 48-35. Cottrell contends these cases are distinguishable because they
did not analyze claims against Cassens Corporation and Cottrell’s preemption
argument in the instant case relates only to the claims against Cassens
Corporation. With regard to Chomko’s argument, the Court notes that many of the
cases referenced by the plaintiff did not address preemption as to Cassens
Corporation. Further, many of the decisions were based, in part, on the fact that
Cottrell was not a signatory to the CBA in question. With regard to Cottrell’s
argument, the Court notes that Cassens Corporation was a party in at least three
of the referenced cases. See Doc. 48-1, Doc. 48-3, and Doc. 48-8.
3
In his reply, Chomko admonishes Cottrell for failing to advise the Court that “on September 29,
2015, Schuring concluded the plaintiffs’ claims were not completely preempted by the LMRA, and
denied Cottrell’s motion for judgment on the pleadings…” (Doc. 50). Cottrell’s motion for
summary judgment was subsequently rejected by the Schuring court. However, the referenced
order addressed preemption as to Cottrell and not Cassens Corporation. Accordingly, it does not
necessarily apply to Cottrell’s arguments with respect to Cassens Corporation in the instant case.
The above is an example of both parties’ tendency to present arguments
based on a selective sampling of case law. Although both parties are guilty of
presenting selective case summaries, some of Cottrell’s arguments border on
being misleading. The Court pauses here to admonish both parties – but in
particular Cottrell – for their conduct.
That being said, after reviewing the relevant material, the Court finds the
state law claims pled by Chomko are not completely preempted by § 301 of the
LMRA, 29 U.S.C. § 185(a). Chomko is not claiming any of the defendants violated
any of the CBA provisions. Further, the Court finds adjudication of Chomko’s
claims against Cassens Corporation is dependent on state law and does not
require interpretation of the subject CBA. Therefore, there is no basis for federal
question jurisdiction.
V.
DIVERSITY JURISDICTION AND FRAUDULENT JOINDER
A. Legal Authority
Diversity jurisdiction requires that the plaintiffs and defendants be
completely diverse, that is, no plaintiff can be a citizen of the same state as any
defendant. Poulos v. Naas Foods, Inc., 959 F.2d 69, 71 (7th Cir.1992). Under the
fraudulent joinder doctrine, a plaintiff may not avoid federal diversity jurisdiction
by suing a non-diverse defendant simply to destroy diversity jurisdiction where
there is no real claim against that defendant. Schwartz v. State Farm Mut. Auto.
Ins. Co., 174 F.3d 875, 878 (7th Cir.1999); Gottlieb v. Westin Hotel Co., 990
F.2d 323, 327 (7th Cir.1993). The fraudulent joinder doctrine allows a court to
disregard the citizenship of any fraudulently joined defendant when determining
whether complete diversity exists. Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d
752, 763 (7th Cir.2009). The court can then assume jurisdiction over the
removed case, dismiss any non-diverse fraudulently joined defendant from the
suit and retain jurisdiction over the case. Id.
The fraudulent joinder doctrine applies when a defendant demonstrates
that “after resolving all issues of fact and law in favor of the plaintiff, the plaintiff
cannot establish a cause of action against the in-state defendant.” Poulos, 959
F.2d at 73; accord Schur, 577 F.3d at 764.2 If there is “any reasonable
possibility” that the plaintiff may prevail against a defendant, the defendant is not
fraudulently joined. Schur, 577 F.3d at 764 (citing Poulos, 959 F.2d at 73). The
defendant's burden is heavy, possibly even heavier than his burden with a motion
to dismiss for failure to state a claim under Federal Rule of Civil Procedure
12(b)(6). Schur, 577 F.3d at 764.
Thus, in the instant case, the Court must ask whether, after resolving all
issues of fact and law in Chomko’s favor, there is any reasonable possibility that
Chomko might prevail against either non-diverse defendant (Cassens Corporation
or A.C. Leasing). Finding that Chomko may prevail on a single claim against
either non-diverse defendant is sufficient grounds for finding that diversity
jurisdiction is lacking.
B. Analysis
1. Cassens Corporation
In the instant case, Cottrell’s argument that there is no possibility a state
court could find Cassens Cororation is liable is disproven by Graham v. Bostrom
Seating, Inc., 398 Ill.App.3d 302, 337 Ill.Dec. 84, 921 N.E.2d 1222 (Ill. App. Ct.
2010). In Graham, the Illinois Appellate Court reversed summary judgment in
favor of a Cassens Corporation subsidiary that claimed its role in the purchase of
a car-hauling trailer was merely “clerical and passive.” In reversing summary
judgment, the Illinois Appellate Court stated “there are circumstances where a
parent or holding company, or a ‘sister’ subsidiary company for that matter,
could be held strictly liable.” Id. at 312. Citing to Ogg v. City of Springfield, 121
Ill.App.3d 25, 32–33, 76 Ill.Dec. 531, 458 N.E.2d 1331 (Ill. App. Ct. 1984), the
Graham Court noted that a parent company is liable for loss caused by a product
when that entity: (1) participated in the manufacture, marketing, and distribution
of an unsafe product; (2) derived economic benefit from placing it in the stream of
commerce; or (3) was in a position to eliminate the unsafe character of the
product. Id. The Appellate Court also cited to Forsythe v. Clark USA, Inc. stating
as follows: “Where there is evidence sufficient to prove that a parent company
mandated an overall business budgetary strategy and carried that strategy out by
its own specific direction or authorization, surpassing the control exercised as a
normal incident of ownership in disregard for the interests of the subsidiary, that
parent company could face liability.” Id. at 313. Finally, in disagreeing with the
dissent, the Illinois Appellate Court stated “all that is required is that [the Cassens
Corporation subsidiary] had the ability to or was in a position to exert influence,
not that [the Cassens Corporation subsidiary] actually exerted any influence.” Id.
Following Graham, at least one Illinois court has denied Cassens Corporation’s
motion for summary judgment as to claims for direct liability and in concert
liability (Doc. 48-47).
Cottrell does not address or attempt, in any way, to distinguish Graham.
Instead, pretending as if the decision is non-existent, Cottrell makes numerous
arguments premised on trial court decisions issued prior to the Graham decision.
This is another example of the selective, if not misleading, argument often
presented by Cottrell.
In the instant case, Chomko alleges that Cassens Corporaton: (1)
participated in the manufacture, marketing and distribution of an unsafe product;
(2) derived economic benefit from placing it into the stream of commerce; and (3)
was in a position to eliminate the unsafe character of the product trailer. If
Chomko’s allegations are true, which the Court must assume in its fraudulent
joinder analysis, there is a reasonable possibility that Cassens Corporation could
be subject to liability, at least with respect to Chomko’s claims for Negligence
(Count IV), Negligence-Direct liability (Count V), and to the extent Chomko has
asserted a claim for In Concert Liability. In fact, the Schuring decision, relied on
so heavily by Cottrell with respect its preemption argument, held that practically
identical claims asserted against Cassens Corporation were sufficient to proceed
on a theory of direct participant liability and denied Cassens Corporation’s
motion to dismiss as to these claims. Schuring, 2014 WL 585295, *3 (N.D. Ill.
Feb. 14, 2014) (J. Kendall). 4
Remand is required if any one of the claims against Cassens Corporation is
possibly viable. Accordingly, based on the above, the Court need not assess the
viability of the remaining claims asserted against Cassens Corporation. The Court
finds that Cottrell has failed to meet its heavy burden of showing that Chomko has
no reasonable possibility of success against Cassens Corporation. Therefore, the
Court finds that Cassens Corporation was not fraudulently joined for the sole
purpose of destroying this Court’s diversity jurisdiction, and consequently this
Court does not have diversity jurisdiction, pursuant to 28 U.S.C. § 1332, over this
case.
2. A.C. Leasing
The presence of a single nondiverse defendant is sufficient to defeat
diversity jurisdiction. Accordingly, in light of the Court’s finding as to Cassens
Corporation, the Court need not assess the fraudulent joinder argument as to A.C.
Leasing.
4
Liability as to Cassens Corporation may be established without piercing the corporate veil. See
Forsythe v. Clark USA, Inc., 224 Ill.2d 274 (2007) (“Direct participant liability, as we now
recognize it, does not rest on piercing the corporate veil such that the liability of the subsidiary is
the liability of the parent.”). The Court further notes that Forsythe v. Clark USA, Inc., 224 Ill.2d
274, 296-299 (2007), defeats Cottrell’s exclusive remedy argument.
VI.
REQUEST FOR COSTS
Chomko asks the Court to award him his attorneys’ fees and costs in this
action pursuant to 28 U.S.C. § 1447(c). The Supreme Court, in Martin, found that
a prevailing plaintiff was only entitled to attorneys' fees under § 1447(c) if the
defendant “lacked an objectively reasonable basis for seeking removal.” Martin,
542 U.S. at 141; see also Lott v. Pfizer, Inc., 492 F.3d 789, 792 (7th Cir. 2007).
Although ultimately Court disagreed with Cottrell’s arguments, it declines to
award fees and costs under the above standard.
VII.
CONCLUSION
For the reasons discussed herein, the Court REMANDS this case to the
Circuit Court of Madison County, Illinois. All remaining motions are DENIED as
MOOT.
IT IS SO ORDERED.
Signed this 21st day of December, 2015.
Digitally signed
by Judge David R.
Herndon
Date: 2015.12.21
14:12:23 -06'00'
United States District Judge
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