Zimmer US Inc et al v. Sikkelee et al
OPINION AND ORDER: GRANTING 12 Plaintiffs' Motion to Remand; DIRECTING the plaintiffs to file an accurate account of the attorneys' fees and costs associated with litigating this motion; DIRECTING the defendants to compensate the plainti ffs accordingly; and DIRECTING the Clerk to remand this case to Kosciusko County Circuit Court. Signed by Judge Robert L Miller, Jr on 5/16/2017. (certified copy of Opinion and Order and Docket Sheet sent to Clerk Kosciusko County Circuit Court) (jld)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
ZIMMER US INC., BIOMET
ORTHOPEDICS LLC, and
BIOMET SPORTS MEDICINE LLC,
PAUL SIKKELEE and
MEDACTA USA INC.,
Cause No. 3:16-cv-585 RLM-JEM
OPINION AND ORDER
Zimmer US, Inc., Biomet Orthopedics, LLC, and Biomet Sports Medicine,
LLC sued Paul Sikkelee and Medacta USA, Inc. in Kosciusko County Circuit
Court for breaching restrictive covenants, unfair competition, and tortious
interference with contract. The defendants removed the case to this court and
the plaintiffs now ask for remand.
The plaintiffs allege the following. Zimmer US, Biomet Orthopedics, and
Biomet Sports Medicine are all subsidiaries of Zimmer Biomet Holdings, Inc. Paul
Sikkelee was a sales representative for Zimmer Biomet medical devices, working
for G. Barnett, Inc. d/b/a Biomet Summit Surgical. He signed non-compete and
non-solicitation agreements in favor of Biomet Orthopedics and Biomet Sports
Medicine. While in this position, he grew Zimmer Biomet’s business with St.
Luke’s Hospital in Columbus, North Carolina and, in particular, with surgeon
Dr. Brian Rosenburg.
Mr. Sikkelee stopped selling devices for Biomet Summit Surgical and
started selling for Medacta, another medical device company and Zimmer Biomet
competitor. Soon after he started selling Medacta devices, St. Luke’s Hospital
and Dr. Rosenburg switched nearly all of their business from Zimmer Biomet to
Medacta devices. Mr. Sikkelee continues to sell for Medacta and to court
business from St. Luke’s Hospital and Dr. Rosenburg. The plaintiffs claim that
Mr. Sikkelee breached the non-compete and non-solicitation agreements in his
contracts with Biomet Summit Surgical and in favor of Biomet Orthopedics and
Biomet Sports Medicine.
Steve Kirschner was another sales representative for Zimmer Biomet
medical devices. He signed a non-compete and non-solicitation agreement in
favor of Zimmer US. Mr. Kirschner then stopped selling Zimmer Biomet products
and began working as a territory manager for Medacta. In this position, he
developed Medacta business in the same territory where he had sold Zimmer
After Zimmer US threatened to enforce the non-compete and nonsolicitation agreement against Mr. Kirschner, Mr. Kirschner entered into a
settlement agreement with Zimmer US, restricting the scope of his duties for
Medacta and releasing Mr. Kirschner from Zimmer US’s claims against him. The
agreement didn’t release Medacta. Even after settlement, Medacta allegedly
encouraged Mr. Kirschner to take part in recruiting activities that violated his
The plaintiffs are suing Medacta for tortiously interfering with their
respective contracts with Mr. Sikkelee and Mr. Kirschner. They sue Mr. Sikkelee
for breaching and tortiously interfering with his non-compete and nonsolicitation agreements with Biomet Sports Medicine and Biomet Orthopedics.
They sue Mr. Sikkelee and Medacta for unfair competition by using confidential
information Mr. Sikkelee acquired while selling Zimmer Biomet products for the
benefit of Medacta.
The plaintiffs allege that Zimmer US is incorporated in Delaware and has
its principal place of business in Indiana. They say Biomet Orthopedics and
Biomet Sports Medicine are Indiana limited liability companies with their
principal places of business in Indiana. They say Mr. Sikkelee is a citizen of North
Carolina and Medacta is a Delaware corporation with its principal place of
business in Illinois.
The plaintiffs sued in the Kosciusko County Circuit Court. The defendants
then filed a notice of removal, removing the case to this court. 28 U.S.C. §§
1441(a), 1446(a). The plaintiffs now ask this court to remand the case back to
the county court, arguing that the defendants’ notice was defective and that this
court doesn’t have subject matter jurisdiction. §§ 1332, 1447(c).
“Federal courts are courts of limited jurisdiction and may only exercise
jurisdiction where it is specifically authorized by federal statute.” Evers v. Astrue,
536 F.3d 651, 657 (7th Cir. 2008). Defendants in a state court case can remove
to federal court if the federal court would have original jurisdiction over the case.
28 U.S.C. § 1441(a). One route for original jurisdiction is “complete diversity
between all named plaintiffs and all named defendants, and no defendant is a
citizen of the forum state.” Lincoln Prop. Co. v. Roche, 546 U.S. 81, 84 (2005); §
1332(a). To remove, the defendants must file a “notice of removal . . . containing
a short and plain statement of the grounds for removal.” § 1446(a).
Failure to comply with § 1446 is a “defect in the removal procedure” that
justifies a motion to remand within 30 days of filing the notice of removal. §
1447(c); In re Cont’l Cas. Co., 29 F.3d 292, 293 (7th Cir. 1994). If the court lacks
subject matter jurisdiction, it must remand, with or without motion, at any time.
§ 1447(c). “Any doubt regarding jurisdiction should be resolved in favor of the
states[,] and the burden of establishing federal jurisdiction falls on the party
seeking removal.” Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993).
The plaintiffs moved for remand within 30 days of the defendants’ notice of
removal. The plaintiffs argue that the notice was defective and that this court
doesn’t have subject matter jurisdiction. They also seek attorney fees and costs
for litigating this motion.
The defendants’ notice of removal claims that the court has diversity
jurisdiction. § 1332(a). It says that the complaint alleges losses of millions of
dollars related to customers switching their business from Zimmer Biomet
devices to Medacta devices, which meets the $75,000 amount in controversy
requirement. Id. To show complete diversity of citizenship, the defendants say
that “Plaintiffs allege that they are citizens of the State of Indiana,” and then go
on to say that defendant Medacta is a citizen of both Delaware and Illinois, and
that defendant Mr. Sikkelee is a citizen of North Carolina. This statement would
seem to indicate that there is complete diversity between the parties.
But this statement of citizenship leaves out important details. First, “[f]or
diversity jurisdiction purposes, the citizenship of an LLC is the citizenship of
each of its members.” Thomas v. Guardsmark, LLC, 487 F.3d 531, 534 (7th Cir.
2007). Both Biomet Orthopedics and Biomet Sports Medicine are limited liability
companies. To determine whether this court has diversity jurisdiction, it must
know all the states where these limited liability companies have citizenship. A
statement that the “Plaintiffs allege that they are citizens of the State of Indiana”
Second, a corporation is a citizen of its state of incorporation and the state
of its principal place of business. § 1332(c)(1). The complaint explicitly says that
Zimmer US is incorporated in Delaware and has its principal place of business
in Indiana. But instead of mentioning this in the notice of removal, the
defendants only mention the plaintiffs’ Indiana citizenship. The complaint and
notice say that Medacta is incorporated in Delaware and has its principle place
of business in Illinois. Because both Zimmer US and Medacta seem to be
Delaware citizens, there doesn’t seem to be complete diversity. This would
require remand for lack of subject matter jurisdiction, if not for defective notice.
The defendants respond that Zimmer US was improperly joined to the
litigation. If it’s true that Zimmer US was improperly joined as a plaintiff to
destroy diversity jurisdiction, its citizenship doesn’t count when determining
diversity jurisdiction. Gottlieb v. Westin Hotel Co., 990 F.2d 323, 327 (7th Cir.
The defendants argue that the claims based on Mr. Kirschner’s settlement
agreement with Zimmer US don’t belong in the same litigation as the claims
based on Mr. Sikkelee’s non-compete and non-solicitation covenants in favor of
Biomet Orthopedics and Biomet Sports Medicine. Rule 20(a)(1)(A) requires that
plaintiffs joined in a single action must “assert any right to relief jointly, severally,
or in the alternative with respect to or arising out of the same transaction,
occurrence, or series of transactions or occurrences,” and that there exists a
common question of law or fact. Fed. R. Civ. P. 20(a)(1)(A). The defendants argue
that this litigation combines suits under two different sets of agreements;
without the “same transaction, occurrence, or series of transactions or
occurrences,” Zimmer US’s suit against Medacta shouldn’t be part of Biomet
Orthopedics’ and Biomet Sports Medicine’s suit against Mr. Sikkelee and
Medacta. The joinder of Zimmer US as a plaintiff is inappropriate, the defendants
say, and so Zimmer US should be dropped, thus ensuring complete diversity.
The defendants didn’t raise this argument in the notice of removal. The
notice of removal should “make the basis for federal jurisdiction clear, and
contain enough information so that the district judge can determine whether
jurisdiction exists.” 14C Charles Alan Wright et al., Federal Practice and
Procedure § 3733 (4th ed. 2017). The court’s jurisdiction relies on Zimmer having
been improperly joined, so it is the defendants’ burden to demonstrate the
improper joinder. See Doe v. Allied-Signal, 985 F.2d at 911. The defendants
didn’t properly alert the court as to the basis for its jurisdiction.
The defendants also left out the crucial detail that would have triggered
inquiry into fraudulent joinder at all: Zimmer’s dual citizenship. 14C Wright et
al., Federal Practice and Procedure § 3733 (“[F]or example, a notice of removal
that fails to contain an allegation of a defendant corporation’s dual citizenship—
its state of incorporation and the state of its principal place of business—is
defective when complete diversity of citizenship is the basis for removal.”). Notice
“should be sufficient if the court is provided the facts from which its jurisdiction
can be determined.” Id. But the defendants asserted diversity jurisdiction and
left out the citizenship of a party whose citizenship would have seemingly
destroyed jurisdiction. They also left out any basis for arguing that Zimmer was
improperly joined, the only cure for the court’s seeming lack of jurisdiction. Even
if the defendants’ improper joinder argument is correct, they still don’t provide
the citizenships of the limited liability company plaintiffs, which could still
destroy jurisdiction even if Zimmer US is dropped.
To put it another way, the court could have remanded this case sua sponte
on the belief that it lacks subject matter jurisdiction before the plaintiffs ever
filed their motion to remand. Tylka v. Gerber Prods. Co., 211 F.3d 445, 447 (7th
Cir. 2000); see § 1447(c). The lack of diversity, but for an un-argued fraudulent
joinder argument, was patent on the faces of the notice and complaint.
Once the defendants became aware of the defects in their notice, they
could have sought to amend it. § 1653; N. Ill. Gas Co. v. Airco Indus. Gases, 676
F.2d 270, 273 (7th Cir. 1982). They didn’t do that, so the plaintiffs moved to
remand on the obvious basis that the parties lacked complete diversity. The
plaintiffs had no reason to rebut an argument of fraudulent joinder because the
defendants didn’t raise one. The court still isn’t aware of all the citizenships of
the LLC plaintiffs.
The court is required to “interpret the removal statute narrowly and
presume that the plaintiff may choose his or her forum. Any doubt regarding
jurisdiction should be resolved in favor of the states.” Doe v. Allied-Signal, 985
F.2d at 911. To fulfill this duty and to give teeth to § 1446(a), remand is the
appropriate remedy. It might seem harsh, but the defendants still have a
perfectly good state forum.
If Zimmer US wasn’t properly joined, the best course would have been for
the defendants to challenge the joinder in state court. 14B Wright et al., Federal
Practice and Procedure § 3723, quoted in Wolf v. Kennelly, 540 F. Supp. 2d 955,
962 (N.D. Ill. 2008). If the state court agreed that the case should be severed,
then the defendants would have had another 30 days to remove. See § 1446(b)(3).
The court won’t correct these errors and still doesn’t have assurance that it has
jurisdiction to keep this case.
B. Attorney Fees and Costs
The plaintiffs also ask that the defendants cover the attorney fees and
costs associated with this motion to remand. § 1447(c) (“An order remanding the
case may require payment of just costs and any actual expenses, including
attorney fees, incurred as a result of the removal.”). The court agrees that
attorney fees and costs are appropriate here. The notice of removal was defective
on its face. “[W]henever the subject matter of an action qualifies it for removal,
the burden is on a plaintiff to find an express exception,” Breuer v. Jim’s
Concrete of Brevard, Inc., 538 U.S. 691, 698 (2003), but it’s the defendants’ job
to show that removal is proper in the first instance, Wilson v. Republic Iron &
Steel Co., 257 U.S. 92, 97 (1921). The notice of removal doesn’t show the
citizenships of the relevant entities and, if it did, this court’s lack of jurisdiction
would have been patent. If the defendants included this information, the notice
still wouldn’t convey why Zimmer US was improperly joined.
Based on the foregoing, the plaintiffs’ motion to remand [Doc. No. 12] is
GRANTED, the plaintiffs are directed to file an accurate account of the attorneys’
fees and costs associated with litigating this motion, the defendants are directed
to compensate the plaintiffs accordingly, and the Clerk is directed to remand this
case to the Kosciusko County Circuit Court.
ENTERED: May 16, 2017
/s/ Robert L. Miller, Jr.
United States District Court
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