Jefferson, et al v. American Sugar Refining, Inc., et al

Filing 177

ORDER AND REASONS. It is ORDERED that Plaintiffs' 165 Motion to Remand is GRANTED. It is ORDERED that the Court declines to exercise supplemental jurisdiction over this matter and hereby REMANDS the matter back to the Civil District Court for the Parish of Orleans, State of Louisiana. It is FURTHER ORDERED that Plaintiffs' 164 Motion to Remand is DENIED as MOOT. Signed by Judge Carl Barbier. (Attachments: # 1 Remand Letter) (gec)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

JOANIE L. JEFFERSON, ET AL.

CIVIL ACTION

VERSUS

NO: 10-4442

AMERICAN SUGAR REFINING,
INC., ET AL.

SECTION: “J” (4)

ORDER AND REASONS
Before the Court are two Motions to Remand (Rec. Docs.
164 and 165) filed by Joanie Jefferson, Adraine Georges, Derrie
Jefferson, Ryan Jefferson, Thomas Jefferson IV, Kevin Jefferson,
Brad Jefferson and Lisa Williams (“Plaintiffs”), and an opposition
thereto (Rec. Doc. 174) filed by Defendant Certain Underwriters at
Lloyd’s, London (“Lloyd’s”). Having considered the motion and
legal memoranda, the record, and the applicable law, the Court
finds that this case should be REMANDED to state court.
FACTS AND PROCEDURAL BACKGROUND
This case dates back to October 16, 2007, when Plaintiffs
first brought suit against multiple defendants in Louisiana state
court alleging that Thomas Jefferson, Jr. died as a result of
exposure to asbestos.

(Rec. Doc. 1-1 at 1-4.) The original

petition alleged that Mr. Jefferson’s asbestos exposure occurred
through his occupation and named Lykes Brother Steamship (“Lykes”)
as one of Mr. Jefferson’s employers.
1

Id. at 3-4, 20.

On or around

December 3, 2009, Plaintiffs filed a First Supplement and Amendment
to

the

Original

Petition

naming

Hartford

(“Hartford”) as a liability insurer for Lykes.

Indemnity
Id. at 29.

Company
On or

about November 4, 2010 Plaintiffs filed a Second Supplement and
Amendment to the Original Petition naming Lloyd’s as a defendant
insurer of Lykes, and identifying the companies they alleged to
have underwritten insurance policies to Lykes: Economic Insurance
Company Limited; Fine Art & General Insurance Company Limited;
National

Provincial

Insurance

Company

Limited;

the

Assurance Company’ and British Law Insurance Company.

Edinburgh
(Rec. Doc.

174 at 1-2.) 1
Later, two entities, Industrial Development Corporation of
South Africa, Ltd. (“IDC”) and South African Marine, were added as
third party defendants.

(Rec. Doc. 174 at 2.)

IDC then removed

the case to this Court under the Foreign Sovereign Immunities Act.
(Rec. Doc. 160 at 3.)
Following

removal,

the

case

was

transferred

to

Eastern

District of Pennsylvania as part of the MDL No. 875 pending in
that court.

(See Rec. Doc. 46 at 1-2.)

That court granted summary

judgment in favor of IDC and South African Marine, exercised
supplemental jurisdiction over the case, and transferred it back

1

To the Best of the Court’s knowledge, the Second Supplement and Amendment to
the Original Petition is not filed in the record. Therefore, the Court relies
on references to it by Lloyd’s in its memorandum, which Plaintiffs do not
dispute.

2

to this Court.

(Rec. Doc. 160 at 3.)

Thereafter, more defendants

were dismissed by way of settlement until Lloyd’s was the sole
remaining defendant.

(See Rec. Doc. 150.)

This Court then

declined to exercise supplemental jurisdiction and remanded the
matter to Louisiana state court.
Lloyd’s

appealed

the

Id.

remand,

arguing

that

jurisdiction exists between itself and Plaintiffs.
at 3.)

diversity

(Rec. Doc. 160

The United States Court of Appeals for the Fifth Circuit

vacated this Court’s order and remanded the case back to this Court
to determine whether diversity jurisdiction exists.

Jefferson v.

Certain Underwriters at Lloyd’s London, 658 F. App’x 739, 741 (5th
Cir. 2016).
LEGAL STANDARD
A defendant may remove a civil action filed in state court if
a federal court would have had original jurisdiction over the
action. See 28 U.S.C. § 1441(a). The district courts have original
jurisdiction over cases involving citizens of different states in
which the amount in controversy exceeds $75,000, exclusive of
interest or costs. 28 U.S.C. § 1332(a)(1).

The Court only has

jurisdiction under 28 U.S.C. § 1332 when “complete diversity”
exists.
1968).

See Harrison v. Prather, 404 F.2d 267, 272 (5th Cir.
“The concept of complete diversity requires that all

persons on one side of the controversy be citizens of different
states than all persons on the other side.”
3

Id.

The removing

party bears the burden of proving by a preponderance of the
evidence that federal jurisdiction exists at the time of removal.
De Aguilar v. Boeing Co., 47 F.3d 1404, 1409 (5th Cir. 1995).
Ambiguities are construed against removal and in favor of remand
because removal statutes are to be strictly construed.

Manguno v.

Prudential Prop. & Cas. Ins., 276 F.3d 720, 723 (5th Cir. 2002).
The jurisdictional facts supporting removal are examined as
of the time of removal.
880,

883

(5th

Cir.

Gebbia v. Wal-Mart Stores, Inc., 233 F.3d

2000).

When

a

case

is

removed

based

on

diversity, the case must have been removable at the time it was
filed in state court, meaning that post-filing changes in a party’s
citizenship will not convert a nonremovable case into a removable
one. Gibson v. Bruce, 108 U.S. 561, 563 (1883). However, even when
a case is initially nonremovable, it may later become removable
through

the

dismissal

of

all

nondiverse

parties.

Estate

of

Martineau v. ARCO Chem. Co., 203 F.3d 904, 910 (5th Cir. 2000);
Walk Haydel & Assocs., Inc. v. Coastal Power Prod. Co., 934 F.
Supp. 209, 212 (E.D. La. 1996).
DISCUSSION
The question before the Court is whether complete diversity
existed between Plaintiffs and Lloyd’s at the time this case was
originally

removed. 2

See

Jefferson,

2

658

F.

App’x

at

743.

Lloyd’s does not contest that the amount in controversy is satisfied in this
case. (Rec. Doc. 174 at 3.)

4

Plaintiffs argue that Lloyd’s has failed to demonstrate that the
parties were completely diverse at the time of removal.

Lloyd’s

counters that it has satisfied the requirements of diversity
jurisdiction in this case.

Plaintiffs were citizens of Louisiana,

Texas, and Wisconsin when they filed their original petition.
(Rec. Doc. 1-1 at 19.)

Therefore, in order to have achieved

diversity, Lloyd’s must demonstrate that it is not a citizen of
any of those three states.
Plaintiffs’ suit is a direct action against Lloyd’s as the
insurer of Lykes; Lykes was not a party defendant in this case.
See Evanston Ins. Co. v. Jimco, Inc., 844 F.2d 1185, 1188 (5th
Cir. 1988) (“The Louisiana Direct Action Statute permits an injured
party to sue the insurer of the person against whom he asserts a
claim.”) In direct action scenarios, there are three ways by which
an insurer obtains citizenship.

First, the insurer is deemed a

citizen of each state where its insured is a citizen.
§ 1332(c)(1)(A).

28 U.S.C.

Second, the insurer is deemed a citizen of every

state where it has been incorporated.

§ 1332(c)(1)(B).

Finally,

the insurer is deemed a citizen of each state where it has its
principal place of business.

§ 1332(c)(1)(C).

Therefore, it is

necessary to determine the citizenship of Lloyd’s and also the
citizenship of its insured, Lykes.

5

Each will be discussed below.

Citizenship of Lykes
The Court will first determine whether Lykes, as the insured
of Lloyd’s, was a citizen of Louisiana, Texas, or Wisconsin at the
time of removal.

Plaintiffs’ original petition named Lykes as an

employer of the decedent Thomas Jefferson.

Plaintiffs’ Second

Supplement and Amendment to the Original Petition named Lloyd’s as
a defendant as insurer for Lykes.
citizen

of

every

1332(c)(1)(A).

state

in

Therefore, Lloyd’s is deemed a

which

Lykes

is

a

citizen.

§

Lloyd’s argues, and Plaintiffs do not dispute,

that Lykes’ citizenship is determined for diversity purposes on
the date of Plaintiffs’ original complaint, October 16, 2007.

See

Thompson v. Greyhound Lines, Inc., 574 F. App’x 407, 408 (5th Cir.
2014) (“Diversity Jurisdiction is based on the facts at the time
of filing.”)
Lykes

experienced

numerous

organizational

changes

in

the

years leading up to October 16, 2007, and this history is important
for determining whether Lykes was a citizen of Louisiana, Texas,
or

Wisconsin

when

Plaintiffs

filed

their

original

petition.

Lloyd’s avers, and Plaintiffs do not dispute, that Lykes filed for
Chapter 11 reorganization in 1995.

On February 24, 1997, the

bankruptcy court approved a bid by CP Ships, Ltd. (“CP Ships”), a
Canadian company, to purchase the assets of Lykes.
175-5.)

(See Rec. Doc.

In April of 1997, the bankruptcy court approved the

creation of a Tort Claims Trust that was created and organized in
6

Florida, and directed that all tort claims be channeled through
this Trust.

(Rec. doc. 175-6 at 7, 62-63.) 3

Lloyd’s argues that CP Ships’ purchase of Lykes resulted in
the assets of the company being owned by a Canadian company.
Lloyd’s further argues, and Plaintiffs do not dispute, that in
2005 a multi-national company called TUI AG purchased CP Ships.
Lloyd’s asserts that TUI AG was headquartered in Germany.

TUI AG

subsequently

German

merged

with

transportation company.

Hapag-Lloyd,

which

is

a

(See Rec. Doc. 175-4 at 328.)

The Court finds the undisputed evidence presented by Lloyd’s
is

sufficient

Louisiana,

to

Texas,

establish
or

that

Wisconsin

Lykes
when

was

not

a

Plaintiffs

citizen
filed

of

their

original complaint.
Citizenship of Lloyd’s
The next inquiry is whether Lloyd’s was incorporated or had
its principal place of business in Louisiana, Texas, or Wisconsin.
See 28 U.S.C. § 1332(c)(1)(B)-(C).
the

nature

insurance

of

underwriting

company

but

at

rather

This issue is complicated by

Lloyd’s.
a

Lloyd’s

self-regulating

operates and controls an insurance market.”

“is
entity

an

which

Corfield v. Dallas

Glen Hills LP, 355 F.3d 853, 857 (5th Cir. 2003).

3

not

“Thus, a

Lloyd’s argues that because of the bankruptcy, Lykes was a “nominal entity”
by the time Plaintiffs filed their original Petition. Therefore Lloyd’s argues
that Lykes’ citizenship should not be considered when determining Lloyd’s’
citizenship. Lloyd’s does not cite to any authority to support this position.

7

policyholder insures at Lloyd’s but not with Lloyd’s.”
(emphasis in original).

Id. at 858

The underwriting itself is actually done

by members or investors who are referred to as “Names.”
Name

is

exposed

to

unlimited

personal

Id.

liability

for

“Each
his

proportionate share of the loss on a particular policy that the
Name has subscribed to as an underwriter.”

Id.

In this case, Plaintiffs allege that five different Names
underwrote the policies issued to Lykes. These Names are: Economic
Insurance Company Limited; Fine Art & General Insurance Company
Limited;

National

Provincial

Insurance

Company

Limited;

the

Edinburgh Assurance Company; and British Law Insurance Company.
(Rec. Doc. 174 at 6.)

Therefore, the citizenship of all five Names

is relevant in this case.

See Corfield, 355 F.3d at 864.

To establish diversity jurisdiction, Lloyd’s must demonstrate
that complete diversity exists between Plaintiffs and all five
Names alleged by Plaintiffs to have underwritten policies for
Lykes.

See Johnson v. Certain Underwriters at Lloyd's London, 09-

2495, 2009 WL 3232006, at *3 (E.D. La. Oct. 2, 2009) (“Federal
courts across the nation have agreed, though through different
rationales, that when determining the diversity of citizenship of
the parties in a case involving Lloyd's of London, all the “names”
must be taken into consideration.”) (collecting cases); Certain
Underwriters

at

Lloyd's

London

Subscribing

to

Policy

No.

B066421355A04 v. Washington, 09-3195, 2009 WL 5215927, at *4 (E.D.
8

La. Dec. 28, 2009) (“[T]his Court agrees with [the] multiple other
jurists of the Eastern District of Louisiana and other Circuit
Courts that the citizenship of the Names, as the real parties to
the controversy, must be considered for purposes of diversity of
citizenship

jurisdiction.”);

Advanced

Sleep

Center,

Inc.

v.

Certain Underwriters at Lloyd’s London, 14-592, 2015 WL 4097069,
at *2 (E.D. La. July 7, 2015) (requiring complete diversity to
exist between plaintiffs and all Names listed in defendant’s notice
of removal).

Lloyd’s has failed to make such a showing.

Instead,

Lloyd’s only discusses the citizenship of Edinburgh Assurance
Company (“Edinburgh”).

Lloyd’s avers that Edinburgh was organized

in the United Kingdom, and that its principal place of business is
also the United Kingdom.
the

citizenship

of

the

However, Lloyd’s does not once mention
other

four

Names

underwritten the policies issued to Lykes.

alleged

to

have

This is not sufficient

to establish complete diversity.
CONCLUSION
Accordingly,
IT IS HEREBY ORDERED that Plaintiffs’ Motion to Remand (Rec.
Doc. 165) is GRANTED.
IT IS FURTHER ORDERED that the Court declines to exercise
supplemental jurisdiction over this matter and hereby REMANDS the
matter back to the Civil District Court for the Parish of Orleans,
State of Louisiana.
9

IT IS FURTHER ORDERED that Plaintiffs’ Motion to Remand (Rec.
Doc. 164) is DENIED as MOOT.
New Orleans, Louisiana this 7th day of March, 2017.

____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE

10