BeneSmart, Inc. v. Total Financial Group, LLC et al
Filing
28
ORDER & REASONS: granting 14 Motion to Remand to State Court; FURTHER ORDERED that this matter is REMANDED to the 22nd Judicial District Court of St. Tammany Parish, Louisiana. Signed by Judge Carl Barbier on 12/3/12. (sek, )
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
BENESMART, INC.
CIVIL ACTION
VERSUS
NO: 12-2645
TOTAL FINANCIAL GROUP, LLC
ET AL.
SECTION: "J” (5)
ORDER AND REASONS
Before the Court are Plaintiff’s Motion to Remand (Rec. Doc.
14)
and
Defendants’
Plaintiff’s
motion
opposition
is
set
for
to
same
hearing
on
(Rec.
Doc.
22).
5,
2012.
December
Having considered the motion and legal memoranda, the record, and
the
applicable
law,
the
Court
finds
that
Plaintiff’s
motion
should be GRANTED for the reasons set out more fully below.
PROCEDURAL HISTORY AND BACKGROUND FACTS
This action arises out of claims for damages and injunctive
relief under Louisiana state law for intentional interference
with
contracts,
breach
of
contract,
defamation,
unjust
enrichment, breach of fiduciary duty, civil conspiracy, violation
of the Louisiana Unfair Trade Practices Act, and violation of the
1
Louisiana
Uniform
Plaintiff,
Trade
Bene$smart,
Secrets
Inc.,
Act.
filed
On
this
September
action
in
8,
2012,
the
22nd
Judicial District Court of St. Tammany Parish, Louisiana, naming
as defendants Total Financial Group, LLC (“TFG”), Denis Joachim,
Donna Pounds Joachim, Benjamin Roth Robertson, Joseph Anthony
Borino,
Blaine
S.
Jennings,
Thomas
S.
Perkins,
John
Martin,
Robert Levy, and Christian Griffith.
In its petition, Plaintiff alleges that it developed “a
supplemental self-funded employee benefit program for small and
mid-size
businesses
that
already
have
an
[sic]
established
Internal Revenue Code Section 105 and 125 benefit programs in
place
to
cover
companies.”
asserts
those
Petition,
that
it
expenses
Rec.
created
not
1-1,
Doc.
this
paid
p.
for
3,
overarching
by
insurance
¶
15.
Plaintiff
program,
related
documents, and employer/employee contracts for use in conjunction
with
the
program,
and
that
all
of
these
are
copyrighted.
Petition, Rec. Doc. 1-1, p. 3, ¶ 16. Plaintiff alleges that in
November 2009, it entered into an oral contract with TFG via its
registered agent Denis Joachim, for the marketing of Plaintiff’s
program. Petition, Rec. Doc. 1-1, p. 4, ¶¶ 17-18. Plaintiff
asserts that after training TFG employees (i.e. all other abovenamed defendants), providing them with confidential information,
2
and
giving
them
access
to
Plaintiff’s
trade
secrets,
the
relationship between the two parties deteriorated. Petition, Rec.
Doc. 1-1, p. 4, ¶¶ 21-22. Plaintiff asserts that the relationship
broke down as the defendants violated the aforementioned laws
through
various
diversion
of
acts
of
business
direct
funds
competition
owed
to
with
Plaintiff,
Plaintiff,
and
misappropriation of Plaintiff’s trade secrets. Petition, Rec.
Doc. 1-1, p. 4, ¶ 23. In particular, Plaintiff notes that all of
defendants’ activities were made possible by “[TFG], Joachim, and
Pounds cop[ying] and confiscat[ion of] Bene$mart’s copyrighted
documents
containing
private
and
confidential
information.”
Petition, Rec. Doc. 1-1, p. 4, ¶¶ 23-24.
Plaintiff served its petition on all defendants, except for
Thomas Perkins and Roth Robertson, between September 18, 2012 and
October 5, 2012.1 Then, on October 22, 2012, Plaintiff moved to
voluntarily dismiss defendants Levy, Borino, Martin, Griffith,
Perkins, and Robertson. Notice of Removal, Rec. Doc. 1, p. 6. On
October
24,
2012,
the
state
court
judge
signed
the
order
dismissing these defendants. Notice of Removal, Rec. Doc. 1, p.
1
TFG, Dennis Joachim, and Donna Pounds Joachim were served on September
18, 2012; Blaine Jennings on September 19, 2012; John Levy on September 20, 2012;
Joseph Borino on September 26, 2012; John Martin on October 1, 2012; and
Christian Griffith on October 5, 2012. Thomas Perkins and Roth Robertson were
never served. Notice of Removal, Rec. Doc. 1, p. 6.
3
4. Nevertheless, on October 25, 2012, Defendant Martin, with the
consent of all defendants, removed the case to federal court.
Notice of Removal, Rec. Doc. 1, p. 3. According to the Defendants
who are currently before this Court,
removed the case,
order
had
not
at the time that Martin
he had reason to believe that the dismissal
been
signed
by
the
state
court
judge
and,
therefore, that his removal was timely filed. Notice of Removal,
Rec. Doc. 1, pp. 3-4. Upon learning that the dismissal order had
actually been signed prior to removal, Martin filed a “notice of
withdrawal” in federal court, which was granted by Judge Berrigan
on November 2, 2012.2
Thereafter, the remaining Defendants, TFG,
Denis Joachim, Donna Pounds Joachim, and Benjamin Roth Robertson,
filed the instant Notice of Removal on October 31, 2012.
In
their
Plaintiff’s
Notice
state
law
of
Removal,
claims
are
Defendants
preempted
by
assert
the
that
federal
Copyright Act, 17 U.S.C. § 301 et seq., thereby giving this Court
subject matter jurisdiction. In addition, Defendants also contend
that they timely filed their notice of removal because (1) they
are entitled to an extension of time to remove under the special
removal rules in the America Invents Act, 28 U.S.C. § 1454(b)(2),
2
Notice of Removal, Rec. Doc. 1, p. 4; November 2, 2012 Order Granting
Mot. to Withdraw, Rec. Doc. 7, CV 12-2599.
4
and (2) because Plaintiff’s dismissal of the six state court
defendants was an unexpected and “bad-faith” attempt to avoid
removal,
thereby
warranting
an
extension.
In
particular,
Defendants note that the only defendants who were dismissed from
the state court action were those defendants who had been served
after
September
19,
2012,
and,
therefore,
could
still
have
removed the case to federal court within the required thirty-day
time
period.
Defendants
assert
that
Plaintiff’s
petition
indicates that all of the state court defendants would have been
equally liable to Plaintiff, and that all of the state court
defendants acted in concert to violate the aforementioned state
laws, indicating that the only reason for Plaintiff’s voluntary
dismissal of the state court defendants was to avoid removal.3
In response to the removal, Plaintiff filed the instant
Motion
to
Remand
thirteen
days
later
on
November
13,
2012.
Defendants responded on November 27, 2012.
THE PARTIES’ ARGUMENTS
In its motion, Plaintiff asserts that Defendants’ second
attempt at removal is improper because (1) it is untimely filed,
and (2) Plaintiff’s state law claims are not preempted by the
3
Defendants also point to the fact that Plaintiff had previously requested
preliminary defaults against four of them, whom it later voluntarily dismissed
as an indication that Plaintiff’s dismissal was in bad faith. Notice of Removal,
Rec. Doc. 1, p. 8 n. 3.
5
Copyright Act. In making its first argument, Plaintiff contends
that Defendants’ removal is untimely on its face, because it was
filed more than thirty days after the Defendants were served.4
Furthermore, Plaintiff claims that Defendants’ interpretation of
Plaintiff’s motives for dismissing the state court defendants is
incorrect. Plaintiff asserts that “because of the financially
crippling effects of Defendants’ own actions in diverting funds
and customers,” Plaintiff began to prosecute this suit as quickly
as possible, which is demonstrated by its immediate seeking of
injunctive relief in state court. Pl. Mem. in Supp., Rec. Doc.
14-1, p. 4. Plaintiff contends that during that process, it
reviewed
termination
letters
and
talked
to
customers
and,
therefore, was able to learn more about the full extent of the
damages. As a result, Plaintiff asserts that it determined that
certain defendants should be dismissed, which was the impetus for
the
October
22,
2012
dismissal
of
the
six
state
court
defendants.5 Furthermore, Plaintiff avers that it is actually the
Defendants who are in bad faith, because they removed the case on
4
Technically, the Plaintiff states that the removal is untimely because
it was filed “more than 30 days after commencement of the suit in state court.”
Pl.’s Mem. in Supp., Rec. Doc. 14-1, p. 4. However, since the actual rule
governing timeliness refers to the time of service upon each defendant, the Court
will assume that is what Plaintiff means when it refers to the “commencement of
the suit.” See 28 U.S.C. § 1446(b).
5
The six state court defendants were dismissed without prejudice. Pl.’s
Mem. in Supp., Rec. Doc. 14-1, p. 4.
6
October 31, 2012, the day their opposition to the preliminary
injunction was due in state court. Plaintiff asserts that the
untimely removal constituted an act of bad faith, because it was
merely
an
attempt
by
Defendants
to
delay
the
preliminary
injunction hearing that was set for November 7, 2012.
As noted, Plaintiff also challenges the jurisdictional basis
for removal. Plaintiff argues that it has not asserted an action
for copyright infringement, and that the Copyright Act does not
preempt its state law claims.
In
their
opposition,
Defendants
reurge
the
timeliness
arguments made in the Notice of Removal. In addition, they also
argue
that
substantively,
Plaintiff’s
complaint
is
properly
removed because all of Plaintiff’s state law claims are preempted
by the Copyright Act. In particular, Defendants contend that in
order for state law claims to be preempted, (1) the cause of
action must fall within the subject matter of copyright, and (2)
it must protect rights that are equivalent to the exclusive
rights of federal copyright. Defendants assert that because all
of
Plaintiff’s
claims
arise
from
the
alleged
copying
of
copyrighted material, they fall within the subject matter of
copyright. Moreover, they contend that the second prong of the
test is also satisfied for each individual cause of action.
7
DISCUSSION
A defendant may remove a civil action filed in state court
if a federal court would have had original jurisdiction over the
case. 28 U.S.C. § 1441(a). As the removing party, the defendant
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,
1412
(5th
Cir.
1995).
Because federalism concerns are inherent in removing a case from
the
state
court
system,
the
removal
statute
is
strictly
construed, and any doubt as to the propriety of removal must be
resolved in favor of remand. Manguno v. Prudential Prop. and Cas.
Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002).
The
timeliness
of
removal
is
governed
by
28
U.S.C.
§
1446(b). This statute creates a thirty-day time limit for removal
which begins when the defendant is served with, or otherwise
receives, the initial complaint. 28 U.S.C. § 1446(b)(1). When an
action is removed solely under Section 1441(a), all defendants
must consent to the removal. Id. § 1446(b)(2)(A). Likewise, when
there are multiple defendants in a suit, each individual has
thirty days after they have been served to file a notice of
removal. Id. § 1446(b)(B). “If defendants are served at different
times, and a later-served defendant files a notice of removal,
8
any earlier-served defendant may consent to the removal even
though that earlier-served defendant did not previously initiate
or consent to removal.” Id. § 1446(b)(C). While the thirty-day
time
limitation
is
procedural,
rather
jurisdictional,
and,
therefore, may be waived by the parties, without such a waiver,
“failure to petition for removal within thirty days may render
removal improvident.” Brown v. Demco, Inc., 792 F.2d 478, 481
(5th Cir. 1986). “In the absence of waiver of the time limit by
the plaintiff, or some equitable reason why that limit should not
be applied . . . a defendant who does not timely assert the right
to
remove
loses
that
right.”
Id.
A
plaintiff
may
waive
the
thirty-day time limit by failing to file a motion to remand
within thirty days after the notice of removal is filed. See 28
U.S.C.
§
1447(c).
The
United
States
Fifth
Circuit
Court
of
Appeals has stated that where “exceptional circumstances” exist,
they may merit an extension of time to remove. Getty Oil Corp. ,
a Div. of Texaco, Inc. v. Ins. Co. of North America, 841 F.2d
1254, 1263 n.12 (5th Cir. 1988) (citing Brown, 792 F.2d at 481).
Likewise, 28 U.S.C. § 1454(b)(2), which governs the removal of
copyright actions, states that “the time limitations contained in
section 1446(b) may be extended at any time for cause shown.” 28
U.S.C. § 1454(b)(2).
9
In
the
extension
instant
outlined
in
matter,
28
Defendants
U.S.C.
§
argue
1454(b)(2)
that
and
both
the
the
Fifth
Circuit “exceptional circumstances” exception to the thirty-day
time period apply. The Court is not convinced.
With regard to Defendants’ argument under the “exceptional
circumstances” exception, the Court looks to the reasoning in
Ortiz v. Young, 431 Fed. Appx. 306 (5th Cir. 2011) and Grand
Texas Homes, Inc. v. American Safety Indem. Co., No. 12-1773,
2012 WL 5355958 (N.D. Tex. October 30, 2012).6 In Ortiz, when
discussing the exception, the court noted that it would likely
apply in situations where (1) the plaintiff had acted in bad
faith
to
prevent
the
defendant
from
removing
and
(2)
where
removal was necessary to prevent injustice. Id. at 307-08 (citing
Doe v. Kerwood, 969 F.2d 165, 759 (5th Cir. 1992);
Brown, 792
F.2d at 482). The court noted that the defendant in that case had
6
The Court looks to these decisions rather than the published Fifth
Circuit decisions of Brown and Getty Oil Corp., because, while those cases
clearly state that the “exceptional circumstances” exception exists, they do not
go into detailed discussion as to what type of circumstances might actually
warrant the application of the exception. Likewise, although the Fifth Circuit
case of Gillis v. Louisiana, 294 F.3d 755 (5th Cir. 2002), does apply the rule
in that case, the circumstances under which it was applied are so unique that no
general analogy to this case can be drawn. See id. at 759. (noting that the rule
applied where a board of individuals that was required to consent to removal
needed to meet before the thirty-day deadline to approve the consent to remove,
attempted to meet but could not, a plaintiff in the case was actually a member
of the board, the board informally authorized someone to consent —who did provide
consent, and the board eventually ratified that individual’s conduct anyway).
10
not provided the court with any explanation of how the plaintiff
had interfered with his ability to remove and/or what injustice
would be prevented by allowing him to remove. Ortiz, 431 Fed.
Appx.
at
308.
Therefore,
the
court
found
that
there
was
no
exceptional circumstance present that warranted an extension of
the thirty-day time period. Id. Likewise, in Grand Texas Homes,
Inc., the court, interpreting Getty Oil, Inc., found that the
exceptional circumstances exception did not apply where there was
no
indication
that
“plaintiff’s
conduct
contributed
to
defendant’s failure to properly remove.” Grand Texas Homes, Inc.,
2012
WL
5355958
at
*2
n.
2.
The
court
reiterated
that
the
exception was extremely limited. Id.
In the instant case, although Defendants do allege that
Plaintiff’s conduct was in bad faith and contributed to their
failure to remove, the Court does not find that they have met
their burden of showing that the circumstances in this case were
truly
exceptional.
Plaintiff’s
First,
dismissals
were
although
in
bad
Defendants
faith,
the
allege
that
Plaintiff
has
plausibly argued that based on information learned in the process
of discovery, the dismissals were warranted. In particular, the
Court notes that while the Defendants argue that there was no
reason to differentiate between the state court defendants other
11
than their respective service
dates,
a reading of the petition
reveals that Plaintiff’s allegations are primarily lodged against
TFG, Denis Joachim, and Donna Pounds Joachim, three of the four
remaining
Defendants;
these
Defendants
allegedly
acted
in
distinct leadership roles during the conspiracy. Specifically,
Plaintiff asserts that TFG is the actual contracting party, that
Denis
Joachim
is
the
registered
agent
who
contracted
with
Plaintiff on TFG’s behalf, and that Donna Pounds Joachim is the
overall manager of the company. Petition, Rec. Doc. 1-1, pp. 2,
4, ¶¶ 2-4, 17-21. In fact, with regard to the copyright claims
that provide the basis for Defendants’ removal of the suit, only
these three defendants are the only defendants alleged to have
copied any of the copyrighted materials. Petition, Rec. Doc. 1-1,
p. 4, ¶ 23 (“In furtherance of this scheme, [TFG], Joachim and
Pounds copied and confiscated Bene$mart’s copyrighted documents
containing private and confidential information for use by them
and
the
remaining
defendants
in
their
competing
business.”).
While the petition does not necessarily indicate that the last
remaining Defendant,
Blaine S. Jennings, played any unique role
in the conspiracy when compared to the dismissed state court
defendants, there is also no reason for this Court to believe
that
Plaintiff’s
discovery
did
12
not
reveal
information
that
indicated
that
defendant
in
Mr.
this
Jennings
suit.
was
As
the
such,
only
the
proper
Court
finds
employeethat
the
Defendants have failed to show that Plaintiff’s actions were in
bad faith.
Moreover, while it is certain that Plaintiff’s voluntary
dismissal
of
the
state
court
defendants
interfered
with
the
ability of those dismissed defendants to remove this suit to
federal court, Defendants have not provided the Court with any
evidence that prior to the expiration of their own individual
thirty-day time periods, the Plaintiff took actions to prevent
them
from
removing
the
suit.
Each
Defendant
that
currently
remains in this suit could have easily removed the suit prior to
the thirty-day deadline.
fact
that
Defendants
Aside from one small reference to the
were
researching
removal,
the
named
Defendants have not indicated why they sat on their rights and
merely waited for the later- served state court defendants to
remove. Notice of Removal, Rec. Doc. 1, p. 7. Therefore, the
Court
finds
that
the
instant
case
does
not
present
the
“exceptional circumstances” that would warrant an extension of
the thirty-day time period.
In
addition
to
their
arguments
under
the
exceptional
circumstance exception, Defendants also argue that 28 U.S.C. §
13
1454(b)(2) provides Defendants with grounds for their untimely
filing. In particular, Defendants argue that they “have shown
cause” for this Court to grant them an extension of time to file
by demonstrating that they would have been able to timely remove
if the Plaintiff had not dismissed the later-served state court
defendants.
The
Court
finds
this
reason
for
requesting
an
extension unpersuasive. While Defendants’ explanation certainly
demonstrates to the Court how the Defendants could have timely
filed, it does not demonstrate to the Court why these individual
Defendants did not timely file, i.e. why they needed an extension
of their own individual thirty-day filing deadlines. Essentially,
Defendants’
explanation
does
not
show
the
Court
what
cause
necessitated the Defendants’ reliance on the later-served state
court defendants in the first place.7 As such, the Court finds
that
Defendants
have
failed
to
timely
file
their
Notice
of
Removal and, therefore, that the instant case should be remanded
to state court. Accordingly,
IT IS HEREBY ORDERED that the Plaintiff’s motion is GRANTED.
7
To the extent that Defendants might argue that they needed more time to
research removal, the Court notes that the face of Plaintiff’s state court
petition clearly indicates that copyrighted material may be at issue in this
case. As such, the Defendants were on notice from day one that removal might be
warranted, and that it was necessary for them to diligently research the issue.
Thirty days was assuredly enough time to conduct that research.
14
IT IS FURTHER ORDERED that the above-captioned matter is
REMANDED to the
22nd Judicial District Court of St. Tammany
Parish, Louisiana.
New Orleans, Louisiana this 3rd day of December, 2012.
____________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
15
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