Dufrene v. Petco Animal Supplies Stores, Inc et al

Filing 22

OPINION Adopting 12 Report and Recommendations of the U.S. Magistrate Judge, IT IS ORDERED that the 6 Motion to Remand filed by Deborah Dufrene is DENIED....This case is referred back to the magistrate judge to set ascheduling conference and such other orders which may be required.. Signed by Judge Frank J. Polozola on 08/23/2012. (KDC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
DEBORAH DUFRENE
CIVIL ACTION
VERSUS
NO. 12-1-FJP-DLD
PETCO ANIMAL SUPPLIES STORES,
INC., ET AL

O P I N I O N
This

matter

is

before

the

Court

on

the

Report

and

Recommendations1 of the Magistrate Judge recommending the Court
grant the Motion to Remand2 filed by the Plaintiff Deborah Dufrene.
Defendant

Petco

Animal

Supplies

Stores,

Inc.

("Petco")3

and

Defendant Spring Park Property Owner, LLC ("Spring Park")4 both
filed oppositions to the report and recommendations.
held

oral

argument

on

the

motion

to

remand,

the

The Court
report

and

recommendations, and the opposition thereto on May 15, 2012.
Thereafter, the Court ordered the parties to supplement their
briefs on various issues.

Considering all of the briefs submitted

by the parties and the arguments of counsel heard at oral argument,
1

Rec. Doc. No. 12.

2

Rec. Doc. No. 6.

3

Rec. Doc. Nos. 13 & 20.

4

Rec. Doc. Nos. 14 & 21.

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the Court refuses to adopt the report and recommendations of the
magistrate judge and denies the motion to remand based on the law
and facts of this case.

I.

Factual Background
In March of 2009, Plaintiff slipped and fell in the parking

lot of a Petco store as she was exiting her vehicle.

On August 19,

2009, Plaintiff filed this lawsuit in state court wherein she
stipulated that her claim for damages did not exceed $75,000.
Thereafter, Plaintiff amended her petition on February 5, 2010, to
join Spring Park as a defendant but again stipulated that her
damages did not exceed $75,000.
2010,

and

her

testimony

Plaintiff was deposed on July 8,

disclosed

she

suffered

a

previously

existing neck injury for which she underwent a procedure relieving
her of approximately 70% of her pain.
In November of 2010, Plaintiff sent a settlement demand to
Spring Park (but for reasons unknown to the Court did not send the
settlement letter to Petco) in which she agreed to settle for
$195,000.

Spring Park responded by letter to Plaintiff's offer

stating it would not engage in any settlement negotiations for a
figure of more than two and one-half times the amount of damages
stipulated to in the petition.

On December 7, 2011, more than one

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year later, Plaintiff amended her petition, alleging for the first
time that her damages exceeded $75,000. Within 30 days of the date
Plaintiff filed her amended petition, Petco filed a notice of
removal on the basis of diversity jurisdiction (28 U.S.C. § 1332)
to which Spring Park also consented.
Plaintiff timely moved to remand this case to state court
arguing the notice of removal was untimely and barred by the oneyear rule set forth in 28 U.S.C. § 1446(b).

Plaintiff contends in

her motion that the Defendants simply failed to properly evaluate
her claim while having sufficient information to do so, including
having her deposition testimony and medical release forms, which
should have put Defendants on notice that Plaintiff's claims could
exceed $75,000.
Defendants argue they were barred from removing the case based
on Plaintiff's allegations in the original and first amended
petitions in which she stipulated that her claim did not exceed
$75,000.

Defendants also contend Plaintiff engaged in forum

manipulation by concealing the true value of her claim for over a
year by waiting to amend her petition to state that the amount in
controversy exceeds $75,000 after the one-year time limitation
expired.

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II.

Law and Analysis
A.

Motion to Remand

Under 28 U.S.C. § 1446(b), a party may remove a case to
federal court based on diversity jurisdiction within 30 days of
receipt of the initial pleading or, if the initial pleading is not
removable, within 30 days of receipt of an amended pleading,
motion, order, or other paper from which it is ascertained that the
case has become removable.
which

later

becomes

A case not initially removable, but

removable,

may

not

be

removed

based

on

diversity jurisdiction more than one year after commencement of the
action.5

This rule is commonly referred to as the "one-year rule"

and runs from the date the lawsuit is filed.6
On a motion to remand, it is the burden of the defendant to
establish

the

controversy.7

existence

of

federal

jurisdiction

over

the

Because this case was filed on August 19, 2009, and

removed on January 3, 2012, the notice of removal is untimely
unless Defendants can establish that they are entitled to an
exception to the one year rule.

Both Defendants argue they are

5

28 U.S.C. § 1446(b); Johnson v. Heublein, Inc., 227 F.3d 236,
241 (5th Cir. 2000).
6

La. Code Civ. P. Art. 421.

7

Winters v. Diamond Shamrock Chem. Co., 149 F.3d 387, 397 (5th
Cir. 1998).
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4

entitled to application of the equitable exception as held by the
Fifth Circuit in Tedford v. Warner-Lambert Co.8 and more recently
in Brower v. Staley, Inc.9
In Tedford, the Fifth Circuit noted that, "Section 1446(b) is
not inflexible, and the conduct of the parties may affect whether
it is equitable to strictly apply the one-year limit."10

The court

continued:
In enacting § 1446(b), Congress intended to "reduc[e]
opportunity for removal after substantial progress has
been made in state court."11 Congress may have intended
to limit diversity jurisdiction, but it did not intend to
allow plaintiffs to circumvent it altogether.
Strict
application of the one-year limit would encourage
plaintiffs to join nondiverse defendants for 366 days
simply to avoid federal court, thereby undermining the
very purpose of diversity jurisdiction.12
B.

Plaintiff's Deposition

Plaintiff contends that her deposition testimony and medical
records,

which

she

voluntarily

provided

to

and

were

in

the

possession of the Defendants, constitute "other paper" which should
have sufficiently put Defendants on notice that Plaintiff's damages
8

327 F.3d 423 (5th Cir. 2003).

9

306 Fed. Appx. 36, 2008 WL 5352019 (5th Cir. Dec. 23, 2008).

10

Tedford, 327 F.3d at 426 (citations omitted).

11

Id. at 427, citing H.R.Rep. No. 889, at 72(1988), reprinted
in 1988 U.S.C.C.A.N. 5982, 6032.
12

Id. (citations omitted).

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exceeded $75,000. Plaintiff further contends Defendants had copies
of her doctor's notes which indicated that her neck pain had been
asymptomatic for twenty years.

Plaintiff argues that Defendants'

characterization of her neck pain as "chronic" is not supported by
the medical records because the exacerbation of a twenty-year old
asymptomatic neck injury cannot be considered chronic.
Petco

interprets

differently.

Plaintiff's

July

8,

2010

deposition

Petco contends the Plaintiff's deposition revealed

that, in addition to having undergone an outpatient surgical
procedure for the injury allegedly sustained at Petco, Plaintiff
also had an extensive prior history of low back pain and neck
problems for which she had previously undergone surgery on both her
lumbar and cervical spine prior to the Petco accident.

For this

reason, Petco agreed with Plaintiff's original and amended petition
that her damages for this accident did not exceed $75,000.
Both Defendants also note that Plaintiff's counsel waited well
over a year after the date of the deposition to amend her petition
to change the allegation that her damages were not limited to
$75,000.

While

Plaintiff

contends

the

information

in

her

deposition served as notice to the Defendants that Plaintiff's case
was worth more than $75,000, the Court is concerned why the
Plaintiff did not amend her petition when her deposition was taken

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and transcribed rather than waiting 16 months to amend the petition
to reflect her damages exceeded $75,000.

At oral argument,

Plaintiff's counsel represented that he did not determine his
client's claims exceeded $75,000 until late August or September of
2010, yet gave no reason why he waited over one year to amend the
petition.

The Court can assume from Plaintiff's failure to amend

her petition when she received her deposition that the reason was
to prevent Defendants from removing the case by letting the one
year limitation pass.
Defendants argue that the trigger for the 30-day removal
period was the date the Plaintiff amended her petition, not the
July 8, 2010 deposition or the settlement demand letter sent only
to Spring Park.

While the Fifth Circuit held in S.W.S. Erectors,

Inc. v. Infax, Inc.13 that deposition testimony could constitute
"other paper" under Section 1446(b), Petco contends the information
in the deposition was not unequivocally clear and certain to start
the time limit to file a notice of removal.14

Defendants assert

that while the July 8, 2010 deposition may have suggested the
possibility of damages in excess of $75,000, it did not clearly and
unequivocally express such a conclusion.
13

Defendants argue this

72 F.3d 489 (5th Cir. 1996).

14

See Bosky v. Kroger Texas, LP, 288 F.3d 208, 210-211 (5th
Cir. 2002).
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contention

is

supported

by

petition for over 16 months.

Plaintiff's

failure

to

amend

her

Defendants also argue that in S.W.S.

Erectors, the deposition was held to constitute "other paper,"
because the plaintiff had expressly stated that its claim at issue
exceeded the jurisdictional amount. Such a declaration was not set
forth in the deposition of Dufrene.

During Dufrene's deposition,

she made no representation on the amount of damages she was
seeking.
Additionally, Petco contends that even if its defense counsel
could have arguably concluded that Plaintiff's claims exceeded
$75,000, this conclusion was still insufficient to trigger the
removal period.

The jurisprudence is clear that the defendant's

subjective knowledge does not convert a case into a removable
action.15

The holding in S.W.S. Erectors makes it clear that the

thirty-day period to remove is only triggered by a voluntary act of
the Plaintiff.16
C.

Settlement Demand Letter

Should the Court find Plaintiff's deposition testimony and
medical

records

not

"unequivocally

clear

and

certain"

as

to

constitute "other paper," Plaintiff contends the settlement demand
15

S.W.S. Erectors, 72 F.3d at 494, citing Chapman, 969 F.2d at

16

Id.

163.

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letter of November 18, 2010 most definitely is.

Plaintiff points

out that the demand letter included an itemized list of her medical
expenses, which at that time amounted to $42,000. Plaintiff argues
that because this demand letter clearly and unequivocally expressed
that her damages exceeded $75,000, Defendants had 30 days from the
date of this letter to remove the case to federal court.
Petco contends that if the settlement demand does constitute
"other paper," the letter still did not trigger the thirty-day
period as to Petco because Plaintiff did not send a copy of this
settlement demand letter to Petco.

Petco contends, and the Court

agrees, that Spring Park's receipt of the settlement demand had no
affect on Petco's ability to ascertain the value of the claim
because Petco was unaware of the content of the letter and thus
could not exercise its right to remove the case to federal court.
Petco also contends Plaintiff's amended petition claiming damages
in excess of $75,000 was the only "other paper" which Petco had
notice of which was unequivocally clear and certain as to the
amount in controversy and which triggered the thirty-day removal
period.
The Court must note that, while Plaintiff clearly alleges
Spring Park had notice of the amount of the claim upon receipt of
this letter, Plaintiff completely fails to respond to Petco's

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argument that it had no knowledge of the contents of the demand
letter Plaintiff sent to Spring Park. The Court finds Petco cannot
be held responsible for the information set forth in the letter,
and Plaintiff has failed to provide, nor could the Court find, any
jurisprudence to support Plaintiff's contention.
Spring Park argues that upon receipt of the settlement demand
letter, it refused to engage in settlement negotiations well above
the amount to which Plaintiff had stipulated in her petition.
Spring Park also argues that contrary to the arguments made by
Plaintiff's counsel, the Plaintiff's deposition actually disclosed
causation issues based on Plaintiff's pre-existing injuries which
justified a conclusion that Plaintiff's claims were less than
$75,000.

Spring Park argues that if Plaintiff's counsel had such

a "concrete" belief following Plaintiff's deposition that her
damages clearly exceeded $75,000, there is no other plausible
explanation for his failure to amend the petition until after the
one-year limitation other than to deprive Defendants of their right
to remove the case to federal court.
Spring Park concedes that in some instances, courts have found
demand letters to be "other paper" sufficient to commence the
thirty-day period for removal. However, Spring Park contends that,
considering all relevant facts and circumstances in this particular

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case, the demand letter was not sufficient as a matter of law to
begin the thirty-day removal period.

When Spring Park received a

demand letter seeking $195,000, which was more than two and a half
times the stipulated amount of damages in Plaintiff's petition,
Spring

Park

evaluation

simply

of

disregarded

Plaintiff's

the

medical

letter

records

based
and

her

on

its

own

deposition

transcript and the amount of stipulated damages set forth in the
petition to which Plaintiff was bound.
Spring Park argues that at the time of Plaintiff's demand
letter, Plaintiff could not have legally recovered more than
$75,000 under Louisiana law.

Spring Park asserts it had the right

to rely upon the "not more than $75,000 language" in Plaintiff's
petition in analyzing its own potential exposure at trial. It also
had the right to rely on the Plaintiff's medical records and
deposition testimony in evaluating any potential settlement offer.
The Court must wonder why Spring Park would engage in settlement
discussions in an amount far above its maximum exposure at trial.
Spring Park contends its counsel made it clear to Plaintiff's
counsel

that

Spring

Park

would

not

engage

in

settlement

negotiations so far outside the scope of the maximum damages
stipulated to in Plaintiff's petition of $75,000 which is less than
the amount required to give the Court subject matter jurisdiction

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under 28 U.S.C. § 1332.
D.

Equitable Tolling

Plaintiff contends she did not act in bad faith nor did she
in any way engage in forum manipulation by waiting almost 16 months
to amend her petition to seek damages greater than $75,000.
Plaintiff further contends that Defendants have failed to

present

any evidence of bad faith which would justify the application of
equitable tolling in this case.
The Defendants strongly disagree with Plaintiff's contentions.
Defendants argue that the one-year period set forth in 28 U.S.C. §
1446(b) began when the suit was filed, but was tolled because of
Plaintiff's manipulation of the amount in controversy.
agrees as does the jurisprudence.

The Court

Petco relies on the Fifth

Circuit's ruling in Tedford17 and which was later explained in
Brower v. Staley, Inc.18 In Brower, the plaintiff filed suit after
a car accident in state court claiming damages less than $75,000.
After receiving Brower's discovery responses indicating some doubt
about this $75,000 limit, the defendant removed the case to federal
court.

Brower moved to remand on the basis that the defendant had

not established that the amount in controversy exceeded $75,000.

17

supra.

18

306 Fed. Appx. 36.

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The court granted this motion.19 Less than two months later, Brower
amended his complaint to seek damages in excess of $75,000.

The

defendant again removed the case to federal court, and Brower's
second motion to remand was denied.20 The court found that, because
Brower did not advise the defendant of a particular surgery until
after

the

one-year

removal

limit

had

expired,

an

equitable

exception to Section 1466(b)'s one-year limit applied under the
facts of this case.21
The Court agrees that Brower is applicable to the case at bar.
As Petco points out, it was facially apparent that the value of
Plaintiff's claim set forth in her petition did not meet the amount
in controversy at the time she filed suit.

Counsel claims he

recognized that Plaintiff's claims exceeded $75,000 some time in
August or September of 2010, but failed to file an amended petition
to reflect the damages exceeded $75,000 until December of 2011,
over one year after plaintiff claims he knew the assertion made as
to damages in the original petition was incorrect.

The Court sees

no possible reason for such a delay to amend the petition in this

19

Id. at 37-38.

20

Id. at 38.

21

Id., citing Tedford, 327 F.3d at 426 ("Section 1446(b) is not
inflexible, and the conduct of the parties may affect whether it is
equitable to strictly apply the one-year limit.").
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case other than finding an attempt by Plaintiff to avoid removal
which is clearly a manipulation of jurisdiction and the right of
the Defendants in this case to remove the case to federal court.
Spring Park argues that it is not a prerequisite that it show
actual bad faith on the part of the Plaintiff to enjoy the benefits
of equitable tolling.

The Court agrees.

Spring Park contends the

question is simply whether equity dictates that the time limit be
extended under the facts of the case. Spring Park further contends
that it must only demonstrate that it would be inequitable or
unfair for Spring Park and Petco to be deprived of their rights to
a federal forum in the manner orchestrated by the Plaintiff,
despite the Plaintiff's alleged innocent intentions.
The

Court

agrees

that

bad

faith

does

established for equitable tolling to apply.

not

have

to

be

The Fifth Circuit's

decision in Brower v. Staley, Inc. was discussed above.

However,

the Court also points out and relies on the district court's
decision in Brower v. Staley, Inc., wherein the court specifically
held that, "...given the very nature of the term 'equitable' in the
equitable exception doctrine means fairness, malfeasance is not
necessarily required to utilize the exception.

Giving the benefit

of the doubt to both parties, it appears equitable and in the
interest of justice and judicial economy to allow Defendants to

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remove the case to federal court since there is now no dispute that
there is diversity of citizenship and an amount in controversy in
excess of $75,000."22 The fact that Plaintiff waited over 16 months
to amend the petition was totally unreasonable and prevented the
Defendants from exercising their right to remove the case to
federal court.
Thus, the Court finds that even if it gives Plaintiff's
counsel the benefit of the doubt that they did not act in bad faith
and/or forum manipulation was not present in counsel's delay in
amending Plaintiff's petition, the Court finds that equity demands
the application of equitable tolling in this matter under the law
and facts of this case.

Therefore, for reasons set forth above,

Plaintiff's motion to remand is hereby DENIED.

III. Conclusion
For

the

reasons

set

forth

above,

the

Court

finds

that

equitable tolling applies under the law and facts of this case.
Therefore, Plaintiff's motion to remand this case to state court is
DENIED.23

22

2006 WL 839469, *3 (S.D. Miss., Mar. 27, 2006).

23

Rec. Doc. No. 6.

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15

This case is referred back to the magistrate judge to set a
scheduling conference and such other orders which may be required.
Baton Rouge, Louisiana, August 23, 2012.

S
FRANK J. POLOZOLA

MIDDLE DISTRICT OF LOUISIANA

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