Parish Disposal Industries L L C v. B F I Waste Services L L C et al
Filing
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MEMORANDUM ORDER: For the foregoing reasons: IT IS ORDERED that plaintiffs 11 Motion for Leave to Amend is DENIED. IT IS FURTHER ORDERED that plaintiffs 12 Motion to Remand is DENIED. A Report and Recommendation that Hylton be dismissed will issue for reasons stated above. Signed by Magistrate Judge Kathleen Kay on 5/27/2014. (crt,Putch, A) Modified on 5/28/2014 to reflect correct judge. (Putch, A)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
LAKE CHARLES DIVISION
PARISH DISPOSAL INDUSTRIES,
LLC
:
DOCKET NO. 2:13-cv-03068
VS.
:
JUDGE MINALDI
BFI WASTE SERVICES, LLC et al.
:
MAGISTRATE JUDGE KAY
MEMORANDUM ORDER
Before the court is a motion for leave to amend [doc. 11] and a motion to remand
[doc. 12] filed by plaintiff Parish Disposal Industries, LLC (hereafter, “plaintiff”). Named
defendants in this matter are: (1) Danny Hylton (hereafter, “Hylton”), the Executive Director of
the Jefferson Davis Parish Sanitary Landfill Commission; (2) BFI Waste Services, LLC; (3) BFI
Waste Systems of Louisiana, LLC; and (4) BFI Waste Systems of North America, LLC
(hereafter, collectively, “BFI”).
For the following reasons, IT IS ORDERED that the motion for leave to amend, [doc.
11], and the motion to remand, [doc. 12], are DENIED.
I. BACKGROUND
A. State Court Suit and Removal
Plaintiff is a Louisiana Limited Liability Company engaged in the business of collection,
transportation, and disposal of solid waste. Doc. 1, att. 2, p. 2. Plaintiff provides dumpsters to
various businesses, then transports and offloads the dumpsters onto landfills located throughout
Louisiana. Id. As per standard business practices, the landfills charge plaintiff a fee for the right
to offload waste at their site, commonly known as a “tipping fee.” Id. at 2–3.
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The dispute in this case concerns the tipping fees charged at the Jefferson Davis Parish
Sanitary Landfill (hereafter, “the landfill”), located in Welsh, Louisiana. The landfill is owned
by the Jefferson Davis Parish Sanitary Landfill Commission (hereafter, “the Landfill
Commission”) and operated by defendant BFI, a waste-disposal company and business
competitor of the plaintiff. Id at 2. BFI has been operating the landfill since 1989 pursuant to a
“Sanitary Landfill Operating and Maintenance Agreement” (hereafter, “the agreement”) with the
Landfill Commission. Id.; see also doc. 20, att. 1, p. 3, ¶ 11; doc 20, att. 3. Under paragraph 5
of the agreement, as modified by the 14th addendum thereto, the tipping fee for residential waste
generated within the “commission governmental area” is contractually fixed; however, BFI is
given the authority to set the tipping fees for residential and commercial waste generated outside
the governmental area. 1 Doc. 20, att. 1, p. 3; see also doc. 20, att. 3, pp. 86–89.
Plaintiff alleges that BFI enjoys an unfair business advantage as a result of this
arrangement because BFI is often able to charge itself dramatically lower tipping fees than it
charges other waste haulers. Doc. 1, att. 2, p. 2. Plaintiff claims that the ability to charge itself
lower tipping fees has allowed BFI to consistently outbid plaintiff and other competitors for
lucrative contracts in the southwest Louisiana region. Id. at 3.
On October 10, 2013, plaintiff sued BFI in the 14th Judicial District Court for Calcasieu
Parish, Louisiana, alleging that BFI’s tipping-fee practices constitute an illegal restraint of trade
under Louisiana Revised Statute Section 51:122 et seq. Id. at 1–5. Plaintiff also asserted a claim
1
The “commission governmental area” consists of Jefferson Davis Parish, excluding the town of Elton. Doc. 20,
att. 3, p. 32. In addition to Jefferson Davis Parish, the landfill is also authorized to accept waste generated in the
following Parishes: Acadia; Allen; Avoyelles; Beauregard; Calcasieu; Cameron; Evangeline; Iberia; Lafayette;
Rapides; St. Landry; St. Martin; Vermilion; and Vernon. Doc. 20, att. 3, pp. 5, 42, 62.
The agreement defines “residential” waste as “solid waste generated by the occupants of a single or multi-unit
residences [sic] or as a result of community activities. Doc. 20, att. 3, p. 32. Commercial waste is defined as “solid
waste generated by businesses involved in the exchange or distribution of goods, services, or commodities” except
for industrial by-products. Id.
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against Danny Hylton, the Executive Director of the Landfill Commission and a Louisiana
domiciliary. Plaintiff also alleged that Hylton is “an employee of BFI.” Id. at 3. Plaintiff
claimed that it “spoke directly to [Hylton] in an effort to obtain a price equivalent to that which
BFI was charging itself,” but that Hylton refused and “continued to set prices for BFI that were
significantly less than those being charged to [plaintiff].” Id. Plaintiff therefore argued that
Hylton should be held liable in solido with BFI because he “participated in, authorized, and
performed acts which constitute the [antitrust] violation in question.” 2 Id.
After it was served with plaintiff’s petition, BFI timely removed the suit to this court.
Doc. 1.
BFI argued in its notice of removal that the exercise of diversity jurisdiction is
appropriate under 28 U.S.C. § 1332 because: (1) it is facially apparent that the amount in
controversy exceeds $75,000; and (2) plaintiff, a citizen of Louisiana, is diverse from BFI, a
citizen of Arizona and Delaware. 3
Doc. 1, pp. 3–8.
BFI asserts that Hylton’s Louisiana
citizenship should be disregarded because he was improperly joined in this matter. Doc. 1,
pp. 5–6. The basis for this contention is that, contrary to plaintiff’s allegations, Hylton is
employed by the Landfill Commission alone and not by BFI. As such, BFI argues that Hylton
cannot be liable for setting preferential tipping fees because Hylton does not set tipping fees on
BFI’s behalf. Id.
2
Under Louisiana law, “[w]henever a corporation violates [the Louisiana antitrust laws] the violation shall also be
that of the individual officers, directors, or agents of the corporation who authorized, ordered, or did any of the acts
constituting in whole or in part a violation.” La. R.S. § 51:126.
3
There were three BFI entities named in the petition, namely: (1) BFI Waste Services, LLC; (2) BFI Waste Systems
of Louisiana, LLC; and (3) BFI Waste Systems of North America, LLC. Doc. 1, p. 1. All three of these limited
liability companies trace their citizenship to that of their sole member: Allied Waste North America, Inc. Id. at pp.
4–5; Harvey v. Grey Wolf Drilling, 542 F.3d 1077 (5th Cir. 2008). Allied Waste North America, Inc. is a Delaware
Corporation with its principal place of business in Phoenix, Arizona. Doc. 1, pp. 4–5. Accordingly, the BFI
defendants (who are referred to collectively herein as “BFI”) are citizens of Delaware and Arizona for diversity
purposes. 28 U.S.C. § 1332(c)(1).
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B. Plaintiff’s Motion to Remand and Motion to Amend
In the current motions before the court plaintiff argues that it has adequately stated a
cause of action against Hylton and, therefore, the case must be remanded. Doc. 12, att. 2.
Alternatively, plaintiff seeks to amend its complaint to add the Landfill Commission itself as a
defendant. Doc. 11, att. 2, p. 3. Plaintiff argues that, if it is granted leave to amend, remand
would also be required because the Landfill Commission is a Louisiana domiciliary. Doc. 12,
att. 2, pp. 6–7.
BFI maintains that Hylton was improperly joined and that complete diversity exists
among the properly joined parties. Doc. 22. BFI further argues that plaintiff should not be
granted leave to amend because the proposed claims have no basis in law and plaintiff’s sole
purpose for amending is to destroy diversity. Id.
II. LAW & ANALYSIS
The burden of proof for establishing federal jurisdiction is placed on the party seeking
removal. Jernigan v. Ashland Oil, Inc., 989 F.2d 812, 815 (5th Cir. 1993). Under 28 U.S.C.
§ 1441, “any civil action brought in a State court of which the district courts of the United States
have original jurisdiction, may be removed by the defendant or the defendants, to the district
court of the United States for the district and division embracing the place where such action is
pending.” 28 U.S.C. § 1441(a). If removal is based on diversity of citizenship, the action is
removable only if there is complete diversity and “none of the parties in interest properly joined
and served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C. §
1441(b).
A. Improper Joinder
If removal is based on a claim that a non-diverse party has been improperly joined, then
the removing party must establish either “actual fraud in the pleading of jurisdictional facts” or
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“an inability of the plaintiff to establish a cause of action against the non-diverse party in state
court.” Smallwood v. Ill. Cent. R.R., 385 F.3d 568, 573 (5th Cir. 2004) (citing Travis v. Irby, 326
F.3d 644 (5th Cir. 2003)). Only the latter method is relevant here insofar as BFI did not allege
actual fraud in the pleading. Thus, the relevant question is whether plaintiff has any possibility
of recovery against Hylton in state court.
In analyzing this issue, courts in the Fifth Circuit determine “whether the defendant has
demonstrated that there is no possibility of recovery by the plaintiff against the in-state
defendant, which stated differently means that there is no reasonable basis for the district court to
predict that the plaintiff might be able to recover against an in-state defendant.” Smallwood, 385
F.3d at 573. The burden of persuasion on a party asserting improper joinder is a “heavy one.”
Kling Realty Co., Inc. v. Chevron USA, Inc., 575 F.3d 510, 514 (5th Cir. 2009); see also B., Inc.
v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981); Scott v. Chevron U.S.A., Inc., 824 F.
Supp. 613, 614 (N.D. Miss. 1993); 15 Moore’s Federal Practice § 102.21[5][a] (3d ed. 2011).
All factual allegations are evaluated in the light most favorable to the plaintiff, resolving all
contested issues of substantive fact in the plaintiff’s favor. Guillory v. PPG Industries, Inc., 434
F.3d 303, 309 (5th Cir. 2005). However, when considering an improper-joinder claim, courts
may “pierce the pleadings” and consider “summary judgment-type evidence such as affidavits
and deposition testimony.” Cavallini v. State Farm Mutual Auto Ins. Co., 44 F.3d 256, 263 (5th
Cir. 1995). Moreover, “there must be a reasonable possibility of recovery, not merely a
theoretical one.” Ross v. CitiFinancial, Inc., 344 F.3d 458, 462 (5th Cir. 2003) (emphasis in
original) (citing Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312
(5th Cir. 2002); Badon v. RJR Nabisco, Inc., 236 F.3d 282, 286 n.4 (5th Cir. 2000); Griggs v.
State Farm Lloyds, 181 F.3d 694, 701 (5th Cir. 1999)).
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Even under the exacting standard for improper joinder claims, it is plain that Hylton was
improperly joined. Plaintiff argues that the court must accept its factual allegations as true and
that it is the state court’s prerogative to determine whether Hylton should be named in the suit.
Doc. 12, att. 2, pp. 3–5. Plaintiff’s argument ignores the fact that the court is authorized to
consider evidence outside the pleadings when determining the propriety of joinder. See, e.g.,
Cavallini, 44 F.3d at 263.
BFI has submitted a declaration from Hylton in which he states that he has never been an
employee of BFI, that he has never set tipping fees at the landfill, and that he has never had the
authority to do so. Doc. 20, att. 1, p. 3. BFI also provides a complete copy of its agreement with
the Landfill Commission, the terms of which support Hylton’s contention that he is not involved
in the setting of tipping fees. See doc. 20, att. 3. Under the agreement, BFI is given the
exclusive authority to set tipping fees for waste generated outside a delineated area, and tipping
fees for residential waste generated within the delineated area are contractually fixed and may
not be changed by any party. Id. at pp. 86–89.
Plaintiff has not presented any evidence to refute that which was put forward by BFI. 4
Its motion simply argues that the court must accept its conclusory allegations as true and find
that recovery is reasonably possible, an argument that has no statutory or jurisprudential support.
Considering the uncontroverted evidence that Hylton is not a BFI employee and does not set
tipping fees, plaintiff’s claims against Hylton lack merit. Hylton cannot be solidarily liable for
BFI’s alleged violation of the Louisiana antitrust laws because Hylton is not an officer, director,
or agent of BFI. 5 See La. R.S. § 51:126. Furthermore, it is clear that Hylton himself does not
4
Plaintiff did not file a reply to BFI’s opposition.
In its motion for remand, plaintiff also argues (for the first time) that Hylton could be held liable under Canter v.
Koehring Co., 283 So. 2d 716 (La. 1973), superseded by statute on other grounds, see Bostick v. Int’l Minerals and
Chemical Corp., 360 So. 2d 898, 901 (La. 1978) (setting forth the circumstances in which a corporate employee may
5
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“set” any tipping fees; that authority has been delegated to BFI alone. As such, it cannot be
genuinely argued that Hylton was involved in the conduct that plaintiff claims constituted an
antitrust violation.
Accordingly, the court holds that Hylton was improperly joined in this matter. The court
will therefore issue a concurrent report and recommendation that plaintiff’s claims against
Hylton be dismissed.
B. Motion to Amend
On the same day it filed the motion to remand, plaintiff filed a motion to amend its
complaint. Doc. 11. Plaintiff argues that if it is allowed to add the Landfill Commission as a
defendant then the case must be remanded because diversity would be destroyed. Doc. 12, pp.
1–2.
“If after removal the plaintiff seeks to join additional defendants whose joinder would
destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the
action to the State court.” 28 U.S.C. § 1447(e); see also Whitworth v. TNT Bestway Transp.,
Inc., 914 F. Supp. 1434, 1435 (E.D. Tex. 1996) (noting that amendments which divest the court
of diversity jurisdiction may only be granted with the court’s leave). Leave to amend is within
the court’s discretion but the court should freely grant it when justice so requires. Fed. R. Civ. P.
15(a)(2). However, “although a district court's discretion to deny leave to amend is limited,
leave to amend is not automatic.” Fin. Acquisition Partners LP v. Blackwell, 440 F.3d 278, 291
(5th Cir. 2006) (emphasis in original) (internal citation omitted). In exercising its discretion, the
court may consider such factors as “undue delay, bad faith, or dilatory motive on the part of the
be held personally liable for the breach of an employment-imposed duty). To begin with, because the court finds
that defendants have satisfactorily established that Hylton has never been a BFI employee, Canter is inapplicable.
Furthermore, as BFI correctly points out, Canter is also inapplicable because the Fifth Circuit limits the imposition
of Canter liability to bodily injury claims. See Kling Realty Co. v. Chevron, USA, Inc., 575 F.3d 510, 515–16 (5th
Cir. 2009) (citing Unimobil Inc. v. Spurney, 797 F.2d 214, 217 (5th Cir. 1986)).
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movant, repeated failure to cure deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the amendment, and futility of the
amendment.” Gregory v. Mitchell, 634 F.2d 199, 203 (5th Cir. 1981).
The court considers plaintiff’s stated causes of action against the Landfill Commission to
be insupportable. Plaintiff claims: (1) that the Landfill Commission was “negligent” in allowing
BFI to charge itself lower tipping fees; and (2) that the Landfill Commission breached “its duty
to the public by effectively denying the public access to a public landfill through its acquiescence
to disparate pricing.” Doc. 11, att. 2, p. 3. Plaintiff fails, however, to set forth any legal
authority that there exists any “public landfill” duty or whether the Landfill Commission owed
any general tort duty to plaintiff that could possibly have been breached. Accordingly, the
amendment would be wholly futile, because the proposed claims would fail to state a claim upon
which relief may be granted. Stripling v. Jordan Production Co., LLC, 234 F.3d 863, 873 (5th
Cir. 2000) (citation omitted) (holding that an amendment is futile if it fails to satisfy the standard
under Fed. R. Civ. P. 12(b)(6)).
Moreover, even if plaintiff stated an arguably viable cause of action, leave to amend
would not necessarily be granted under the circumstances of this case. When faced with a postremoval amendment that would destroy diversity, the court “should scrutinize the amendment
more closely than an ordinary amendment.” Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th
Cir. 1987); see also Tillman v. CSX Transp., Inc., 929 F.2d 1023, 1029 (5th Cir. 1991) (noting
that it is appropriate to apply Hensgens when weighing a claim under 28 U.S.C. § 1447(e)). The
court should balance a number of factors to determine whether to give more weight to
defendant's interest in maintaining the federal forum or the competing interest of having all
related matters determined in a single suit. Hensgens, 833 F.2d at 1182. These factors include:
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(1)
the extent to which the purpose of the amendment is to defeat federal
jurisdiction;
(2)
whether plaintiff has been dilatory in seeking amendment;
(3)
whether plaintiff will be significantly injured if amendment is not allowed;
and
(4)
any other factors bearing on the equities.
Id. If, after weighing these factors, the court allows the amendment and adds the non-diverse
defendant then the court must then remand the case to the state court. Id. If the amendment is
not allowed, the federal court maintains jurisdiction. Id.
The following application of Hensgens further supports the court’s conclusion that
plaintiff’s motion for leave to amend should be denied.
1. Purpose of the Amendment & Whether Amendment is Dilatory
When conducting a Hensgens analysis, courts consider “whether plaintiff has been
dilatory in seeking amendment.” Hensgens, 833 F.2d at 1182. In considering this factor, “courts
often look to the amount of time that has passed between the filing of the original complaint and
the amendment and the amount of time between removal and the amendment.” See Tomlinson,
2006 WL 1331541 at *4.
Plaintiff filed its state court petition on October 10, 2013, and BFI removed the case on
November 13, 2013. Doc. 1. On December 11, 2013—two months after plaintiff filed suit and
nearly one month after removal—plaintiff filed its motion to amend. Doc. 11. The court does
not consider such a delay “dilatory;” however, that factor is not dispositive because it is clear to
the court that the sole purpose of the amendment is to destroy diversity.
In analyzing whether the purpose of amendment is to destroy diversity, courts consider
“whether the proposed amendment presents a valid cause of action.” See, e.g., Mallery v. Becker,
2014 WL 60327 at *2 (W.D. La. 1/7/2014) (citing Tillman, 929 F.2d at 1029; Kling Realty Co.,
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Inc. v. Texaco, 2007 WL 4553611 (W.D. La. 2007)). If the amendment presents a valid claim,
“it is unlikely that the primary purpose of [the amendment] is to destroy diversity jurisdiction.”
Schindler v. Charles Schwab & Co., Inc., 2005 WL 1155862 at *3 (E.D. La. 2005) (emphasis in
original) (internal citations omitted). Additionally, courts consider “whether the plaintiff knew
or should have known the identity of the non-diverse defendant when the state court complaint
was filed.” Laborde v. Treadwell Restaurants of LA, LLC, 2013 WL 1452024 at *4 (W.D. La.
4/9/2013) (quoting Schindler, 2005 WL 1155862 at *3).
“[A] plaintiff's failure to join a
non-diverse defendant to an action prior to removal when such plaintiff knows of a non-diverse
defendant's identity . . . suggests that the purpose of the amendment is to destroy diversity.”
Tomlinson v. Allstate Indem. Co., 2006 WL 1331541 at *3 (E.D. La. 2006) (citing Schindler,
2005 WL 1155862 at *3).
As discussed above, plaintiff’s claims against the Landfill Commission do not present a
valid cause of action. Furthermore, there is no doubt that plaintiff knew the identity of the
Landfill Commission from the beginning because the Landfill Commission is specifically
mentioned throughout plaintiff’s state-court petition. See doc. 1, att. 2, pp. 1–5. The fact that
plaintiff did not attempt to add claims against the Landfill Commission until after removal
strongly suggests that the sole purpose of the amendment is to destroy diversity, particularly
considering that the proposed amendment was brought simultaneously with the motion to
remand. Had plaintiff genuinely wished to advance a negligence claim against the Landfill
Commission, there is no reason why it could not have done so at the outset. Plaintiff’s proposed
amendment does not state any new factual allegations other than that the Landfill Commission
was “fully aware of the disparity in prices being charged by BFI to itself and its competitors.”
Doc. 11, att. 2, p. 2. Plaintiff offers no explanation as to why it did not bring this claim until
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after removal, nor is the court able to conceive of one. Accordingly, the court finds that the sole
purpose of the amendment is to destroy diversity, which strongly weighs against granting leave
to amend in this case.
2. Prejudice to Plaintiff and Other Equitable Factors
Here, the proposed amendment does not seek any different or additional relief, and
plaintiff has not argued that the presence of the Landfill Commission is necessary for a complete
adjudication of this matter. See doc. 11. Plaintiff has not argued that there are equitable reasons
for allowing it to amend. Id. On the other hand, BFI argues that it has a strong interest in
exercising the right to a neutral federal forum. Doc. 22, p. 16.
The third and fourth Hensgens factors weigh against granting the amendment. Denial of
the amendment will not significantly injure the plaintiff, and there are no equitable issues present
here. If the amendment is not allowed, plaintiff will still be able to fully litigate its antitrust
claims against BFI in federal court. See 28 U.S.C. § 1447(e).
III. CONCLUSION
For the foregoing reasons:
IT IS ORDERED that plaintiff’s motion for leave to amend, [doc. 11] is DENIED.
IT IS FURTHER ORDERED that plaintiff’s motion to remand, [doc. 12], is DENIED.
A Report and Recommendation that Hylton be dismissed will issue for reasons stated above.
THUS DONE this 27th day of May, 2014.
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