Salser et al v. Dyncorp International, Inc. et al

Filing 186

OPINION AND ORDER GRANTING 117 Motion to Amend/Correct. Signed by Magistrate Judge R. Steven Whalen. (AChu)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
PATRICIA SALSER, ET AL.,
Plaintiffs,

No. 12-10960

v.

District Judge Arthur J. Tarnow
Magistrate Judge R. Steven Whalen

DYNCORP INTERNATIONAL, INC.,
ET AL.,
Defendants.
/
OPINION AND ORDER
Before the Court is Plaintiffs’ Motion for Leave to File First Amended Complaint
[Doc. #117], which has been referred for hearing and determination under 28 U.S.C. §
636(b)(1)(A). For the reasons discussed below, the motion will be GRANTED.
I.

FACTS

On March 5, 2012, Plaintiffs filed a corrected complaint [Doc. #3], based on
diversity jurisdiction, raising state law claims of intentional infliction of emotional injury
and conspiracy to intentionally inflict emotional injury.1 In short, Plaintiffs allege that
Defendants Dyncorp International, Inc. and Dyncorp International, LLC (collectively
“Dyncorp”), which employed the decedent, Justin Pope, lied about Justin’s death in Iraq,
and did so in concert with other Defendant employees of Dyncorp. Plaintiffs state that
while in truth, Justin was shot by Defendant Kyle Palmer, the Defendants concealed this

1

This corrected complaint, docketed three days after the original complaint was
filed on March 2, 2012, was filed as of right under Fed.R.Civ.P. 15(a), without the
necessity of obtaining leave of the Court. The corrected complaint contained no
substantive changes, but rather corrected what appeared to be some typographical errors.
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fact from Justin’s family, falsely telling them that Justin shot himself, and intentionally
misrepresenting the facts of the killing.
The Plaintiffs now seek leave to amend their complaint as follows:
(1) To dismiss Ray Whiting as a Defendant.
(2) To request punitive damages under Virginia law.
(3) To correct the misspellings of the names of Defendants Michael Kehoe, Noah
Flemming, and Derick Agustin.
II.

STANDARD OF REVIEW

Rule 15(a) of the Federal Rules of Civil Procedure provides that leave to amend
complaints shall be freely granted “when justice so requires”. Foman v. Davis, 371 U.S.
178, 181, 83 S.Ct. 227, 229, 9 L.Ed.2d 222 (1962); Troxel Manufacturing Co. v. Schwinn
Bicycle Co., 489 F.2d 968, 970 (6th Cir.1973); Tefft v. Seward, 689 F.2d 637 (6th
Cir.1982); Howard v. Kerr Glass Mfg., 699 F.2d 330, 333 (6th Cir.1983).
Fed.R.Civ.P. 19 permits an amendment that dismisses a non-diverse party without
prejudice, in order to preserve diversity jurisdiction. See Newman–Green, Inc. v.
Alfonzo–Larrain, 490 U.S. 826, 834 n. 7, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989) (noting
with approval, “Other courts have remanded the case to the district court with mandatory
instructions to allow an amendment dismissing the nondiverse party in order to preserve
diversity jurisdiction.”) (citations omitted); Aetna Cas. & Sur. Co. v. Dow Chem. Co., 44
F.Supp.2d 870, 876 (E.D.Mich.1999) (Edmunds, J.) (“Both district courts and appellate
courts have the authority to dismiss a dispensable party who is a jurisdictional spoiler at
any time during the pendency of proceedings”) (citing Newman–Green, 490 U.S. at 832,
and Commercial Union Ins. Co. v. Cannelton Indus., Inc., 154 F.R.D. 164, 170
(W.D.Mich.1994) (Quist, J.)).
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III.
A.

DISCUSSION

Ray Whiting/Diversity Jurisdiction

The Defendants contend that at the time the complaint was filed, Defendant Ray
Whiting was domiciled in Michigan, thereby destroying the basis for diversity
jurisdiction. Plaintiffs seek to amend so as to drop Whiting as a Defendant.
Fed.R.Civ.P. 21 provides that “[o]n motion or on its own, the court at any time, on
just terms, add or drop a party.” It is well settled that a district court may preserve
diversity jurisdiction by dismissing a dispensable, non-diverse party without prejudice.
Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 833 (1989); Aetna Cas. & Sur.
Co. v. Dow Chemical Co., 44 F.Supp.2d 870, 876 -877 (E.D.Mich. 1999). The question in
this case is whether Whiting is considered an indispensable party. If so, he would be
subject to dismissal with prejudice; if not, he would be dismissed without prejudice. The
distinction is important because a dismissal with prejudice is a dismissal on the merits,
and therefore could possibly have a preclusive effect vis-a-vis the remaining Defendants.
Rule 19 sets forth a three-step procedure for determining whether an action should
proceed in the absence of a particular party. PaineWebber, Inc. v. Cohen, 276 F.3d 197,
200 (6th Cir. 2001). First, the court must determine whether the person or entity is a
“necessary party.” Rule 19(a)(2)(ii) states that a person is a necessary party if:
“the person claims an interest relating to the subject of the action and is so
situated that the disposition of the action in the person’s absence may..leave
any of the persons already parties subject to a substantial risk of incurring
double, multiple, or otherwise inconsistent obligations by reason of the
claimed interest.”
Secondly, if the person is a necessary party, the court asks whether the party can
be joined without eliminating the basis for subject matter jurisdiction, e.g., diversity
jurisdiction. PaineWebber at 200. If not, the court moves to the third step under Rule
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19(b), and asks whether the action should continue without joinder of the party, or
whether it should be dismissed because the party is “indispensable.” Id. Rule 19(b) sets
forth four factors to consider in determining whether a necessary party is also
indispensable: (1) whether and to what extent a judgment rendered in the person’s
absence might be prejudicial to the person or to existing parties; (2) whether and to what
extent the court can reduce or avoid the prejudice; (3) “[w]hether a judgment rendered in
the person’s absence will be adequate;” and (4) “[w]hether the plaintiff will have an
adequate remedy if the action is dismissed for nonjoinder.” Id.
In their Response to Plaintiffs’ Supplemental Brief [Doc. #183], Defendants state
that on August 6, 2015, Ray Whiting appeared with his new counsel for a continued
deposition, where he and Plaintiffs placed a stipulation on the record “whereby Plaintiffs
agreed to dismiss [Mr. Whiting] from this action and agreed never to sue Mr. Whiting in
any other forum for the claims alleged in Plaintiffs’ Complaint.” Id., at 4 (Emphasis in
original). Defendants further state, “Given the stipulation, the legal argument raised in
Plaintiffs’ Supplemental Brief is now moot.” Id. It is unclear from this last statement
whether Defendants are now conceding that Mr. Whiting may be dismissed without
prejudice, but because of this stipulation, Whiting is neither a necessary nor an
indispensable party.
Because the stipulation bars Plaintiffs from pursuing any action against Mr.
Whiting in this or any other forum, it is questionable whether he “claims an interest
relating to the subject of the action.” But even if he does, proceeding with this case in his
absence will not subject any of the remaining parties to multiple or inconsistent
obligations “by reason of the claimed interest.” Rule 19. Therefore, Mr. Whiting is not a
necessary party.
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Even assuming that Mr. Whiting were a necessary party, an application of the
PaineWebber test shows that he is not an indispensable party. First, because the
stipulation protects Mr. Whiting from being sued, his dismissal from this action would not
be prejudicial to him. Nor would it be prejudicial to the either the remaining Plaintiffs
(who seek his dismissal) or to the other Defendants. Earlier in these proceedings,
Plaintiffs moved to extend the summonses for certain unserved Defendants, including
Ray Whiting. In their response [Doc. #28, p. 7], the Defendants conceded that these
parties (including Whiting) were not necessary parties, stating that if they were not
served, “Plaintiffs’ cause of action would not be time barred; rather, it would simply press
on without unnecessary parties to the suit....The cause of action can continue without the
five (5) listed Defendants yet to be served.” In other words, any judgment rendered in Mr.
Whiting’s absence will be adequate.
Because Mr. Whiting is neither a necessary nor an indispensable party, he may be
dismissed without prejudice in order to preserve diversity jurisdiction.2
2

The Defendants argue in their Motion to Dismiss for Lack of Subject Matter
Jurisdiction [Doc. #130] that the Plaintiffs’ inclusion of unserved “John Doe” Defendants
destroys diversity. The Motion to Dismiss has not been referred for Report and
Recommendation, and thus is beyond the scope of the present motion to amend.
However, I note that under 28 U.S.C. § 1441, the removal statute, “ the citizenship of
defendants sued under fictitious names shall be disregarded.” See Alexander v. Elec. Data
Sys. Corp., 13 F.3d 940, 948 (6th Cir.1994)(Jane Doe defendant against whom only
generalized allegations were made should “be disregarded for purposes of diversity
jurisdiction”); Curry v. U.S. Bulk Transp., Inc., 462 F.3d 536, 539 (6th Cir.2006)(where
the non-diverse defendants are John Does, it is proper to disregard their citizenship for the
purpose of determining diversity jurisdiction). The claims against the John Doe
Defendants in the present case are based on a theory of conspiracy, the facts alleged are
general and non-specific. Indeed, they appear to be more passive eyewitnesses to Justin
Pope’s shooting rather than active participants in a conspiracy to intentionally inflict
emotional distress on the Plaintiffs. See Complaint [Doc. #3], ¶ 27 (the Doe Defendants
were “present in Justin’s room and were eyewitnesses to the occurrences at the time of his
death”). See Asher v. Pacific Power & Light Co., 249 F.Supp. 671, 676
(N.D.Cal.1965)(“[W]hether or not the joinder of the resident ‘doe’ will destroy diversity
depends on the degree of specificity with which the complaint charges the ‘doe’ with
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B.

Punitive Damages

The corporate Defendants have their principal place of business in Virginia.
Punitive damages are available under Virginia law. Punitive damages are not available
under Michigan law. In a diversity case, this Court must apply the conflict of laws rules
of Michigan. See Muncie Power Products Inc. v. United Techs Auto Inc., 328 F.3d 870,
873 (6th Cir. 2003). Both parties agree that the operative conflict of laws analysis flows
from Sutherland v. Kennington Truck Serv., Ltd., 454 Mich. 274, 562 N.W.2d 466
(1997).
In Sutherland, the Court recognized that strict application of the lex loci delicti rule
is no longer viable. Rather, the Court framed the inquiry as follows:
“[W]e will apply Michigan law unless a ‘rational reason’ to do otherwise
exists. In determining whether a rational reason to displace Michigan law
exists, we undertake a two-step analysis. First, we must determine if any
foreign state has an interest in having its law applied. If no state has such an
interest, the presumption that Michigan law will apply cannot be overcome.
If a foreign state does have an interest in having its law applied, we must
then determine if Michigan's interests mandate that Michigan law be
applied, despite the foreign interests.” Id. at 286-287 (quoting Olmstead v.
Anderson, 428 Mich. 1, 29-30).
As to the first part of the test, Virginia has an interest in having its law permitting
punitive damages applied. Virginia permits punitive damages where the defendant’s
conduct “ was so willful or wanton as to show a conscious disregard for the rights of
others.” Booth v. Robertson, 236 Va. 269, 273, 374 S.E.2d 1, 3 (1988). “The purpose of
punitive damages is to provide ‘protection of the public, as a punishment to [the]
defendant, and as a warning and example to deter him and others from committing like

actionable conduct.... If ... the allegations ... [are] so general that they give no clue as to
whom they could pertain, then the parties ... should be disregarded for the purposes of
determining diversity jurisdiction.”)(Citations omitted).
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offenses.’” Huffman v. Love, 245 Va. 311, 315, 427 S.E.2d 357, 360 (Va.,1993), quoting
Baker v. Marcus, 201 Va. 905, 909, 114 S.E.2d 617, 621 (1960). Given the claims in this
case, if the jury accepts Plaintiffs’ version of events, it will necessarily have found that
Defendants’ conduct showed “a conscious disregard for the rights of others.”
Nevertheless, Defendants argue that because “Virginia is only one of ten states that
applies the Lex Loci Delicti,” Defendants’ Response [Doc. #134] at 17, and because the
events giving rise to Plaintiffs’ claims occurred in Michigan, Virginia does not have an
interest in permitting otherwise available punitive damages. Thus, Defendants argue,
“Virginia’s conflict-of-law rule dictates the application of Michigan law.” Id. at 19. Both
Defendants and Plaintiffs rely on Judge Feikens’ opinion in In re Aircrash Disaster Near
Monroe, Mich. on January 9, 1997, 20 F.Supp.2d 1110 (E.D.Mich. 1998).
In re Aircrash Disaster observed two basic principles. First, the domicile of the
plaintiff is not relevant to the conflict of laws resolution. Second, the mere fact that a
corporate defendant is incorporated in a particular state–that the state has a “substantial
relationship with the defendant”– does not necessarily afford that state an interest in the
litigation. Rather, “a court should look at the punitive damage laws of jurisdictions
having both contact with the lawsuit and a significant relationship to a defendant.” Id. at
1112. (Emphasis in original). The fact that Defendant Dyncorp is incorporated in Virginia
does not in and of itself bring Virginia law on punitive damages into play; the more
salient issue is Virginia’s contact with the lawsuit.
This brings us to the lex loci issue. Specific acts that are alleged to have constituted
intentional infliction of emotional distress in this case occurred in Michigan, so as to the
substantive intentional infliction claim, Defendants’ have a point. However, it is
significant that the claims in this case include conspiracy. Plaintiffs allege that regardless
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of where certain overt acts occurred, the conspiracy was orchestrated out of Dyncorp
corporate headquarters in Virginia. Had this case been filed in Virginia, application of
that state’s lex loci delicto rule to the conspiracy claim would therefore call for the
application of Virginia law on punitive damages. Again, Virginia has an interest in having
its punitive damages law applied to this case as to the conspiracy claim.
The next question under Sutherland is whether Michigan’s interest in not
permitting punitive damages should be applied despite Virginia’s interests. In In re
Disaster at Detroit Metropolitan Airport on Aug. 16, 1987, 750 F.Supp. 793, 801
(E.D.Mich. 1989), Judge Cook noted that Michigan’s preclusion of punitive damages
“reflects a producer protective policy. Such a doctrine is designed to induce
companies to conduct business in Michigan by protecting domiciled
producers from excessive financial liability. By protecting the economic
health of companies that conduct business in Michigan, the state derives
substantial revenues in sales and taxes, directly and indirectly, and furthers
the economic well being of the entire state.”
Likewise in, In re Aircrash Disaster Near Monroe, Mich., at 1112, Judge Feikens
stated, “Michigan has a predominant interest in protecting the financial integrity of
corporations who conduct substantial business within its borders because this enables its
citizenry to earn livelihoods. Because a bar on punitive damages furthers this policy, In re
Disaster applied Michigan's punitive damages law.”
Unlike the airlines involved in the above cases, Dyncorp does not conduct
substantial business within the borders of Michigan, does not produce revenue within
Michigan, and does not significantly enable Michigan citizens to earn their livelihood.
Therefore, Michigan does not have any interest in protecting Dyncorp’s financial
integrity.
In summary, because Virginia has a substantial interest in having its punitive
damage law applied, and Michigan has no interest in having its bar to punitive damages
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applied to foreign Defendants who have no significant economic connection to this case,
there is a “rational reason” to apply Virginia law on punitive damages to Plaintiffs’
conspiracy claim. Sutherland at 286-287.
C.

Correction of Misspellings

Defendants have no objection to this amendment. Neither do I.
IV.

CONCLUSION

For these reasons, Plaintiffs’ Motion for Leave to File First Amended Complaint
[Doc. #117] is GRANTED.
IT IS SO ORDERED.

/s/R. Steven Whalen
R. STEVEN WHALEN
UNITED STATES MAGISTRATE JUDGE
Date: August 17, 2015
Certificate of Service
I certify that a copy of this order was served upon parties of record on August 17,
2015 via electronic or postal mail.
/s/A. Chubb
CASE MANAGER

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