Howell v. Forest Pharmaceuticals, Inc. et al

Filing 24

MEMORANDUM AND ORDER / ORDER OF REMAND - IT IS HEREBY ORDERED that plaintiff's motion to remand [Doc. # 11 ] isgranted. IT IS FURTHER ORDERED that the Clerk of the Court shall remand this action to the Twenty-First Judicial Circuit Court of Missouri (County of St. Louis), from which it was removed. (Certified copy of order mailed to County of St. Louis, Circuit Court). Signed by District Judge Carol E. Jackson on 9/21/15. (KKS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
TERRILL HOWELL,

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Plaintiff,
v.
FOREST PHARMACEUTICALS, INC.
and FOREST LABORATORIES, LLC,
Defendants.

No. 4:15-CV-1138 (CEJ)

MEMORANDUM AND ORDER
This matter is before the Court on plaintiff’s motion to remand this action to
the Circuit Court of the County of St. Louis, Missouri. Defendants have responded
in opposition, and the issues are fully briefed.
I.

Background

Plaintiff

Terrill

Howell

brings

this

action

against

defendants

Forest

Pharmaceuticals, Inc. and Forest Laboratories, LLC. Forest Laboratories, LLC is the
successor to Forest Laboratories, Inc., as a result of an acquisition by Actavis plc on
July 1, 2014. Forest Pharmaceuticals, Inc. is a wholly-owned subsidiary of Forest
Laboratories, LLC.

Howell was employed by Forest Laboratories, Inc. from 1986

until January 30, 2014. His last position was senior vice-president of operations.
After a proxy dispute and a series of corporate mergers, defendants terminated
Howell’s employment as part of a restructuring plan called “Project Rejuvenate.”
On February 4, 2014, Howell signed a separation agreement and general
release as part of his termination.

This agreement provided for the payment of

severance pay and severance benefits to Howell. However, based on an

employment agreement dated January 16, 1995, Howell asserts that he was
entitled to a greater amount of compensation and benefits because he was
discharged in connection with or anticipation of a “change of control,” as defined in
the agreement. According to Howell, the acquisition by Actavis plc of 20% or more
of the outstanding shares of common stock of Forest Laboratories, Inc., constituted
a change of control.

Howell alleges that when he signed the release, the

defendants did not tell him that they were engaged in discussions and activities to
effect a sale of Forest Laboratories, Inc. As a result, Howell claims that he incurred
damages in the form of lost pay, bonuses and benefits that were due to him
pursuant to the 1995 employment agreement.
In the four-count complaint, plaintiff asserts state law claims of fraudulent
concealment, negligent misrepresentation, breach of contract, and breach of the
covenant of good faith and fair dealing against both defendants.

Defendants

removed the action to this Court on the basis of diversity jurisdiction.

In the

instant motion, plaintiff argues that remand is required because defendants failed
to carry their burden of proving complete diversity of citizenship between the
parties and because defendants failed to comply with the 30-day deadline for
removal prescribed by law.
II.

Legal Standard

An action is removable to federal court if the claims originally could have
been filed in federal court. 28 U.S.C. § 1441; In re Prempro Prods. Liab. Litig., 591
F.3d 613, 619 (8th Cir. 2010). Defendants bear the burden of establishing federal
jurisdiction by a preponderance of the evidence.

Altimore v. Mount Mercy Coll.,

420 F.3d 763, 768 (8th Cir. 2005). A case must be remanded if, at any time, it

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appears that the district court lacks subject matter jurisdiction. § 1447(c); Fed. R.
Civ. P. 12(h)(3). Any doubts about the propriety of removal are resolved in favor
of remand. Wilkinson v. Shackelford, 478 F.3d 957, 963 (8th Cir. 2007).
III.

Discussion

Plaintiff initiated this action in the Circuit Court of St. Louis County on
December 19, 2014.

Howell v. Forest Pharms., Inc., et al., Cause No. 14SL-

CC04366 (Mo. Cir. Ct. Dec. 19, 2014).

On June 9, 2015, plaintiff filed a first

amended petition, substituting successor entity Forest Laboratories, LLC as a
defendant for Forest Laboratories, Inc.

On June 23, 2015, counsel for Forest

Pharmaceuticals, Inc. and Forest Laboratories, Inc. accepted service of the first
amended petition on behalf of Forest Laboratories, LLC. On July 23, 2015, Forest
Laboratories, LLC removed the case to this Court with the consent of Forest
Pharmaceuticals, Inc. on the basis of diversity jurisdiction under 28 U.S.C. §§ 1332
and 1441. Plaintiff argues that removal was untimely, because Forest Laboratories,
LLC, as the real defendant in interest, was on notice of this action since its
inception and was aware of plaintiff’s mistake in suing its non-existent predecessor.
Forest Laboratories, LLC contends that removal of the action was timely because it
was filed within thirty days of the date it received service of the amended petition.
Section 1446(b)(1) of Chapter 28 of the United States Code prescribes a
thirty-day period for removing a civil action from state court to federal court. The
thirty-day window for removal begins with formal service of process on the
removing defendant in accordance with state law.

Murphy Bros. v. Michetti Pipe

Stringing, Inc., 526 U.S. 344, 347–48, 354 (1999).

Generally, a later-served

defendant has a right of removal separate from that of an earlier-served defendant.

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See 28 U.S.C. § 1446(b)(2)(B) (“Each defendant shall have 30 days after receipt by
or service on that defendant of the initial pleading or summons . . . to file the notice
of removal.”); see also § 1446(b)(2)(C) (“If defendants are served at different
times, and a later-served defendant files a notice of removal, any earlier-served
defendant may consent to the removal even though that earlier-served defendant
did not previously initiate or consent to removal.”).
However, courts recognize an exception to this framework for a “‘real party
defendant in interest’ or another closely affiliated ‘intended defendant’ that is
mistakenly omitted from the initial complaint.” HSBC Bank USA v. Mohanna, No.
15-CV-2130 (WHO), 2015 WL 4776236, at *4 (N.D. Cal. Aug. 13, 2015). In these
circumstances, courts have held that the thirty-day period for the “real party
defendant in interest” to remove begins as soon as it is “on notice” of the plaintiff’s
mistake. Id. (collecting cases); see La Russo v. St. George’s Univ. Sch. of Med.,
747 F.3d 90, 96 (2d Cir. 2014) (“The real party defendant in interest is not only
entitled to remove, but, if it seeks removal, it must act promptly because the 30day interval in which it is permitted to do so . . . begins when it is on notice that
the wrong company defendant has been named.”) (internal citations and quotations
omitted); Lee v. Food Lion, LLC, No. 12-CV-142 (RGD), 2013 WL 588767, at *2–4
(E.D. Va. Feb. 13, 2013) (“[F]ederal courts have, time and again, rejected a
corporation defendant’s claim that its removal was timely because the original state
court complaint named the wrong defendant (a nonentity) and the case was not
removable until such time that the plaintiff amended the complaint to name the
correct entity.”) (internal quotations omitted); Ware v. Wyndham Worldwide Inc.,
No. 09-6420 (RBK), 2010 WL 2545168, at *4–5 (D.N.J. June 18, 2010) (identifying

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“two requirements [that] must be satisfied to trigger the running of an intended but
improperly named defendant’s thirty-day removal window”—first, “the intended
defendant must be formally served with process,” and second, “the intended
defendant must ascertain or be able to ascertain that it is indeed the intended
defendant and that the plaintiff made a mistake in its complaint”); Brown v. New
Jersey Mfrs. Ins. Grp., 322 F. Supp. 2d 947, 952–53 (M.D. Tenn. 2004) (finding
removal untimely where plaintiffs named the wrong defendant in the initial
complaint, but the record “strongly suggest[ed] that [d]efendant was on notice of
[the] lawsuit from the very beginning”); Iulianelli v. Lionel, L.L.C., 183 F. Supp. 2d
962, 966 (E.D. Mich. 2002) (noting that “[i]n nearly every other case involving a
misnamed defendant, or even the addition of a new defendant closely aligned with
an existing one, the courts have declined to extend the initial 30-day period of
removal”).
As conceded by defendants, the facts in Iulianelli v. Lionel, L.L.C. are similar
to the case at hand.

183 F. Supp. 2d 962 (E.D. Mich. 2002).

In Iulianelli, the

initial complaint named Lionel Trains, Inc., the company that had hired plaintiff, as
the defendant.

Id. at 965.

Both the initial and amended complaints alleged a

single breach of contract claim for termination of plaintiff’s employment without just
cause. Id. Unbeknownst to plaintiff, however, Lionel Trains, Inc. had substantially
sold all of its assets to Lionel, L.L.C. and dissolved. Id. After the defendant filed a
motion to dismiss, arguing that plaintiff had sued the wrong defendant, plaintiff
filed an amended complaint, substituting Lionel, L.L.C. as the defendant.
963.

Id. at

Within thirty days after the amended complaint was filed, but ten months

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after the initial complaint was filed, Lionel, L.L.C. removed the case to federal court.
Id.
Upon plaintiff’s motion, the district court remanded the case, reasoning that
“[l]ong before this case was removed, and perhaps even at its inception, Defendant
and its counsel were aware that Plaintiff had misidentified Lionel Trains as his
employer, and that Lionel, L.L.C. was the proper party.”

Id. at 968.

The court

noted that the two entities were “not merely closely aligned, but one is the
corporate successor to the other.”

Id.

The court also noted that the agent for

Lionel Trains, Inc. was an attorney at the law firm representing Lionel, L.L.C. in the
federal action—“so that Plaintiff’s service of the initial complaint upon the dissolved
corporation arguably sufficed as service upon its successor.” Id. Thus, the court
stated, “the record not only suggests that Defendant was on notice of this litigation
from its earliest days, but strongly indicates that Defendant had actual knowledge
of both the initial complaint and Plaintiff’s error in naming Lionel Trains as a party.”
Id. (emphasis in original).
After a review of the record, the Court finds that defendant’s removal was
likewise untimely.

Here, as in Iulianelli, the amended complaint involved the

substitution of a properly-named entity for an improperly-named defendant with
the same claims as the original complaint, rather than the addition of a new
defendant with new claims. In multiple documents filed by defendants in the state
action, defendants noted that “Plaintiff has incorrectly named Forest Laboratories,
Inc. as a Defendant. Forest Laboratories, Inc. no longer exists as an entity. Forest
Laboratories, LLC is its successor entity.” E.g., Defs.’ Notice of Removal, Ex. C –
Part 3 at 33 n.1, 35 n. 1, 52 n. 1, 56 n.1 [Doc. #1-6], Ex. C – Part 4 at 2 n.1, 6

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n.1, 10 n.1 [Doc. #1-7]; see also id. at 2 (“At the time Plaintiff filed his Petition,
Forest Laboratories, Inc. was not an existing entity.”) [Doc. #1].

Plaintiff

attempted to determine whether he needed to substitute defendants early on in the
litigation, but received no response from defendants.

Pl.’s Ex. 15 [Doc. #21-1].

Forest Laboratories, Inc. and Forest Laboratories, LLC are not only closely related,
but one is the corporate successor to the other.

Indeed, both share the same

counsel and place of business. Thus, the record indicates that Forest Laboratories,
LLC was not only on notice of the litigation from its onset, but also had actual
knowledge

of

the

initial

complaint

Laboratories, Inc. as a party.

and

plaintiff’s

error

in

naming

Forest

Despite this knowledge, Forest Laboratories, LLC

waited more than six months—until after the state court had denied defendants’
motion to enforce a forum selection clause and dismiss for improper venue—to
remove the action to federal court.
The consideration of “fairness to later-served defendants” for the codification
of the later-served defendant rule in § 1446(b)(2)(B) does not arise under these
circumstances. See Brown, 322 F. Supp. 2d at 952 (“Permitting the Defendant to
delay removing the case for such a long period would contravene the 30 day rule’s
purpose of preventing parties from adopting a ‘wait and see’ approach in state court
before removing.”).

Instead, the Court finds that the statutory 30-day period of

removal for these defendants expired long before service of the amended
complaint.

Plaintiff’s error in naming the defendant in the original complaint as

Forest Laboratories, Inc. instead of Forest Laboratories, LLC “provides no relief from
the operation of § 1446(b)(1).” Lee, 2013 WL 588787, at *4. As such, defendant’s
removal was untimely and the case will be remanded to state court.

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Accordingly,
IT IS HEREBY ORDERED that plaintiff’s motion to remand [Doc. #11] is
granted.
IT IS FURTHER ORDERED that the Clerk of the Court shall remand this
action to the Twenty-First Judicial Circuit Court of Missouri (County of St. Louis),
from which it was removed.

_________________________
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 21st day of September, 2015.

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