Lifrak v. Boy Scouts of America et al
MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that plaintiff's motion to remand [Doc. # 19 ] is granted. IT IS FURTHER ORDERED that the Clerk of Court shall remand this action to the Twenty-First Judicial Circuit Court of Missouri (St. Louis County) from which it was removed. Signed by District Judge Carol E. Jackson on 4/6/2017. (Copy of Docket Sheet and Order of Remand Mailed to Twenty-First Judicial Circuit Court of Missouri (St. Louis County))(CLO)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
BOY SCOUTS OF AMERICA, et al.,
Case No. 4:16-CV-2024 (CEJ)
MEMORANDUM AND ORDER
This matter is before the Court on plaintiff’s motion to remand the action to
the state court from which it was removed, pursuant to 28 U.S.C. § 1447(c). [Doc.
#19]. Defendants have responded in opposition, and the issues are fully briefed.
Plaintiff Alicia Lifrak worked for defendant Boy Scouts of America (BSA) from
November 1, 1994, to January 31, 2016. [Doc. #20 at 2; Doc. #20-6 at 2].
Beginning in February 2009, she served as the Chief Executive Officer of defendant
Lewis & Clark Council, Inc. (LCC), a regional affiliate of defendant BSA. Id. In her
capacity as CEO, she reported to defendant Michael McCarthy (McCarthy), a BSA
area director, and to the Board of Directors of defendant LCC. Id. On January 30,
2016, plaintiff was terminated from her position at LCC. [Doc. #20-6 at 7].
Plaintiff claims that her “sex or gender was a contributing factor” in her
suspension and subsequent termination. [Doc. #20-6 at 8]. She also claims that
the defendants perpetrated a series of discriminatory acts against her between
2011 and 2016, ultimately culminating in her termination. [Doc. #20 at 16].
Specifically, plaintiff alleges that defendant McCarthy made negative statements
about women in the workplace and other derogatory comments, and that he
discriminatorily lowered plaintiff’s performance ratings. [Doc. #20-6 at 3–4; Doc.
#37 at 3]. Plaintiff alleges that she complained to supervisors at BSA about the
investigation of her claims. [Doc. #20-6 at 4]. Instead, plaintiff says, she became
the target of multiple audits and suffered other adverse employment actions, such
as exclusion from leadership conferences and other professional development
opportunities; defendant McCarthy purportedly “played a role,” in these decisions.
[Doc. #20-6 at 4–6]. Finally, Plaintiff claims that defendants retaliated and
committed their final discriminatory act in terminating her employment under false
pretenses. [Doc. #20 at 2]. Defendants, for their part, assert that plaintiff was
terminated because she filed fraudulent expense reports. [Doc. #37 at 2]. Plaintiff
denies submitting fraudulent expense reports and argues that defendants’ stated
reason for terminating her employment is a pretext for discrimination. She asserts
that “other similarly-situated executives of [d]efendants have fraudulently or
inadvertently submitted incorrect or improper expense reports but were not
terminated or disciplined.” [Doc. #20 at 2].
After plaintiff’s termination, on March 22, 2016, she filed a discrimination
claim with the Missouri Commission on Human Rights. [Doc. #20 at 3; Doc. #201].1 Then, on November 1, 2016, defendant LCC filed an action against plaintiff in
the United States District Court for the Southern District of Illinois, alleging
Plaintiff notes that she received a right to sue letter from the Missouri Commission on
Human Rights on October 27, 2016. [Doc. #20 at 3; Doc. #20-3]. Plaintiff also filed a
complaint with the Illinois Department of Human Rights. [Doc. #20-2].
violations of the Computer Fraud and Abuse Act, 18 U.S.C. §§ 1030, et seq., as well
as common law conversion, unjust enrichment, breach of fiduciary duty, and breach
duty of loyalty claims.2 [Doc. #37 at 2; Doc. #20-4]. Plaintiff asserted her
gender discrimination claims as counterclaims in that action, under the Missouri
Human Rights Act (MHRA), Mo. Rev. Stat §§ 213.010, et seq. See Fed. R. Civ. P.
13(a); [Doc. #20 at 3; Doc. #20-5].
Plaintiff then filed this action against defendant McCarthy in the Circuit Court
of St. Louis County, Missouri on November 9, 2016, asserting MHRA violations.
[Doc. #20 at 3; Doc. #20-6]. She amended the complaint to add defendants BSA
and LCC on December 15, 2016. [Doc. #1-2]. On December 19, 2016, defendant
BSA removed the action to this Court on the basis of diversity jurisdiction, 28
U.S.C. § 1332. [Doc. #1]. Plaintiff had not yet served the amended complaint on
defendants at the time of removal.3
Plaintiff moves to remand the case, arguing that complete diversity of
citizenship is absent. Plaintiff is a citizen of Illinois. [Doc. #20 at 11]. Defendant
LCC is an Illinois citizen. Id. Defendant McCarthy is a citizen of Missouri. Id. And
defendant BSA is a District of Columbia congressionally-chartered corporation, with
its principal place of business in Texas. Id.
Plaintiff also argues that because
defendant McCarthy is a “forum defendant,” removal is barred by 28 U.S.C. §
1441(b)(2). Defendants argue that the fact that the plaintiff and defendant LLC are
The Computer Fraud and Abuse Act, 18 U.S.C. §§ 1030, et seq., claims arise from the
alleged “destruction of data” on plaintiff’s “LCC-issued iPad and iPhone after her
termination.” [Doc. #37 at 2].
Plaintiff served the original complaint on defendant McCarthy on December 11, 2016, and
served the amended complaint on December 27, 2016. [Doc. #20 at 3; Doc. #37 at 4; Doc.
both Illinois citizens should be disregarded, because LLC was fraudulently joined to
defeat diversity. [Doc. #37 at 1–2]. Defendants also argue that § 1441(b)(2) is
III. Legal Standard
“A defendant may remove a state law claim to federal court only if the action
originally could have been filed there.” In re Prempro Prods. Liab. Litig., 591 F.3d
613, 619 (8th Cir. 2010) (citing Phipps v. FDIC, 417 F.3d 1006, 1010 (8th Cir.
2005)). Moreover, the removing defendant bears 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). “All doubts about federal jurisdiction should be
resolved in favor of remand to state court.” In re Prempro, 591 F.3d at 620 (citing
Wilkinson v. Shackelford, 478 F.3d 957, 963 (8th Cir. 2007)). A case must be
remanded if, at anytime, it appears that the district court lacks subject-matter
jurisdiction. 28 U.S.C. § 1447(c); Fed. R. Civ. P. 12(h)(3).
“It is axiomatic that a court may not proceed at all in a case unless it has
jurisdiction.” Crawford v. F. Hoffman-La Roche Ltd., 267 F.3d 760, 764 (8th Cir.
2001). “The requirement that jurisdiction be established as a threshold matter
‘spring[s] from the nature and limits of the judicial power of the United States,’ and
is ‘inflexible and without exception.’” Steel Co. v. Citizens for a Better Env’t, 523
U.S. 83, 94–95 (1998) (quoting Mansfield, C. & L.M.R. Co. v. Swan, 111 U.S. 379,
A. Fraudulent Joinder
Diversity of citizenship jurisdiction under 28 U.S.C. § 1332 requires an
amount in controversy greater than $75,000 and complete diversity of citizenship
among the litigants. “Complete diversity of citizenship exists where no defendant
holds citizenship in the same state where any plaintiff holds citizenship.” OnePoint
Solutions, LLC v. Borchert, 486 F.3d 342, 346 (8th Cir. 2007). In this case,
defendants argue that plaintiff fraudulently joined defendant LCC and therefore that
complete diversity remains intact.
The doctrine of fraudulent joinder is an exception to the complete diversity
rule. In re Prempro, 591 F.3d at 620. Specifically, “[t]he doctrine of fraudulent
joinder allows a district court to assume jurisdiction over a facially nondiverse case
temporarily and, if there is no reasonable basis for the imposition of liability under
state law, dismiss the nondiverse party from the case and retain subject matter
jurisdiction over the remaining claims.” Murphy v. Aurora Loan Servs., LLC, 699
F.3d 1027, 1031 (8th Cir. 2012), as corrected (Nov. 28, 2012).
“Fraudulent joinder occurs when a plaintiff files a frivolous or illegitimate
claim against a non-diverse defendant solely to prevent removal.” In re Prempro,
591 F.3d at 620. To prove fraudulent joinder, the removing party must show that
“the plaintiff’s claim against the diversity-destroying defendant has ‘no reasonable
basis in fact and law.’” Knudson v. Sys. Painters, Inc., 634 F.3d 968, 980 (8th Cir.
2011) (quoting Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 810 (8th Cir. 2003)). In
other words, “if it is clear under governing state law that the complaint does not
state a cause of action against the non-diverse defendant, the joinder is
fraudulent.” Id. (emphasis
(internal quotation marks omitted).
Conversely, “joinder is not fraudulent where ‘there is arguably a reasonable basis
for predicting that the state law might impose liability based upon the facts
involved.’” Id. (quoting Filla, 336 F.3d at 811). Ergo, the Eighth Circuit has noted
that “[f]raudulent joinder is not easily shown by the defendant or lightly found by
the district court.” Vang v. PNC Mortg., Inc., 517 Fed. Appx. 523, 524 (8th Cir. May
22, 2013) (unpublished per curiam). Indeed “the defendant must ‘do more than
merely prove that the plaintiff’s claim should be dismissed pursuant to a Rule
12(b)(6) motion’ since ‘we do not focus on the artfulness of the plaintiff’s
pleadings.’” Block v. Toyota Motor Corp., 665 F.3d 944, 948 (8th Cir. 2011)
(quoting Knudson, 634 F.3d at 980).
Defendants argue that non-diverse defendant LCC was fraudulently joined,
because plaintiff’s claims are barred (1) under the claim-splitting doctrine, and (2)
pursuant to the compulsory counterclaim rule, under Federal Rule of Civil Procedure
13.4 [Doc. #37 at 1–2].
(1) Claim Splitting
“[A] tribunal generally has discretion to decide whether to dismiss a suit
when a similar suit is pending elsewhere.” Elgin v. Dep’t of Treasury, 567 U.S. 1
(2012); see also Sparkman Learning Ctr. v. Ark. Dep’t of Human Servs., 775 F.3d
993, 1000 (8th Cir. 2014). In this matter, the Court must determine whether
plaintiff has asserted colorable claims against defendant LCC under Missouri law, or
whether the doctrine of claim-splitting dispels any reasonable basis for believing
that the state court will impose liability. See Klaxon Co. v. Stentor Elec. Mfg Co.,
313 U.S. 487, 496 (1941) (holding that a federal court sitting in diversity will follow
the choice of law principles of the forum state).
Defendants have also filed a motion to dismiss or in the alternative, transfer venue, which
asserts similar res judicata and compulsory counterclaim arguments. [Doc. #16].
Initially, the Court finds that most of the cases cited by defendants are
inapposite in that they pertain to actions where a first-filed action resulted in a final
disposition on the merits. See, e.g., Johnson v. Bank of Am., N.A., 594 F. App’x 953
(11th Cir. Nov. 6, 2014) (affirming a district court’s denial of remand on the
grounds of fraudulent joinder where the first-filed action reached adjudication on
merits); Thompson v. R.J. Reynolds Tobacco Co., No. 12-01326-CV-W-GAF, 2013
WL 12075969 (W.D. Mo. May 3, 2013) (denying remand on the grounds of
fraudulent joinder because a jury reached a verdict in the first-filed action);
Palmore v. City of Pacific, 393 S.W.3d 657 (Mo. Ct. App. 2013) (dismissing secondfiled action on grounds of res judicata where first-filed action resulted in a
judgment). Others deal with claim-splitting in actions filed in the same court. See
Hutnick v. Beil, 84 S.W.3d 463 (Mo. Ct. App. 2002) (dismissing one case under the
claim-splitting doctrine where plaintiff filed two cases in St. Louis County Circuit
Defendants cite to the Missouri Court of Appeals decision in Bagsby v.
Gehres, in support of their argument that a Missouri court might dismiss an action
for claim-splitting where a first-filed case is pending. 139 S.W.3d 611 (Mo. Ct. App.
2004) (reasoning that “[a] cause of action that is single may not be split or tried
piecemeal.”) But, according to the Missouri Supreme Court, a final judgment on the
merits is an essential element of the claim-splitting defense. See King Gen.
Contractors, Inc. v. Reorganized Church of Jesus Christ of Latter Day Saints, 821
S.W.2d 495, 501 (Mo. 1991); see also Kesterson v. State Farm Fire & Cas. Co., 242
S.W.3d 712, 716 (Mo. 2008) (reasoning that “improper splitting of claims occurs
when a party sues on a claim which arises out of the same ‘act, contract or
transaction’ as the previously litigated claims” (internal quotation marks and
citation omitted)). Here, there has been no final judgment on the merits of case
filed by LLC in the Southern District of Illinois. This Court is bound by the
“statement of law pronounced by the Supreme Court in King General Contractors.”
Christenson v. Freeman Health Sys., 71 F. Supp. 3d 964 (W.D. Mo. Dec. 2, 2014).
Even if claim-splitting could be established here, defendants do not identify
cases from any circuit where fraudulent joinder was premised on claim-splitting in
two pending cases.
The Court finds persuasive the reasoning of the Fifth Circuit in
Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362 (5th Cir. 1995).
Carpenter, the court addressed the argument that “the existence of a parallel suit
should render removable an otherwise unremovable state claim.” Id. at 371. The
court reasoned that the language of § 1441 could not justify such an argument, and
the “statute simply does not address issues of judicial economy and litigation
management – matters beyond the statute’s language and policy.” Id. Instead, the
court noted that either of the courts in which the cases were pending could
voluntarily abate or dismiss its own proceedings. Id.
Defendants have therefore failed to demonstrate that the plaintiffs would
have no colorable cause of action under the MHRA in state court.5 Accordingly, the
Court finds that there is arguably a reasonable basis for predicting that the state
law might impose liability under the MHRA based upon the facts involved.6
The Court need not address or rely upon the “common defense” argument proposed by
plaintiff. See [Doc. #41].
The argument that defendant LCC is not an “employer” as defined in the MHRA has been
contested by plaintiff such that it is not appropriate to raise it in the context of fraudulent
joinder. Rather, “in situations where the sufficiency of the complaint against the non-diverse
defendant is questionable, the better practice is for the federal court not to decide the
doubtful question in connection with a motion to remand but simply to remand the case and
(2) Compulsory Counterclaims
Defendants also argue that plaintiff fraudulently joined defendant LCC
because any claims asserted against it are compulsory counterclaims in the firstfiled suit in the Southern District of Illinois. [Doc. #37 at 1].
This argument is essentially recasting defendants’ claim-splitting argument
under a different guise. And again, defendants cite no precedent for such an
argument. The Court is unaware of any cases in which these grounds served as the
basis for fraudulent joinder. In KC-X American Aerospace LLC v. Smithline, No. CV12-10415-GAF, 2013 WL 1218993 at *1 (C.D. Cal. Feb. 27, 2013), “the present
lawsuit,” originally filed in state court and removed to federal court, was
“essentially a counterclaim arising out of [previously filed] actions.” Id. The
defendants argued that “because the state claims arise out of the same transaction
as the [original federal suit], removal is proper even though complete diversity
does not exist.” Id. In deciding a motion to remand, the court wrote that “[c]learly
the language of Rule 13(a) cannot be construed as empowering the federal court to
restrain state-court proceedings. Thus, if a party asserts a claim in a state court
that should be a compulsory counterclaim in an already pending federal action, the
federal court cannot enjoin the prosecution of the state court proceeding.” Id. at *5
(quoting Wright, Miller, Kane & Marcus, 6 Fed. Prac. & Proc. Civ. § 1418). Instead,
“the parties must address questions of efficiency and economy” pertaining to
compulsory counterclaims in state court. Id. This Court agrees, and finds that there
leave the question for the state court to decide.” Filla v. Norfolk S. Ry. Co., 336 F.3d 806,
811 (8th Cir. 2003) (internal quotation marks and citations omitted).
are “colorable claim[s]” here. Junk v. Terminix Int’l Co., 628 F.3d 439, 446 (8th Cir.
2010) (internal quotation marks omitted).
B. Forum Defendant Rule
Plaintiff asserts that removal is prohibited by 28 U.S.C. § 1441(b), because
she filed suit in Missouri where defendant McCarthy is a citizen.
provides: “A civil action otherwise removable solely on the basis of the jurisdiction
under section 1332(a) of this title may not be removed if any 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)(2). Defendants argue that because
defendant McCarthy (the forum defendant) was not properly served with the
amended complaint prior to removal, § 1441(b)(2) does not apply. [Doc. #37 at
10]. Because the Court finds that there is a lack of complete diversity on the face
of the complaint, the Court need not address the forum defendant issue here.
For the reasons set forth above,
IT IS HEREBY ORDERED that plaintiff’s motion to remand [Doc. #19] is
IT IS FURTHER ORDERED that the Clerk of Court shall remand this action
to the Twenty-First Judicial Circuit Court of Missouri (St. Louis County) from which
it was removed.
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 6th day of April, 2017.
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