NORTH JERSEY BRAIN & SPINE CENTER v. AETNA LIFE INSURANCE CO. et al

Filing 24

REPORT AND RECOMMENDATIONS re: Plaintiff's motion to remand (ECF No. 6). Objections, if any, to R&R due by 12/6/2016. Signed by Magistrate Judge Mark Falk on 11/22/16. (LM, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

NORTH JERSEY BRAIN AND SPINE
CENTER,

Civil Action No. 16-1797 (WJM)

Plaintiff,
v.
REPORT & RECOMMENDATION
AETNA LIFE INSURANCE
COMPANY, et al.,
Defendants.

FALK, U.S.M.J.
This is a healthcare payment dispute filed in state court. Before the Court is
Plaintiff’s motion to remand due to procedural defects in the removal process. [ECF No.
6.] The motion is opposed. No oral argument is necessary. Based upon the following, it
is respectfully recommended that the motion be GRANTED.

BACKGROUND1
Plaintiff, North Jersey Brain & Spine Center, is a New Jersey-based medical
practice specializing in neurosurgical procedures and the treatment of the brain and spinal

1

This section is drawn from the pleadings and briefs submitted. Direct citations
are omitted.

cord. There are twenty-six (26) defendants named in the Complaint. The primary
Defendant, Aetna Life Insurance Co., is part of the Aetna-family of managed care
companies consisting of plans providing healthcare coverage to members and their
dependents, as well as administrative services to self-funded plans. Of the remaining 25
Defendants, two (2) are Aetna-related companies and twenty-three (23) are either selfinsured funds or plan sponsors. Plaintiff claims that it rendered emergency medical care
to 34 patients who were insured under healthcare insurance sponsored, funded, and/or
administered by one of the twenty-six Defendants, and that it was not properly paid for
services rendered.2
On February 16, 2016, Plaintiff filed the current suit in state court, asserting state
law claims for breach of implied contract; breach of the covenant of good faith and fair
dealing; unjust enrichment; quantum meruit; interference with economic advantage;
business libel; violations of the New Jersey Healthcare Information Networks and
Technologies Act (“HINT”); and violations of New Jersey regulations governing the

2

The three Aetna defendants are: Aetna Life Insurance Co.; Aetna Health, Inc.;
and Aetna Health Insurance Co. (collectively, “Aetna”). There are nine self-insured plan
defendants: Bank of America Corp.; Marriot International, Inc.; Teamsters Western
Region & New Jersey Health; Securitas Systems, USA, Inc.; United Benefit Fund; Mason
Tenders’ District Council Welfare Fund; Bergen Municipal Employee Fund; United
Airlines, Inc.; and Costco Wholesale Corp. There are 14 defendants referred to as “Other
Plan Defendants”: Creative Management Services LLC; KPMG LLP; Reynolds America
Inc.; BioReference Laboratories, Inc.; Quest Diagnostics, Inc.; Aramak Corp.; SDK
Apartments, LLC; Tyco International Management Co., LLC; The Bank of New York
Mellon; Techmedia Network, Inc.; Bazing, LLC; TD Bank NA; Brooker Engineering,
PLLC; and Tension Envelope Corp.
2

payment of emergency services. At or around the same time, Plaintiff separately filed a
second, independent action, just against Aetna, in state court (the “second complaint”).
On March 17, 2016, Aetna attempted to remove both cases to federal court,
alleging that most, if not all, of the plans at issue are governed by the Employee
Retirement Income Security Act of 1974 (“ERISA”), preempting Plaintiff’s state law
claims and giving rise to federal question jurisdiction under 28 U.S.C. § 1331.
However, in attempting to remove the two separate cases, Aetna attached the
second complaint to both removal petitions, resulting in a duplicate removal and the
current complaint not being technically removed. Apparently upon discovering the
mistake, the duplicate removal (Civil Action No. 16-1545) was dismissed. See Civ. A.
No. 16-1545, ECF No. 7.
On March 31, 2016, the current docket was amended to include the correct notice
of removal and complaint, with a retroactive removal date of March 17, 2016.
On April 18, 2016, Plaintiff filed the current motion to remand, arguing that, even
as amended, the removal is procedurally deficient and the case must be remanded
pursuant to 28 U.S.C. § 1447(c). Specifically, Plaintiff claims that Defendants’ amended
notice of removal violates a procedural rule commonly referred to as the rule of
unanimity—that is, a requirement that all defendants join in the notice of removal, see,
e.g., Balazik v. County of Dauphin, 44 F.3d 209, 213 (3d Cir. 1995)—because Defendant
Bazing LLC did not join in, or provide timely consent to, the removal of this case.3

3

Procedural defects are not jurisdictional and must be raised by the party seeking
to remand within 30 days, cannot be raised by the Court sua sponte, and are waived if not
3

Defendants oppose the motion, arguing that removal was proper and that any
Defendant that has not joined in the removal should be considered nominal and excused
from joining in the removal petition.
As is explained below, the rule of unanimity is strictly enforced. It is applied
regardless of the number of Defendants in the case, and attempts to amend or later justify
non-joinder of defendants are rejected. Here, at least one defendant did not timely join in
the notice of removal. For that reason, the case should be remanded.

DISCUSSION
A.

Removal Generally
The federal removal statute provides that “[e]xcept as otherwise provided by

Congress, any civil action brought in a State court of which the district courts of the
United States have original jurisdiction, may be removed . . . 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). The removing party bears the burden of demonstrating
that the removal was proper. See Boyer v. Snap-On Tools, Inc., 913 F.2d 108, 111 (3d

timely raised. See, e.g., Korea Exchange Bank v. Trackwise Sales Corp., 66 F.3d 46, 48
(3d Cir. 2003). A challenge to the Court’s subject matter jurisdiction, on the other hand,
can be made at any time, and subject matter jurisdiction can never be waived. See, e.g.
Wis. Dep’t Corr. v. Schacht, 524 U.S. 381, 392 (1998). The current motion addresses a
“procedural” defect. Balazik, 44 F.3d at 214 (lack of unanimity is procedural). However,
Plaintiff has also filed a separate “jurisdictional” motion to remand this and the related
case of New Jersey Brain & Spine v. Aetna Life Ins. Co., et al., 16-1544. (See ECF No.
17; Civ. A. No. 16-1544, ECF No. 10.) In that motion, Plaintiff challenges Defendants’
contention that the claims in this case are preempted by ERISA. Since the procedure for
removing this case is defective and alone warrants remand, there is no need to reach the
“jurisdictional” issues raised in the second motion.
4

Cir. 1990). A district court “must resolve all contested issues of substantive fact in favor
of the plaintiff and must resolve any uncertainties about the current state of controlling
substantive law in favor of the plaintiff.” Thompson v. Novartis Pharm. Co., 2007 WL
1521138, at *2 (D.N.J. May 22, 2007) (quotations omitted). Removal is strictly construed
and all doubts are resolved in favor of remand. See Samuel-Bassett v. Kia Motors Am.,
Inc., 357 F.3d 392, 396 (3d Cir. 2004).
B.

The Rule of Unanimity
“Removal is a statutory right, and the procedures to effect removal must be

followed.” Lewis v. Rego, 757 F.2d 66, 68 (3d Cir. 1985). It is well-established that all
defendants must join in the notice of removal—often referred to as “the rule of
unanimity.” Balazik, 44 F.3d at 213; see Step Plan Services v. Koresko, 219 Fed. Appx.
249, 250 (3d Cir. 2007) (“[Defendant] failed to obtain the unanimous consent of all
defendants before seeking to remove the case to federal court. Therefore, his removal
was procedurally defective.”).
The rule of unanimity requires that all properly joined defendants file, join, or
consent to removal within 30 days of service of the Complaint. See 28 U.S.C. § 1446;
New York Reg’l Rail Corp. v. Bridges, No. 06-44, 2006 WL 1722631, at *3 (D.N.J. June
30, 2006) (all proper defendants must “join in the notice of removal or give their consent
within the thirty day period for the removal to be proper.”). The rule applies regardless of
whether a defendant has entered an appearance in state court. See Aqua-Gulf Transp.,
Inc. v. Twin County Trans., 06-1952, 2006 WL 3591291, at *4 (D.N.J. Dec. 11, 2006).
Further, unanimous consent is required even when there is a large number of defendants.
5

See Cacoilo v. Sherwin-Williams Co., 902 F. Supp. 2d 511, 518 (D.N.J. 2012)
(remanding when 33 of 36 defendants joined); Pinnacle Choice v. Silverstein, 2008 WL
2003759, at *5 (D.N.J. May 6, 2008) (remanding when 30 of 31 defendants joined). And,
no matter the number of defendants, each must individually provide written consent to
removal; defendants generally cannot speak for each other. Ogletree v. Barnes, 851 F.
Supp. 184, 188 (E.D. Pa. 1994).
Despite the stringent nature of the rule, the non-joinder of a defendant can be
excused in three circumstances: (1) when the non-joining defendant or defendants are
unknown or nominal parties; (2) where a defendant has been fraudulently joined; or (3)
when a non-resident defendant has not been served at the time of removal. See Balazik,
44 F.3d at 213 n.4.
If it is determined that the rule has been violated and no exception applies, the
defect cannot be cured and remand is required. See, e.g., Cacoilo, 902 F. Supp. at 518
(“The subsequent filing of an untimely notice of consent is of absolutely no moment, does
nothing to cure the defect in removal procedure, and is properly rejected by the court.”);
14C Charles A. Wright, et al. Federal Practice & Procedure § 3739 (“Thus, courts often
allow removing defendants, or other parties, to cure failures to file with the district court
all process, pleadings, and orders served on the defendants in state court . . . . On the
other hand, other defects in the removal procedure cannot be cured. For example, if
fewer than all defendants who must join in the removal fail to do so within the time
prescribed in Section 1446 . . . that defect cannot be cured.” (emphasis added)).

6

C.

Unanimity is Not Present; Remand is Required
It is effectively undisputed that at least one Defendant—Bazing, LLC—did not

participate in the removal of the case and did not provide written consent to removal
within 30 days. Therefore, the case must be remanded unless an exception to the rule of
unanimity applies. Aetna contends that there are two, arguing that Bazing is a nominal
party and that it was not properly served. Ultimately neither has merit.
First, Aetna did not identify Bazing as nominal in the removal petition. Good
removal practice generally requires that the removal petition itself state the reason why
the consent of non-joining parties is unnecessary. See, e.g., Lewis v. Rego, 757 F.2d 66,
69 (3d Cir. 1985) (“[T]he removal petition will be effective provided that it alleges that
the defendants who did not join in it were not served in the state proceeding (emphasis
added)); PP Farmers’ Elvtr. Co. v. Farmers Elvtr. Mut. Ins. Co., 395 F.2d 546, 548 (7th
Cir. 1968) (“[W]here the suit involves multiple defendants and one or more of the
defendants does not join in the petition, better practice dictates that the petition expressly
indicate why, e.g., that he is a nominal party or was not served at the time of filing the
petition.”). While not necessarily a standalone reason for remand, it does suggest that at
the time of removal Bazing was not considered nominal.
Second, removal statutes are strictly construed, and Aetna has not established that
Bazing is a “nominal” party. In the remand context, determining whether a party should
be considered nominal is a practical inquiry focused on the particular facts and
circumstances of the case. Hartford Fire Ins. Co. v. Harleysville Mut Ins. Co., 736 F.3d
255, 259-61 (4th Cir. 2013). In general, nominal is considered “trifling” or “existing in
7

name only.” Id. Examples of nominal parties include John Doe defendants or insurance
stakeholders—i.e., an interpleader insurance dispute. See, e.g., Green v. America Online,
318 F.3d 465, 470 (3d Cir. 2003) (doe defendants); Miller v. Principal Life Ins. Co., 189
F. Supp. 2d 254, 256 (E.D. Pa. 2002) (insurance stakeholder).
Aetna claims Bazing is nominal for two reasons: (1) Bazing operates a fully
insured plan and that any money owed in this matter would allegedly paid by Aetna,
essentially contending that Aetna is the real party-in-interest; and (2) the claim relating to
Bazing has already been paid in full. The arguments fall short.
Aetna has not established that Bazing is free from liability in this case. Plaintiff
has pleaded direct state law claims against Bazing for, inter alia, breach of contract and
business libel. It specifically alleges that Bazing promised its employees health benefits
and breached that promise through its relationship with Aetna. Plaintiff also disputes that
the plan is fully funded and contends that the actual Bazing plan gives no indication
whether it is fully or self funded. In other words, Plaintiff claims that it has legitimate
and direct state law claims against Bazing, which at this stage of the proceedings must be
taken as true. Thompson v. Novartis Pharm. Co., 2007 WL 1521138, at *2 (D.N.J. May
22, 2007). This is not a “Doe” defendant or a mere insurance stakeholder; direct and
substantive allegations in a pleading filed pursuant to Rule 11 have been made against the
company.
Much of Aetna’s argument hinges on the presumption that ERISA preempts
Plaintiff’s claims and that they are the only proper ERISA defendant in the case.
However, Aetna has not established preemption at this time. Nor is a fulsome preemption
8

analysis into the merits of the case appropriate when evaluating the preliminary question
of whether a party is “nominal” for purposes of joining in a removal petition, which is
somewhat surface inquiry.4
With respect to the fact that Aetna allegedly paid the Bazing-related claim, the
amount of that payment and the timing of same are disputed. It appears clear that no
payment was made until after the case was removed. Post-removal payment does not
speak to whether a party was “nominal” when the case was removed; indeed, it could
plausibly suggest an attempt to eliminate an impediment to removal by resolving the
claims against a non-joining party. More important, Plaintiff disputes that Bazing’s claim
has been “fully paid,” contending that only a partial payment has been made and that
additional money is owed. And even assuming the benefit claim was paid in full,
payment on such a claim would not seem to resolve, for example, the business libel claim,
for which additional damages could be sought.
While it may ultimately be that Bazing is a minor party in this larger dispute, it
hasn’t been shown to be nominal. Nor has Bazing submitted anything timely consenting
to removal or claiming nominal status.
Third, Aetna fails to establish that Bazing had not been served at the time of
removal. Again, Bazing itself has not contended that service was improper. In fact,
Plaintiff has submitted a certification stating that Bazing’s counsel conceded service of

4

Although it is the subject of a latter-filed and separate jurisdictional remand
motion, it is not at all clear that ERISA would preempt any claims in this case, let alone
all of them.
9

the Complaint. (See Reply Certification of Eric D. Katz, Esq., ¶ 6; providing transcript of
conversation with Bazing’s counsel).
In sum, Aetna’s removal of this case is procedurally defective. Bazing did not
timely join in the notice of removal. Indeed, the Court still has not been provided with
Bazing’s written consent to removal. Plaintiff has alleged numerous state law claims
against Bazing, and Aetna has not carried its burden to show that Bazing is either a
nominal party or that it was an unserved party. As stated, removal is strictly construed
and all doubts are resolved in favor of remand.5
CONCLUSION
For the reasons stated above, it is respectfully recommended that Plaintiff’s motion
to remand pursuant to 28 U.S.C. § 1447(c) [ECF No. 6] be GRANTED.

s/Mark Falk
MARK FALK
United States Magistrate Judge

DATED: November 22, 2016

5

For the first time in its reply papers, Plaintiff also contends a second
defendant—Quest Diagnostics—did not timely consent to removal of the case. Plaintiff
essentially alleges that the Aetna’s counsel stated—mistakenly but innocently—that it
represented Quest and was removing the case on its behalf, while in actuality Quest had
not yet retained Aetna’s law firm. (Pl.’s Reply Br. 2-3.) Plaintiff further contends that,
ultimately, the same counsel was retained 46 days after Quest was served and only after
the case was already removed. (Id.) Since this issue was raised for the first time in reply
papers, the Court does not base the decision on this point. However, it is possible that
unanimity may be lacking on this additional basis.
10