Wallace v. Dolgen Midwest, LLC et al

Filing 20

Memorandum Opinion: The Court concludes that plaintiff's first amended complaint, legitimately filed under Rule 15(a)(1)(A), divested this Court of diversity jurisdiction. Accordingly, plaintiff's motion to remand (Doc. No. 9 ) is granted and this case is remanded to the Summit County Court of Common Pleas. Judge Sara Lioi on 2/12/2013. (P,J)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
JEFFREY J. WALLACE,

PLAINTIFF,
vs.
DOLGEN MIDWEST, LLC, et al.,
DEFENDANTS.

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CASE NO. 5:12CV2945

JUDGE SARA LIOI

MEMORANDUM OPINION

Before the Court is plaintiff Jeffrey J. Wallace’s motion to remand (Doc. No. 9),
defendant Dolgen Midwest, LLC’s memorandum in opposition (Doc. No. 13), and plaintiff’s
reply (styled as a “response”) (Doc. No. 19). For the reasons discussed below, plaintiff’s motion
is GRANTED and this case is REMANDED to the Summit County Court of Common Pleas.
I. BACKGROUND
On November 8, 2012, plaintiff Jeffrey J. Wallace (“Wallace” or “plaintiff”) filed
an action in the Summit County Court of Common Pleas against Dolgen Midwest, LLC,
identified as Dollar General Store, and two John Does, one alleged to be the manager of the
relevant Dollar General Store and the other an employee. (Doc. No. 1-1.) The complaint was
served on November 16, 2012.
Plaintiff alleged in his complaint that he was a district sales manager for Red Bull
Distributing Corporation whose duties included visiting certain locations to stock shelves and
assist subordinates in updating merchandise. (Doc. No. 1-1 at 5, ¶ 5.) On or about November 22,
2011, his supervisors suddenly approached him and advised him that “[Dollar General] Store, its
managers, employees and persons operating with them,” had accused him of shoplifting while he

was in the store stocking the shelves several months before. He denied the accusation. (Doc. No.
1-1 at 6, ¶ 6.) His supervisor advised him that, because of the accusations, he was terminated
effective immediately. (Doc. No. 1-1 at 6, ¶ 7.) Plaintiff alleges that defendants defamed him,
maliciously and intentionally, and discriminated against him on the basis of race in violation of
Ohio Rev. Code § 4112.02(g).
On November 29, 2012, defendant Dolgen Midwest, LLC (“Dolgen” or
“defendant”) timely filed a notice of removal asserting diversity as the basis for this Court’s
jurisdiction. (Doc. No. 1.)
On December 5, 2012, prior to the filing of any responsive pleading, plaintiff filed
his first amended complaint (Doc. No. 7), adding one Lora Wakefield, an Ohio resident alleged
to have “assisted employees at Dollar General Store who contributed toward providing false,
misleading and inappropriate information regarding [p]laintiff[,]” and to have “referred to
[p]laintiff as a thief.” (Doc. No. 7 at 47, ¶ 5.) The amended complaint seeks recovery against all
defendants, including Ms. Wakefield individually. (Doc. No. 7 at 48, ¶ 14.)
On December 17, 2012, plaintiff filed the instant motion to remand, asserting that
there is not complete diversity of citizenship. (Doc. No. 9.) Later, on the same date, defendants
filed their answer to the first amended complaint. (Doc. No. 10.)
II. DISCUSSION
Under 28 U.S.C. § 1441(a), “any civil action brought in a State court of which the
district courts of the United States have original jurisdiction, [sic] may be removed by the
defendant or defendants, to the district court of the United States for the district and division
embracing the place where such action is pending.” When determining whether a civil action is

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removable solely on the basis of diversity jurisdiction, “the citizenship of defendants sued under
fictitious names shall be disregarded.” 28 U.S.C. § 1441(b)(1).
“The party that removed the case to federal court bears the burden of establishing
federal subject matter jurisdiction.” Village of Oakwood v. State Bank & Trust Co., 539 F.3d
373, 377 (6th Cir. 2008) (citing Ahearn v. Charter Twp. of Bloomfield, 100 F.3d 451, 453-54
(6th Cir. 1996)).1 “The general rule is that diversity is determined at the time of the filing of a
lawsuit.” Curry v. U.S. Bulk Transp., Inc., 462 F.3d 536, 540 (6th Cir. 2006).
It is true that complete diversity existed at the time of removal, rendering the
removal proper under § 1441. However, plaintiff amended his complaint after removal, but prior
to the filing of any responsive pleading, as was his right under Fed. R. Civ. P. 15(a)(1)(A) (“A
party may amend its pleading once as a matter of course within [. . .] 21 days after serving it[.])
(emphasis added).2 “A pleading that has been amended under Rule 15(a) supersedes the pleading
it modifies and remains in effect throughout the action unless it is subsequently modified. Once
an amended pleading is interposed, the original pleading no longer performs any function in the
case.” Broyles v. Corr. Med. Servs., Inc., No. 1:07cv690, 2010 WL 989711, at *1 (W.D. Mich.
Feb. 25, 2010). Therefore, once plaintiff filed his first amended complaint naming a non-diverse
defendant, no subject matter jurisdiction remained; diversity was destroyed.
In its opposition, defendant relies upon 28 U.S.C. § 1447(e) to argue that it is
within this Court’s discretion to deny post-removal amendment of the complaint if the
amendment would destroy diversity. Section 1447(e) provides: “If after removal the plaintiff
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“[R]emoval statutes are to be narrowly construed.” Palkow v. CSX Transp. Inc., 431 F.3d 543, 555 (6th Cir. 2005)
(quoting Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941), quoting Healy v. Ratta, 292 U.S. 263,
270 (1934) (“Due regard for the rightful independence of state governments, which should actuate federal courts,
requires that they scrupulously confine their own jurisdiction to the precise limits which the statute has defined.”)).
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As already noted, the complaint was served on November 16, 2012 and the amended complaint was filed nineteen
(19) days later, on December 5, 2012.

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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.” (emphasis
added.) However, under the circumstances of this case, plaintiff was not required to seek joinder
(i.e., to move for it) as he had the right under Rule 15(a)(1)(A) to amend his pleading once as a
matter of course. Therefore, there was nothing for this Court to “deny” and Section 1447(e)
offers defendants no refuge.3
Defendants next argue that the non-diverse defendant who was added by way of
the first amended complaint is a sham defendant whose fraudulent joinder should not be
permitted to destroy the diversity that existed at the time of removal.
“‘When a non-diverse party has been joined as a defendant, then in the absence of
a substantial federal question the removing defendant may avoid remand only by demonstrating
that the non-diverse party was fraudulently joined.’” Kent State Univ. Bd. of Trs. v. Lexington
Ins. Co., No. 11-3601, 2013 WL 216026, at *3 (6th Cir. Jan. 22, 2013) (quoting Casias v. WalMart Stores, Inc., 695 F.3d 428, 432 (6th Cir. 2012), quoting Jerome-Duncan, Inc. v. Auto-ByTel, L.L.C., 176 F.3d 904, 907 (6th Cir. 1999)). “‘To prove fraudulent joinder, the removing
party must present sufficient evidence that a plaintiff could not have established a cause of action
against non-diverse defendants under state law.’” Id. (quoting Coyne v. Am. Tobacco Co., 183
F.3d 488, 492-93 (6th Cir. 1999)). As noted by the Sixth Circuit:
[I]f there is a colorable basis for predicting that a plaintiff may recover against
non-diverse defendants, this Court must remand the action to state court. The
district court must resolve all disputed questions of fact and ambiguities in the

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The Court agrees with defendants that Curry, supra, is not the best case to rely upon, but for a different reason than
argued by defendants. In Curry, a responsive pleading had already been filed by the time plaintiff sought leave to
amend to add a non-diverse party. Because the district court exercised its discretion under § 1447(e) to grant the
amendment, which destroyed diversity, § 1447(c) required remand. The procedural facts of the instant case differ
from those in Curry.

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controlling state law in favor of the non-removing party. All doubts as to the
propriety of removal are resolved in favor of remand.
Coyne, 183 F.3d at 493 (internal quotation marks and citation omitted). “The combination of the
‘colorable’ standard with the requirement that all ambiguities of state law are to be resolved in
favor of the non-removing party presents a significant hurdle. A defendant attempting to prove
fraudulent joinder thus faces a particularly heavy burden.” Kent State, 2013 WL 216026, at *4.
Here, defendant has not and cannot meet the test in Coyne. Defendant’s sole
argument is that plaintiff cannot prevail against Ms. Wakefield because of the alleged existence
of an arbitration agreement.4 Plaintiff’s claim against Ms. Wakefield sounds in defamation.
Plaintiff argues in response to defendant’s opposition that the arbitration agreement, if it applies
at all, would have no bearing on this state law claim.
Whether or not plaintiff can prevail on the defamation claim against Ms.
Wakefield in the face of an arbitration agreement is a question on the merits. Given the parties’
differing legal and factual views with respect to this claim, it is not “clear that there can be no
recovery under the law of the state on the cause alleged or on the facts in view of the law.”
Alexander v. Electronic Data Sys. Corp., 13 F.3d 940, 949 (6th Cir. 1994) (quoting Bobby Jones
Garden Apartments, Inc. v. Suleski, 391 F.2d 172, 176 (5th Cir. 1968)). If this Court lacks
jurisdiction, and it does, defendant’s argument in this regard cannot be resolved here.

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Defendant also asserts that Ms. Wakefield is not and has never been its employee (Doc. No. 13 at 84), as if this
would preclude adding her as a defendant. It further asserts, without any basis, that her “involvement in the instant
case is unclear and tenuous at best.” (Id.) However, the allegations against her in the amended complaint are quite
clear and not tenuous. (See, Doc. No. 7 at 47, ¶ 7 and First Cause of Action.) These arguments and assertions of
defendant have so little merit that the Court need not address them further.

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III. CONCLUSION
For the reasons set forth herein, the Court concludes that plaintiff’s first amended
complaint, legitimately filed under Rule 15(a)(1)(A), divested this Court of diversity jurisdiction.
Accordingly, plaintiff’s motion to remand (Doc. No. 9) is GRANTED and this case is
REMANDED to the Summit County Court of Common Pleas.

IT IS SO ORDERED.

Dated: February 12, 2013
HONORABLE SARA LIOI
UNITED STATES DISTRICT JUDGE

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