Acain et al v. International Plant Services, LLC

Filing 94

MEMORANDUM AND ORDER (Signed by Judge Nancy F. Atlas) Plaintiffs Motion to Remand [Doc. # 57] is GRANTED and this case will be REMANDED to the 113th Judicial District Court of Harris County, Texas. It is furtherORDERED that Defendants Motion to Stri ke [Doc. # 78] is DENIED. It is furtherORDERED that the Court does not reach Defendants Motions to Dismiss [Doc. ## 63, 66] and they are carried with the case on remand.The Court will issue a separate Remand Order. Parties notified.(sashabranner, )

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
RENATO ACAIN, et al.,
Plaintiffs,
v.
INTERNATIONAL PLANT
SERVICES, LLC, et al.,
Defendants.

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CIVIL ACTION NO. 4:12-cv-00044

MEMORANDUM AND ORDER
This case is before the Court on Plaintiffs’ Motion for Remand [Doc. # 57]
(“Motion”). Defendants filed an objection and response to the motion to remand
[Doc. # 65] (“Response”), Plaintiffs filed a reply [Doc. # 75], and Defendants
submitted a sur-reply [Doc. # 78]. Having carefully reviewed the full record and
applied governing legal authorities, the Court GRANTS Plaintiffs’ Motion for
Remand, and REMANDS this case to the 113th District Court, Harris County, Texas.
I.

BACKGROUND
This lawsuit arises out of an action originally filed in the 113th District Court

of Harris County, Texas. Plaintiffs allege that Defendants conspired to fraudulently
contract with skilled foreign labor from the Republic of the Philippines (the
“Philippines”) by falsely promising them steady employment at companies in the oil
industry operating in the United States. Plaintiffs raise numerous state law claims:
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human trafficking, breach of contract, fraud, unjust enrichment, conversion, violation
of the Texas Theft Liability Act, breach of fiduciary duty, and conspiracy.
On December 30, 2011, while the case was pending in state court, Plaintiffs
amended their petition [Doc. # 3, Ex. B] to add a claim under the Racketeer Influenced
Corrupt Organization Act (“RICO”), 18 U.S.C. § 1961. Pursuant to 18 U.S.C. § 1441,
Defendants timely removed the action to federal court on January 6, 2011 [Doc. # 1].
This Court, upon removal, possessed federal question jurisdiction based on Plaintiffs’
RICO claim, 28 U.S.C. § 1331, and supplemental jurisdiction over Plaintiffs’ Texas
state law claims, 28 U.S.C. § 1367(a). See Enochs v. Lamps Cnty., 641 F.3d 155, 158
(5th Cir. 2011).
Defendants thereafter filed a Motion to Dismiss Pursuant to Rule 12(b)(6) [Doc.
# 6] focusing on the RICO claim. At a hearing on March 19, 2012, the Court denied
Defendants’ motion without prejudice [Doc. # 47], and gave Plaintiffs leave to amend
their complaint. On May 21, 2012, Plaintiffs filed a Second Amended Complaint
[Doc. # 56] that did not contain any RICO or other federal claims. On May 29, 2012,
Plaintiffs filed their Motion seeking remand to state court. Defendants thereafter filed
two motions to dismiss pursuant to Federal Rules of Civil Procedure 12(b)(1) [Doc.
# 63] and 12(b)(6) [Doc. # 66]. Because the Court remands this case to state court,
the Court does not reach these motions to dismiss.

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II.

LEGAL STANDARDS
“‘Federal courts are courts of limited jurisdiction.’” Rasul v. Bush, 542 U.S.

466, 489 (2004) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375,
377 (1994)); McKee v. Kansas City S. Ry. Co., 358 F.3d 329, 337 (5th Cir. 2004);
Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001). “‘They possess only
that power authorized by Constitution and statute, which is not to be expanded by
judicial decree.’” Rasul, 542 U.S. at 489 (quoting Kokkonen, 511 U.S. at 377).
“[W]hen there is a subsequent narrowing of the issues such that the federal claims are
eliminated and only pendent state claims remain, federal jurisdiction is not
extinguished. Instead, the decision as to whether to retain the pendent claims lies
within the sound discretion of the district court.” Brown v. Sw. Bell Tel. Co., 901 F.2d
1250, 1254 (5th Cir. 1990).
To determine whether to retain pendent state claims, this Court looks “to the
statutory factors set forth by 28 U.S.C. § 1367(c), and to the common law factors of
judicial economy, convenience, fairness, and comity.” Enochs v. Lamps Cnty., 641
F.3d 155, 158-59 (5th Cir. 2011) (citations omitted); see also Brown, 901 F.2d at
1254-55. Under § 1367(c), a district court may decline to exercise supplemental
jurisdiction if “(1) the claim raises a novel or complex issue of State law, (2) the claim
substantially predominates over the claim or claims over which the district court has

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original jurisdiction, (3) the district court has dismissed all claims over which it has
original jurisdiction, or (4) in exceptional circumstances, there are other compelling
reasons for declining jurisdiction.” This Court also must consider “whether the
plaintiff has ‘attempted to manipulate the forum’ in which the case will be heard
‘simply by deleting all federal-law claims from the complaint and requesting that the
district court remand the case . . . .’” Brown, 901 F.2d at 1255; see also Enochs, 641
F.3d at 159.
III.

ANALYSIS
The statutory factors governing whether to retain Plaintiffs’ pendent state law

claims favor remand in this case. First, Plaintiffs’ claim under Texas Penal Code
§§ 20A.02 and 20A.03 for trafficking of persons is a complex, novel state law claim.
The Texas Supreme Court has not provided guidance on how to interpret and apply
those provisions. Enochs, 641 F.3d at 159. No cases have discussed § 20A.03, and
only two state cases, both unpublished, have analyzed § 20A.02. See Ramos v. State,
No. 13-06-00646-CR, 2009 WL 3210924 (Tex. App.—Corpus Christi Oct. 8, 2009);
Buggs v. State, Nos. 05-07X00676-CR, 05-07-00677-CR, 05-07-00749-CR, 2008
WL 541892 (Tex. App.—Dallas Aug. 20, 2008). Second, “Texas state law claims
predominate over the non-existent federal claims . . . .” Enochs, 641 F.3d at 159.
Third, although not dismissed by this Court, the only federal claim, the RICO claim,

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has been voluntarily dismissed by Plaintiffs.
Turning to the common law factors, three of the four weigh in favor of remand.
Judicial economy favors remand because a significant amount of judicial resources
have not been expended in the Court’s consideration of this case. In Parker & Parsley
Petroleum Co. v. Dresser Indus., 972 F.2d 580 (5th Cir. 1992), the Fifth Circuit held
that judicial economy would not be served by trying the case in federal court even
though “some substantial development” had occurred. 972 F.2d at 587. Although “a
number of discovery matters had been presented to, and decided by, the magistrate
judge,” the case “had been pending for only nine months, not four years” and was not
ready for trial. Id. Additionally, the Fifth Circuit noted that the case would require
further development before trial because the plaintiff had recently filed a second
amended complaint that made significant changes to the theories of recovery.
Ultimately, “the trial court was not so intimately involved in, and familiar with, the
case that proceeding further in federal court would have prevented redundancy and
would have conserved substantial judicial resources.” Id.
Similarly, this Court has not yet developed a “substantial” or “intimate”
familiarity with Plaintiffs’ Texas state law claims. The case has been pending in
federal court less than a year, only limited discovery has occurred, and numerous
extensions have been granted within that time. In addition, Plaintiffs’ Second

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Amended Complaint [Doc. # 56] filed on May 22, 2012 added various new state law
claims. Specifically, Plaintiffs have added claims of violations of the Texas Human
Trafficking statute, breach of fiduciary duty, and theft. Although the Court ruled on
Defendants’ first motion to dismiss, the motion to dismiss was filed at a very early
stage of the litigation and “did not require a thorough consideration of the merits of
the state [claims] . . . .” Enochs, 641 F.3d at 160. The only other hearing conducted
by this Court was the initial scheduling conference. Although two subsequent
motions to dismiss were filed about five weeks after the Motion was filed, neither has
been addressed by this Court.
Next, remand would be fair to both parties. The Fifth Circuit has held that “it
[is] certainly fair to have had the purely Texas state law claims heard in Texas state
court.” Enochs, 641 F.3d at 160. As in Enochs, “there is nothing to indicate that
either party [will be] prejudiced by a remand to Texas state court.” Id.
Further, the principles of comity and federalism weigh in favor of remand.
“[T]he interests of comity and federalism are better served when federal courts avoid
unnecessary determinations of state law.” Parker & Parsley, 972 F.2d at 590 n.12.
“The federal courts are courts of limited jurisdiction, and often are not as well
equipped for determinations of state law as are state courts.” Id. at 588-89 (citation
omitted). This case is factually unusual and raises novel issues of state law that are

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best addressed by the state courts. See id. at 589.
The final common law factor, convenience, is neutral. The state court is in the
same county as this Court, making it an equally geographically convenient forum.
Financial inconvenience will also be minimal. “Little [if any] new legal research
would be necessary, as the surviving claims [are] governed by state law, in either
forum, and any additional factual research would have had to be conducted anyway.”
Parker & Parsley, 972 F.2d at 587-88 (citation omitted); see also Enochs, 641 F.3d
at 160.
Finally, this Court finds that Plaintiffs did not engage in forum manipulation;
Plaintiffs dismissed their RICO claim in good faith after recognition of its complexity
in light of Defendants’ legal challenges in the motion to dismiss [Doc. ## 6, 8].1
Defendants argue that Plaintiffs’ remaining claims are “inextricably intertwined
with issues of international and federal law . . . .,” Response, at 2, because the case
was brought by citizens of the Philippines against citizens of the Philippines, Tunis,
and the United States and because Philippine law may govern part or all of the
dispute. The Court is unpersuaded. First, Defendants fail to identify which specific
federal law is implicated by this case. Second, Texas state courts are capable of

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In any event, even if Plaintiffs had engaged in forum manipulation, “it was not so
improper as to override the balance of the statutory and common law factors weighing
heavily in favor of remand.” See Enochs, 641 F.3d at 160.

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determining whether Philippine law governs Plaintiffs’ claims and dismissing the case
if required. State courts have the authority to address whether foreign law applies to
a dispute and to adjudicate disputes when non-citizens are parties. See, e.g., Nexen
Inc. v. Gulf Interstate Engineering Co., 224 S.W.3d 412, 419-23 (Tex.
App.—Houston [1st Dist.] 2006) (deciding whether Texas law or the law of Alberta,
Canada applied); Bridas Corp. v. Unocal Corp., 16 S.W.3d 893, 896-900 (Tex.
App.—Houston [14th Dist.] 2000) (deciding whether Texas law or the laws of
Turkmenistan and Afghanistan applied). Defendants have offered no case law to the
contrary. Ultimately, any federal interest in this dispute is outweighed by the interest
of Texas courts in adjudicating Plaintiffs’ Texas state law claims.
IV.

CONCLUSION AND ORDER
Based on the foregoing, the Court declines to exercise its discretion to exercise

jurisdiction to retain Plaintiffs’ pendent state law claims. It is therefore
ORDERED that Plaintiffs’ Motion to Remand [Doc. # 57] is GRANTED and
this case will be REMANDED to the 113th Judicial District Court of Harris County,
Texas. It is further
ORDERED that Defendants’ Motion to Strike [Doc. # 78] is DENIED. It is
further
ORDERED that the Court does not reach Defendants’ Motions to Dismiss

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[Doc. ## 63, 66] and they are carried with the case on remand.
The Court will issue a separate Remand Order.
SIGNED at Houston, Texas, this 10th day of October, 2012.

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