Hydrokinetics, LLC v. French
MEMORANDUM OPINION AND ORDER granting 3 MOTION to Remand. This action is remanded to the 55th Judicial District Court of Harris County, Texas. (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)
United States District Court
Southern District of Texas
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
JAMES FRENCH and HYDROCHEM,
February 17, 2017
David J. Bradley, Clerk
CIVIL ACTION NO. H-17-0318
MEMORANDUM OPINION AND ORDER
Pending before the court is Plaintiff Hydrokinetics,
Motion to Remand
("Motion to Remand")
Hydrokinetics argues that its joinder of a non-
diverse party subsequent to removal deprives this court of subjectmatter jurisdiction.
Defendants James French and Hydrochem, LLC
( "Hydrochem") (collectively, "Defendants") argue that Hydrochem was
For the reasons stated below, the Motion to
Remand will be granted.
Factual and Procedural Background
Hydrokinetics alleges that French worked as a Hydroblasting
November 28, 2016. 1
As part of the hiring process, French signed
a Confidentiality and Non-Disclosure Agreement ("the Agreement").
The following facts are presented as alleged in Plaintiff
Hydrokinetics, LLC' s Verified First Amended Complaint ("Plaintiff's
Amended Complaint") (Docket Entry No. 2) unless otherwise stated.
terminating his employment with the company.
Hydrokinetics is a
Texas-based company that does business in Texas and elsewhere in
the southern region of the United States.
French was a Texas
resident when he was hired by Hydrokinetics. 2
Hydrochem is a limited liability company
organized under Delaware law with its principal place of business
In early January of 2017 Hydrokinetics discovered that
French had been in contact with one of its customers.
that French was in violation of the Agreement, Hydrokinetics sued
French in the 55th Judicial District Court of Harris County, Texas,
("the State Court") on January 25, 2017. 3
The State Court granted
Hydrokinetics a temporary restraining order
set to expire
after a temporary injunction hearing on February 6. 4
On February 1 French, now a resident of Oklahoma, removed the
action to this court, asserting the court's diversity jurisdiction.
Plaintiff Hydrokinetics, LLC's Reply Brief in Support of Its
Motion to Remand ("Plaintiff's Reply"), Docket Entry No. 8, p. 8.
See Plaintiff Hydrokinetics, LLC's Verified Original Petition
and Application for Temporary Restraining Order and Temporary
Injunction ("Original Petition"), Exhibit B to Defendant James
French's Notice of Removal ("Notice of Removal"), Docket Entry
See Temporary Restraining Order, Exhibit E to Defendant James
French's Notice of Removal, Docket Entry No. 1-6.
customers once the TRO expired. 5
On February 6
Hydrokinetics filed its Amended Complaint, adding Hydrochem as a
Also on February 6 Hydrokinetics moved to remand the
action to State Court, citing a lack of complete diversity.
The court held a hearing on February 15 to discuss the issue of
At that hearing the court adopted the
State Court TRO and extended it until February 22.
The court also
instructing the parties to brief the court on the factors set forth
by the Fifth Circuit in Hensgens v. Deere & Co., 833 F.2d 1179 (5th
Cir. 1987), concerning joinder of non-diverse parties after removal.
An amendment that would add a "new nondiverse defendant in a
removed case" should be scrutinized "more closely than an ordinary
F. 2d at 1182.
the plaintiff seeks
additional defendants whose joinder would destroy subject matter
the court may deny joinder,
increased scrutiny is appropriate.
or permit joinder and
Hensgens, 833 F.2d at 1182.
Plaintiff's Reply, Docket Entry No. 8, pp. 4-5.
The Fifth Circuit has provided district courts determining the
propriety of joinder and remand a nonexhaustive list of factors to
(1) whether the primary purpose of joinder is to defeat
whether the plaintiff has diligently
requested the addition of a party;
be prejudiced if
(3) whether the plaintiff will
factors bearing on the equities."
The Fifth Circuit recog-
nized the competing interests of preventing parallel state and
federal litigation and of allowing diverse defendants to retain the
Taking into account the relevant factors,
"[t]he district court, with input from the defendant, should then
If so, it then must remand to the state court.
Beyond the Hensgens
joinder can be established in two ways:
the pleading of
inability of the plaintiff to establish a
against the non-diverse party in state court."
F.3d 644, 647 (5th Cir. 2003)
cause of action
Travis v. Irby, 326
(citing Griggs v. State Farm Lloyds,
181 F.3d 694, 698 (5th Cir. 1999)).
To show fraudulent joinder, a
defendant must show "that there is no possibility of recovery by
district court to predict that the plaintiff might be able to
recover against an in- state defendant."
Central Railroad Co., 385 F.3d 568, 573
(5th Cir. 2004)
pointing to the plaintiff's lack of evidence while discovery is
ongoing is insufficient.
the Hens gens
Irby, 326 F.3d at 650-51 (5th Cir. 2003).
the primary purpose of
encompasses the issue of the validity of claims against nondiverse
relevant analyses in logical order below.
Hydrokinetics argues that
it was not aware of Hydrochem's
involvement in French's alleged breach of the Agreement at the time
Hydrokinetics filed its Original Petition.
Hydrochem was fraudulently joined.
Defendants argue that
The court will first consider
Defendants' fraudulent joinder argument.
The Hensqens Factors
Hydrokinetics argues in its Reply that the Hensgens factors
favor joinder and remand.
Because Defendants declined to address
these factors, the court considers Hydrokinetics' arguments without
the benefit of input from Defendants.
Determining the Purpose of Hydrokinetics' Joinder
In determining the purpose of a plaintiff's proposed amendment
Circuit consider whether prior to removal the plaintiff knew or
activities, Martinez v. Holzknecht, 701 F. Supp. 2d 886, 889 (S.D.
Tex. 2010), and whether the plaintiff has a viable cause of action
against the nondiverse defendant, see Holstine v. DaimlerChrysler
Corp., Civil Action No. L-06-53, 2007 WL 4611914, at *2 (S.D. Tex.
Dec. 12, 2007)
(citing Tillman v. CSX Transp., Inc., 929 F.2d 1023,
1029 (5th Cir. 1991)).
Although Hydrokinetics concedes that it knew of Hydrochem's
employment of French, it argues that it did not know of Hydrochem's
Hydrochem' s activities during the post-removal deposition of French
position that joinder was not solely to
The court next
to the question of the viability of
Because Hydrokinetics needs only one viable
claim, the court looks first to whether the facts alleged support
a claim of tortious interference with an existing contract against
The elements of this claim are:
a valid contract;
interfered with the
(1) the existence of
the defendant willfully and intentionally
caused the plaintiff injury; and (4) the plaintiff incurred actual
Plaintiff's Reply, Docket Entry No. 8, p. 6.
damage or loss.
Ford Motor Co.,
84 S.W.3d 198,
Hydrokinetics alleges in its Amended Complaint that
the Agreement between Hydrokinetics and French is an existing,
valid contract. 7
Hydrokinetics also alleges
French to solicit work,
that by "allowing
and/or engage in
business discussions with Hydrokinetics customers in violation of
interfered with the contract. 8
Finally, Hydrokinetics alleges that
required to prove its entire case.
Hydrokinetics need only plead
facts that, if true, would provide a reasonable basis for the court
to predict that Hydrokinetics might be able to recover against
The court concludes that Hydrokinetics has done so and
that Hydrochem was not joined solely for the purpose of defeating
Hydrokinetics' Diligence in Filing an Amendment
dilatory in seeking to amend a complaint when no scheduling order
Plaintiff's Amended Complaint, Docket Entry No. 2, p. 9.
has been entered and no significant activity beyond the pleading
stage has occurred.
Akbani v. TRC Engineers,
2009 WL 2614473,
That general rule applies in this case, where no scheduling
order has been entered and little activity has occurred beyond the
Moreover, from the time the action was filed in
State Court to the time Hydrokinetics joined Hydrochem was less
business day after removal.
joined Hydrochem on
Hydrokinetics diligently filed its
Hydrokinetics' Injury if the Amendment is Not Allowed
If Hydrochem were not allowed to be joined,
would be forced to pursue its claims in a parallel proceeding in
"[T]he danger of parallel federal/state proceedings
with the inherent dangers of inconsistent results and the waste of
is a primary concern cited by the court in
833 F.2d at 1182 (5th Cir. 1987).
be exposed to significant actual and potential injury if forced to
Hydrochem's competing interest in retaining the federal forum, the
court concludes that this factor weighs in Hydrokinetics' favor.
Other Equitable Factors
Hydrokinetics' arguments regarding this factor largely repeat
the arguments from the third factor.
But the court notes that
French's quick removal of this action before Hydrokinetics could
in halting French's alleged violations
combined with the rapid sequence of events following the initiation
of this action weigh in favor of permitting Hydrokinetics to join
parties against which it may not have initially made any claims.
discussing the Hensgens factors and instead framed their response
to Hydrokinetics' motion to remand as an argument for fraudulent
Defendants do not argue actual fraud, instead focusing
their arguments against the validity of Hydrokinetics'
The court has already explained that Hydrokinetics has at least one
potentially valid claim.
But the court will briefly respond to
Hydrochem's three main arguments for fraudulent joinder.
Hydrochem argues that Hydrokinetics has no evidence that French
breached the Agreement. 12
pointing to a
As stated above in Section II,
lack of evidence while discovery is
ongoing is insufficient to establish fraudulent joinder.
Hydrochem argues that Oklahoma law should be applied and that the
Agreement is invalid under Oklahoma law. 13
The court is neither
10 See Defendants' Response to Plaintiff's Motion to Remand
("Defendants' Response"), Docket Entry No. 7, p. 1.
Id. at 3.
12Id. at 5 .
Id. at 6-9.
convinced that taking up the issue of choice of law is appropriate
under the circumstances nor that Oklahoma law would be controlling.
Finally, Hydrochem argues that the Agreement is unenforceable as
written even under Texas law. 14
That issue is beyond the scope of
the present analysis regarding joinder and remand and will be left
for the State Court to address once the parties have fully briefed
the relevant issues.
Conclusion and Order
For the reasons explained above,
the court concludes that
Hydrokinetics has established that it is entitled to join a new,
nondiverse defendant to this action.
done so in its Amended Complaint,
Because Hydrokinetics has
the court lacks subject-matter
Motion to Remand
(Docket Entry No.
This action is REMANDED to the 55th Judicial District
Court of Harris County, Texas.
The Clerk will promptly provide a
Order of Remand
the District Clerk of
SIGNED at Houston, Texas, on this 17th day of February, 2017.
UNITED STATES DISTRICT JUDGE
Id. at 10-11.
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