Martinez v. El Paso Corporation
Filing
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ORDER GRANTING 6 Motion to Remand to State Court Signed by Judge Kathleen Cardone. (dl1, )
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
EL PASO DIVISION
GABRIEL I. MARTINEZ,
Plaintiff,
v.
EL PASO CORPORATION,
Defendant.
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EP-11-CV-143-KC
ORDER
On this day, the Court considered “Plaintiff’s Motion to Remand” (“Motion”), ECF No.
6. For the reasons set forth herein, the Motion is GRANTED.
I.
BACKGROUND
On February 28, 2011, Plaintiff filed suit in Texas state court against El Paso Corporation
(“EPC”), alleging that he was terminated from his employment in retaliation for complaining to
his supervisor about national origin discrimination and hiring an attorney to investigate the
possibility of filing an employment discrimination suit. Notice of Removal 6-15, ECF No. 1
(“Petition”), at 7-8. Plaintiff also alleged that his termination constituted discrimination against
him based on a disability. Id. at 7.
Despite the fact that it was not named in the suit, El Paso Natural Gas Corporation
(“EPNG”) removed that action to this Court on April 15, 2011. Notice of Removal. EPNG did
so because it believed Plaintiff had mistakenly named EPC in his Petition, believing it was his
employer. See id. at 1-2. EPNG believed that it, EPNG, was his actual employer, so EPNG
simply stepped in to defend the suit. See id. EPNG argued that removal jurisdiction was proper
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because EPNG, being an out-of-state corporation, was diverse from Plaintiff. Id. Thirty days
later, Plaintiff filed his Motion to remand the suit to Texas state court. Mot.
II.
DISCUSSION
A.
Standard
A defendant may remove a case to the federal district court in the division embracing the
place where such action is pending in state court if the district court has original jurisdiction over
the matter. 28 U.S.C. § 1441(a). The district court is required to remand a case to state court if,
at any time before final judgment, it determines that it lacks subject matter jurisdiction over the
case. Id. § 1447(c). Where the jurisdiction of the court is challenged, the burden is on the party
seeking to preserve the district court’s removal jurisdiction. Frank v. Bear Stearns & Co., 128
F.3d 919, 921-22 (5th Cir. 1997); Sid Richardson Carbon & Gasoline Co. v. Interenergy Res., 99
F.3d 746, 751 (5th Cir. 1996). The removal statutes are to be construed strictly against removal
and in favor of remand. Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988); Brown v.
Demco, Inc., 792 F.2d 478, 481 (5th Cir. 1986).
B.
Removal Jurisdiction
Plaintiff argues that removal was improper because EPC was not fraudulently joined, and
that even if he had named EPNG as a defendant instead of EPC, EPNG is a citizen of Texas and
so its presence in this action would not create diversity. Mot. 4-7. EPNG argues in response that
fraudulent joinder analysis is not the applicable framework, yet does not present an alternative
framework aside from one reference to a Texas Supreme Court decision dealing briefly with
misnomer and misidentification. Def.’s Opp’n to Pl.’s Mot. to Remand 4, ECF No. 7. For the
rest of its response, EPNG cites to cases dealing with the issue of fraudulent joinder and argues
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that EPC was fraudulently joined because Plaintiff has no possibility of recovery against EPC.
Id. at 3-7. EPNG also argues that it is a citizen of Colorado, so that if it were the sole defendant,
this Court would have diversity jurisdiction. Id. at 7-10.
Although the Court is considering Plaintiff’s Motion, because EPNG is the party seeking
to preserve the Court’s jurisdiction, EPNG has the burden of showing jurisdiction is proper. See
Frank, 128 F.3d at 921-22. The Court does not find EPNG has carried its burden, but it agrees
that fraudulent joinder does not apply here. Plaintiff did not sue multiple defendants and include
at least one non-diverse defendant to prevent the diverse defendants from removing to federal
court. See Salazar v. Allstate Texas Lloyd’s, Inc., 455 F.3d 571, 574 (5th Cir. 2006) (holding
fraudulent joinder analysis inapplicable where a plaintiff sued only one defendant, because the
plaintiff was not attempting to force any other defendant to remain in state court). Instead,
Plaintiff named and served only one defendant in state court, EPC. See Notice of Removal 1, 1618 (EPNG’s admission of and the state court documentation for service on EPC on March 29,
2011). Even if Plaintiff did so solely to keep his suit in state court, that is not improper.
Assuming for the sake of argument that EPNG is correct that Plaintiff has no possibility of
recovering against EPC, that impossibility does not create a situation of fraudulent joinder. It
just means Plaintiff’s case will not succeed. See Smallwood v. Ill. Cent. R. Co., 385 F.3d 568,
574 (5th Cir. 2004) (en banc) (holding that where an allegation of fraudulent joinder is based on
an argument of impossibility of recovery against the non-diverse defendants, but that argument
would also serve to defeat a plaintiff’s claims against the diverse defendants, there is no
fraudulent joinder).
Moreover, on a more basic, technical level, EPNG “was not a party at the time of
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removal, and accordingly . . . fraudulent joinder jurisprudence offers no guidance.” Salazar, 455
F.3d at 574. Because EPNG was not properly “made a party in state court, removal jurisdiction
cannot be premised on its presence in the action.” Id. at 575 (citing Housing Auth. of City of
Atlanta, Ga. v. Millwood, 472 F.2d 268, 272 (5th Cir. 1973)). EPNG was not named or served in
state court, so it had no power to take any action in the case. Consequently, removal was
improper in the first place.
EPNG may have believed it was doing Plaintiff a favor by substituting itself for EPC,
since it apparently believes that it, and not EPC, was Plaintiff’s actual employer. Def.’s Opp’n to
Pl.’s Mot. to Remand 4-7. If Plaintiff had in fact made this mistake, then EPNG’s actions might
be laudable, since in Texas courts a failure to properly serve the correct defendant, even where
due to a mistake, can result in a dismissal if the statute of limitations has run. See Enserch Corp.
v. Parker, 794 S.W.2d 2, 4-5 (Tex. 1990). However, based on Plaintiff’s Motion it appears
EPNG’s perhaps well-intentioned but paternalistic actions were based on an incorrect
assumption. Rightly or wrongly, Plaintiff believes EPC was his employer, and purposefully sued
EPC and not EPNG. In these circumstances, the Court has no power to order the substitution of
EPNG for EPC. See Salazar, 455 F.3d at 575.
In sum, there was no fraudulent joinder here because Plaintiff sued only one party, EPC.
Because he did not sue EPNG, EPNG was never a party to the action, and thus could not properly
remove this case to federal court. The Court has no power to rule upon EPNG’s implicit request
to be substituted for EPC as the defendant in this matter. Whether Plaintiff has any possibility of
recovery against EPC, EPNG, both corporations, or none, the issue is one for a Texas state court
to resolve.
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C.
Attorney’s Fees
1.
Whether attorneys’ fees are appropriate
Plaintiff has requested attorneys’ fees relating to the removal of this action from state
court, alleging EPNG had no reasonable basis for removing the case to this Court. Mot. 7-8.
EPNG did not specifically respond to this argument.
The statute governing procedure of removed cases after removal provides, “An order
remanding the case may require payment of just costs and any actual expenses, including attorney
fees, incurred as a result of the removal.” 28 U.S.C. § 1447(c). Absent unusual circumstances,
courts should award costs and fees upon remand of a case “only where the removing party lacked
an objectively reasonable basis for seeking removal.” Martin v. Franklin Capital Corp., 546
U.S. 132, 141 (2005). There is no presumption for or against an award of fees. Admiral Ins. Co.
v. Abshire, 574 F.3d 267, 280 (5th Cir. 2009) (citing Martin, 546 U.S. at 140). In determining
whether to award fees, the removing party’s intent is irrelevant; in fact, the Court “may award
fees even if removal is made in subjective good faith.” Valdes v. Wal-Mart Stores, Inc., 199 F.3d
290, 292 (5th Cir. 2000).
Here, the Court finds EPNG had no objectively reasonable basis to remove this case. As
set forth above, EPNG was not a party to the action. Until it formally became a party either
through intervention or substitution, the Court cannot see how EPNG could have had an
objectively reasonable basis to believe it could take any action in this case whatsoever.
Moreover, clearly applicable precedent at the time of removal showed that EPNG’s attempted
maneuver was improper. See Salazar, 455 F.3d 571. In Salazar, a plaintiff sued Allstate Texas,
a non-diverse party, in a state court action for breach of insurance contract. Id. at 572. Allstate
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Texas removed the case to federal court, where it filed a motion to join Allstate Illinois, a diverse
party, on the basis that Allstate Texas had merely sold the plaintiff the policy, but that Allstate
Illinois was the underwriter ultimately responsible for it. Id. The district court denied the
plaintiff’s motion to remand, granted Allstate Texas’s motion to join Allstate Illinois as a
defendant, and then dismissed Allstate Texas from the suit. Id. This effectively substituted
Allstate Illinois for Allstate Texas as the sole defendant in the case, and created a diverse action
where there was none at the start in state court. Id. Upon plaintiff’s appeal, the Fifth Circuit
reversed. Id. at 575. It held that fraudulent joinder principles could not support the removal
because there was only one defendant in the action to begin with, making fraudulent joinder
analysis inapplicable. Id. at 574. It also held that removal could not be effected by an entity that
was not a party to the action in state court. Id. at 575. Further, it ruled that district courts could
not substitute one defendant for another so as to create an action over which they would have
jurisdiction. Id.
The parallels between this case and Salazar could not be more plain. In both actions, the
sole named defendant was non-diverse, but was alleged by the removing party to be plainly not
liable because it was not directly responsible for the actions that formed the basis of the claims.
The entity that did take the actions, which in both cases was diverse from the plaintiff, then
sought to take over the case to create a diverse action that would support removal jurisdiction.
Given this almost factually identical precedent, there was no objectively reasonable basis for
EPNG to remove this action. Furthermore, the one difference between this case and Salazar
makes removal even less appropriate here. There, the entity who removed the case was actually
the sole defendant, whereas here EPNG was not a party to the action at all. This type of removal
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by a non-party had also already been ruled improper by the Fifth Circuit in Salazar and in
Millwood, further depriving EPNG of an objectively reasonable basis for its actions. See id.
(citing Millwood, 472 F.2d at 272).
Even assuming EPNG was attempting to fix Plaintiff’s “correctable mistake,” Def.’s
Opp’n to Pl.’s Mot. to Remand 3, the procedure it used to do so was inappropriate. If it intended
to assist Plaintiff in identifying and suing the correct entity, it should have done so by formally
joining the state court action in the appropriate fashion. But EPNG’s subjective intent in
removing this action is irrelevant in any event. See Valdes, 199 F.3d at 292. Its actions in
removing this case lacked any objectively reasonable chance of success, so Plaintiff is entitled to
reimbursement of his attorneys’ fees incurred as a result of the removal.
2.
Amount of attorneys’ fees
When determining exactly what amount of fees is reasonable to award upon remand of an
action, district courts in the Fifth Circuit should use the lodestar method. Halliburton Latin Am.
SA v. Int’l Technical Solutions, 273 F.3d 392, 392 (5th Cir. 2001) (per curiam) (unpublished).
This method involves a two-step procedure. La. Power & Light Co. v. Kellstrom, 50 F.3d 319,
323-24 (5th Cir. 1995). First, the district court must determine a figure based on a reasonable
number of hours and a reasonable billing rate. Id. at 324. Then, the court may adjust that figure
upward or downward based on its consideration of twelve enumerated factors. See Cobb v.
Miller, 818 F.2d 1227, 1231 n.5 (5th Cir. 1987) (listing the twelve factors). Contemporaneous
billing records or other sufficient documentation is customarily required to support a request for
attorneys’ fees. Kellstrom, 50 F.3d at 324.
Here, Plaintiff has not yet provided sufficient information to permit the Court to engage
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in the lodestar analysis. He has provided only a total number of attorney hours expended, not
records of the time spent on specific tasks. Neither has he shown what fee agreement he has with
his attorney, or an explanation of how his attorney’s fee compares to that of other attorneys. Cf.
RMC Publ’ns, Inc. v. Doulos PM Training, No. 3:07-CV-2139-O, 2010 WL 742575, at *5 (N.D.
Tex. Mar. 3, 2010) (awarding fees where party provided “highly detailed billing records and
records of costs . . . with an authoritative study establishing the standard billing” rates of
attorneys in the field). Nor has Plaintiff submitted any evidence that would allow the Court to
apply the lodestar factors. Additionally, with his Motion Plaintiff submitted a record of hours
expended to that date and an estimate of the hours his attorney would expend on the matter in
preparing a reply brief and appearing at an evidentiary hearing. But the Court did not hold an
evidentiary hearing, Plaintiff submitted no breakdown of the estimate between the two tasks, and
there is no way for the Court to know whether the estimate was accurate. The Court cannot
determine how many hours Plaintiff’s attorney has expended on this matter since the Motion was
filed.
Accordingly, before the Court may award a specific amount of attorneys’ fees, Plaintiff
must submit proper documentation as specified in Local Rule CV-7(i).
III.
CONCLUSION
For the foregoing reasons, Plaintiff’s Motion, ECF No. 6, is GRANTED. It is hereby
ORDERED that the Clerk of Court remand the case to County Court at Law Number Three in El
Paso County, Texas.
IT IS FURTHER ORDERED that Plaintiff, if he wishes to be reimbursed for his
attorney’s fees incurred as a result of EPNG’s removal of this case, shall submit, within fourteen
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days, a detailed accounting of the hours his attorney expended on the case only relating to
removal and the fee he charged for this portion of the case, and show that the fee is reasonable
for the community.
The Clerk of Court shall close the case.
SO ORDERED.
SIGNED on this 16th day of August, 2011.
______________________________________
KATHLEEN CARDONE
UNITED STATES DISTRICT JUDGE
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