Eklund v. Midland Funding LLC

Filing 5

ORDER TO SHOW CAUSE as to why this action should not be remanded for lack of federal jurisdiction. Defendant's Show Cause Response due by 5/5/2017, by Judge Robert S. Lasnik. (SWT) (cc: Plaintiff)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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_______________________________________
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DOUGLAS EKLUND,
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Plaintiff,
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v.
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MIDLAND FUNDING, LLC,
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Defendant.
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_______________________________________)

No. C17-0631RSL
ORDER TO SHOW CAUSE

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On April 20, 2017, this matter was removed from state court based on both federal

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question and diversity jurisdiction. Plaintiff filed this action in Snohomish County Superior

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Court asserting claims arising out of a lawsuit defendant filed to recover a debt. Plaintiff alleges

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that Midland Funding, LLC, sued him approximately five years ago on a debt he does not owe.

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He further alleges that Midland Funding has no evidence of the alleged debt, has no standing to

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pursue the claim, failed to validly serve, filed outside the statute of limitations, and engaged in

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fraud on the court. Dkt. # 1-1 at 3-6. Plaintiff seeks the entry of judgment in the amount of

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“$60,000 in damages, to include legal expenses, harassemnt [sic], hardship, mental stress, credit

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damages, to include 12% interest until paid in Full”. Dkt. # 1-1 at 7.

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A defendant in state court generally has the right to remove the case to federal court only

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if the case could have been filed originally in federal court (i.e., on federal diversity or federal

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question grounds). See 28 U.S.C. § 1441(b). The general removal statute, 28 U.S.C. § 1441, is

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ORDER TO SHOW CAUSE

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construed restrictively: any doubts regarding the removability of a case will be resolved in favor

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of remanding the matter to state court. See, e.g., Shamrock Oil & Gas Corp. v. Sheets, 313 U.S.

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100, 108-09 (1941); Durham v. Lockheed Martin Corp., 445 F.3d 1247, 1252 (9th Cir. 2006).

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Defendant has the burden of proving by a preponderance of the evidence that removal is

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appropriate under the statute. Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009).

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It has not met its burden.

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Midland Funding asserts that because plaintiff has identified it as a “third party debt

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collector,” he must be asserting a claim under the Fair Debt Collections Practices Act

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(“FDCPA”), 15 U.S.C. § 1692, et seq. The question of whether a claim arises under federal law

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for purposes of 28 U.S.C. § 1331 must be determined by reference to the complaint. Mere

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mention of a federal statute, much less the mention of a phrase that bears some resemblance to a

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federal statute, is not “a password opening federal courts . . . .” Grable & Sons Metal Prods., Inc.

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v. Darue Eng’g & Mfg., 545 U.S. 308, 314 (2005). Rather, federal law must create the cause of

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action or plaintiff’s right to relief must depend on the resolution of a substantial question of

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federal law. Franchise Tax Bd. v. Constr. Laborers Trust, 463 U.S. 1, 27-28 (1983).

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Plaintiff has not specifically identified the cause or causes of action he is asserting, but

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the facts alleged are more consistent with state malicious prosecution, fraud on the court, and/or

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consumer protection act claims than a claim under the FDCPA. A finding that defendants

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violated federal law would not be essential to any of these claims, and the Court will not assume

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that plaintiff is artfully pleading around a federal cause of action when there are legitimate and

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obvious state claims that address his situation.1 Defendant has not, therefore, shown that

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plaintiff’s claims or right to relief necessarily depend on resolution of a question of federal law.

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The artful pleading doctrine prevents a plaintiff from avoiding federal jurisdiction by “omitting
from the complaint federal law essential to his claim, or by casting in state law terms a claim that can be
made only under federal law.” Olguin v. Inspiration Consol. Copper Co., 740 F.2nd 1468, 1472 (9th Cir.
1984).
ORDER TO SHOW CAUSE

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With regards to diversity jurisdiction, the citizenship of a limited liability company is

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determined by the citizenship of its owners/members. See Johnson v. Columbia Props.

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Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (holding that “like a partnership, an LLC is a

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citizen of every state of which its owners/members are citizens”). Midland Funding is therefore a

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citizen of Delaware, and diversity has been established. Midland has not, however, shown that

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the amount in controversy exceeds $75,000. In removed diversity cases where there is a dispute

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regarding the amount in controversy, “the defendant bears the burden of actually proving the

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facts to support jurisdiction, including jurisdictional amount.” Gaus v. Miles, Inc., 980 F.2d 564,

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566-67 (9th Cir. 1992).2 Here, plaintiff specifically seeks judgment in the amount of $60,000,

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inclusive of attorney’s fees. Defendant has not “provide[d] evidence establishing that it is more

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likely than not that the amount in controversy exceeds” $75,000. Guglielmino v. McKee Foods

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Corp., 506 F.3d 696, 699 (9th Cir. 2007) (internal quotation marks omitted).

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Defendant is hereby ORDERED TO SHOW CAUSE why this action should not be

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remanded for lack of federal jurisdiction. The Clerk of Court is directed to note this show cause

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proceeding on the Court’s calendar for May 5, 2017. Defendant’s response is due on or before

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the note date.

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Dated this 25th day of April, 2017.
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A

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Robert S. Lasnik
United States District Judge

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Defendant relies on a “legal certainty” test that has been rejected in these circumstances
because it “would force the federal court to exercise jurisdiction even if there was only a legal
possibility that the amount in controversy exceeded” $75,000. Sanchez v. Monumental Life Ins. Co.,
102 F.3d 398, 403 (9th Cir. 1996).
ORDER TO SHOW CAUSE

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