Frisch v. Shanghai Huayi Grp. Corp.

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TANYA FRISCH and LISA SHELANGOSKI, Plaintiffs, v. SHANGHAI HUAYI GROUP CORPORATION LIMITED, a Chinese corporation, and CHINA MANUFACTURERS ALLIANCE, LLC; A California limited liability company, Defendants.

No. 23-CV-15-CJW-KEM

United States District Court, N.D. Iowa, Cedar Rapids Division

May 16, 2023

ORDER

C.J Williams, United States District Judge.

The matter before the Court is plaintiffs' motion to remand. (Doc. 21). Defendants timely resisted. (Doc. 23). Plaintiffs timely replied. (Doc. 26). For the following reasons, the Court grants this motion.

I. BACKGROUND

A. The Accident

On August 14, 2018, a tire on a dump truck blew out, causing the dump truck to crash into plaintiffs' vehicle and severely injure both plaintiffs. (Doc. 21-1, at 3). The dump truck was owned by Liberty Drainage & Excavation (“Liberty Drainage”). (Doc. 21-3, at 1). The tire was designed and manufactured by Double Coin Holdings, Ltd., now known as Shanghai Huayi Group (“SHG”), and distributed by defendant China Manufacturers Alliance, LLC (“CMA”). (Doc. 21-2, at 1).

After communications between plaintiffs' counsel and counsel for Liberty Drainage, Liberty Drainage made the tire available for inspection. (Doc. 21-4, at 1).

On February 6, 2019, plaintiffs, Liberty Damage, SHG, Sadler Power Train, Inc. (“Sadler Power Train”), and Harry's Farm Tire, Inc. (“Harry's Farm Tire”) attended the inspection of the tire. (Docs. 21-1, at 4; 21-6, at 1). On February 7, 2019, Liberty Drainage informed plaintiffs that Harry's Farm Tire installed the tire before the accident and that Sadler Power Train put the brakes on the truck in June before the accident. (Docs. 21-1, at 4; 21-4, at 1; 21-6, at 1).

Several months later, plaintiffs settled any potential claims with Liberty Damage. (Doc. 21-4, at 2). Plaintiffs then sued the remaining companies. (Doc. 5). In that petition, plaintiffs asserted that they were citizens of Iowa. (Id., at 1). Defendant SHG is a citizen of China. (Id.). Defendant CMA is a citizen of California. (Id., at 2). Plaintiffs also sued Harry's Farm Tire and Sadler Power Train (collectively “the Iowa defendants”) (Id., at 2) both of whom are Iowa citizens.

B. Procedural History

On May 1, 2020, plaintiffs sued defendants in state court under theories of negligence and strict liability. (Docs. 1-1, 1-8; 5, at 1). Between May 27, 2020, and July 30, 2020, the Iowa defendants and CMA filed their answers. (Doc. 21-4, at 2; 215; 21-6). Defendant CMA specifically pled that the Iowa defendants' negligence “was the real, active and primary cause of the alleged injuries complained of in the Petition. The superseding, initiating, and intervening negligence is pleaded in bar of recovery by the Plaintiffs.” (Doc. 1-1, at 162) (asserting CMA's Fifteenth Defense).

On June 17, 2020, plaintiffs were required to serve defendant SHG under the Hague Service Convention. (Doc. 1-1, at 511). That day, plaintiffs moved, with defendants' approval, to extend the deadline for service under the Hague Service Convention. (Id.). On July 30, 2020, SHG filed its answer, asserting in part the Iowa defendants' negligence “was the real, active and primary cause of the alleged injuries complained of in the Petition. The superseding, initiating, and intervening negligence is pleaded in bar of recovery by the Plaintiffs.” (Id., at 597) (asserting SHG's Sixteenth Defense).

By August 21, 2020, plaintiffs obtained initial disclosures from the Iowa defendants. (Docs. 21-1, at 14; 23, at 14). Harry's Farm Tire's initial disclosure and the attached invoice revealed that on October 13, 2014, it had sold the tire to Liberty Drainage-almost four years before the crash. (Docs. 21-1, at 14; 21-9, at 3; 21-11, at 1). Sadler Power Train's initial disclosure and the attached invoice revealed that in June 2018, Sadler Power Train was employed only to fix the brakes, not the tires. (Docs. 21-1, at 14; 21-8, at 2; 21-12, at 1).

On November 25, 2020, plaintiffs served defendant SHG through the Hague Service Convention procedures. (Doc. 21-4, at 2). On December 15, 2020, defendant SHG moved to dismiss the case for lack of personal jurisdiction. (Id.). The state court permitted jurisdictional discovery and argument on this issue to be completed by May 25, 2021. (Id.). Throughout the litigation, the parties filed joint motions to extend discovery deadlines, which the court granted. (Doc. 1-1, at 512, 517, 523, 561, 565, 633). These motions cited the delay in service and the litigation over personal jurisdiction. (Id.).

In January 2021, defendants served Liberty Drainage with a subpoena, and Liberty Drainage produced annual inspections and invoices for the subject tractor-trailer, including invoices from Harry's Farm Tire and Sadler Power Train that named the inspector in charge. (Doc. 21-1, at 6). Before May 25, 2021, plaintiffs learned defendant SHG sold the tire to K&M Tire in Iowa, who then sold that tire to Harry's Farm Tire. (Docs. 21-1, at 6, 14; 21-13, at 1) (Item No. 1133378258).

On October 26, 2021, months after the removal deadline, the parties deposed the truck driver and owner of Liberty Drainage. (Doc. 21-1, at 7; 21-14). Testimony revealed Liberty Drainage, not Sadler Power Train, employed the inspector who prepared the annual inspection the year of the accident. (Docs. 21-1, at 7; 21-14, at 4). Testimony also confirmed Harry's Farm Tire sold the tire four years prior to the accident, rather than a year earlier. (Docs. 21-1, at 7; 21-14, at 6, 13).

On March 14, 2022, the state court denied defendant SHG's motion to dismiss for lack of personal jurisdiction. (Doc. 21-4, at 3; 1-1, at 512). On April 7, 2022, plaintiffs served written discovery on defendant SHG. (Doc. 21-4, at 3). On June 14, 2022, defendant SHG produced documents in Mandarin, which required translation. (Id.). On July 11, 2022, plaintiffs requested depositions of corporate representatives of defendants SHG and CMA, and between September 21 and 22, 2022, plaintiffs conducted those depositions. (Id.).

On November 21, 2022, plaintiffs served expert designations with reports that did not support Sadler Power Train and Harry Farm Tire's liability. (Doc. 21-1, at 8; 214, at 4). In response, on January 9, 2023, Sadler Power Train moved for summary judgment on the grounds of lack of expert testimony. (Doc. 1-1, at 749-58). On January 12, 2023, plaintiffs asked for an extension of time to respond to the motion so they could “see CMA/Double Coin's expert reports first.” (Docs. 21-4, at 4; 21-15, at 1)^[1]. On February 1, 2023, defendants SHG and CMA provided their expert disclosures. (Doc. 1-1, at 798). On February 13 and 20, 2023, after discussions with counsel for Sadler Power Train and Harry's Farm Tire, plaintiffs dismissed their claims against Sadler Power Train and Harry's Farm Tire without prejudice, four months before trial.^[2](Docs. 1-1, at 627, 805-10; 21-4, at 4).

On March 9, 2023, within 30 days of the dismissal of the Iowa defendants, defendants CMA and SHG removed this case to federal court, asserting diversity of citizenship now existed. (Docs. 1; at 1-3; 21-1, at 9). Plaintiffs then filed this motion to remand. (Doc. 21).

II. APPLICABLE LAW

Federal courts have subject matter jurisdiction only over matters authorized by the United States Constitution and Congress. U.S. CONST. art. III, § 2, cl.1; see also Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (stating that federal courts “possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree”) (internal citations omitted). Federal courts should therefore “presume[ ] that a cause lies outside this limited jurisdiction[.]” Kokkonen, 511 U.S. at 377 (internal citations omitted); Spreitzer Props., LLC v. Travelers Corp, 599 F.Supp.3d 774, 778-79 (N.D. Iowa 2022).

Congress codified diversity of citizenship jurisdiction in Title 18, United States Code, Section 1332. Under this statute, “diversity jurisdiction does not exist unless each defendant is a citizen of a different State from each plaintiff” and the amount in controversy exceeds $75,000. Spreitzer Properties, 599 F.Supp.3d at 779 (quoting Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978) (emphasis in original)) (explaining the history and purpose of diversity jurisdiction); 18 U.S.C. § 1332.

“The proponents of federal jurisdiction bear ‘the burden to establish federal subject matter jurisdiction,' and ‘all doubts about federal jurisdiction must be resolved in favor of remand.'” Moore v. Kansas City Pub. Schs., 828 F.3d 687, 691 (8th Cir. 2016) (quoting Cent. Iowa Power Coop. v. Midwest Indep. Transmission Sys. Operator, Inc., 561 F.3d 904, 912 (8th Cir. 2009)). “This is true, even when the party opposing removal has moved to remand.” Druivenga v. Hillshire Brands Co., No. C 18-4003-MWB, 2018 WL 1115935, at *4 (N.D. Iowa Mar. 1, 2018).

A. Removal Procedure

Unless otherwise provided for by an act of Congress, defendants may remove “any civil action brought in a State court” to federal court if the federal district courts “have original jurisdiction” over that civil action. 28 U.S.C. § 1441(a). The action may be removed to the federal district court and division “embracing the place where such action is pending.” Id. The proponent of removal has the burden of establishing removal is proper. In re Bus. Men's Assurance Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993) (per curiam). “All doubts about federal jurisdiction should be resolved in favor of remand to state court.” Sloss v. Tyson Fresh Meats, No. 4:18-cv-00286-RGE-HCA, 2018 WL 9815609, at *2 (S.D. Iowa Dec. 17, 2018) (quoting Block v. Toyota Motor Corp., 665 F.3d 944, 948 (8th Cir. 2011) (quoting In re Prempro Prods. Liab. Litig., 591 F.3d 613, 620 (8th...