Little v. Wyndham Worldwide Operations, Inc.

251 F.Supp.3d 1215

Robert E. LITTLE, and Kathleen D. Little, Plaintiffs,

v.WYNDHAM WORLDWIDE OPERATIONS, INC., Wyndham Vacation Resorts, Inc., Wyndham Vacation Ownership, Inc., and Christopher Clabough, Defendants.

No. 3:16-cv-02758.

United States District Court, M.D. Tennessee, Nashville Division.

May 5, 2017

Aubrey T. Givens, Givens Law Office, Nashville, TN, Kristin J. Fecteau, Law Office of Kristin Fecteau, Nashville, TN, for Plaintiffs.

Eugene J. Podesta, Jr., Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Memphis, TN, Joy Boyd Longnecker, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC, Nashville, TN, Lindsey Elise Martin, Matthew J. Evans, Paine, Bickers, LLP, Knoxville, TN, for Defendants.

MEMORANDUM OPINION

WAVERLY D. CRENSHAW, CHIEF UNITED STATES DISTRICT JUDGE

Pending before the Court is Plaintiffs' Motion to Remand (Doc. No. 16), to which Defendants have responded in opposition (Doc. No. 21), and Plaintiffs have replied (Doc. No. 33). For the reasons that follow, Plaintiffs' Motion will be granted and this case will be remanded to state court.

I. Background

This litigation asserting common law and statutory claims under Tennessee law was filed in the Chancery Court for Davidson County on October 14, 2016. Plaintiffs, Robert E. and Kathleen D. Little, are citizens of the state of Illinois. (Doc. No. 1–1, Chancery Complaint). Named as Defendants are Wyndham Worldwide Operations, Inc., which is alleged to be a Delaware corporation with its principal place of business in New Jersey, and Wyndham Vacation Resorts, Inc. and Wyndham Vacation Ownership, Inc., both of which are alleged to be Delaware corporations with their principle places of business in Florida. (Id.¶¶ 2–4). Also named as a Defendant is Christopher Clabough, who is alleged to be a licensed sales agent for the Wyndham Defendants and a Tennessee resident. (Id.¶¶ 5, 8(h)). Four business days after suit was filed, the Wyndham Defendants removed the action to this Court on diversity jurisdiction grounds,¹ even though Defendant Clabough had yet to be served with process.

Plaintiffs now move to remand, arguing that those Defendants are attempting "to game the system" by "watching the [state] court dockets and quickly removing cases before anyone can even be served" in order to bypass the forum defendant rule. (Doc. No. 33 at 2). Plaintiffs ask this Court to prohibit "big corporate giants like Wyndham" from engaging in "jack rabbit removal to defeat the purpose of Congressional intent,"² and to remand the case to the Chancery Court from whence it originated for lack of diversity jurisdiction. (Id. ). Plaintiffs also contend that the Court should "ignore" the Wyndham Defendants' "lame argument" that federal question jurisdiction exists under the Truth in Lending Act ("TILA"), 15 U.S.C. § 1601, et seq. , characterizing the argument as being "embarrassingly specious, even for a sneaky corporate defendant." (Id. at 5). Although the Court finds such hyperbole unnecessary, it agrees that remand is appropriate.

II. Analysis

Diversity jurisdiction is conferred by 28 U.S.C. § 1332 that provides shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interests and costs and is—(1) against citizens of different states." 28 U.S.C. § 1332(a)(1). Under this statute, "diversity jurisdiction does not exist unless each defendant is a citizen of a different State from each plaintiff," Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978), as is alleged to be the case here.

A defendant sued in state may remove to federal court "any civil action brought in a State court of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). Specifically with regard to diversity jurisdiction, however, Section 1441(b) of the removal statute—also known as the "forum defendant rule"—provides:

(b) Removal based on diversity of citizenship.—

(1) In determining whether a civil action is removable on the basis of the jurisdiction under section 1332(a) of this title, the citizenship of defendants sued under fictitious names shall be disregarded.

(2) A civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

28 U.S.C.A. § 1441(b).

The Wyndham Defendants argue that removal was proper based upon both the plain language of § 1441(b)(2) and the Sixth Circuit's decision in McCall v. Scott, 239 F.3d 808 (6th Cir. 2001). While both sources provide a colorable basis for their decision to remove when they did, the Court finds that McCall is not controlling and that permitting the Wyndham Defendants' removal would thwart the underlying purpose for the forum defendant rule.

In McCall, the Sixth Circuit stated that "[w]here there is complete diversity of citizenship, as [plaintiff] concedes there was, the inclusion of an unserved resident defendant in the action does not defeat removal under 28 U.S.C. § 1441(b)." 239 F.3d at 809 n.2. However, that statement—made without any further elaboration and relegated to a footnote—has repeatedly been characterized as dicta, both within and outside the Sixth Circuit, and is therefore not necessarily followed. See e.g. Breitweiser v. Chesapeake Energy Corp., 2015 WL 6322625, at *3 (N.D. Tex. Oct. 20, 2015) ; Arrington v. Medtronic, Inc., 130 F.Supp.3d 1150, 1155 (W.D. Tenn. 2014) ; In re Darvocet, Darvon & Propoxyphene Prod. Liab. Litig., 2012 WL 2919219, at *3 (E.D. Ky. July 17, 2012) ; Goodwin v. Reynolds, 2012 WL 4732215, at *8 (N.D. Ala. Sept. 28, 2012) ; NFC Acquisition LLC v. Comerica Bank, 640 F.Supp.2d 964, 969 n.3 (N.D. Ohio 2009).

Additionally, the facts in McCall were entirely different from those that usually underlie jack rabbit or snap removals. Unlike the typical situation where a large corporate defendant monitors local state filings and promptly removes actions filed against it, McCall involved a situation where "the derivative shareholder actions brought against non-forum defendants were already in federal district court at the time of removal by the forum defendant." Harrison v. Wright Med. Tech., Inc., 2015 WL 2213373, at *6 (W.D. Tenn. May 11, 2015) (citing McCall, 239 F.3d at 813 n.1 ).

Apart from McCall, there is a dearth of appellate authority construing the "properly joined and served" language of § 1441(b)(2) because orders remanding cases are, by statute, non-reviewable. Harvey v. Shelter Ins. Co., 2013 WL 1768658, at *1 (E.D. La. Apr. 24, 2013) ; see, Powerex Corp. v. Reliant Energy Servs., Inc., 551 U.S. 224, 229, 127 S.Ct. 2411, 168 L.Ed.2d 112 (2007) ("The authority of appellate courts to review district-court orders remanding removed cases to state court is substantially limited by statute."). For their part, district courts have struggled with the issue, leading to conflicting results, not only nationwide, but among the district courts in the Sixth Circuit, and even within at least one district in this circuit. See Margetta v. Medtronic, Inc., 2013 WL 12149654, at *2 (W.D. Tenn. Nov. 21, 2013) ("There is a split within this Circuit as to the issue of a defendant's removal prior to service."); compare Linder v. Medtronic, Inc., 2013 WL 5486770, at *1 (W.D. Tenn. Sept. 30, 2013) (holding "there is nothing in the removal statute that precludes [Defendant] from filing a notice of removal prior to Plaintiff effecting service of process upon it") with Montgomery v. Medtronic Sofamor Danek USA, Inc., 2014 WL 12611256, at *4 (W.D. Tenn. June 26, 2014) (holding that defendants' prompt removal prior to service of process on an in-state defendant was improper). This Court has yet to consider the issue, but does so now.

Generally speaking, trial courts addressing the issue take one of two approaches. Many woodenly apply the "properly joined and served" language and permit pre-service removal, being of the view that this is in keeping with the literal language of the statute.³ See, e.g., Rogers v. Boeing Aerospace Operations, Inc., 13 F.Supp.3d 972, 978 (E.D. Mo. 2014) ("Under the plain, unambiguous language of Section 1441(b)(2), an out-of-state defendant may remove a diversity case if at least one defendant—and no forum defendant—has been served."); Harvey, 2013 WL 1768658, at *2 (stating that " § 1441(b)(2) plainly provides that a civil action may not be removed if any defendant that has been joined and served is a forum defendant," and that "the plain language of the statute must prevail over the plaintiff's policy arguments to the contrary"); Holmes v. Lafayette, 2013 WL 654449, at *1 (N.D. Miss. Feb. 21, 2013) ("The plain language of the statute provides that the forum defendant be ‘properly joined and served’ to prevent removal."); Ott, 213 F.Supp.2d at 666 (stating that, "in accordance with the plain language of § 1441(b), courts have held, virtually uniformly, that where, as here, diversity does exist between the parties, an unserved resident defendant may be ignored in determining removability under 28 U.S.C. § 1441(b)").

Many other district courts prohibit pre-service removal when there is a resident defendant, being of the opinion that this is in keeping with Congress's intent. See e.g., In re Testosterone Replacement, 67 F.Supp.3d at 959 ("The Court finds the cases that rely on the underlying purpose of the forum-defendant rule more persuasive than those that simply apply its language."); Vallejo v. Amgen, Inc., 2013 WL 12147584, at *3 (C.D. Cal. Aug. 30, 2013) ("If defendants were permitted to remove a case before the plaintiff even had the opportunity to serve them, this would effectively circumvent Congress's entire statutory scheme and render § 1441(b)(2) superfluous. Such an application could not have been intended by Congress."); Fields v. Organon USA Inc., 2007 WL...