Mahdi v. Convergent Outsourcing Inc.

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YASIN MAHDI, Plaintiff, v. CONVERGENT OUTSOURCING INC. and IC SYSTEM INC., Defendants.

No. 22-cv-1184-pp

United States District Court, E.D. Wisconsin

January 30, 2024

ORDER GRANTING PLAINTIFF'S MOTION TO REMAND TO RACINE COUNTY CIRCUIT COURT (DKT. NO. 21) AND REMANDING CASE DECLINING TO RULE ON DEFENDANT CONVERGENT OUTSOURCING'S MOTION TO COMPEL/MOTION FOR SANCTIONS (DKT. NO. 16) AND MOTION FOR LEAVE TO FILE SUPPLEMENTAL EXHIBITS (DKT. NO. 19) AND DECLINING TO RULE ON DEFENDANT IC SYSTEM'S MOTION FOR JUDGMENT ON THE PLEADINGS (DKT. NO. 20)

HON PAMELA PEPPER CHIEF UNITED STATES DISTRICT JUDGE

On October 5, 2022, defendant Convergent Outsourcing Inc. filed a notice of removal from Racine County Circuit Court/Small Claims Civil Division on the ground that the plaintiff purported to allege violations under the Fair Debt Collection Practices Act, 15 U.S.C. §1692, et seq. Dkt No. 1. Two days after the case was removed, Attorney Brian Ponder filed a notice of appearance on behalf of the plaintiff, dkt. no. 3, and both defendants filed answers dkt. nos. 7, 8. In their joint Rule 26 report, the parties summarized the plaintiff's claim as follows: “Plaintiff alleges that Defendants attempted to collect an alleged consumer debt from Plaintiff in violation of state and federal law.” Dkt. No. 13 at 1. The parties agreed that the court had federal question jurisdiction. Id. at 3-4. Attorney Ponder signed that report mindful of his obligations under Rule 11. Id. at 5. The court issued a scheduling order with discovery due by June 30, 2023. Dkt. No. 14.

On June 30, 2023, Convergent filed a motion to compel and motion for sanctions, asserting that the plaintiff failed to appear for his deposition and failed to serve timely responses to Convergent's requests for admission, interrogatories and production of documents. Dkt. No. 16. The plaintiff did not respond to the motion. On July 28, 2023, Convergent filed an expedited motion for leave to file supplemental exhibits to the pending motion for sanctions. Dkt. No. 19. Again, the plaintiff did not respond.

One month later, defendant IC System, Inc. filed a motion for judgment on the pleadings. Dkt. No. 20. The plaintiff did not respond to that motion, but within days of IC System's filing, the plaintiff filed his own motion to remand, arguing that the court lacks subject matter jurisdiction because the plaintiff does not have standing under Article III. Dkt. No. 22 at 2. The plaintiff simultaneously asked for fees and costs in connection with the remand. Id. at 5. Both defendants oppose the motion to remand, noting that the plaintiff waited eleven months to bring the motion, and brought it after he failed to appear for his deposition or engage in discovery, after the deadline for completing discovery or filing dispositive motions, after he failed to respond to the defendants' motions and after receiving a motion for judgment on the pleadings. Dkt. Nos. 26 at 3; 28 at 1.

I. Plaintiff's Motion to Remand (Dkt. No. 21)

A. Legal Standard

On a motion to remand, all doubt is resolved in favor of remand. Paldrmic v. Altria Corp. Servs., Inc., 327 F.Supp.2d 959, 963 (E.D. Wis. 2004) (citing Milwaukee Carpenter's Dist. Council Health Fund v. Philip Morris, Inc., 70 F.Supp.2d 888, 892 (E.D. Wis. 1999)). The case must be remanded if, at any time before final judgment, it appears that the court lacks subject-matter jurisdiction. 28 U.S.C. §1447(c). A federal court has subject-matter jurisdiction only if the plaintiff has Article III standing. MAO-MSO Recovery II, LLC v. State Farm Mut. Auto. Ins. Co., 935 F.3d 573, 581 (7th Cir. 2019). Article III standing is a crucial element for a District Court as it ensures that the court does not exceed its authority over cases and controversies that the federal court cannot hear. Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016).

To have Article III standing, a plaintiff must have “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Id. at 338. To establish an injury in fact, a plaintiff must show that he suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” Id. at 339. A plaintiff does not “automatically satisf[y] the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Nettles v. Midland Funding LLC, 983 F.3d 896, 899 (7th Cir. 2020) (citing Spokeo, Inc., 578 U.S. at 341); see also Raines v. Byrd, 521 U.S. 811, 820 n.3 (1997) (“It is settled that Congress cannot erase Article III's standing requirements by statutorily granting the right to sue to a plaintiff who would not otherwise have standing.”).

A party removing a case from state to federal court must “establish that all elements of jurisdiction-including Article III standing-existed at the time of removal.” Collier v. SP Plus Corp., 889 F.3d 894, 896 (7th Cir. 2018). If a removed case lacks Article III standing, it is appropriate to remand the case back to state court. Thornley v. Clearview AI, Inc., 984 F.3d 1241, 1249 (7th Cir. 2021).

B. The Parties' Arguments

1. The Plaintiff's Motion to Remand (Dkt. No. 21)

The plaintiff's motion to remand asserts that he lacks Article III standing and that he has failed to allege a concrete injury in fact. Dkt. No. 22 at 3. The plaintiff says that his allegations are indistinguishable from the types of allegations rejected by the Seventh Circuit as insufficient for standing. Id. at 4 (citing Markakos v. Medicredit, Inc., 997 F.3d 778, 780 (7th Cir. 2021); see also Casillas v. Madison Ave. Assocs., Inc., 926 F.3d 329 (7th Cir. 2019); Larkin v. Fin. Sys. of Green Bay, Inc., 982 F.3d 1060 (7th Cir. 2020); Bazile v. Fin. Sys. of Green Bay, Inc., 983 F.3d 274 (7th Cir. 2020); Spuhler v. State Collection Serv., Inc., 983 F.3d 282 (7th Cir. 2020); Gunn v. Thrasher, Buschmann & Voelkel, P.C., 982 F.3D 1069 (7th Cir. 2020); Brunett v. Convergent Outsourcing, Inc., 982 F.3d 1067 (7th Cir. 2020); Nettles v. Midland Funding, LLC, 983 F.3d 896 (7th Cir. 2020); Smith v. GC Servs. Ltd. P'ship, 986 F.3d 708 (7th Cir. 2021); Pennell v. Glob. Tr. Mgmt., LLC, 990 F.3d 1041 (7th Cir. 2021)). The plaintiff points out that even the notice of removal fails to allege a concrete injury in fact. Id. at 4. The plaintiff asks the court to remand with an award of costs and fees. Id. at 5.

2. IC System's Response (Dkt. No. 26)

IC System points out that contrary to the plaintiff's suggestion that it removed the case, it merely consented to the October 5, 2022 removal filed by Convergent. Dkt. No. 26 at 2 (“The Plaintiff's claim that ICS ‘removed' the case is, at best, the result of careless drafting and at worst, an implicit attempt to mislead the court regarding ICS's role in the removal process.”). IC System argues that the plaintiff has failed to cite any legal authority that he can recover costs and fees from a party that merely consented to removal. Id.

IC System also argues that the plaintiff should not be rewarded for his dilatory behavior when the plaintiff failed to seek consent to remand before filing the motion to remand. Id. at 2-3. IC System cites a decision from Judge Lynn Adelman of this district denying fees and costs even though removal was improper because the plaintiff “contributed to the delay in remanding [the] case.” Id. at 3 (citing Carhart-Halaska Intern. LLC v. Carhart, Inc., 920 F.Supp.2d 971, 974 (E.D. Wis. 2013)). IC System emphasizes that the plaintiff waited 326 days after his counsel filed a notice of appearance to seek remand and even then only after IC System filed its motion for judgment on the pleadings. Id. at 4.

3. Convergent's Response (Dkt. No. 28)

Convergent argues that the motion raises one primary issue-whether the plaintiff pled a concrete injury-and a secondary issue of whether removal was so “objectively unreasonable to warrant an award of costs and fees to plaintiff despite his dilatory conduct in bringing the motion to remand.” Dkt. No. 28 at 2. Convergent cites the allegations in the complaint, particularly paragraph 8, where the plaintiff alleges that the “Defendant's conduct proximately caused Plaintiff costs, loss of credit opportunities, and stress.” Id. at 3 (citing 1-1 at ¶8). Convergent recounts that two days after the notice of removal, the plaintiff's attorney filed his notice of appearance. Id. It recounts that the parties exchanged emails, and plaintiff's counsel wrote the following:

Ponder (Plaintiff's counsel): Thanks for the discussion today. Hopefully, we can stay in federal court. The way Mr. Mahdi couched the action against Convergent for a CFR (Reg. F) violation, we should be good.

Homes (Convergent's counsel): Thanks for reaching out today, Brian. As discussed, if you have any authority showing the federal court would not have original jurisdiction over this matter had it been brought initial[ly] in federal court, please let me know. Under the circumstances, I think it's a waste of time to file responsive pleadings until that matter is decided. Can we stipulate that my client's responsive pleadings will be filed 14 days after a decision denying any motion to remand or November 7, 2022, whichever comes first? Please let us know.

Ponder: My prior email was intended to let you know that I won't press the issue of original jurisdiction.... Again, it is best it s[t]ays in federal court so I can participate and hopefully bring about a meaningful resolution of the case.

Dkt. No. 28 at 3-4 (emphasis added). Convergent notes that the parties then filed a joint Rule 26 report in which they agreed...