Valles v. David Pleasant & Cleveland-Cliffs Steel, LLC

1

HUNTER VALLES, Plaintiff, v. DAVID PLEASANT and CLEVELAND-CLIFFS STEEL, LLC, Defendant.

No. 1:22-cv-6484

United States District Court, N.D. Illinois, Eastern Division

August 4, 2023

MEMORANDUM OPINION AND ORDER

Franklin U. Valderrama United States District Judge

Plaintiff Hunter Valles (Valles) was injured following an explosion at a steel production plant owned by Defendant Cleveland-Cliffs Steel LLC (Cleveland-Cliffs). Valles filed this action in the Circuit Court of Cook County, Illinois, asserting seven counts, including negligence and strict liability, against Cleveland-Cliffs and one count of negligence against Defendant David Pleasant (Pleasant, collectively with Cleveland-Cliffs “Cleveland-Cliffs”),^[1] a safety engineer at the plant. Cleveland-Cliffs then removed this case to federal court arguing that there is diversity jurisdiction under 28 U.S.C. § 1332 because there is complete diversity of citizenship between Valles on one side, and Cleveland-Cliffs on the other. As for Pleasant, who is an Illinois resident and thereby destroys complete diversity, Cleveland-Cliffs argues that Pleasant has been fraudulently joined in this lawsuit and his citizenship should be disregarded in assessing diversity jurisdiction. Before the Court is Valles' Motion for Remand to the Circuit Court of Cook County, R. 9, Mot. Remand,^[2] and Motion for Costs, Expenses, and Attorneys' Fees, R. 10, Mot. Fees. For the following reasons, the Court grants Valles' Motion for Remand and denies his Motion for Costs, Expenses, and Attorneys' Fees.

Background^[3]

Valles is a machine operator and employee for Metal Services LLC d/b/a Phoenix Services (Phoenix), R. 1-1, FAC ¶¶ 19, 21-22, a contractor at Cleveland-Cliffs' East Chicago, Indiana steel production plant (the Plant) that provides metal recovery and scrap processing for Cleveland-Cliffs, R. 1, Not. Removal ¶ 26. The previous owner of the Plant, ArcelorMittal, entered into a service contract with Phoenix in April 2009. Id. In 2020, Cleveland-Cliffs took over the Plant and the service contract with Phoenix from ArcelorMittal. Id. ¶ 22.

Employees and contractors at the Plant transport “molten slag” or steel byproduct, and “blow down” and/or “bottom wash” slag, which can be highly explosive. FAC ¶ 20. Under amendments to the service contract, Phoenix employees, like Valles, who operate pot carriers owned by Phoenix have access to Cleveland-Cliffs' staging area. Not. Removal ¶¶ 28-32. These employees routinely pick up pots filled with molten slag from Cleveland-Cliffs' staging area and transport the pots to an area of the facility owned by Cleveland-Cliffs but leased by Phoenix (Leased Property). Id. ¶ 33. Pleasant is a safety engineer at the Plant. FAC ¶ 13. As a safety engineer, Pleasant was responsible for the operation, maintenance, and control of the Plant, which includes implementing safety standards and coordinating safety training for Phoenix employees. Id. ¶¶ 15-16, 19. Pleasant, as a safety engineer, knew or should have known that slag coming into contact with water could cause an explosion. Id. ¶ 23.

On March 3, 2022, Valles was injured after a pot filled with molten slag was deposited onto water that resulted in an explosion. FAC ¶¶ 24, 26-27. Valles, an Illinois resident, filed this lawsuit in the Circuit Court of Cook County, Illinois, asserting one count of negligence against Pleasant. R. 1-2. Valles subsequently filed an amended complaint adding five counts against Cleveland-Cliffs, namely negligence (Count II), strict liability (Count III), construction negligence (Count IV), Restatement (Second) § 343 liability (Count V), and premise liability (Count VI), and a negligence count against Pleasant (Count I), an Illinois resident. FAC ¶¶ 7-12. Cleveland-Cliffs filed a Notice of Removal, thereby removing the case from the Circuit Court of Cook County to this Court on the basis of diversity of citizenship, asserting that Valles fraudulently joined Pleasant to destroy diversity. Not. Removal ¶ 4, 14- 15. Valles now moves to remand the case back to the Circuit Court of Cook County due to lack of subject matter jurisdiction. Mot. Remand.

Legal Standard

Federal courts are courts of limited jurisdiction. Exxon Mobil Corp. v. Allapatthah Servs., Inc., 545 U.S. 546, 552 (2005). A case may only be brought before the federal court, as deemed by Congress, when such a cause of action arises under a federal question, 28 U.S.C. § 1331, or where there is diversity of citizenship and an amount-in-controversy exceeding $75,000, id. § 1332(a); see Home Depot U.S.A., Inc. v. Jackson, 139 S.Ct. 1743, 1746 (2019). Congress authorized federal courts to exercise diversity jurisdiction, in particular, to protect “those who might otherwise suffer from local prejudice against out-of-state parties.” Hertz v. Friend, 559 U.S. 77, 85 (2010).

A defendant may remove to federal court any action filed in state court that could have originally been filed in federal court. 28 U.S.C. § 1441(a); Tylka v. Gerber Prods. Co., 211 F.3d 445, 448 (7th Cir. 2000). “Removal based on diversity of citizenship under § 1332(a), however, is governed by the forum defendant rule” Graff v. Leslie Hindman Auctioneers, Inc., 299 F.Supp.3d 928, 932 (N.D. Ill. 2017). That is, “[a] civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title [diversity jurisdiction] 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. § 1441(b)(2). Put differently, the “forum defendant rule disallows federal removal premised on diversity in cases where the primary rationale for diversity jurisdiction-to protect defendants against presumed bias of local courts-is not a concern because at least one defendant is a citizen of the forum state.” Morris v. Nuzzo, 718 F.3d 660, 665 (7th Cir. 2013). “The party seeking removal has the burden of establishing federal jurisdiction.” Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 758 (7th Cir. 2009). “Courts should interpret the removal statute narrowly and presume that the plaintiff may choose his or her forum.” Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993).

Removal based on diversity jurisdiction requires that the parties be of diverse state citizenship and that the amount in controversy exceed $75,000. 28 U.S.C. § 1332(a). A removing defendant in a diversity case must also satisfy the requirements of 28 U.S.C. § 1441(b). Section 1441(b)(2) prohibits removal in diversity cases when one of the “parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” Id. § 1441(b)(2); see also Graff, 299 F.Supp.3d at 932. At any time before final judgment, the court may remand a case for lack of subject matter jurisdiction. 28 U.S.C. § 1447(c).

Analysis

Cleveland-Cliffs removed this case to federal court based on diversity jurisdiction, asserting that Valles' allegations against Pleasant were unfounded and constitute fraudulent joinder. Not. Removal ¶ 4. In his Motion to Remand, Valles argues that the Court lacks subject matter jurisdiction over this case because Pleasant is domiciled in Illinois, thereby defeating diversity jurisdiction, and all claims against Pleasant have a reasonable possibility of success in state court. Mot. Remand ¶ 9. The Court agrees with Valles and grants his Motion to Remand.

However, the Court denies Valles' Motion for Costs Expenses, and Attorneys' Fees (Motion for Fees).

I. Cleveland-Cliffs' Citizenship

As an initial matter, Valles posits that Cleveland Cliffs, a limited liability company, may be a citizen of Illinois as opposed to Ohio, thereby destroying diversity^[4]and warranting remand. Mot. Remand ¶¶ 69-71 (“[I]t is unclear whether even Cleveland-Cliffs is a diverse defendant.”). “As the party seeking to invoke federal jurisdiction, . . . [Cleveland-Cliffs] bears the burden of demonstrating that removal is proper.” Boyd v. Phoenix Funding Corp., 366 F.3d 524, 529 (7th Cir. 2004) (cleaned up).^[5]

Cleveland-Cliffs is a limited liability corporation (LLC). See Mot. Remand ¶ 69; Not. Removal ¶ 12. For diversity purposes, the citizenship of a limited liability company is “based on the citizenship of its members. If any of the LLC's members are citizens of the same state as the opposing party, then there is no complete diversity.” J.P. Morgan Sec. LLC v. Cresset Asst Mgmt., LLC, 2021 WL 5918879, *3 (N.D. Ill.Dec. 15, 2021) (cleaned up). Determining the citizenship of an LLC poses a unique problem because unlike corporations which may have citizenship in one to two states, LLCs can have multiple citizenships among its members and some of its members may also be LLCs. Calchi v. TopCo Assocs., LLC, 2023 WL 3863355, *4 (N.D. Ill. June 7, 2023). Also complicating matters for plaintiffs is that in some states the members of the LLC need not be publicly identified. Qin v. Deslongchamps, 31 F.4th 576, 579 (7th Cir. 2022) (finding that “in the handful of states that allow it (among them Delaware), its members can be anonymous: an authorized third-party representative can register the LLC without disclosing the identities of the LLC's members”).

Here neither Valles' FAC, nor Motion to Remand, disclose the citizenship of the members of Cleveland-Cliffs, a limited liability company. No matter, because, as stated above, the party seeking to invoke the Court's federal subject matter jurisdiction-here, Cleveland-Cliffs-must establish the citizenship of each of the LLC's members. Schur, 577 F.3d at 758; see also Rooflifters, LLC v. Nautilus Ins. Co., 2013 WL 3975382, at *4 (N.D. Ill. Aug. 1, 2013) (collecting cases finding that a removing defendant...