Opinion
3:21-cv-0461-AC
08-11-2021
EBONY HARDAWAY, Plaintiff, v. WESTROCK SERVICES, LLC, Defendant.
FINDINGS AND RECOMMENDATION
JOHN V. ACOSTA UNITED STATES MAGISTRATE JUDGE
Introduction
Before this court is the motion to remand filed by plaintiff Ebony Hardaway (“Hardaway”) seeking remand from federal court to state court and fees pursuant to 28 U.S.C. 1447 (c). (“Motion”) (Pl.'s Mot. and Mem. for Remand to the Cir. Ct. of Or. And for Multnomah Cty., ECF No. 5), (“Mot.”) at 2.) Defendant WestRock Services LLC (“WestRock”), removed the lawsuit based on diversity jurisdiction. (Def.'s Notice of Removal of Action under 28 U.S.C. 1332, ECF No. 1 (“Notice”), ¶ 2.) WestRock alleges it is a citizen of Georgia and Hardaway is a citizen of Oregon. The parties disagree whether complete diversity exists. For the reasons set forth below, the court recommends the Motion be denied.
Hardaway requested oral argument in the Motion. The court finds the Motion appropriate for disposition without oral argument, pursuant to LR 7-1(d)(1), and denies the request.
Procedural Background
On February 18, 2021, Hardaway filed a complaint in state court seeking damages against WestRock for three claims: (1) workers' compensation discrimination; (2) retaliation for opposing race discrimination; and (3) whistleblower discrimination. WestRock filed a notice of removal in this court on March 26, 2021, asserting diversity jurisdiction. Hardaway filed the Motion on March 31, 2021, alleging WestRock failed to: (1) provide admissible evidence the parties are diverse; (2) provide information about the citizenship of all its members; and (3) allege parties were diverse when WestRock filed the Notice, (at 4-5.)
Legal Standard
A defendant sued in state court may qualify to remove the matter to federal court, pursuant to Section 1441 of Title 28, which provides:
[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.28 U.S.C. 1441(a). A defendant's removal can be based either on diversity or on federal question jurisdiction. 28 U.S.C. 1441 (b). Section 1332(a) of Title 28 authorizes district courts to exercise original jurisdiction over civil actions in diversity only when the matter in controversy exceeds $75,000, exclusive of interest and costs, and the parties are citizens of different states. 28 U.S.C. 1332(a). This statutory conferral of federal jurisdiction “requires complete diversity between the parties - each defendant must be a citizen of a different state from each plaintiff.” In re Digimarc Corp. Derivative Litigation, 549 F.3d 1223, 1234 (9th Cir. 2008).
In cases where entities, rather than individuals, are parties, assessing the form of the entity is necessary to determine the entity's citizenship and, thus, whether diversity jurisdiction exists. Johnson v. Columbia Prop. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). For purposes of diversity jurisdiction, corporations are citizens of both their state of incorporation and the state of their principal place of business. Id. But the citizenship of LLCs, partnerships, and trusts includes all of the states of which its owners, members, partners, and trustees are citizens. Id. In such instances, courts only look to the citizenship of each member of an LLC to establish the company's citizenship. Johnson, 437 F.3d at 899. If any member of an LLC is itself a partnership or' association (or another LLC), the federal court must know the citizenship of each “sub-member” as well. V&MStar, LP v. Centimark Corp, 596 F.3d 354, 356 (6th Cir. 2010). When a defendant seeks to remove under diversity, the court presumes that it knows its own citizenship and is, “in the best position to know it.” Cretian v. JoblUSA, Inc., No. 09-770-ST, 2009 WL 484103, at *3 (D. Or. Dec. 11, 2009).
The courts strictly construe the removal statute and will resolve any doubt about the right of removal in favor of remand. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). “Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” Id. There is a strong presumption against removal jurisdiction and the burden of establishing proper removal lies with the defendant. Id. When a plaintiff believes an action has been improperly removed to federal court, a motion to remand is appropriate. Section 1447(c) provides: “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. 1447(c).
Discussion
By not arguing otherwise in the Motion, Hardaway has impliedly conceded two things: (1) the amount-in-controversy is met; and (2) Hardaway is a citizen (not merely a resident) of Oregon. Therefore, the court addresses only the contested diversity of citizenship.
The party invoking diversity jurisdiction bears the ultimate burden of persuasion on the issue of complete diversity. Desmare v. United Stcites, 93 U.S. 605, 610 (1876). When federal jurisdiction is asserted as the basis for removal, diversity must exist both at the time the complaint is filed and when the notice of removal is filed. Strotek Corp. v. Air Trctnsp. Ass'n. of Am., 300 F.3d 1129, 1131 (9th Cir. 2002).
In the Ninth Circuit, alleging defendant is a “citizen of state other than that of plaintiff' is insufficient. Bautista v. Pan Am. World Airlines, Inc., 828 F.2d 546, 552 (9th Cir. 1987). To prevail, WestRock must show: (1) who its members were at the time the Complaint was filed; (2) the citizenship of its members at the time the Complaint was filed; (3) who its members were at the time the Notice was filed; and (4) the citizenship of its members at the time the Notice was filed. Absent unusual circumstances, diversity citizenship should be affirmatively alleged. Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001).
In the Notice and its Response brief, WestRock contends it is an LLC whose members are all “residents of the state of Georgia.” (Notice ¶ 2; Def's Resp. to Pl.'s Mot. to Remand, ECF No. 10 (“Resp.”), at 4.) In the Notice, WestRock stated, “all members of the LLC are residents of the state of Georgia.” (Notice at ¶ 2.) Using the plural form of “member” and “resident, ” WestRock indicated it had multiple members at the time the Complaint was filed, (Id.') WestRock argues residence is evidence of citizenship and suggests that because its members are “residents” of Georgia, this court ought to infer its members thus are “citizens” of Georgia. (Resp., at 4-5.)
The two concepts, however, are not interchangeable. The Ninth Circuit has explained “the diversity jurisdiction statute, 28 U.S.C. 1332, speaks of citizenship, not of residency.” Kanter, 265 F.3d at 857. In addition, the Supreme Court has emphasized, “residence and citizenship are wholly different things within the meaning of the Constitution and the laws defining and regulating the jurisdiction of the Circuit Courts of the United States.” Steigleder v. McQuesten, 198 U.S. 141, 145 (1905).
WestRock's proposed Amended Notice of Removal, filed after and arguably in response to the Motion (“Amended Notice”), attempts to cure the citizenship deficiency by alleging its sole member is a corporation, WRKCo., Inc. (“WRKCo”), whose principal place of business and place of incorporation is Georgia. (Baumgart Deci, dated April 14, 2021, ECF No. 11 (“Baumgart Deci.”), Ex. A ¶ 2.) However, the Amended Notice lacks the necessary temporal information; it fails to state when WRKCo became WestRock's sole member and whether WRKCo has always been a citizen of Georgia.
The declaration of Kevin Maxwell, Assistant Secretary for WestRock, provides the missing: information: “WestRock's sole member is WRKCo., Inc., a Delaware corporation with its principal place of business in Georgia. WRKCo Inc. has been the sole member of WestRock since before this action was commenced on February 18, 2021.” (Maxwell Deci, dated April 14, 2021, ECF No. 12 (“Maxwell Deci.”), ¶ 2.) Maxwell also states the information from the Oregon Secretary of State's website, “does not reflect the current member of WestRock, which is WRKCo Inc.” (Maxwell Deci. ¶ 3.) Read with Maxwell's declaration, the Amended Notice sufficiently corrects the deficiencies of the Notice. WestRock is an LLC, its sole member at the time of the filing of both the Complaint and the Notice was WRKCo, and WRKCo was a citizen of Georgia during that time. Accordingly, WestRock has met its burden to allege diversity existed at the time' the Complaint and the Notice were filed.
Therefore, because WestRock has established complete diversity between the parties and the amount-in-controversy has been met, removal is proper under 28 U.S.C. 1332.
Conclusion
Hardaway's motion (ECF No. 5) to remand should be DENIED.
Scheduling Order
The Findings and Recommendation will be referred to a district judge for review. Objections, if any, are due within seventeen (17) days. If no objections are filed, then the Findings and Recommendation will go under advisement on that date.
If objections are filed, then a response is due within fourteen (14) days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendation will go under advisement.