Summary
distinguishing Gebbia on the basis of the plaintiff's disfigurement claim
Summary of this case from Bonck v. Marriott Hotels, Inc.Opinion
No. 02-2199, Section "R"(4)
October 21, 2002
ORDER AND REASONS
Before the Court is plaintiffs' motion to remand on the grounds that removal was untimely and that not all served defendants properly joined in the notice of removal. For the following reasons, the Court grants plaintiffs' motion.
I. Background
This matter arises out of an accident in which plaintiff Gregory Jacob was allegedly injured when he was a passenger on a Greyhound bus. Wesley Eugene Neel was the driver of the bus. plaintiffs filed suit in Louisiana state court, naming as defendants Greyhound, Wesley Eugene Neel and XYZ Insurance company. Plaintiffs claimed that Jacob suffered "serious and permanent injuries to his mind and body," including "injuries to his neck, back, right shoulder and left leg . . . ." (Def.'s Notice of Removal, Ex. A, Petition for Damages, at 4.) Plaintiffs sought damages for past and future loss of earnings, past and future medical expenses, pain and suffering, and disability. Defendants conducted discovery to determine the nature of plaintiffs' alleged damages and then, on July 18, 2002, defendants removed the lawsuit to this Court based on diversity jurisdiction. Plaintiffs challenge removal on two grounds. First, plaintiffs assert that removal was untimely. Second, plaintiffs assert that not all served defendants properly joined in the removal, violating the so-called rule of unanimity.
II. Discussion
A. Timeliness
As plaintiffs challenge the timeliness of removal, a brief review of the timeline of this lawsuit is in order. Defendant Greyhound was cited and served with the state court petition on April 16, 2002, and defendant Neel was served on April 18, 2002. Greyhound and Neel filed their answer to the petition for damages on May 11, 2002. Two weeks earlier, on April 29, 2002, plaintiffs amended their petition for damages to name as defendant State Farm Mutual Automobile Insurance Company ("State Farm"). State Farm is Jacob's uninsured motorist carrier. State Farm was served on May 15, 2002, and filed its answer to plaintiffs' petition on June 21, 2002.
Meanwhile, defendants began to conduct discovery to determine the extent of Jacob's injuries. On June 26, 2002, plaintiffs responded to defendants' interrogatories and requests for production of documents. Defendants then learned that Jacob earned approximately $28,000 per year, that he had missed several weeks of work, and that he had already incurred over $10,000 in medical expenses. (Def.'s Notice of Removal, Ex. C, Answers to Interrogatories and Responses to Requests For production of Documents.) In a supplemental discovery response that defendants received on July 11, 2002, defendants learned that Jacob suffered from a bulging disc at L5-S1 and that plaintiff's doctor recommended surgery on his right shoulder. (Def.'s Notice of Removal, Ex. E, First Supplemental Answers.) Defendants then removed the lawsuit to this Court on July 18, 2002.
A defendant may remove a civil action filed in state court if a federal court would have had original jurisdiction. See 28 U.S.C. § 1441(a). As the removing party, defendants bear the burden of establishing that federal jurisdiction exists at the time of removal. See Allen v. R H Oil Gas Co., 63 F.3d 1326, 1335 (5th Cir. 1995); De Aguilar v. Boeing Co., 47 F.3d 1404, 1408 (5th Cir. 1995). Because the exercise of removal jurisdiction raises significant federalism concerns, these provisions are strictly construed. See Shamrock Oil Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S.Ct. 868, 872 (1941); Eastus v. Blue Bell Creameries, L.P., 97 F.3d 100, 106 (5th Cir. 1996).
Section 1446(b) addresses the timeliness of removal and provides:
"The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.
If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action."28 U.S.C. § 1446(b) (2002). The time limit of the first paragraph of § 1446(b) is triggered "only when that pleading affirmatively reveals on its face that the plaintiff is seeking damages in excess of the minimum jurisdictional amount of the federal court." Bosky v. Kroger, Texas, LP, 288 F.3d 208, 210 (5th Cir. 2002) (quoting Chapman v. Powermatic, Inc., 969 F.2d 160, 163 (5th Cir. 1992)). When it is unclear from the complaint whether the minimum jurisdictional amount is met, then the time limit of the second paragraph of § 1446(b) is triggered when other pleadings, motions or papers make it "unequivocally clear or certain" that the lawsuit is removable. Id. The burden is on the removing defendant to prove by a preponderance of the evidence that the amount in controversy exceeds $75,000. Id.
Plaintiffs' petition for damages indicates that the parties are diverse, but it did not claim a specific amount of damages. Indeed, they are precluded from doing so by state law. LA. CODE CIV. P. art. 893 (West 2002). The petition did not allege that the bus was involved in a collision with another vehicle or structure. Rather, the complaint alleges that the bus drifted off the road, "impacted" a ditch, reentered the road, and came to a stop sometime after that. Plaintiff claims he suffered "serious and permanent injuries to his mind and body," including "injuries to his neck, back, right shoulder and left leg . . . ." (Def.'s Notice of Removal, Ex. A, Petition for Damages, at 4.) Plaintiffs sought damages for past and future loss of earnings, past and future medical expenses, pain and suffering, and disability. ( Id.) Plaintiff does not specify the nature of the injuries to his neck, leg, shoulder or back, the nature of any disability he suffered, or the nature of any medical treatment he received or expected to receive.
When a petition for damages includes "vanilla" allegations of damages from which it is difficult to determine the amount in controversy, defendants may conduct discovery to determine whether the case is removable. De Aguilar, 47 F.3d at 1412; Alonzo v. Shoney's Inc., 2001 WL 15641, *1 (E.D.La. 2001); Seaman v. Tetra Applied Technologies, Inc., 2000 WL 222851, *2 (E.D.La. 2000). In Alonzo, for example, this Court found that a plaintiff describing damages as "severe and permanent" stated only vanilla allegations that did not trigger the 30-day period in the first paragraph of § 1446(b). Alonzo, 2001 WL 15641, at *1. Rather, plaintiff's suit was not removable until "other paper" put defendant on notice that plaintiff's claim was removable. Id. Also, in Seaman, the court found that allegations of damages nearly identical to those in the lawsuit before this Court were "vanilla" allegations that did not make the amount in controversy facially apparent. Seaman, 2000 WL 222851, at *1.
In Seaman, the plaintiff sought damages for "serious injuries to his mind and body, including, but not limited to neck and back, past and future mental and physical pain and suffering, lost wages, loss of future earning capacity, medical expenses and related expenses." Seaman, 2000 WL 222851, at *1.
Given the nature of the accident and the generalized description of Jacob's injuries, the Court finds that the petition did not affirmatively reveal that the amount in controversy exceeds the jurisdictional minimum. Therefore, the 30-day period set forth in the first paragraph of § 1446(b) was not triggered when Greyhound, the first-served defendant, was served on April 16, 2002. See Getty Oil Corporation v. Insurance Company of North America, 841 F.2d 1254, 1261 (5th Cir. 1988). Instead, as provided in the second paragraph of § 1446(b), the 30-day period for removal was triggered when plaintiffs' responses to defendants' discovery requests made it "unequivocally clear or certain" that the lawsuit was removable. Bosky, 288 F.3d at 211. This occurred on July 11, 2002, when defendants received sets of discovery responses revealing the amount of plaintiff's lost wages and medical expenses, that plaintiff suffered from a bulging disc, and that doctors recommended shoulder surgery. The lawsuit was then timely removed on July 18, 2002, well within the applicable 30-day period.
Plaintiffs assert that defendants should have known from the original complaint that the amount in controversy exceeded the $75,000 minimum. First, in Louisiana, jury trials are only available when the amount in controversy exceeds $50,000. LA. CODE CIV. P. art. 1731 (West 2002). Plaintiffs assert that defendants request for a jury trial in their answer to the petition for damages amounts to an acknowledgment that the amount in controversy exceeded $50,000. This argument is without merit, for defendants were required by Louisiana law to request a jury trial at that time lest the request be waived. LA. CODE CIV. P. art. 1731 (West 2002). Furthermore, this Court has held that while a jury demand in state court may be relevant in determining jurisdictional amount, it does not control the analysis. See Brown v. Richard, 2000 WL 1653835, *4 (E.D.La. 2000). Second, plaintiffs cite to a number of cases in which courts found that a petition for damages, without mentioning a particular amount in controversy, nevertheless described damages from which it was facially apparent that the amount in controversy exceeded $75,000. See Gebbia v. Wal-Mart Stores, Inc., 233 F.3d 880, 883 (5th Cir. 2000); Luckett v. Delta Airlines, Inc., 171 F.3d 295, 298 (5th Cir. 1999). These cases are distinguishable because in Luckett, the plaintiff suffered heart failure and pulmonary edema and was hospitalized unconscious. In Gebbia, the plaintiff included a claim for disfigurement in addition to other injuries. Here, by contrast, plaintiff's injuries, as alleged, are less serious. Indeed, were the Court to find that plaintiffs' vanilla allegations did trigger the 30-day period set forth in the first paragraph of § 1446(b), then future defendants faced with similar petitions for damages would be forced to prematurely remove the lawsuit, prior to conducting any discovery, lest they lose their opportunity to do so. This is precisely the result that the Fifth Circuit has avoided, rejecting a rule that "would encourage defendants to remove prematurely cases in which the initial pleading does not affirmatively reveal that the amount in controversy [meets the jurisdictional minimum] so as to be sure that they do not accidentally waive their right to have the case tried in a federal court." Chapman, 969 F.2d at 163.
When, as here, the amount in controversy is not facially apparent from the complaint, the first paragraph of § 1446(b) does not apply. The 30-day period in the second paragraph of § 1446(b) is not triggered until it is "unequivocally clear or certain" that the lawsuit is removable. Bosky, 288 F.3d at 211. This did not occur until July 11, 2002, when defendants received the second response to their discovery request, meaning that defendants removal of this lawsuit on July 18, 2002 was timely.
B. Nominal Defendants and The Rule of Unanimity
The Fifth Circuit has interpreted § 1446(b) to require that all then served defendants join in the removal petition. Getty Oil, 841 F.2d at 1261. Under this "rule of unanimity" it is not necessary that each defendant sign the original petition for removal, "but there must be some timely filed written indication from each served defendant, or from some person or entity purporting to formally act on its behalf in this respect and to have authority to do so, that it has actually consented to such action." Getty Oil, 841 F.2d at 1262, n. 11; see also Spillers v. Tillman, 959 F. Supp. 364, 369 (S.D.Miss. 1997). Plaintiffs assert that this lawsuit should be remanded because State Farm, which had been served with process well before this lawsuit was removed, failed to either join in the removal or timely file written consent to removal. Defendants assert that State Farm is a nominal defendant that need not join in removal.
1. Nominal Defendants
The Fifth Circuit has held that in cases based on diversity jurisdiction and federal question jurisdiction alike, nominal defendants need not join in removal. Farias v. Bexar County Board of Trustees, 925 F.2d 866, 872 (5th Cir. 1991). A nominal party is "neither necessary nor indispensable to join in the action," and "the bottom line concern in determining a nominal party is whether the plaintiff can establish a cause of action against the nonremoving defendant in state court." Id. (citing Tri-Cities Newspapers, Inc., 427 F.2d 325, 327 (5th Cir. 1970)). In making such a determination, courts may pierce the pleadings and, even though the petition may state a claim against the nonremoving defendant, the case may be removed if the defendants show by evidence outside the pleadings that there is no reasonable basis to predict that plaintiffs could establish a claim against the nominal defendant. Badon v. R J R Nabisco, Inc., 224 F.3d 382, 389 (5th Cir.)( Badon I), op. after certified question declined, 236 F.3d 282, 286 (5th Cir. 2000) ( Badon II); see also B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981). In so doing, courts may examine "summary judgment type evidence." Badon, 224 F.3d at 389, n. 10. Nevertheless, the Court must consider all of the factual allegations in the light most favorable to plaintiffs and resolve all of the contested issues of fact in favor of plaintiffs. See Burden, 60 F.3d at 217. Furthermore, the Court must resolve any uncertainties as to the current state of controlling substantive law in favor of plaintiffs. B., Inc., 663 F.2d at 549. Thus, defendants must show, as a matter of law, that "there is no reasonable basis for predicting that the plaintiff [5] might establish liability on [their] claim against [State Farm]." Badon I, 224 F.3d at 390. See also Burden, 60 F.3d at 216 (District courts "do not determine whether the plaintiff will actually or even probably prevail on the merits of the claim, but look only for a possibility that the plaintiff might do so.").
Although Badon involved a fraudulently-joined defendant — an in-state defendant joined to defeat diversity jurisdiction — the Court finds that the standard articulated by the Badon court applies with equal force to nominally-joined defendants. In both situations, the central inquiry is whether the plaintiff can establish a cause of action against the nonremoving defendant in state court.
Defendants assert that plaintiffs have no viable cause of action against State Farm, Jacob's uninsured motorist carrier. (Def.'s Supplemental Memo. in Opp. to Pl.'s Mot. to Remand, Ex. 4.) "Uninsured motorist coverage is intended to protect the insured at all times against the generalized risk of damages at the hands of uninsured motorists." Jones v. Henry, 542 So.2d 507, 508 (La. 1989). An injured person has a right of direct action against an insurer "[w]hen the insurer is an uninsured motorist carrier." LA. REV. STAT. ANN. § 22:655(B)(1)(e) (West 2002); see also LA. REV. STAT. ANN. § 22:1406(D). Plaintiffs assert that they have a direct cause of action against their UM carrier because Jacob was injured in an accident caused by Greyhound, an uninsured motorist.
At the time of the alleged accident, Greyhound maintained an insurance policy under which Greyhound itself acted as a self-insurer for claims of up to $1,500,000 per accident. (Def.'s Supplemental Memo. in Opp. to Pl.'s Mot. to Remand, Ex. 2.) Greyhound also carried insurance from American Home Assurance Company to cover claims in excess of $1,500,000, up to a limit of $5,000,000 per accident. ( Id.) In other words, a victim of an accident for which Greyhound was liable would first recover $1,500,000 from Greyhound itself and then up to $5,000,000 from Greyhound's insurer. In no event, including insolvency, is the insurer to be held responsible for the first $1,500,000 of Greyhound's liability.
Louisiana courts have examined the nature of self insurance policies and determined that self-insurance is not an insurance policy per se, but is rather one method for complying with Louisiana's requirement that every motor vehicle maintain proof of financial responsibility. Hearty v. Harris, 574 So.2d 1234, 1237 (La. 1991). Pursuant to LA. REV. STAT. ANN. § 32:861(A) (West 2002), every owner of a motor vehicle is prospectively required to maintain proof of financial responsibility by purchasing car insurance, posting a bond, depositing with the state treasurer cash and securities, or obtaining a certificate of self-insurance in accordance with the terms of LA. REV. STAT. ANN. § 32:1042. Greyhound chose to comply with Louisiana law by obtaining a certificate of self-insurance. Importantly, self insurance "is, in actuality, not insurance at all." Id. at 1237. A self-insurance policy is rather "a certificate indicating the state's satisfaction that the self-insurer has and will continue to have the ability to pay judgments." Jones, 542 So.2d at 509.
In Jones, the Louisiana Supreme Court considered whether an insurer and an insured may by contract exclude from UM coverage accidents involving self-insureds. In other words, the contractual provisions at issue in Jones, if found enforceable, would have meant that the insured could not seek UM recovery from its UM insurer for injuries sustained in accidents involving self-insured motorists like Greyhound. The Jones court found such contractual clauses unenforceable and contrary to the intent of UM coverage. Jones, 542 So.2d at 510. To hold otherwise would place on the shoulders of insureds "the burden of ascertaining whether the resources are available from a self-insurer . . . and the burden (including the costs) of securing a recovery." Id. (internal citations omitted). The court further noted that the UM statute "does not evince any intent to allow an insurer to condition its UM obligation on the tortfeasor's wealth or poverty or the status of the vehicle." Id.
The Fifth Circuit interpreted Jones to mean that "a motorist with UM coverage who was involved in an accident with a self-insured motorist could recover from the UM carrier." Provost v. Unger, 949 F.2d 161, 163 (5th Cir. 1992). Afterwards, "[t]he carrier could then pursue the self-insured motorist." Id. This is exactly the situation here. Plaintiffs have UM coverage with State Farm and were involved in an accident with Greyhound, which is uninsured for the first $1,500,000 in liability. Plaintiffs may, in light of Provost, pursue recovery directly from State Farm, and then State Farm can pursue Greyhound. This is true notwithstanding Greyhound's sound fiscal status. Indeed, the process of obtaining self-insurance requires some showing of fiscal responsibility. Nevertheless, Greyhound, a self-insurer, is deemed to be an uninsured motorist for purposes of uninsured motorist coverage and recovery, meaning that plaintiffs may maintain a cause of action directly against State Farm, its UM carrier, for damages. Farias, 925 F.2d at 872. Accordingly, the Court finds that State Farm is not a nominally-joined defendant.
2. Rule of Unanimity
The "rule of unanimity" requires that all then served defendants either join in the notice of removal or timely file written consent to removal into the record. Getty Oil, 841 F.2d at 1262, n. 11. In Getty, the removing defendant failed to provide written consent to removal of a co-defendant that had been served just two days prior to removal. Instead, the removing party indicated that this co-defendant "do[es] not oppose and consent[s] to this Petition for Removal." Getty Oil, 841 F.2d at 1262. The Fifth Circuit ruled that this representation to the court was insufficient, for the removing party did not indicate that it had formal authority to represent to the court that the co-defendant consents to removal. Getty Oil, 841 F.2d at 1262 n. 11; see also Jones v. Scogin, 929 F. Supp. 987, 988 (W.D.La. 1996). Although the Getty court left open the possibility that "exceptional circumstances" might warrant a departure from this rigid rule, Getty, 841 F.2d at 1263 n. 12, the Fifth Circuit has since identified only one such exceptional circumstance. See Gillis v. Louisiana, 294 F.2d 755 (5th Cir. 2002); see also Prescott v. Memorial Medical Center, 2000 WL 532035, *5 (E.D.Tex. 2000). In Gillis, the nonremoving defendant failed to timely file written consent into the record because consent could be authorized only at a board meeting, and a board meeting could not be scheduled within the thirty-day removal period because the chairman of the Board, who was also a plaintiff in the matter, had interposed scheduling conflicts. Gillis, 294, F.2d at 759. Thus Gillis is easily distinguished, as here State Farm has no similar excuse for failing to timely file written consent into the record. Moreover, the Gillis court reaffirmed the standard for filing written consent into the record set forth in Getty, namely, that there be "written indication from each served defendant, or from some person or entity purporting to formally act on its behalf in this respect and to have the authority to do so, that it has actually consented to such action." Id.
State Farm was served with process over two months before the Petition for Removal was filed. The only indication in the record that State Farm joined in the removal is in the Petition for Removal, signed by Greyhound and Neel, which provides that "State Farm does not object to this matter being removed to federal court." (Petition for Removal, at 2.) Absent an indication that State Farm authorized its co-defendants to express its consent, this representation is not sufficient. Getty Oil, 841 F.2d at 1262 n. 1l; Gillis, 294 F.3d at 759.
To support their assertion to the contrary, defendants cite to White v. Chevron, U.S.A., Inc., 1990 WL 28167 (E.D.La. 1990), and Sercovich v. State Farm Mutual Automobile Insurance Company, 1999 WL 970346 (E.D.La. 1999). In Sercovich, the court held that it is sufficient for a removing defendant to indicate in a petition for removal that it "spoke with" a co-defendant and that that co-defendant "joins in this removal." Sercovich, 1999 WL 970346, *1. Notwithstanding this looser construction of the formalities required by the rule of unanimity, the Court finds that Getty and Gillis control the issue. Defendants' notice of removal therefore violates the rule of unanimity. Accordingly, the Court grants plaintiffs' motion to remand.
III. Conclusion
For the reasons stated above, the Court grants plaintiffs' motion to remand.