Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_07-cv-02293/USCOURTS-azd-2_07-cv-02293-1/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

NATHAN HANDY, 

Plaintiff, 

vs.

WELLS FARGO BANK, N.A.; and

LINDA HARLAND, 

Defendants. 

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No. CV07-2293-PHX-GMS

ORDER

“Inquiring whether the court has jurisdiction is a federal judge’s first duty in every

case.” Belleville Catering Co. v. Champaign Market Place, L.L.C., 350 F.3d 691, 693 (7th

Cir. 2003). In this case, the notice of removal fails to sufficiently plead jurisdiction. See 28

U.S.C. § 1332; Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001).

The removal statute provides, in pertinent part: “[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 . . . 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); see

Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987) (“Only . . . actions that originally

could have been filed in federal court may be removed to federal court by the defendant.”).

Case 2:07-cv-02293-GMS Document 43 Filed 10/20/08 Page 1 of 4
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“If 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).

There is a “strong presumption” against removal jurisdiction, and “[f]ederal

jurisdiction must be rejected if there is any doubt as to the right of removal in the first

instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (emphasis added). “The

‘strong presumption’ against removal jurisdiction means that the defendant always has the

burden of establishing that removal is proper.” Id.

Here, the Notice of Removal states that both Plaintiff and Defendant Linda Harland

are citizens of the State of Arizona. (Dkt. # 1, at ¶ 6.) However, Defendants assert that

diversity jurisdiction is not destroyed because Defendant Harland’s citizenship should be

disregarded “on the ground that there is no possibility that plaintiff will be able to establish

liability against said defendant.” (Id.) Defendants’ position is based on the fraudulent

joinder doctrine. 

Under the fraudulent joinder doctrine, “‘If the plaintiff fails to state a cause of action

against a resident defendant, and the failure is obvious according to the settled rules of the

state, the joinder of the resident defendant is fraudulent.’” Ritchey v. Upjohn Drug Co., 139

F.3d 1313, 1318 (9th Cir. 1998) (quoting McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339

(9th Cir. 1987)); see In re Med. Lab. Mgmt. Consultants, 931 F. Supp. 1487, 1491 (D. Ariz.

1996). In evaluating the allegations and evidence, courts employ a presumption against

finding fraudulent joinder. See Plute v. Roadway Package Sys., Inc., 141 F. Supp. 2d 1005,

1008 (N.D. Cal. 2001); Diaz v. Allstate Ins. Group, 185 F.R.D. 581, 586 (C.D. Cal. 1998).

This presumption is often expressed by a series of requirements placed upon the party

asserting fraudulent joinder. Diaz, 185 F.R.D. at 586. First, the defendant “‘must

demonstrate that there is no possibility that the plaintiff will be able to establish a cause of

action in state court against the alleged sham defendant.’” Id. (quoting Good v. Prudential

Ins. Co. of Am., 5 F. Supp. 2d 804, 807 (N.D. Cal. 2001)). Second, “it must appear to ‘a near

certainty’ that joinder was fraudulent.” Id. (quoting Lewis v. Time, Inc., 83 F.R.D. 455, 466

(E.D. Cal. 1979), aff’d, 710 F.2d 549 (9th Cir. 1983)). “This occurs if the plaintiff has no

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actual intention to prosecute an action against [the] particular resident defendant[].” Id.

Third, “merely showing that an action is likely to be dismissed against that defendant does

not demonstrate fraudulent joinder.” Id. “‘The standard is not whether plaintiff[] will

actually or even probably prevail on the merits, but whether there is a possibility that [it] may

do so.’” Id. (quoting Lieberman v. Meshkin, Mazandarani, No. C-96-3344, 1996 WL

732506, at *3 (N.D. Cal. Dec. 11, 1996)).

Despite asserting a reliance on the fraudulent joinder doctrine, Defendants fail to

present facts or arguments sufficient to support its application. Defendants merely state that

“the Complaint fails to state a cause of action as to [Linda Harland].” (Dkt. # 1, at ¶ 6.) This

is untrue, however, as Plaintiff claims that “Harland disseminated and published false

statements concerning the Plaintiff which were intended to cast Plaintiff in a false and

unfavorable light, and were made with actual and constructive knowledge of their

untruthfulness.” (Dkt. # 1, Ex. 1, at ¶ 24.) Additionally, Plaintiff claims, “Plaintiff and . .

. Harland entered into an agreement, the terms of which included that the only information

that would be provided about Plaintiff by Defendants to future prospective employers would

be his dates of employment and position held . . . .” (Id. ¶ 29.) Based on these statements,

it is unclear how Defendants contend that no claims were asserted against Harland.

Defendants have even moved for summary judgement on the breach of contract and

defamation claims asserted against Harland in Plaintiff’s Complaint. (Dkt. # 20.) Because

the Court has some doubt as to the right of removal in the first instance, it must fall upon the

Defendants to sufficiently plead jurisdiction in the Notice of Removal. See Gaus, 980 F.2d

at 566. Accordingly,

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IT IS HEREBY ORDERED that by October 31, 2008, Defendants shall file an

amended notice of removal properly alleging federal subject matter jurisdiction such that the

Court could find that there is no possibility that Plaintiff could establish liability against

Linda Harland. Failure to comply will result in remand of this case without prejudice for

lack of federal subject matter jurisdiction.

DATED this 17th day of October, 2008.

Case 2:07-cv-02293-GMS Document 43 Filed 10/20/08 Page 4 of 4