Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-01067/USCOURTS-azd-2_08-cv-01067-0/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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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Lac Vieux Desert Band of Lake Superior

Chippewa Indians Holdings Mexico, LLC

et al., 

Plaintiffs, 

vs.

Atlico USA, LLC et al., 

Defendants. 

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No. CV-08-1067-PHX-ROS

ORDER

Background

On November 6, 2008, the Court granted Plaintiff Lac Vieux Desert Band of Lake 

Superior Chippewa Indians Holdings Mexico, LLC’s (LVDHM) motion to amend its

Complaint (Doc. 43). Among other amendments, Plaintiff LVDHM’s First Amended

Complaint joined Lac Vieux Desert Band of Lake Superior Chippewa Indians, a federally

recognized Indian Tribe (the Tribe), as a Plaintiff to the action (Doc. 44). Because subject

matter jurisdiction over this case is dependant on satisfying the requirements of 28 U.S.C.

§ 1332, the Court ordered the parties to brief two issues: (1) Whether joinder of Plaintiff

Tribe destroys complete diversity and (2) If complete diversity does not exist, whether to

remand (Doc. 43 at 11).

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Discussion

Because Defendants removed this action pursuant to 28 U.S.C. §§ 1332, 1441 and do

not assert another ground on which this Court may assert jurisdiction, maintenance of this

action will require a showing of complete diversity (Doc. 1). See State Farm Fire & Cas. Co.

v. Tashire, 386 U.S. 523, 530-21 (1967) (interpreting 28 U.S.C. § 1332 to require complete

diversity among plaintiffs and defendants). Section 1332 generally defines diverse actions

as those involving citizens of different States or citizens of the United States and citizens of

a foreign state (or the foreign state itself). See 28 U.S.C. § 1332(a). Plaintiff Tribe, as a

federally recognized Indian Tribe, is not a citizen of a State, a citizen of a foreign state, or

a foreign state. See Am. Vantage Co.’s, Inc. v. Table Mountain Rancheria, 292 F.3d 1091,

1098 (9th Cir. 2002) (federally recognized Indian Tribe is not contemplated in the diversity

jurisdiction statute).

Defendants do not dispute that the Tribe’s joinder destroys complete diversity (Docs.

50-51). Instead, Defendants argue that joinder of the Tribe does not divest the Court of

subject matter jurisdiction because the Court must determine diversity at the time the action

was commenced and complete diversity existed at the commencement of the action (Doc. 50

at 4). However, the federal removal statute states otherwise: “If after removal a plaintiff

seeks to join additional defendants whose joinder would destroy subject matter jurisdiction,

the court may deny joinder, or permit joinder and remand the action to the State court.” 28

U.S.C. § 1447(e). In this way, a court may remand a case that had been previously removed

to federal court via diversity jurisdiction if a diversity-destroying party subsequently joins

the action. See Yniques v. Cabral, 985 F.2d 1031, 1034 (9th Cir. 1993), overruled on other

grounds.

Most of Defendants’ citations for the proposition that a federal court must determine

diversity at the time of the action’s commencement predate the 1988 Judicial Improvements

and Access to Justice Act, the source of § 1447(e), and thus were abrogated by Congress

(Doc. 50 at 4). Only one case decided after 1988 supports Defendants’ argument. See

Freeport-McMoRan, Inc. v. K N Energy, Inc., 498 U.S. 426, 428 (1991) (per curiam) (“We

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Ninth Circuit jurisprudence does not require a different outcome. The Ninth Circuit has

cited Freeport approvingly in only two published opinions. In one opinion, the Court construed

Freeport to stand for the limited proposition that “the presence of a nondiverse and not indispensable

defendant intervenor does not destroy complete diversity.” Mattel, Inc. v. Bryant, 446 F.3d 1011,

1013 (9th Cir. 2006). In the other opinion, the Court cited Freeport for the equally limited

proposition that “a federal court is not divested of jurisdiction if a party subsequently moves to

another state.” Hill v. Blind Indus. and Serv.’s of Md., 179 F.3d 754, 757 (9th Cir. 1999). 

 

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have consistently held that if jurisdiction exists at the time an action is commenced, such

jurisdiction may not be divested by subsequent events.”). While Freeport’s sweeping

language suggests a legal principle at odds with the 1988 Judicial Improvements and Access

to Justice Act amendment, nowhere in Freeport does the Court explicitly discuss § 1447(e).

More important, even if Freeport had discussed and disagreed with § 1447(e), the Supreme

Court would not have been authorized to invalidate the statute, since diversity jurisdiction

and the complete diversity rule are creatures of neither Article III nor any other constitutional

provision, but rather are statutory creations and fall entirely within the prerogative of

Congress. See State Farm Fire & Cas. Co., 386 U.S. at 530-21 (interpreting the federal

diversity requirement as a statutory creation, not rooted in the Constitution); see also e.g.

Cobb v. Delta Exp.’s, Inc., 186 F.3d 675, 680 (5th Cir. 1999) (“Courts, of course, may

overrule statutes on constitutional grounds, but the limits of diversity jurisdiction are

determined purely by statute . . . Hence, the [Supreme] Court must defer to § 1447(e), and

in reading Freeport-McMoRan, we should assume the Court did so.”). 

Te Court will adopt the holding of a number of circuits construing Freeport narrowly,

as it pertains to substitution of parties under Federal Rule of Civil Procedure 25. See e.g.

Am. Fiber & Finishing, Inc. v. Tyco Healthcare Group, LP, 362 F.3d 136, 139-40 (1st Cir.

2004); Ingram v. CSX Transp., Inc., 146 F.3d 858, 861-62 (11th Cir. 1998); Cobb, 186 F.3d

675, 680.1

 

Defendants’ remaining arguments are unavailing. Defendants’ citation to Williams

v. CostCo Wholesale Corp. is inapposite because that case dealt with analysis of whether an

action was properly removable (Doc. 50 at 4). See 471 F.3d 975, 976 (9th Cir. 2006). Here,

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Defendants appropriately removed the action and no party questions the propriety of this

removal. Defendants’ citation to Takeda v. Nw. Nat’l Life Ins. Co., 765 F.2d 815 (9th Cir.

1985) and Federal Rule of Civil Procedure 19 is also inapposite (Doc. 51 at 3-5). Takeda,

insofar as it requires a Rule 19 indispensability analysis to determine the propriety of

remanding a removed action to state court because of a diversity-destroying joinder, was

abrogated by the plain terms of § 1447(e).

Accordingly,

IT IS ORDERED this case is remanded to Arizona Superior Court, in the County of

Maricopa, for further proceedings. The Clerk of Court shall close this case.

FURTHER ORDERED Defendants’ Motion To Dismiss For Lack of Personal

Jurisdiction (Doc. 13) IS DENIED AS MOOT.

FURTHER ORDERED Defendants’ Motion To Dismiss For Lack of Subject Matter

Jurisdiction (Doc. 14) IS DENIED AS MOOT.

FURTHER ORDERED Defendants’ Motion and Incorporating Memorandum To

Strike (Doc. 36) IS DENIED AS MOOT.

FURTHER ORDERED Defendants’ Supplemental Motions To Dismiss (Doc. 46)

ARE DENIED AS MOOT.

FURTHER ORDERED Plaintiffs’ Motion For Alternative Service (Doc. 55) IS

DENIED AS MOOT.

FURTHER ORDERED Defendants’ Motion To Stay (Doc. 60) IS DENIED AS

MOOT.

 

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DATED this 17th day of February, 2009.

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