Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_09-cv-01596/USCOURTS-azd-2_09-cv-01596-1/pdf.json

Nature of Suit Code: 380
Nature of Suit: Other Personal Property Damage
Cause of Action: 28:1332 Diversity-Petition for Removal

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WO

NOT FOR PUBLICATION

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

State of Arizona, ex rel Terry Goddard, 

Plaintiff, 

vs.

Albert Yun Szu Yeh, et al., 

Defendants. 

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No. CV-09-1596-PHX-GMS

ORDER

Pending before the Court is the State’s Motion to Remand to Arizona Superior Court

(Dkt. # 26). Also pending are Defendants’ Motion for Rule 60 Motion for Relief From

Seizure Warrant for Lack of Jurisdiction (Dkt. # 24), Motion for Return of Unconstitutionally

Seized Property (Dkt. # 25), Defendants’ Motion To Dismiss Party (Dkt. # 46) and Plaintiff’s

Motion For Extension of Time For Response To Defendants’ Motion to Dismiss (Dkt. # 52).

For the following reasons the State’s Motion to Remand to Arizona Superior Court (Dkt. #

26) is granted. In light of the remand, the remaining motions are denied as moot.

BACKGROUND

On July 6, 2009, the Maricopa County Superior Court signed a Seizure Warrant listing

as Defendants Dr. Albert Yun Szu Yeh, his wife Jennifer Wu; Taibra, LLC; Bryan Espinosa;

and Pain Wellness Management Center aka Pain Wellness Center. The State sought to seize

Defendants’ property based on Arizona statutes that authorize the State to seek the forfeiture

Case 2:09-cv-01596-GMS Document 55 Filed 12/15/09 Page 1 of 5
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of property involved in crimes of racketeering, the illegal use and sale of narcotic or

dangerous drugs, fraudulent schemes, money laundering, illegally participating in a criminal

enterprise and other criminal or fraudulent activities. 

On August 3, 2009, Defendant Jennifer Wu filed a Notice of Removal of that action

to this Court (Dkt. # 1). Upon motion by the State, (Dkt. # 7), this Court remanded this

matter to Maricopa County Superior Court pending the initiation of a forfeiture proceeding.

(Dkt. # 11). The State initiated those proceedings by filing its Notice of Pending Forfeiture

on September 3, 2009 in Maricopa County Superior Court. Arizona Revised Statutes

(“A.R.S.”) § 13-2308 (B) ( 2001) (requiring the state to initiate forfeiture proceedings within

sixty days of property seizure by filing a notice of pending forfeiture). 

On September 18, Defendant Jennifer Wu again filed a Notice of Removal (Dkt. #

 12) after which the State again moved to remand this action to Superior Court. 

ANALYSIS 

Defendants assert that this case falls within the diversity jurisdiction of this Court.

Defendants acknowledge, however, the general rule that the state of Arizona is not itself the

citizen of any state, and is, thus, not subject to diversity jurisdiction. Moor v. County of

Alameda, 411 U.S. 693, 717 (1973). Further an agency of the state, acting as an arm of the

state, is similarly not subject to federal diversity jurisdiction. Id. Because the State through

its Attorney General is the Plaintiff here, there is presumptively no diversity jurisdiction that

would allow the Defendants to remove the pending forfeiture action. Nuclear Eng’g Co. v.

Scott, 660 F.2d 241, 250 (7th Cir. 1981) (holding that because the Illinois Attorney General

filed suit in “his official capacity on behalf of the State . . . the district court has no

jurisdiction” over the suit).

The Defendants assert that an exception to the general rule applies when the state is

acting on behalf of others and is only a nominal party. But, Defendants do not establish the

existence of such an exception to the general rule. Defendants mix and match cases

involving both diversity jurisdiction and Eleventh Amendment immunity with cases

involving the parens patriae doctrine to suggest that if the state is acting on behalf of others,

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its inability to qualify for diversity jurisdiction should be ignored. But not only do

Defendants fail to convince the Court that such an exception exists or should exist, they fail

to establish that even if it did, the State was acting in a nominal capacity in exercising a

remedy given to it in enforcing state laws, or that Defendants have otherwise established

diversity jurisdiction in this case.

Defendants cite Ford Motor Co. v. Dep’t of Treasury of the State of Indiana, 323 U.S.

459, 464 (1945) for the proposition that “if the state is not the real party of interest (sic) and

just a nominal party, . . . the state becomes a citizen for diversity jurisdiction purposes.” The

Ford case, however, stands for no such proposition. Ford, which at any rate has since been

overruled by the Supreme Court, did not involve whether a removed action against state

officials met the diversity jurisdiction requirements of the federal court. Rather, it examined

the scope of the Eleventh Amendment bar on suits brought against states in federal court.

The Ford Court held that a refund action brought by Ford Motor Company against the

Indiana Department of the Treasury and officers constituting the Treasury Board was barred

by the Eleventh Amendment because to the extent the officials and not the state were named

as the Defendants, the refund action was still against the State, and thus could not be pursued

in federal court. “We have previously held that the nature of a suit as one against the state

is to be determined by the essential nature and effect of the proceeding.” Ford, 323 U.S. at

464. 

And, while courts frequently use similar considerations in determining whether the

state is actually a party for purposes of diversity jurisdiction, “a state, or its alter ego, may

waive its Eleventh Amendment privilege but cannot create diversity jurisdiction.” Befitel v.

Global Horizons, Inc., 461 F. Supp.2d 1218, 1222 (D. Haw. 2006) citing Fifty Associates v.

Prudential Insurance Co. Of America, 446 F.2d 1187, 1192 (9th Cir. 1970). Thus, when the

state is a legitimate party to the suit, there can be no diversity jurisdiction in the federal court.

The other cases cited by the Defendants stand for the proposition that when suit is

brought by or against a state official or a state agency, the court must consider whether the

official or agency is acting as an arm of the state as it pertains to the action. If so, then

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federal diversity jurisdiction does not exist. See, e.g., Missouri, Kansas & Texas Railway Co.

v. Hickman, 183 U.S. 53, 59 (1901) (holding that a suit brought by Missouri Railway

Commissioners could not be removed because the suit was brought by the Commissioners

in their official capacity and on behalf of the state); Scott, 600 F.2d at 250 (holding that suit

brought by Illinois Attorney General was brought on behalf of state and could not be

removed to federal court); Befitel v. Global Horizona, Inc., 461 F.Supp.2d 1218 (D. Haw.

2006) (holding that agency director was suing on behalf of the state of Hawaii to obtain

unpaid unemployment assessments, thus action could not be removed to federal court.). If

the state official or agencies are not acting as an arm of the state, then their citizenship may

be considered for purposes of establishing diversity jurisdiction. Cf. Streit v. County of Los

Angeles, 236 F.3d 552, 566 (9th Cir. 2001) (holding that the Alameda County Sheriff was

not acting as an arm of the state for purposes of invoking Eleventh Amendment immunity

to action concerning the operation of county jails). 

The Defendants intermingle the above cases with two cases discussing the right of a

state to bring a claim as parens patriae. Not only do those cases fail to discuss how a state’s

parens patriae status might affect federal diversity jurisdiction, they both suggest that a state

cannot pursue a parens patriae action without having some interest of its own at stake. In

other words, a state cannot pursue a parens patriae action in a purely nominal capacity.

Alfred L. Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592, 607 (1982) (“In order to maintain

such an action, the State must articulate an interest apart from the interests of particular

private parties, i.e., the State must be more than a nominal party.”). To the extent then, that

the Defendants wish to suggest that the State is pursuing this action only on behalf of others

as a parens patriae, it is unavoidably acknowledging that the State has its own interests at

stake, which it demonstrably does. To the extent that the State is pursuing its own interest

in securing a civil remedy against criminal conduct provided by law, it cannot be considered

merely a nominal party that could be ignored for purposes of determining whether there is

federal diversity jurisdiction. 

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The statute authorizing forfeiture here authorizes the State to bring such a forfeiture

action. A.R.S. § 13-4302 (2001). “The state may commence a proceeding in the superior

court . . .” There is no question that it is the State, through its Attorney General that seeks

such forfeiture here. In such circumstances, the Court does not accept Defendants’ assertion

that the State is merely a nominal party. Even if it did, the Defendants assert that one of the

principal beneficiaries of the forfeiture action is the AHCCCS Administration. In seeking

to recover public funds wrongfully expended due to Defendants’ alleged fraud, the

Administration is acting as an arm of the State. Cf. Befitel, 461 F.Supp.2d at 1218 (holding

that agency director was suing on behalf of the state of Hawaii to obtain unpaid

unemployment assessments, thus action could not be removed to federal court.). This, too,

is a sufficient basis to deprive this Court of jurisdiction.

IT IS THEREFORE ORDERED that Plaintiff’s Motion to Remand (Dkt. # 26) is

GRANTED. 

IT IS FURTHER ORDERED directing the Clerk of the Court to REMAND this

action back to the Maricopa County Superior Court.

IT IS FURTHER ORDERED that given the remand, Defendants’ Motion for Rule

60 Motion for Relief From Seizure Warrant for Lack of Jurisdiction (Dkt. # 24), Motion for

Return of Unconstitutionally Seized Property (Dkt. # 25), Defendants’ Motion To Dismiss

Party (Dkt. # 46) and Plaintiff’s Motion For Extension of Time For Response To Defendants’

Motion to Dismiss (Dkt. # 52) are MOOT.

DATED this 14th day of December, 2009.

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