Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_19-cv-06799/USCOURTS-cand-3_19-cv-06799-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

PHL VARIABLE INSURANCE 

COMPANY, 

Plaintiff, 

v. 

CONTINENTAL CASUALTY 

COMPANY, et al., 

Defendants.

Case No. 19-cv-06799-CRB 

ORDER GRANTING MOTION TO 

REMAND AND DENYING AS MOOT 

ADDITIONAL MOTIONS 

Now pending is Plaintiff PHL Variable Insurance Company’s (“PHL”) motion to remand 

this action to the Superior Court for the County of San Francisco. Remand Mot. (dkt. 12) at 1. 

PHL filed its First Amended Complaint in that court, seeking a declaration of its rights under 

insurance policies it holds against Defendants Continental Casualty Company (“CNA”) and 

Certain Underwriters at Lloyd’s of London (the “Lloyd’s Defendants”). See generally First 

Amended Complaint (“FAC”), Notice of Removal (“Notice”) Ex. 2 (dkt. 1–3). CNA removed the 

action to this Court based on diversity jurisdiction. Notice at 3. CNA requests that the Court deny 

the motion to remand and dismiss or stay the action, or in the alternative, transfer it to the United 

States District Court for the District of Connecticut, where CNA already filed its own action 

against PHL regarding the same controversy. See generally Mot. to Dismiss or Stay, or Transfer 

(“Transfer Mot.”) (dkt. 4). The Lloyd’s Defendants, excess insurers in this case, move to dismiss 

the action against them for failure to state a claim, arguing that PHL cannot bring suit against them 

until PHL exhausts its primary policy with CNA. See Mot. to Dismiss (dkt. 20). For the reasons 

discussed below, the Court GRANTS the motion to remand, and DENIES AS MOOT the motions 

to transfer and dismiss. 

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I. BACKGROUND 

A. The Coverage Dispute Actions 

This litigation arises out of a pair of class actions that certain PHL life insurance 

policyholders filed against PHL in the Southern District of New York, alleging breach of contract. 

FAC at ¶¶ 14–18. PHL holds policies of its own that it contends should cover its costs relating to 

the underlying litigation. First, it holds a primary Management Liability Solutions Policy (the 

“Primary Policy”) issued by CNA, which has a liability limit of $10,000,000. Id. at ¶ 10. Second, 

it holds two Excess Policies (the “First Excess Policy” and “Second Excess Policy”) with Certain 

Underwriters at Lloyd’s of London (the “Lloyd’s Defendants”). Id. at ¶¶ 55–56. The First Excess 

Policy has a liability limit of $10,000,000, and the Second Excess Policy has a liability limit of 

$20,000,000. Id. at ¶ 58. PHL contends that it is entitled to full coverage of its defense costs 

under the policies, notified CNA to that effect, and requested indemnification. See id. at ¶¶ 24–26. 

CNA disputed the extent of coverage, and ultimately denied coverage entirely. See id. at ¶ 30. 

Meanwhile, PHL requested that the Lloyd’s Defendants further articulate their position on the 

extent of coverage under the Excess Policies, which the Lloyd’s Defendants refused to do. See id. 

at ¶¶ 60–65. 

CNA was first to file in this controversy, having brought suit in the District Court for the 

District of Connecticut against PHL seeking declaratory relief as to the coverage dispute. See 

Transfer Mot. at 3–4. Shortly afterwards, PHL filed a Complaint in San Francisco Superior Court 

naming CNA, and then a FAC joining the Lloyd’s Defendants. Notice at ¶¶ 1–5. CNA then 

removed the action to this Court. See generally Notice. 

B. Lloyd’s of London and its Underwriters 

Certain of the issues raised in this case require an understanding of the peculiar 

organizational structure of Lloyd’s of London (“Lloyd’s”) and its underwriters. Lloyd’s itself is 

not an insurance company and does not underwrite risk. Underwriters at Lloyd’s, London v. 

Osting-Schwinn, 613 F.3d 1079, 1083 (11th Cir. 2010). Rather, Lloyd’s serves as a marketplace 

where investors, referred to as “Names,” buy and sell insurance risk. Id. The Names are 

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organized through administrative subgroups called syndicates, which are themselves often 

organized into larger groups called consortiums. Id. The Names are severally, but not jointly, 

liable to the insured for their proportion of the underwritten risk. Id. The syndicates are not 

incorporated, but are generally organized by Managing Agents who may or may not be 

corporations. Id. The Names themselves can be people or corporations from many nationalities—

not just the United Kingdom. Id. 

II. LEGAL STANDARD 

A. Motion to Remand and Diversity Jurisdiction 

“[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 may remove an action to federal court based on 

federal question jurisdiction or diversity jurisdiction.” Hunter v. Philip Morris USA, 582 F.3d 

1039, 1042 (9th Cir. 2009) (citing 28 U.S.C. § 1441). District courts have diversity jurisdiction 

over all civil actions between citizens of different states where the amount in controversy exceeds 

$75,000, exclusive of interest and costs. 28 U.S.C. § 1332 (“Section 1332”). Consistent with the 

framework outlined above, “[t]he party seeking to invoke the district court’s diversity jurisdiction 

always bears the burden of both pleading and proving diversity jurisdiction.” NewGen LLC v. 

Safe Cig, LLC, 840 F.3d 606, 613–14 (9th Cir. 2016). 

If a district court ultimately determines that it lacks jurisdiction, the action must be 

remanded back to state court. Martin v. Franklin Capital Corp., 546 U.S. 132, 134 (2005) (citing 

28 U.S.C. § 1447). The Ninth Circuit recognizes a “strong presumption against removal.” 

Hunter, 582 F.3d at 1042 (quoting Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (per 

curiam)). Thus, “‘the defendant always has the burden of establishing that removal is proper,’ and 

. . . the court resolves all ambiguity in favor of remand to state court.” Id. (quoting Gaus, 980 F.2d 

at 566). 

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B. Fraudulent Joinder 

“Although an action may be removed to federal court only where there is complete 

diversity of citizenship, ‘one exception to the requirement for complete diversity is where a nondiverse defendant has been ‘fraudulently joined.’” Hunter, 582 F.3d at 1043 (quoting Morris v. 

Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001)) (internal citation omitted); see also 

Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318–19 (9th Cir. 1998). “If a 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.” McCabe v. Gen. Foods 

Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). 

That said, there is a “general presumption against fraudulent joinder,” and defendants who 

assert that a party is fraudulently joined carry a “heavy burden.” Hunter, 582 F.3d at 1046. 

Defendants must “show that the individuals joined in the action cannot be liable on any theory,” 

Ritchey, 139 F.3d at 1318, and 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,” Good v. Prudential 

Ins. Co. of Am., 5 F. Supp. 2d 804, 807 (N.D. Cal. Apr. 16, 1998). That is, “[r]emand must be 

granted unless the defendant shows that the plaintiff ‘would not be afforded leave to amend his 

complaint to cure [the] purported deficiency.’” Padilla v. AT&T Corp., 697 F. Supp. 2d 1156, 

1159 (C.D. Cal. 2009) (quoting Burris v. AT & T Wireless, Inc., No. 06–CV-02904-JSW, 2006 

WL 2038040, at *2 (N.D. Cal. July 19, 2006)). As such, a court’s “doubts concerning the 

sufficiency of a cause of action because of inartful, ambiguous or technically defective pleading 

must be resolved in favor of remand.” Plute v. Roadway Package Sys., Inc., 141 F. Supp. 2d 

1005, 1008 (N.D. Cal. Apr. 18, 2001) (citations and internal quotation marks omitted). 

“Where fraudulent joinder is an issue . . . [t]he defendant seeking removal to the federal 

court is entitled to present the facts showing the joinder to be fraudulent.” Ritchey, 139 F.3d at 

1318 (internal quotation marks omitted). If factual issues are in dispute, the Court must resolve all 

disputed questions of fact in favor of the plaintiff. See Kalawe v. KFC Nat. Mgmt. Co., Civ. No. 

90–007799, 1991 WL 338566, at *2 (D. Haw. July 16, 1991) (citing Kruso v. Int’l Tel. & Tel. 

Corp., 872 F.2d 1416, 1426 (9th Cir. 1989)); see also Mohammed v. Watson Pharm., Inc., No. SA 

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CV09-0079, 2009 WL 857517, at *6 (C.D. Cal. Mar. 26, 2009) (“A party is only deemed to have 

been joined ‘fraudulently’ if after all disputed questions of fact and all ambiguities in the 

controlling state law are resolved in the plaintiff’s favor, the plaintiff could not possibly recover 

against the party whose joinder is questioned.” (citations and internal quotation marks omitted)). 

III. DISCUSSION 

PHL asks the Court to remand the case to the San Francisco Superior Court, arguing that 

Defendants have not proven that (1) each Lloyd’s Defendant has diverse citizenship and (2) the 

individual claim against each Lloyd’s Defendant meets the minimum amount in controversy 

requirement. See Remand Mot. at 8–12. The Lloyd’s Defendants respond that their evidence 

proves diversity of citizenship, and that they can meet the minimum amount in controversy by 

aggregating the claims against them. If the Court determines that the Lloyd’s Defendants are nondiverse, they argue that: (1) they were fraudulently joined; (2) the Court should extend 

supplemental jurisdiction over the claims anyway; and (3) if the Court does not extend 

supplemental jurisdiction, the Lloyd’s Defendants should be severed and dismissed to perfect 

diversity jurisdiction over the rest of the claims. 

As discussed below, the prevailing law requires that each claim against each Lloyd’s 

Defendant meet the minimum amount in controversy requirement—they cannot aggregate the 

claims. Even viewing the evidence in a light most favorable to Defendants, the claims against 

many of the Lloyd’s Defendants cannot meet the requirement, as one of the Lloyd’s syndicates 

consists of over a thousand Names. Resultingly, the amount in controversy as to each individual 

Name in that syndicate is far below the required amount in controversy. The rest of Defendants’ 

arguments fail as well. They were not fraudulently joined, the Court cannot exercise supplemental 

jurisdiction over the claims, and the Court, in its discretion, declines to sever the Lloyd’s 

Defendants to perfect diversity. Having no subject matter jurisdiction, the Court will remand the 

action, thus mooting Defendants’ motions. 

A. The Court Lacks Diversity Jurisdiction 

The removing parties assert only diversity as a basis for subject matter jurisdiction in this 

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case. See Notice of Removal at 1. District courts have diversity jurisdiction over civil cases 

where (1) the matter “is between . . . citizens of different States,” and (2) the amount in 

controversy “exceeds the sum or value of $75,000, exclusive of interest and costs.” 28 U.S.C. § 

1332(a)(1). Consistent with the framework outlined above, “[t]he party seeking to invoke the 

district court’s diversity jurisdiction always bears the burden of both pleading and proving 

diversity jurisdiction.” NewGen LLC v. Safe Cig, LLC, 840 F.3d 606, 613–14 (9th Cir. 2016). 

There is some disagreement among the Circuits as to how Lloyd’s peculiar organizational 

structure impacts diversity jurisdiction analysis. Majestic Ins. Co. v. Allianz Int'l Ins. Co., 133 F. 

Supp. 2d 1218, 1221 (N.D. Cal. 2001) (explaining split between Second, Sixth, and Seventh 

Circuits). The prevailing trend, and the trend in California and in this District, is to adopt the 

Second Circuit’s treatment of Lloyd’s articulated in E.R. Squibb & Sons, Inc. v. Accident & Cas. 

Ins. Co., 160 F.3d 925, 931 (2d Cir. 1998), which requires a court to consider the citizenship and 

amount in controversy as to each Name for the purposes of diversity analysis. See Majestic Ins. 

Co., 133 F. Supp. 2d 1222; see also Certain Underwriters at Lloyd’s of London Subscribing to 

Policy No. FINFR 1001771 v. Commonwealth Int’l, Inc., No. 2:12-CV-00824-ODW, 2012 WL 

2328215, at *2 (C.D. Cal. June 19, 2012); Certain Underwriters at Lloyd’s London v. Raytheon 

Co., No. C 01-03317 WHA, 2001 WL 1836268, at *2 (N.D. Cal. Dec. 4, 2001); Genstar Container 

Corp. v. Certain Underwriters at Lloyd’s Subscribing to that Ins. Policy Numbered C70408, No. 

C-00-0361 PJH, 2000 WL 1897299, at *2 (N.D. Cal. Dec. 22, 2000). Squibb relied heavily on 

Carden, in which the Supreme Court held that diversity jurisdiction in a suit by or against an entity 

depends on the citizenship of all of its members. 160 F.3d at 931 (citing Carden v. Arkoma 

Assocs., 494 U.S. 185, 195 (1990)). 

1. Diversity of Citizenship 

The Second Circuit held in Squibb, 160 F.3d at 931, that the party invoking diversity 

jurisdiction over Lloyd’s underwriters must establish diversity of citizenship as to each of the 

individual Names that make up a syndicate, rather than just the lead underwriter or managing 

agent of a given policy. As the removing parties here, Defendants carry the burden of proving 

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diversity as to each Lloyd’s Defendant. Defendants alleged in their Notice of Removal that none 

of the Names are citizens of California or Connecticut. Notice at 3. Defense counsel also 

supplied declarations attesting that none of the Names are citizens of California or Connecticut. 

See Bach Decl., Ex. A at ¶¶ 14–24; Lucas Decl., Ex. B at ¶¶ 14–44; Winterbourne Decl., Ex. C at 

¶¶ 10–20; Pecego Decl., Ex. D at ¶¶ 10–20. 

PHL argues that Defendants fail to establish that certain of the Names are corporations, as 

opposed to some other kind of business organization, thus barring the Court from determining 

citizenship. See Remand Reply at 5 (citing Parse v. Those Certain Underwriters at Lloyd's 

London, No. CV1400782MMMJEMX, 2014 WL 12561586, at *2 (C.D. Cal. Mar. 4, 2014)). In 

Parse, Lloyd’s merely alleged that certain Names were “‘entities’ organized under the laws of the 

United Kingdom,” id., whereas here, Defendants’ Declarations specifically use the term 

“incorporated,” see, e.g., Bach Decl., Ex. A at ¶ 15, so the argument that Defendants failed to 

plead incorporation fails. PHL points out that in Liberty Nw. Ins. Co. v. Certain Underwriters at 

Lloyd’s, No. 15-CV-02334-WHO, 2015 WL 5012758, at *3 (N.D. Cal. Aug. 24, 2015), Judge 

Orrick held that conclusory allegations that none of the Names were citizens of the forum state 

were insufficient, and remanded on that basis. Although the Notice here is similar, defendants’ 

Declarations affirmatively allege that each and every Name is incorporated, resides in, or is 

otherwise domiciled in the United Kingdom. See Bach Decl., Ex. A at ¶¶ 14–24; Lucas Decl., Ex. 

B at ¶¶ 14–44; Winterbourne Decl., Ex. C at ¶¶ 10–20; Pecego Decl., Ex. D at ¶¶ 10–20. 

Though the Notice of Removal fails to establish the Names’ citizenship, the Declarations 

cure that deficiency. In Certain Underwriters at Lloyd's of London Subscribing to Policy No. 

FINFR 1001771 v. Commonwealth Int’l, Inc., No. 2:12-CV-00824-ODW, 2012 WL 2328215, at 

*2 (C.D. Cal. June 19, 2012), Lloyd’s affirmatively alleged that each Name was incorporated and 

did business in the United Kingdom; the court, noting that party moving for remand offered no 

contradictory evidence, held that the allegations were sufficient. Such is the case here. PHL does 

not offer any evidence to contradict Defendants’ assertions, so the Court finds that they have 

proven diverse citizenship. 

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2. Amount in Controversy 

The amount in controversy requirement is a different story. Under the policies at issue, the 

Names are severally, but not jointly, liable. Eagan Decl., Ex. B at 7 (dkt. 12–2). Therefore, 

Defendants must show that each Name meets the amount in controversy requirement. See Squibb, 

160 F.3d at 933 (“Aggregation to achieve diversity jurisdiction is barred when the liability of the 

defendants is several and not joint . . . each and every severally liable defendant must, in the 

normal course of things, meet the amount in controversy”). 

Defendants argue that a case from the Southern District of Texas justifies aggregating the 

claims, but that case is not applicable here. See Remand Opp’n at 5 (citing Cronin v. State Farm 

Lloyds, No. CIV.A.H-08-1983, 2008 WL 4649653, at *5 (S.D. Tex. Oct. 10, 2008)). In Cronin, 

the court discussed at length the distinction between the entities in that case (called “Texas 

Lloyd’s”), which are “singular legal entities created by Texas law,” and the traditional Lloyd’s 

entities present here. See id. In fact, the court in Cronin seemed to fully endorse the holding in 

Squibb as it pertains to Lloyd’s of London policies, and did not argue against it. Squibb simply 

did not apply to the particular entities in Cronin, which were creatures unique to Texas law. See 

id. Thus, Cronin does not just fail to support aggregation of the claims here—it works directly 

against it. 

Defendants’ argument that the Court should only consider the consortium leader for 

diversity purposes fails as well. See Remand Opp’n at 6. Their only case supporting this 

argument involved the leader of a bank consortium suing a debtor, and citizenship questions 

stemming therefrom, but these facts have little relevance here. See Chase Manhattan Bank v. 

Motorola, Inc., 136 F. Supp. 2d 265, 271 (S.D.N.Y. 2001). Moreover, the court in Chase 

Manhattan specifically discussed Squibb and the state of the law as it pertains to Lloyd’s. Id. at 

269. The court noted that ordinarily, suits brought against Lloyd’s Names require consideration of 

each and every Name for diversity purposes. See id. An exception to that rule, upon which 

Defendants rely, arises when an insured files suit against only the consortium leader in its 

individual, not representative, capacity, effectively excluding the Names as parties to the action. 

See id. But in the instant suit, PHL refers to the Names generally as parties and makes no mention 

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B. The Court Lacks Supplemental Jurisdiction 

Defendants argue that, in the absence of diversity, the Court should exercise supplemental 

jurisdiction over the Lloyd’s claims. See Remand Opp’n at 7–9 (citing 28 U.S.C. § 1367 

(“Section 1367”)). Section 1367 allows a court to exercise supplemental jurisdiction over claims 

that arise out of the same case or controversy as a claim over which the court has original 

jurisdiction. However, Section 1367(b) states that when a court derives original jurisdiction solely 

from Section 1332 (i.e., diversity jurisdiction), there is no supplemental jurisdiction over claims 

made against parties joined under Rule 19 or 20. 28 U.S.C. § 1367(b). Defendants attempt to 

construe Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546 (2005) in their favor, but that 

case concerned supplement jurisdiction over non-diverse plaintiffs joined to an action. Id. at 560. 

Exxon Mobil Corp. reiterated the plain directive of the statute as it pertains to defendants, stating 

that “§ 1367(b) explicitly excludes supplemental jurisdiction over claims against defendants joined 

under Rule 20.” Id. The Lloyd’s Defendants are permissively joined parties per Rule 20, and the 

Court’s original jurisdiction over the action stems from diversity, therefore the Court cannot have 

supplemental jurisdiction over the Lloyd’s claims. 

C. The Lloyd’s Defendants Were Not Fraudulently Joined 

Defendants argue that the Lloyd’s Defendants were fraudulently joined because PHL’s 

cause of action against them cannot possibly succeed. See Remand Opp’n at 10–13. In order to 

prove fraudulent joinder, a defendant must prove that “after all disputed questions of fact and all 

ambiguities in the controlling state law are resolved in the plaintiff’s favor, the plaintiff could not 

possibly recover against the party whose joinder is questioned.” Kalawe v. KFC Mgmt. Co., 1991 

WL 338566, at *2 (D. Haw. 1991) (citing Kruso v. Int’l Telephone & Telegraph Corp., 872 F.2d 

1416, 1426 (9th Cir. 1989)). Although the removing defendant may present facts to prove the 

fraudulent joinder, courts “must resolve all disputed questions of fact in favor of the plaintiff.” 

Good v. Prudential Ins. Co. of America, 5 F. Supp. 2d 804, 807 (N.D. Cal. 1998). 

Defendants’ argument that PHL cannot possibly succeed on its claim against the Lloyd’s 

Defendants because it has not exhausted the primary policy fails to persuade. See Remand Opp’n 

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at 11 (citing Iolab Corp. v. Seaboard Sur. Co., 15 F.3d 1500, 1504 (9th Cir. 1994)). However, 

PHL’s claim against the Lloyd’s Defendants is only for declaratory relief, not breach of contract. 

FAC at ¶¶ 81–87. The Ninth Circuit discussed declaratory relief in Iolab, but only to say that the 

district court did not abuse its discretion by declining to sua sponte treat the plaintiff’s breach of 

contract action as a declaratory relief action. See Iolab, 15 F.3d at 1504–05. The plaintiff in Iolab 

brought a claim for breach of contract, not declaratory relief, and never asked the district court to 

treat the claim as a request for declaratory relief; rather, it argued on appeal that the district court 

should have done so on its own—a contention the Ninth Circuit rejected. Id. This issue simply is 

not present here, as PHL requested declaratory relief in the first instance. 

Defendants fail to demonstrate that PHL cannot possibly succeed on its claim against 

Lloyd’s, because California law allows insureds to file declaratory relief actions against excess 

insurers without showing exhaustion of primary policies. In California, “the party need not 

establish a right to a favorable declaration” to be entitled to declaratory relief. Lockheed Martin 

Corp. v. Cont’l Ins. Co., 134 Cal. App. 4th 187, 221 (2005), disapproved on other grounds by 

State of Cal. v. Allstate Ins. Co., 45 Cal. 4th 1008 (2009). California “does not require an insured 

to show a reasonable probability of exhaustion of its primary coverage before it may state a cause 

of action for declaratory relief against an excess insurer,” and only requires “that there be an actual 

controversy relating to the legal rights and duties of the respective parties.” Lockheed Martin, 134 

Cal. App. 4th 220. PHL asserts a number of disputed issues regarding the coverage of the Excess 

Policies, see FAC at ¶¶ 82–86, and under California law, can seek a declaratory judgement to 

resolve those issues. Defendants, relying solely on their exhaustion argument, have not shown 

that PHL cannot possibly succeed on its request for declaratory relief against the Lloyd’s 

Defendants after all ambiguities are resolved in PHL’s favor. The Lloyd’s Defendants were not 

fraudulently joined. 

D. Severance 

Finally, Defendants argue that the Court, if unconvinced by their arguments above, should 

use its discretion under Federal Rule of Civil Procedure 21 to sever and dismiss the action against 

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the Lloyd’s Defendants to perfect diversity jurisdiction. See Remand Opp’n at 9. Rule 21 

provides that “the court may at any time, on just terms, add or drop a party” and that “[t]he court 

may also sever any claim against a party.” Fed. R. Civ. P. 21. Rule 21 grants a court 

“discretionary power to perfect its diversity jurisdiction provided the nondiverse party is not 

indispensable to the action under Rule 19.” Kirkland v. Legion Ins. Co., 343 F.3d 1135, 1142 (9th 

Cir. 2003) (citing Sams v. Beech Aircraft Corp., 625 F.2d 273, 277 (9th Cir. 1980)). In exercising 

this discretion, “the paramount considerations are the interests of justice.” Anrig v. Ringsby 

United, 603 F.2d 1319, 1325 (9th Cir. 1978). The Ninth Circuit considers the four factors outlined 

in Federal Rule of Civil Procedure 19(b) to determine if a party is indispensable. See White v. 

Univ. of Cal., 765 F.3d 1010, 1027 (9th Cir. 2014). 

The Court is not obligated to, and will not, sever the Lloyd’s Defendants from the case to 

perfect diversity jurisdiction, as doing so would waste judicial resources. As discussed above, 

using Rule 21 in this manner is discretionary. Even accepting without argument that the Lloyd’s 

Defendants are dispensable, see Remand Opp’n at 9, the Court is not obliged to sever them from 

the case. Rather, a limit on the Court’s discretion would arise only if the Lloyd’s Defendants are 

indispensable, in which case the Court would be prohibited from severing them to maintain 

diversity. Defendants argue that all four of the Rule 19(b) factors weigh “in favor of dismissing 

the Lloyd’s Defendants,” but provide no authority that endorses construing the factors in this way. 

See id. Even accepting Defendants’ application of the factors as correct, the factors are 

outweighed considerably by the larger interest in justice, specifically judicial efficiency, and the 

general presumption towards remand. 

 The Court will not sever the Lloyd’s Defendants, because doing so will only add to the 

already-prolific litigation surrounding the underlying dispute here. CNA filed the first suit 

concerning this controversy in the U.S. District Court for the District of Connecticut, where that 

suit continues. See Transfer Mot. at 3–4. Soon after, PHL filed its own action in the San 

Francisco Superior Court. See generally FAC. Defendants then removed that case to this Court. 

See generally Notice. PHL intimates that it could simply refile or resume the action against 

Lloyd’s in state court if the Court elects to sever it. See Remand Reply at 9 (“It would make no 

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