The Honor able James L

. Gra ham, Unit ed S tates Dist rict J udg e for the Southern District of * Ohio, sitti ng by

desig nation. File Na me: 07a0345n.06 Filed: May

16, 2007 NOT RECOMMENDED F OR FUL L -TEXT PUB L I CATI ON

No. 06-6188 UN ITED STA TES C OU RT OF AP P EA LS F O R T H E S IX T H C IR C U IT PAT PRO B US, Pla int if f- Ap pe lla nt,

v. CHARTER COMMUNI C ATI ONS, L L C and KE L L Y G UI L ES, De fe nd ants -A

pp e lle e s. ON APPEALFROM THE UN I TE D ST AT ES D I STR I CT CO UR T F OR

TH E WE STE RN DI STRI CT OF KENTUCKY

/ OP IN ION Be fore : MARTI

N and SUTTON , Circuit J udg es; GRAHAM, District Judge. * BO YCE F. MARTIN, J R ., Circuit J udg e. Plaintiff Pat Probus sued her f ormer e mploy er, Charter Communi cations, and he r for mer c o-worke r, Ke lly

Guiles, in Kentucky

state cour t, alleg ing

va ri ou s v iol a tio ns of

state law. De fe nd ants r e mov e d th e c a se to f e de ra l c ourt , c on te nd ingin t he ir notice of r emoval that eve n though Probus a nd Guiles wer e both c itiz ens of Kentucky , Probus had fra udulently joined Guiles as a de fenda nt for the p u

r p o s e o f destroy

ing dive rsity . Wit hout addre ssing the iss ue of su

bje c t ma tte r j ur isd ic tio n, the dis tr ic t c ourt e nte re d s umm ary

jud g me nt i n f

a vo r o f b oth defe ndants on all claims. Probus now appe als the district court’ s order

. Be cause we f ind that theNo. 06-6188

Probus v. Charter Pag e 2 district c ourt enter

tained jurisdiction of this c ase in the absenc e of c omplete diversity , we VA CA TE the di strict court’s judg ment and REMAND the ca se to the district court so that it may resolve the issue of fr audulent joinder in orde r to deter mine whether

there was c omplete diversity

. I. On August 31, 2 0 0 4, Pat Probus filed suit in t he Jeffer son Circuit Court of the Commonwealth of Kentuc ky ag ainst her f

ormer e mploy er, Char

ter Communications, and her former

co-w orker

at Charter , Kelly

Guiles. Probus and Guiles ar e both citizens of Kentucky . Charter Com mun ic a tio ns is inc or po rate d in De lawa

re and ha s its pr inc ipa l pla c e of bu sin e ss in Misso ur i. Probus sued Guiles for the s tate-la w t orts of sl ander and outrag eous conduct. She sued Charte r base d

on the se tor ts und e r a th eory of vic ari ou s li a bil ity , a nd a lso on oth e r s ta te -l aw c la ims of

re ve rs e discrimination, r acia lly

hostile work environme nt, and re taliatory discharg e. On Oc tober 8, 2004, defe ndants filed a notice of remova l pur suant to 28 U.S.C. §§ 1332 and 1441 et seq . Section 1332 pr ov ide s th a t a

dis tr ic t court sh a ll have jur isd ic tio n ove r a ci vil c a se wh e re the a mou nt i n c on tr ov e rs y exceeds $75,000 a

nd it is between c itiz ens of diff ere nt states. Pursuant to § 1441(b): Any civil action of which the district courts have orig inal jurisdiction founded on a claim or rig ht arisi n g u nder the Constit ution, treaties or la ws of the United States shall be re movable without reg ard to the c itiz enship or re sidence of the par ties. Any oth e r s uc h a c tio n sha ll be re mov a ble on ly if no ne of

the pa rt ie s in int e re st p ro pe rl y jo in ed and

se rv e d a s d e fe nd ants is a c iti zen of the State in whic h s uc h a c tio n is br ou g ht. Def endants c laimed in their notice of remova l that althoug h Probus and Guiles wer e both citizens of Ke ntucky , Guiles was f raudule ntly

joined in order to fore close feder al j urisdiction, and ther efor e, this action was re movable.No. 06-6188

Probus v. Charter Pag e 3 Pr ob us did

no t fi le a mot ion to re mand the c a se to state c ourt . In h e r a pp e llate br ie f, wh ile she disag ree s with defenda nts’ asser tion that Guiles was fra

udulently joined, she admits that she failed to move to re mand the ca se to state cour t before the district c ourt enter ed judgme nt in favor of def endants. She a

ppare ntly believes that her fa ilure to rema nd the ca se may

have “ cre ated jurisdiction” in the district court. Appellant’s Br. at 1. Her belief is incorrec t. Whi le a plaintiff ma y waive her ability to c ontest fac tual claims that might underlie a finding of jurisdiction (such as the location o f t h e d ef

en d an t ’s p ri n ci p al p l ac e o f b u s i n es s ), n o p l ai n t i ff ca n“c re at e” d i v er s ity

jurisdiction by fa ili ngto m ov e to r e mand wh e n it is c le ar t hat c omp le te div e rs ity do es no t ex is t. C ourt s mu st examine subject matter jurisdiction “on their own initiative.” Ruhrgas AG v. M arathon Oil Co. , 526 U.S. 574, 583 (1999). The ref ore, d es p i t e P robus’s fa ilure to move to rema nd, the district court should have sua sponte a d dr e s s e d th e is s u e o f s u b je c t matt e r ju

r is diction. Cur

ry v . U .S . B ulk Transport , Inc. , 462 F.3d 536, 539- 41 (6th Cir. 2006). II. “W h en a n o n -d i v erse party has bee n joined as a de fenda nt, then in the absenc e of a substantial fede ral que stion th e re m o v i ng defe ndant may avoid re mand [to st ate c ourt] only by demonstrating that the non-diver se par ty w a s fra udulently joined.” Jerom e-D uncan, Inc . v. Auto-By

Te l, L .L. C. , 1 76 F .3 d 9 04 , 9 07 (6 th C ir . 1 99 9) (c itatio n o mitte d) . A s o ur c a se law make s c le ar, it i s the re moving party ’s burden to de monstrate fra udulent joinder, and a

ny doubts are r esolved ag

ain st

remova l. Alexande r v. Elec tronic Data Sys. Corp. , 13 F.3d 940, 948-49 (6th Cir. 1994). Fur ther, the pl aintiff’s moti ve for suing the non-diverse defe ndant is irrele vant. Jerom e-D uncan , 176 F.3d at 907.No. 06-6188

Probus v. Charter Pag e 4 I n o rd e r t o d e te rm ine wh e the r a no n- div e rs e de fe nd ant was fr a ud ule ntl y joi ne d, we a sk whether the plaintiff had a co l o ra b l e b asis for he r cla ims ag ainst that defe ndant. To answe r that question, we e mploy

the following standard: There can be no fra

udulent joinder unless it [is] clea r that there can be no rec overy under the law of the state on the c ause a lleg ed or on the fac ts in view of the law. . .

. There fore the questi on is whether there is arguably a re asonable basis for pr edicting that the state lawmight impose l i ab i l ity on the fa cts involved. [R estated,] the question [i s] whethe r there was a ny rea sonable ba sis for pre dicting that [ the plaintiff] could pre vail. Alexande r , 13 F.3d at 949 (internal quotation mar ks and citations omitted). Def endants c ontended in their notic e o f re m oval that there was no c olorable ba sis for Probus’s outrag eous conduc t and slander claims ag ainst Guiles, and t h at beca use Guiles wa s fra udulently joined, her “citizenship should be ignor ed for purposes of dive rsity .” B ut if Guiles was fra udulently joined and ther e wa s in fact c omplete diversity , the prope r procedure would have be en to dismis s G u il e s f

r o m th e s u it e n ti r e ly , n o t to me r e ly ig n o r e h e r c it iz e n s h ip “ f o r p u r p o s e s of div e rs ity” and

pr oc e e d to the summa

ry jud g me nt s ta g e wi th h e r a s a name d pa rt y . A lte rn a tiv e ly , if the dis tr ic t c ourt

dis a g re e d w ithde fe nd ants ’ co nte nti on that Pr ob us ha d n ot a lle g e d a c olo ra ble c la im ag ainst Guiles, then Guiles was p roper ly named a s a def

endant, a nd the district court should have

rema nded the case to state court for lac k of subject matter jurisdiction. Jerom e-D uncan , 176 F.3d

a t 90 7. Se c tio n 1 33 2 r e qu ir e s th a t f e de ra l c ourt s e nte rt a in j ur isd ic tio n o f c a se s b a se d o n d ive rs ity of c iti zen sh ip o nly

if the re is complete diversity

. Ruhrgas AG , 526 at 584. That is, no pla intiff may be a c itiz en of the same state a s any defe ndant. Such complete dive rsity is lacking in this case.No. 06-6188

Probus v. Charter Pag e 5 Th e dis tr ic t c ourt

ne ith e r d ism iss e d Pr ob us fr om t he su it, no r rem and e d th e c a se to s tate court. Rather, the district court per mitted defenda

nts to file a motion for summary judgme nt, which it subsequently

g rante d on all claims. Pr ob us v . Char te r Comm un ic ati on s, LLC , No. 3:04-CV-582- S, 2006 W L 1737947 (W.D. Ky

. J une 21, 2006). The district c ourt’s prog ression to the summary jud g me nt s ta g e wh ile Gu ile s w a s st ill a pa rt y to the su it w a s im

pr op e r. Th e dis tr ic t c ourt

fi rs t sh ou ld have looke d to the pleading s and dete rmined whe ther Probus’s c laims ag ainst G u i l es (t h e nondiverse de fenda

nt) wer e color able unde r Ke ntucky law, i.e. , whether , if Probus’s alleg ations were pr ov e n, the y

c ou ld h a ve satis fi e d th e e le me nts of e ith e r state -l aw tor t cla im br ou g ht a g a ins t G uil e s. See, e .g. , Sprowls v. Oakwood Mobile H o me s , Inc. , 119 F. Supp. 2d 694, 697 (W.D. Ky . 2000) (discussing whether

a plaintiff ha d a color able c laim unde r state law , and stating that “[s] ummary judgme nt standards do not apply to the questi on now before it. Rather, this Court must ex amine the ple a din g s f

or a lle g atio ns , w hic h if

pr ov e n, wo uld pr ov ide a re a so na ble ba sis fo r a

fi nd ingof

lia bil ity ag ainst [defendant who w as allege dly joined fra

udulently ]”). Be cause a cour t cannot simply

ignor e jur isd ic tio na l shor

tc omi ng s, we ho ld t

hat th e dis tr ic t c ourt

e rr e d b y re a c hin g the me ri ts o f t

his c a se b e f o r e d e te r mi n in g w h e th e r ju

r is d ic ti o n w a s p r o per. S ee S t eel Co. v. Citizens for a Better Environment , 523 U.S. 83, 94-95 (1998). The ref ore, w e re mand this case to the district c ourt for a d e te r mi n a ti o no f

w h e th e r th e r e w a s a

c o lo r a b le b a s is f

o r Pr o b u s ’ s s tate

- la

w c la im s a g a in s t Guiles fo r ou tr a g e ou s c on du c t and sla nd e r. Th e dis tr ic t c ourt ne e ds to fi nd that on ly on e of the se c la ims is colora ble, wit hout reg ard to fac tual merit, in order to rema nd to state court. See Coyne v . American Tobacco Co. , 183 F.3d 488, 493 ( 6th Cir. 1999) (“[I ]f there is a color able ba sis for pre dicting thatNo. 06-6188

Probus v. Charter Pag e 6

a pla int if f m ay re c ov e r a g a ins t no n- div e rs e de fe nd ants , th is C ourt mus t r e mand

the a c tio n to state court.” ). We rea liz e tha t t h e d i strict court a lrea dy deter mined, based on the evidenc e bef ore it, that Pr ob us ’s c la ims did

no t pa ss m

us te r u nder the s umm ary

jud g me nt s tand ard . B ut t he a pp ro pr iate inq uir y in t his c a se wa s n ot whe the r Pr ob us wo uld ult imate ly los e on the me ri ts; rathe r, it w a s si mpl y wh e the r P ro bu s “ ha d at lea st a c olo ra ble c a us e of a c tio n a g a ins t [Gu ile s] in the [Ke ntu c ky ] state courts.” Jerom e-D uncan , 176 F.3d at 90 7. There fore , we VA CA TE the judg ment of the district court a nd REMAND the case for a deter mination of diversity

jurisdiction — specifica lly , whether Guiles was f

raudule ntly

joined.