The Court agrees that this is the general rule. However, Freeport has been distinguished
from cases in the present situation. Ingram v. CSX Transp., Inc., 146 F.3d 858, 861-62 (11th
Cir. 1998) (stating that the holding in Freeport dealt with the substitution of a party under
Fed. R. Civ. P. 25, not the addition of a party after the case had been removed); Williams v.
Holiday Inn Worldwide, No. Civ. A 97-3385, 1998 WL 914258, at *2 (E.D. La. Dec. 29,
1998) (stating that Freeport dealt with a case originally filed in federal court, not one which
was filed in state court and later removed).

The Seventh Circuit has recognized that when a party has been joined after the case
has been removed, the Court should apply 28 U.S.C. § 1447, which addresses post-removal
procedures. Jass, 88 F.3d at 1492. In addition, as Plaintiff argues, the First Circuit also
recognized that section 1447(e) applies to cases in which a non-diverse defendant is added
to the case after removal. Casas Office Machines, Inc. v. Mita Copystar Am., Inc., 42 F.3d
668, 673-75 (1st Cir. 1994). While that case dealt with substitution of fictitious defendants
for named defendants, the court also recognized its application to the joinder context. Id. at
674-75 (stating, “under § 1447(e), the joinder or substitution of non-diverse defendants after
removal destroys diversity jurisdiction ...”) This case involves the addition of a party after
removal. Thus, the Court will not revert to the general rule, but will apply section 1447(e).
B. Application of 28 U.S.C. § 1447(e)

1. Amending the complaint to add a direct claim against the third-party
defendant is a joinder for section 1447 purposes.

Before analyzing whether the amendment and joinder were proper, the Court will

5



IV. CONCLUSION

Pursuant to 28 U.S.C. § 1447(e) and for the above stated reasons, Plaintiff's motion

to remand the case to the Circuit Court of Cook County, Illinois is granted.

SO ORDERED THIS 7th DAY OF MAY, 2003.

Copies mailed to:

Robert A. Novelle

Vincent Petrosino

SERPICO, NOVELLE & NAVIGATO,
LTD.

61 West Superior Street

Chicago, IL 60610

Attorneys for Plaintiff

10

Morte, Reale!

MORTON DENLOW
United States Magistrate Judge

Alton C. Haynes

Shimon Ben Kahan

MORGANS, HAYNES & STUDNICKA,
LLC

One North LaSalle Street

Suite 2100

Chicago, IL 60602

Attorneys for Defendant / Third-Party
Plaintiff

Phillip G. Brinckerhoff

Ronald Everett Scott

GARAFALO, SCHREIBER, HART &
STORM, CHTD.

211 West Wacker Drive

Suite 1300

Chicago, IL 60606

Attorneys for Defendant / Third-Party
Defendant



the parties, it noted that such realignment was proper “where there is no actual, substantial
conflict between the parties that would justify placing them on opposite sides of the lawsuit.”
Id. at 151, The court also stated that the “propriety of alignment is a matter not determined
by mechanical rules, but rather by pragmatic review of the principal purpose of the action and
the controlling matter in dispute.” Jd. (citing Indianapolis v. Chase Nat’l Bank, 314 U.S. 63
(1941)).

While not controlling, the realignment situation indicates that a court should

practically view the actual dispute in determining proper diversity jurisdiction. Here, both
the practical nature of the Plaintiff's direct claim against Pasta and the fundamental
difference in being named a direct defendant as opposed to a third-party defendant leads the
Court to find that there has been a joinder for purposes of 28 U.S.C. § 1447(e). Furthermore,
once the parties are viewed in light of the second amended complaint, it is clear that lack of
diversity would have precluded the case from being filed originally in federal court.

2. The amendment was proper making remand mandatory.

Section 1447 (e) provides that “[i]f after removal the 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).
Thus, although permitting the joinder is discretionary, once the court has done so, allowing

diversity to be destroyed, it must remand the case to the state court. Kortum v. Raffles

Holdings Ltd., No. 01 C 9236, 2002 WL 31455994, at *3 (N.D. Ill. Oct. 30, 2002) (citing



address Defendant’s second argument. Defendant argues that there was no “joinder” as the
term is used in section 1447(e). In this case, Pasta was already a party to the litigation—the
third-party defendant. Thus, it could not technically have been joined to a lawsuit of which
it was already a part. Joinder is: “The uniting of parties or claims in a single lawsuit.”
BLACK’s LAW DICTIONARY 841 (7th ed. 1999). Arcobaleno urges the Court to adopt a strict
interpretation of the definition of joinder. The Court believes this to be a case of first
impression. While the argument is creative, the Court disagrees with Arcobaleno’s analysis.

Although a person or entity may be a party to an action, there is a fundamental
difference in the relationships of the parties when one is a third-party defendant as opposed
to a direct defendant. Rule 14 allows a defendant to bring in a third-party defendant “who
is or may be liable to the third-party plaintiff for all or part of the plaintiff's claim against the
third-party plaintiff.” Fep.R. Civ. P. 14. Thus, as a third-party defendant, Pasta’s only
possible liability is to Arcobaleno and necessarily relies on an adjudication of its liability to
Arcobaleno in addition to the adjudication of Arcobaleno’s liability to Plaintiff. In contrast,
when Pasta is added as a direct defendant, its liability is independent of Arcobaleno’s and
may be adjudicated at the same time.

In addition, the Court rejects Arcobaleno’s strict reading of joinder because in
diversity cases, a court may realign the parties according to their true interest in the case,
even if doing so would destroy diversity jurisdiction. See American Motorists Ins. Co. v.

Trane Co., 657 F.2d 146, 149 (7th Cir. 1981). Although the court in Trane did not realign



finds that the amendment to add Pasta as a direct defendant was made in good faith and was
not made solely to defeat diversity.

Second, there was some delay in seeking the amendment. Specifically, a minute order
directed the parties to add all additional parties by November 14, 2002. Plaintiff did not file
her request to amend until March 20, 2003-over four months later. While the Court does
recognize the late nature of the amendment, Plaintiff indicated in her motion that the

amendment was based on newly discovered facts and theories. The Court finds no dilatory

motive in Plaintiff's motion to amend.

Third, the Court finds no prejudice to Arcobaleno if the amendment is permitted. On
the contrary, the Plaintiff may not obtain full relief if the amendment is not granted and Pasta
is liable to her. Fourth, the Court finds that other equitable considerations weigh in favor of
remand. Although Defendant does have an interest in the federal forum, it does not outweigh
Plaintiff's interest in full recovery.

In sum, although the motion was late in the game, there is no indication of fraudulent
or dilatory motive. Joinder was not sought solely for the opportunity to stay in federal court,
and Defendant’s only objection was to possible remand, not to the amendment itself. After
considering all of the equitable factors, this Court finds that permitting the amendment to add
Bison and Pasta as direct defendants was proper, and the addition of Pasta as a direct

defendant was a joinder for purposes of section 1447(e). Therefore, remand is also proper.



IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DIsTRIcT oF LiNois DOCKETED
EASTERN DIVISION MAY - 9 2003
LILIANA PEREZ, )
Plaintiff, )
)
v. ) Case No. 02 C3590
)

ARCOBALENO PASTA MACHINES,)
INC., a foreign national corporation, )

f/k/a A D PASTA MACHINES y
TECHNOLOGY INC., a foreign )
national corporation, f/k/a A.D. )
ENGINEERING LTD., a foreign )
national corporation, PERFECT )

PASTA, INC., an Illinois corporation, )
BISON COMMERCIAL LEASING _)
CORP., a New York corporation, and )
BISON COMMERCIAL LEASING, )
L.L.C., a New York limited liability)
corporation,

Defendants.

www erm wm

ARCOBALENO PASTA MACHINES,)
INC., a foreign national corporation )

)

Third-Party Plaintiff, )

)

v. )

)

PERFECT PASTA, INC. )
)

Third-Party Defendant. )

Magistrate Judge Morton Denlow

MEMORANDUM OPINION AND ORDER



Jass, 88 F.3d at 1486); Goutanis v. Mutual Group (US), No. 92 C 1689, 1995 WL 86588, at
*6(N.D. IIL. Feb. 24, 1995) (“The language ‘permit joinder and remand to state court’ means
that permitting a joinder of parties which destroys subject matter jurisdiction must result in
aremand.”). Thus, in order to determine whether remand is proper in this case, the Court
must examine whether the amendment joining the non-diverse parties was proper. Goutanis,
1995 WL 86588, at *6. If so, the case must be remanded.

Allowing an amendment is an equitable determination, and does not rely on whether
the new party is indispensable. Vasilakos v. Corometrics Medical Systems, Inc., No. 93 C
5343, 1993 WL 390283, at *2 (N.D. Ill. Sept. 30, 1993). Although the Seventh Circuit has
not articulated the equitable factors which must be considered,”other courts in this district
have considered the following factors: 1) the plaintiff's motivation in seeking to join the
additional party—particularly where it is sought solely to defeat diversity jurisdiction, 2) the
timeliness of the request, 3) the prejudice to the parties, and 4) other equitable considerations,
including the defendant’s interest in a federal forum. Kortum, 2002 WL 31455994, at *3.

First, the Court notes that although the Plaintiff admits that she prefers state-court
juries, Defendant concedes that there was no ill or fraudulent motivation behind the joinder.
Further, during a hearing regarding the amendment to add additional parties, Defendant

Arcobaleno stated that it had no objection to the amendment, only to remand. This Court

228 U.S.C. § 1447(d) precludes appellate review of an “order remanding a case to the
State court from which it was removed . . . on appeal or otherwise...” The Seventh Circuit has
determined that this section precludes review of cases remanded under section 1447(e). In re
Florida Wire and Cable Co., 102 F.3d 866, 869 (7th Cir. 1996).


A. Diversity Jurisdiction Can Be Destroyed By The Joinder Of A Non-Diverse
Party Post Removal.

1. Diversity jurisdiction is determined using the Second Amended Complaint
at Law.

As a preliminary matter, the Court will address which complaint is to be used for
determining whether diversity jurisdiction is proper. The Seventh Circuit has recognized that
once an amended pleading is filed, the amended pleading supersedes the original one, and
the original pleading has no function in the case. Wellness Community - National v, Wellness
House, 70 F.3d 46, 49 (7th Cir. 1995) (quoting 6 CHARLES WRIGHT, ARTHUR MILLER &
Mary Kay KANE, FEDERAL PRACTICE AND PROCEDURE § 1476 at 556-57 (1990)). Where
an amended complaint is filed, federal jurisdiction will be determined based on that
complaint. Jass v. Prudential Healthcare Plan, Inc., 88 F.3d 1482, 1492 (7th Cir. 1996).

In this case, an amended complaint was filed in the Circuit Court of Cook County.
After the case was removed, a second amended complaint was filed. Thus, the operative
complaint for purposes of the jurisdictional issue is Plaintiff's Second Amended Complaint
at Law.

2. Section 1447(e) governs the disposition of this case.

Defendant’s first argument is that once established, diversity jurisdiction can not be
divested. Defendant relies on Freeport-McMoRan v. K N Energy, Inc., for the proposition
that diversity jurisdiction is determined at the time the case is filed, and subsequent acts of

the parties do not affect the court’s subject matter jurisdiction. 498 U.S. 426, 428 (1991).



principal place of business in British Columbia, Canada. Arcobaleno is the alleged
manufacturer and distributor of the dough sheeter.

On May 20, 2002, Arcobaleno removed this case to federal court. Arcobaleno filed
a third-party complaint against Pasta, an Illinois corporation, on November 13, 2002.

On March 20, 2003, Plaintiff filed a motion to amend her complaint to add two
additional parties: Bison Leasing (“Bison”) and Pasta. Bison is a New York corporation
allegedly involved in the design, distribution, and leasing of the dough sheeter. This Court
granted Plaintiff's motion to amend on March 25, 2003, without objection, and she filed her
second amended complaint adding Bison and Pasta as direct defendants on April 1, 2003.

III. DISCUSSION

The case is now before the Court on Plaintiffs motion to remand the case to the
Circuit Court of Cook County. Plaintiff argues that the addition of Pasta as a direct
defendant destroys diversity jurisdiction because Pasta and Plaintiff are both citizens of
Illinois. The following issues are raised: 1) whether diversity jurisdiction can be destroyed
by the joinder of a non-diverse party post removal, 2) whether Pasta was “joined” in the
second amended complaint for purposes of 28 U.S.C. § 1447(e) when it was already a third-
party defendant, and 3) whether the amendment was proper. The Court will address each in

turn.


IL. INTRODUCTION

This case is before the Court on plaintiff, Liliana Perez’s (“Perez” or “Plaintiff”),
motion to remand the case to the Circuit Court of Cook County, Illinois.' The issue is
whether Plaintiff's second amended complaint asserting a direct claim against third-party
defendant, Perfect Pasta, Inc. (“Pasta”), deprives this court of diversity jurisdiction under 28
U.S.C. § 1332 by reason of 28 U.S.C. § 1447(e). Defendant, Arcobaleno Pasta Machines,
Inc., (“Arcobaleno” or “Defendant”) argues that the addition of Plaintiff’s claim directly
against Pasta was not a joinder for purposes of § 1447(e) because Pasta was previously
joined in the action as a third-party defendant. For the reasons discussed herein, the motion
to remand is granted.

Il. FACTUAL BACKGROUND

Before addressing the merits of Plaintiff's motion, a review of the facts and
procedural history is instructive. Plaintiff, a former employee of Pasta, alleges that on May
18, 2000 she was investigating a problem with a dough sheeter. During this investigation,
her hand was pulled into the dough sheeter and crushed, causing permanent injury and
requiring an amputation. Plaintiff, an Illinois citizen, initiated this action against Arcobaleno
on April 17, 2002 in the Circuit Court of Cook County, Illinois. On May 8, 2002, she filed

a two-count first amended complaint against Arcobaleno, a foreign corporation with its

' The parties executed a limited consent for this Court to decide this issue pursuant to 28
U.S.C. § 636(c)(1).