Source: http://la.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20150227_0000247.MLA.htm/qx
Timestamp: 2016-12-05 08:29:06
Document Index: 527261507

Matched Legal Cases: ['§ 1332', '§ 1332', '§ 1446', '§ 1332', '§ 1441', '§ 1447', '§ 1447', '§ 1447', '§ 1447', '§ 1447', '§ 1332', '§ 1447', '§ 1447', '§ 1332', '§ 1447', '§ 1447']

| German Sport Guns Gmbh v. Heckler & Koch Gmbh
German Sport Guns Gmbh v. Heckler & Koch Gmbh
GERMAN SPORT GUNS GmbHv.HECKLER & KOCH GmbH, ET AL.
Before the court is the Motion to Remand filed by plaintiff German Sport Guns GmbH ("GSG"). Record document number 8. The motion is opposed.[1]
Plaintiff filed a Petition for Declaratory Judgment in state court seeking to have certain trademarks registrations filed by defendants Heckler & Koch GmbH ("HKG") and Heckler & Koch, Inc. ("HKI") declared invalid under Louisiana law and canceled. Defendants removed the action asserting diversity jurisdiction under 28 U.S.C. § 1332(a). Defendants alleged complete diversity of citizenship between the plaintiff and the defendants.[2] Defendants also alleged several facts to demonstrate that the amount in controversy exceeded $75, 000.[3]
Plaintiff moved to remand, asserting a lack of complete diversity under § 1332(a) because plaintiff GSG and defendant HKG are both citizens of a foreign state, Germany. Plaintiff also argued that the defendants failed to establish that the required amount in controversy is been met.
Defendants opposed the motion arguing that the HKG was fraudulently misjoined, i.e. not properly joined under the state law statute for permissive joinder of claims, and therefore its citizenship should be disregarded for the purpose of determining diversity jurisdiction. Plaintiff responded by arguing that the defendants' claims of misjoinder were not asserted in the Notice of Removal and therefore are untimely § 1446.
It is well settled that when faced with a motion to remand, the removing party bears the burden of establishing the facts necessary to show that federal jurisdiction exists. Allen v. R&H Oil & Gas Co., 63 F.3d 1326, 1335, rhrg. denied, 70 F.3d 26 (5th Cir. 1995). Under 28 U.S.C. § 1332(a), a federal court has subject matter jurisdiction when the amount in controversy is satisfied and complete diversity of citizenship between the parties exists. When jurisdiction is based on diversity of citizenship, an action between alien citizens is not removable. Vantage Drilling Co. v. Hsin-Chi Su, 741 F.3d 535 (5th Cir. 2014); Giannakos v. M/V Bravo Trader, 762 F.2d 1295, 1298 (5th Cir.1985); Chick Kam Choo v. Exxon Corp., 764 F.2d 1148 (5th Cir. 1985).
Defendants asserted that non-diverse defendant HKG was fraudulently misjoined, and thus its citizenship should be disregard for purposes of analyzing jurisdiction. The statutory basis for the doctrine of improper joinder is found in 28 U.S.C. §§ 1441 and 1359. Smallwood v. Illinois Cent. R. Co., 385 F.3d 568, 572 (5th Cir. 2004), cert. denied, 544 U.S. 992, 125 S.Ct. 1825 (2005). The Fifth Circuit has recognized two ways to establish improper joinder: (1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court. Id., Travis v. Irby, 326 F.3d 644, 646-47 (5th Cir. 2003).
The party seeking removal based on improper joinder bears a heavy burden of proving that the joinder was improper. Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002). In resolving questions of improper joinder, all disputed questions of fact and ambiguities in the controlling state law are resolved in favor of the non-removing party. Carriere v. Sears, Roebuck and Co. 893 F.2d 98, 100 (5th Cir.), cert. denied, 498 U.S. 817, 111 S.Ct. 60 (1990).
Plaintiff also moved for an award of costs and attorney's fees under 28 U.S.C. § 1447(c). There is no automatic entitlement to an award of costs and attorney fees under § 1447(c). The clear language of the statute, which provides that the "order remanding the case may require payment of just costs and any actual expenses including attorney fees, incurred as a result of the removal, " makes such an award discretionary. The Supreme Court set forth the standard for awarding fees under § 1447(c) in Martin v. Franklin Capital Corporation, 546 U.S. 132, 126 S.Ct. 704 (2005):
[T]he standard for awarding fees should turn on the reasonableness of the removal. Absent unusual circumstances, courts may award attorney's fees under § 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal. Conversely, when an objectively reasonable basis exists, fees should be denied. See, Hornbuckle v. State Farm Lloyds, 385 F.3d 538, 541 (5th Cir. 2004); Valdes v. WalMart Stores, Inc. 199 F.3d 290, 293 (5th Cir. 2000). In applying this rule, district courts retain discretion to consider whether unusual circumstances warrant a departure from the rule in a given case. For instance, a plaintiff's delay in seeking remand or failure to disclose facts necessary to determine jurisdiction may affect the decision to award attorney's fees. When a court exercises its discretion in this manner, however, its reasons for departing from the general rule should be "faithful to the purposes" of awarding fees under § 1447(c).
Id., at 711.
The court must consider the propriety of the removing party's actions at the time of removal, based on an objective view of the legal and factual elements in each particular case, irrespective of the fact that it was ultimately determined that removal was improper. Id .; Miranti v. Lee, 3 F.3d 925, 928 (5th Cir. 1993); Avitts v. Amoco Production Co., 111 F.3d 30, 32 (5th Cir.), cert. denied, 522 U.S. 977, 118 S.Ct. 435 (1997).
Defendants failed to show that the citizenship of defendant HKG does not destroy diversity jurisdiction. The parties do not dispute that both the plaintiff and defendant HKG are citizens of Germany. Thus, based on the allegations of the plaintiff's Petition for Declaratory Judgment and the Notice of Removal, complete diversity does not exist.[4]
Defendants argued that under the analysis set forth in Tapscott v. MS Dealer Service Corp, HKG was improperly "misjoined" and its citizenship should be disregarded in a diversity jurisdiction determination.[5] In Tapscott, the Eleventh Circuit found that a removing party may establish that another defendant was fraudulently joined by demonstrating that (1) a defendant has been misjoined with other defendants in violation of applicable joinder rules; and (2) the misjoinder is so egregious as to constitute fraudulent joinder.[6]
The Tapscott decision is not controlling in the Fifth Circuit, and its analysis has not been adopted by the Fifth Circuit. Although dicta from the Fifth Circuit's opinion in In re Benjamin Moore & Co. [7] has been cited by other district courts to justify applying Tapscott 's theory of improper misjoinder, [8] this court does not need to resolve the legal issue because ambiguities in the applicable law must be resolved in favor of the non-removing party. Until the Fifth Circuit adopts the holding in Tapscott, improper joinder can only be established by demonstrating actual fraud in the pleading of jurisdictional facts or the inability of the plaintiff to establish a cause of action against the non-diverse party in state court. Defendants have not shown actual fraud in the pleading of jurisdictional facts or the inability of the plaintiff to establish a cause of action against the non-diverse party in state court. At most, the defendants have shown that there is a state law procedural issue as to whether the plaintiff's claims against both defendants can be brought in the came case. Because the defendants have not shown that defendant HKG was improperly joined, as the term is applied in the context of removal, its citizenship destroys diversity jurisdiction under § 1332.
The record supports finding that an award of expenses is not warranted under § 1447©). An award under § 1447(c) requires a showing that at the time of removal the defendants lacked an objectively reasonable basis for seeking removal. Given the questionable applicability of Tapscott in the Fifth Circuit, a finding that the defendants lacked an objectively reasonable basis for the removal is not supported. For this reasons, the plaintiff's request for an award of fees and costs incurred in connection with the Motion to Remand should be denied.
Defendants have the burden of establishing subject matter jurisdiction. Plaintiff and defendant HKG are both citizens of a foreign state. Thus, the defendants failed to establish complete diversity of the parties for purposes of subject matter jurisdiction under 28 U.S.C. § 1332.
Because the defendants' removal was objectively reasonable, an award of expenses under § 1447(c) is not warranted.
It is the recommendation of the magistrate judge that the Motion to Remand filed by plaintiff German Sport Guns GmbH be granted. It is further recommended that the plaintiffs' request for an award of expenses under 28 U.S.C. § 1447(c) be denied.