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Bagshaw v. Management Registry, Inc.

United States District Court, Sixth Circuit

May 20, 2013

TIMOTHY BAGSHAW, et al., Plaintiffs,
MANAGEMENT REGISTRY, INC., et al., Defendants.


CHARLES R. SIMPSON, III, Senior District Judge.

This matter is before the court for consideration of a number of motions in this action which was recently removed to this court from the Jefferson County, Kentucky, Circuit Court.

The plaintiffs, Timothy Bagshaw and Freda Setters, filed a motion to stay all proceedings in the matter pending a decision on their motion to remand the action to state court. DN 6. The defendants, Management Registry, Inc., et al. (collectively "MRI"), have joined in the motion. DN 11. Therefore, the motion to stay will be granted, and the motion to remand will be addressed herein.

MRI filed a motion to remand on the ground that removal of the action was barred by the "forum defendant rule." 28 U.S.C. § 1441(b)(2) states that

A civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

Courts in this district treat the "forum defendant rule" as jurisdictional rather than procedural. See Choate v. Underwood, No. 5:12CV-58-TBR, 2012 WL 2920010, *2 (W.D.Ky. July 17, 2012). The case at bar was removed on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). The defendants in this action are all citizens of Kentucky. Thus the action was improperly removed by the defendants.

MRI now appears to have abandoned its assertion of diversity jurisdiction. In response to the motion, MRI has moved for leave to amend its notice of removal to add the ground of federal question jurisdiction. While it restates in the amended notice that the parties are "diverse" and the amount in controversy exceeds $75, 000.00 (§§ 6-9), it does not address, nor does it controvert, the argument that the "forum defendant rule" bars removal on the basis of diversity. Rather, the thrust of the amended notice is MRI's newly added assertion of federal question jurisdiction.

MRI asserts that it has timely sought to amend its notice of removal. "Prior to the expiration of the period for seeking removal, [a] defendant may freely amend [a] notice of removal." 29A Federal Procedure, Lawyers Edition (2010) § 69.92, citing Wormley v. Southern Pacific Transportation Co., 863 F.Supp. 382 (E.D.Tex. 1994). There appears to be no dispute that the defendants were served with the state court pleadings on January 14, 2013 and the motion to amend the notice of removal was filed on February 12, 2013, prior to the expiration of the thirty-day removal period. Therefore, MRI's motion to amend its notice of removal will be granted.

MRI grounds its assertion of federal question jurisdiction on a statement made by the plaintiffs in a pre-suit settlement letter that certain of the defendants' conduct "caused Mr. Bagshaw grave concerns about the welfare of the company" because it was "an example of SUTA dumping, " and it violate[d] the SUTA Dumping Prevention Act of 2004." DN 8-2, p. 3. MRI has focused on this lone reference to federal law, urging that

Plaintiff Bagshaw seeks, in this action ( inter alia ), to recover from Defendants under the auspices of the False Claims Act, 31 U.S.C. § 3701, as set forth in Plaintiff's Sixteenth Cause of Action, as further elaborated upon in Plaintiff's original correspondence threatening the within litigation...While Plaintiff's Complaint is extremely vague and ambiguous, thus potentially leading to confusion as to Plaintiff's intentions in alleging Public Policy Wrongful Discharge and Retaliatory Discharge, the additional description volunteered by Plaintiff provides sufficient basis for the allegations contained in Plaintiff's Complaint to identify that the claim of Public Policy Wrongful Discharge addresses a purported "violation of statutory and common law."

Amend. Notice (DN 8-1), §§ 10-11. MRI then concludes that

This court has jurisdiction over this matter based on federal question jurisdiction, based upon Plaintiff Bagshaw's allegations set forth in his Sixteenth Cause of Action, as supplemented by the detailed explanation volunteered by Plaintiff's counsel, in his July 12, 2012 correspondence, identifying the basis for such a claim as being the SUTA Dumping Prevention Act of 2004, necessarily arising under the False Claims Act.

DN 8-1, § 17.

The Sixteenth Cause of Action to which MRI refers alleges wrongful discharge of Bagshaw in ...

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