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Bustos v. Quality Restaurant Concepts, LLC

United States District Court, E.D. Kentucky, Southern Division, London

June 23, 2014

CANDACE BUSTOS, et al., Plaintiffs,


DANNY C. REEVES, District Judge.

This matter is pending for consideration of the plaintiffs' motion to remand this action to Whitley County Circuit Court. [Record No. 3] The plaintiffs contend that they have a viable claim against Defendant Nathan Bunger, a non-diverse party. However, the defendants argue that Bunger was fraudulently joined to defeat diversity jurisdiction. For the reasons set forth below, under state law, it is unsettled whether Bunger meets the definition of an employer. Therefore, the Court will grant the plaintiffs' motion and remand this action to the Whitley Circuit Court for further proceedings.


At times relevant to this action, the plaintiffs were employed as servers at Applebee's Neighborhood Bar & Grill ("Restaurant") in Corbin, Kentucky. All of the plaintiffs are citizens of Kentucky. Defendant Quality Restaurant Concepts, LLC, ("QRC") owns and operates the Restaurant. QRC is a limited liability company, incorporated under the laws of Alabama and having its principal place of business in that state. Defendant Bunger was the general manager of the Restaurant. He is also a citizen of Kentucky.

The plaintiffs originally filed this action in Whitley Circuit Court. The Complaint alleges that they were not paid a "prevailing wage" because they were required to redistribute their tips to non-tipped employees in violation of KRS § 337.065. The defendants removed the case to this Court under 28 U.S.C. § 1446, alleging that Defendant Bunger was fraudulently joined for the purpose of defeating diversity jurisdiction. The plaintiffs moved to remand the case to state court, arguing that their claims are premised solely on Kentucky law and that there is not complete diversity between the parties.

The plaintiffs assert that Bunger was properly joined as a defendant because, in his position as general manager of the Restaurant, he meets the statutory definition of employer under KRS § 337.010(1)(d). The plaintiffs further claim that Bunger had control, direction, and oversight over the Restaurant including its employment and labor practices. Thus, they contend that Bunger is potentially liable for the alleged violations of KRS § 337.065. Conversely, the defendants maintain that there can be no viable claim against Bunger because he does not meet the statutory definition of employer. And they argue that, because there is no conceivable cause of action against an individual under KRS § 337.065, Bunger was fraudulently joined and removal to this Court is proper.


Title 28 of the United States Code, Section 1332, provides that district courts have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between citizens of different states. A case filed in state court is removable only if it could have been brought in federal court originally. See 28 U.S.C. § 1441(a) ("[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction[] may be removed... to the district court of the United States for the district and division embracing the place where such action is pending."). The removing party bears the burden of establishing diversity jurisdiction. Coyne ex rel. Ohio v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999). When removal is based on diversity jurisdiction, the burden is satisfied by a preponderance of the evidence. Everett v. Verizon Wireless, Inc., 460 F.3d 818, 829 (6th Cir. 2006)

When addressing a motion to remand, a court must determine if federal jurisdiction existed at the time the removing party filed the notice of removal. City of Warren v. City of Detroit, 495 F.3d 282, 286 (6th Cir. 2007) (citing Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 871-72 (6th Cir. 2000)). And any doubts concerning jurisdiction should be interpreted in favor of remand, because federal courts possess limited jurisdiction and removal raises serious federalism issues. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941); Palkow v. CSX Transp., Inc., 431 F.3d 543, 555 (6th Cir. 2005). In fact, the Sixth Circuit has held that "all doubts as to the propriety of removal are resolved in favor of remand." Jacada (Europe), Ltd. v. Int'l Mktg. Strategies, Inc., 401 F.3d 701, 704 (6th Cir. 2005) (quoting Coyne v. American Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999)). If a non-removing party joins a party against whom there is no "colorable cause of action, " the joinder is considered fraudulent. Casias v. Wal-Mart Stores, Inc., 695 F.3d 428, 433 (6th Cir. 2012) (citing Jerome-Duncan, Inc. v. Auto-By-Tel, L.L.C., 176 F.3d 904, 907 (6th Cir. 1999)).

The test for evaluating a motion to remand is similar to, but more lenient than, the test for a Rule 12(b)(6) motion to dismiss. Casias, 695 F.3d at 433. The Sixth Circuit has interpreted this issue as "whether there was any reasonable basis for predicting that [the plaintiff] could prevail.'" Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949 (6th Cir. 1994) (citing Tedder v. F.M.C. Corp., 590 F.2d 115, 117 (5th Cir. 1979)). This has been described as a "heavy burden" because a plaintiff can defeat a fraudulent joinder argument by establishing that he has a "glimmer of hope" of prevailing with respect to the claim asserted against the nondiverse defendant. Murriel-Don Coal Co., Inc. v. Aspen Ins. UK Ltd., 790 F.Supp.2d 590, 597 (E.D. Ky. 2011) (citations omitted). Additionally, "[a]ny disputed questions and fact and ambiguities in the controlling state law [should be resolved]... in favor of the nonremoving party.'" Alexander, 13 F.3d at 949 (quoting Carriere v. Sears, Roebuck & Co., 893 F.2d 98, 100 (5th Cir. 1990)).


The plaintiffs' claim against Bunger is premised on alleged violations of KRS § 337.065. The statute prohibits employers from requiring employees to remit gratuity to the employer or require an employee to participate in a tip-pool arrangement. The statute defines an employer as:

any person, either individual, corporation, partnership, agency, or firm who employs an employee and includes any person, either individual, corporation, partnership, agency, or firm acting directly or indirectly in the interest of an employer in relation to an employee

KRS § 337.010(1)(d). Thus, to violate KRS § 337.065, Bunger must fit with this statutory definition. The plaintiffs claim that Bunger meets this definition because he had control, oversight, and ...

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