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Larue v. Volkswagen Group of America, Inc.

United States District Court, W.D. Kentucky, Bowling Green Division

May 26, 2017

GARY LARUE PLAINTIFF
v.
VOLKSWAGEN GROUP OF AMERICA, INC. et al. DEFENDANTS

          ORDER

          Greg N. Stivers, Judge

         This matter is before the Court on Plaintiff's Motion to Remand (DN 9), Defendants' Motion for Leave to File Sur-Reply (DN 18), and Defendants' Motion for Oral Argument (DN 17). For the reasons outlined below, the motion to remand is GRANTED but the request for attorneys' fees and costs is DENIED; the motion for leave to file is GRANTED; and the motion for oral argument is DENIED.

         I. STATEMENT OF FACTS AND CLAIMS

         On October 16, 2013, Plaintiff Gary Larue (“Larue”) was seriously injured in a one-car accident in which his 2002 Volkswagen Golf left the roadway, crossed over both lanes of traffic, and rolled at least one time before coming to a stop in a field. (Notice Removal Ex. 1, at 360, DN 1-1). As a result of the accident, Larue is an incomplete quadriplegic. (Notice Removal Ex. 1, at 360).

         On October 14, 2014, Larue filed suit in Warren Circuit Court against Volkswagen Group of America, Inc.; Volkswagen, A.G., and Volkswagen do Brasil Limitada alleging design defect and negligence claims relating to the 2002 Volkswagen Golf.[1] (Notice Removal Ex. 1, at 360-64). Larue also named various individuals employed by the Kentucky Transportation Cabinet (“KTC Defendants”) asserting claims of negligence and strict liability against them in their individual and official capacities. (Notice Removal Ex. 1, at 364-68). Approximately a month before trial was to take place in state court, on January 3, 2017, VW Defendants removed the action to federal court pursuant to 28 U.S.C. §§ 1441 and 1446 on the basis of fraudulent joinder. (Pl.'s Mot. Remand Ex. 4, at 1, DN 9-6; Notice Removal 5-7, DN 1). Larue has since moved to remand this case to state court. (Pl.'s Mot. Remand, DN 9).

         II. DISCUSSION

         A. Plaintiff's Motion to Remand [2]

         Larue moves to remand this matter to state court on the basis that the removal was untimely under 28 U.S.C. § 1446(c) and requests an award of attorneys' fees and costs for improper removal. (Pl.'s Mem. Supp. Mot. Remand 2-10, DN 9-2). In general, “[n]othing is to be more jealously guarded by a court than its jurisdiction.” Douglas v. E.G. Baldwin & Assocs., Inc., 150 F.3d 604, 606 (6th Cir. 1998) (quoting In re Mooney, 841 F.2d 1003, 1006 (9th Cir. 1988)), abrogated on other grounds by Thomas v. Miller, 489 F.3d 293 (6th Cir. 2007) (internal quotation marks omitted). “[R]emoval statutes are to be strictly construed, and doubts regarding the propriety of removal should be resolved in favor of remanding the case to state court.” Smith v. Giant Food, LLC, 931 F.Supp.2d 717, 721 (D. Md. 2013) (citation omitted). “[A]ny disputed questions [of] fact and [all] ambiguities in the controlling state law [should be resolved] . . . in favor of the nonremoving party.” Walker v. Philip Morris USA, Inc., 443 F. App'x 946, 951 (6th Cir. 2011) (alterations in original) (internal quotation marks omitted) (quoting Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949 (6th Cir. 1994)).

         1. Timeliness of Removal

         When VW Defendants removed the case from state court to this Court, more than one year had passed since the commencement of this action. Federal law, however, prohibits the removal of cases in which federal jurisdiction is based on diversity after more than one year has passed since the commencement of the lawsuit. See 28 U.S.C. § 1446(c). VW Defendants oppose Plaintiff's motion to remand back to state court on the basis that Larue acted in bad faith by naming KTC Defendants, who are non-diverse defendants, to preclude timely removal. (Defs.' Resp. Pl.'s Mot. Remand 12, DN 14). VW Defendants point to Larue's failure to develop discovery in support of his claims against KTC Defendants and argue that Larue failed to fulfill a continuing obligation to develop and reevaluate his claims. (Defs.' Resp. Pl.'s Mot. Remand 18-23).

         In ruling on this motion, the Court must consider the effect of a relatively recent statutory amendment. Effective in 2012, Congress amended 28 U.S.C. § 1446(c) to allow the removal of cases more than one year after commencement when “the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing an action.”[3] See Federal Courts Jurisdiction and Venue Clarification Act of 2011, Pub. L. No. 112-63, § 103(b), 125 Stat. 758, 760-61 (2011) (codified as 28 U.S.C. § 1446(c)(1)). The amendment also clarifies that the statute is procedural in nature and can be waived or equitably tolled. See Ehrenreich v. Black, 994 F.Supp.2d 284, 288 (E.D.N.Y. 2014) (“The amendment confirms that the limitation is procedural, excusable by federal courts upon a proper showing of bad faith.”).

         This Court has had few opportunities to consider what constitutes bad faith under that statute.[4] See Taylor ex rel. McNeill v. King, No. 5:12-CV-1, 2012 WL 3257528, at *4-5 (W.D. Ky. Aug. 8, 2012). As this Court has noted in construing the appropriate standard for bad faith by a plaintiff:

The Sixth Circuit has not clearly defined the meaning of “bad faith” in the amended statute, however federal courts that have examined the new language agree that the issue is whether the plaintiff engaged in intentional conduct to deny the defendant the chance to remove the case to federal court.

Hiser, 2014 WL 6885433, at *4 (citation omitted). As a sister court has stated, “[t]he determination of bad faith is left to the discretion of the district court, but ‘the exception to the bar of removal after one year is limited in scope.'” Bryson v. Wells Fargo Bank, N.A., No. 1:16-CV-28, 2016 WL 1305846, at *4 (E.D. Tex. Mar. 31, 2016) (quoting H.R. Rep. No. 112-10, at 15, reprinted in 2011 U.S.C.C.A.N. 576).

         VW Defendants argue that Larue engaged in bad faith when he failed to actively litigate his claims against KTC Defendants, which prevented VW Defendants from timely removing this matter to federal court. In their response, VW Defendants generally argue that KTC Defendants were fraudulently joined. As the Sixth Circuit has explained, fraudulent joinder is “a judicially created doctrine that provides an exception to the requirement of complete diversity.” Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999) (citation omitted) (internal quotation marks omitted). Fraudulent joinder exists where “it [is] clear that there can be no recovery under the law of the state on the cause alleged or on the facts in view of the law . . . .” Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949 (6th Cir. 1994) (citation omitted). Defendants can avoid remand “by demonstrating that the non-diverse party was fraudulently joined.” Probus v. Charter Commc'n, LLC, 234 F. App'x 404, 406 (6th Cir. 2007) (citation omitted) (internal quotation marks omitted). “However, if there is a colorable basis for predicting that a plaintiff may recover against non-diverse defendants, [the federal] [c]ourt must remand the action to state court.” Coyne, 183 F.3d at 494. “[A] claim is colorable ‘if the state law might impose liability on the resident defendant under the facts alleged.'” Kent State Univ. Bd. of Trs. v. Lexington Ins. Co., 512 F. App'x 485, 489 (6th Cir. 2013) (citing Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 810 (8th Cir. 2003)). See also Alexander v. Elec. Data Sys., 13 F.3d 940, 949 (6th Cir. 1994) (“[T]he question is whether there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved.”).

         The standard for fraudulent joinder is similar to that for motions to dismiss under Fed.R.Civ.P. 12(b)(6). Courts analyzing those motions consider only pleadings and attached documents. See Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008). All allegations in the complaint are assumed true. See Great Lakes Steel v. Deggendorf, 716 F.2d 1101, 1105 (6th Cir. 1983). The standard for fraudulent joinder is even more deferential to the plaintiff than motions under Fed.R.Civ.P. 12(b)(6). See Walker, 443 F. App'x at 954. Because fraudulent joinder questions the court's jurisdiction rather than the merits of the claim, in analyzing motions to remand for fraudulent joinder courts are empowered to go beyond the pleadings. Id. Nonetheless, “even if the district court ‘pierces the pleadings' to consider summary-judgment-type evidence (such as depositions, affidavits, etc.), the proper standard for evaluating that evidence remains akin to that of a Rule 12(b)(6) motion to dismiss, and is arguably even more deferential.”[5] Id. Further, “any contested issues of fact must be construed in the plaintiff's favor.” Id. However, “[t]he non-moving party's motive for joining the non-diverse party to the lawsuit is ‘immaterial to our determination regarding fraudulent joinder.'” Id. at 951 (quoting Jerome-Duncan, Inc. v. Auto-By-Tel, LLC, 176 F.3d 904, 907 (6th Cir. 1999)). The party alleging fraudulent joinder bears a heavy burden of persuasion. See Id. at 953 (citation omitted).

         In their response, VW Defendants concede that Larue had colorable claims of negligence and strict liability against KTC Defendants at the outset of this litigation, which undermines any argument of fraudulent joinder. (Defs.' Resp. Pl.'s Mot. Remand 2 n.1, 26 n.9). Kentucky law recognizes that employees of the Kentucky Transportation Cabinet, Department of Highways may be liable in their individual capacities for a failure to perform a ministerial duty relating to highway maintenance. See Hammers v. Plunk, 374 S.W.3d 324, 330 n.3 (Ky. App. 2011) (en banc) (“Because the present case involves the maintenance or repair of existing sections of roadway, rather than a decision to erect signs or guardrails on same, such action or inaction may be considered ministerial.”); Estate of Clark ex rel. Mitchell v. Daviess Cty., 105 S.W.3d 841, 846 (Ky. App. 2003) (holding that county employees sued in their individual capacities were personally liable for any failure to perform a ministerial duty like replacing a stop sign). Thus, Larue had a colorable claim of negligence and strict liability against KTC Defendants and asserting claims against those Defendants did not constitute bad faith. See Johnson v. Dollar Tree Stores, Inc., No. 3:15-cv-706-DJH, 2016 WL 126875, at *2 (W.D. Ky. Jan. 11, 2016) (“The relevant inquiry for a fraudulent joinder claim is whether [the plaintiff] ‘had at least a colorable cause of action against' [the alleged fraudulently joined party] in Kentucky state courts.” (quoting Jerome-Duncan, Inc., 176 F.3d at 907)).

         Contrary to VW Defendants' characterizations of KTC Defendants as token parties, the record reflects that Larue retained two experts to proffer expert testimony relating to the accident and the road conditions: Gary M. Chambers, P.E. (“Chambers”); and Mariusz Ziejewski, Ph.D. (“Ziejewski”). (Pl.'s Reply Mot. Remand 10-12, DN 16; Pl.'s Mot. Remand Exs. 2-3, DN 9-2 to 9-3). As an expert witness, Chambers' specialties include “highway design and highway construction zone issues . . . .” (Pl.'s Mot. Remand Ex. 2, at 1, DN 9-4). Ziejewski is an engineer and professor of engineering at North Dakota State University, and in his curriculum vitae, he notes that he is a “Fully Accredited Accident Reconstructionist, Accreditation Commission for Traffic Accident Reconstruction (ACTAR) #1939.” (Pl.'s Mot. Remand Ex. 3, at 1, DN 9-5). Ultimately, as Larue has noted, “Chambers was unable to determine that the roadway violated any controlling guidelines under AASHTO or FHWA and thus, he was not named as an expert.” (Pl.'s Mem. Supp. Mot. Remand 9). In contrast, Ziejewski did prepare an expert report and was deposed. (Ziejewski Report, DN 14-10; Ziejewski Dep., Aug. 3, 2016, DN 14-11). Ziejewski testified as follows:

Q. Doctor, is it fair to say that your report does not express any opinions as to the condition or maintenance of the ...

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