United States District Court, W.D. Kentucky, Louisville Division
CHARLES A. KNOPPE, on behalf of himself and all other similarly situated, Plaintiffs,
LINCOLN NATIONAL LIFE INSURANCE COMPANY, KENTUCKY DEPARTMENT of INSURANCE, and NANCY G. ATKINS, COMMISSIONER, Defendants.
MEMORANDUM OPINION AND ORDER
REBECCA GRADY JENNINGS, DISTRICT JUDGES
matter is before the Court on Plaintiff Charles A.
Knoppe's (“Knoppe”) Motion to Remand [DE 6]
and the Motion to Dismiss [DE 10] filed by Defendants
Kentucky Department of Insurance (“DOI”), and
Insurance Commissioner, Nancy G. Atkins
(“Commissioner”). The matters are ripe. For the
reasons below, the Court DENIES Knoppe's
Motion to Remand; and GRANTS the DOI's
and Commissioner's Motion to Dismiss.
brought this class action complaint against defendants
Lincoln National Life Insurance Company
(“Lincoln”), the DOI, and the Commissioner in
Nelson County Circuit Court. [DE 1-2 at ⁋⁋
43-69]. Knoppe is an insured under a long-term disability
insurance policy issued by Lincoln to the City of Bardstown
for its Kentucky resident employees. [Id. at ¶
4, 10]. Lincoln then removed to this Court based on
subject-matter jurisdiction. [DE 1 at ⁋ 5].
class action complaint alleges breach of contract, bad faith,
unfair claims settlement practices under KRS §
304.12-230, and unfair and deceptive practices under KRS
§ 304.12-010. [DE 1-2 at ⁋⁋ 43-59]. Knoppe
alleges that Lincoln calculated improperly, and continues to
calculate improperly, the monthly long-term disability
benefits payable under the insurance policy to Knoppe and
others similarly situated. [DE 1-2 at ¶ 4]. Knoppe
states that Lincoln is wrongfully reducing benefits because
of his receipt of compensation from the Kentucky Retirement
System. [Id. at ¶ 20]. Knoppe also alleges that
the DOI's and Commissioner's approval of the policy,
or failure to deny it, violates Kentucky insurance code and
law. [Id. at ¶ 5]. Knoppe seeks a writ of
mandamus and declaratory relief against the DOI and
Commissioner. [DE 1-2 at ⁋⁋ 60⎼69].
removed to federal court on diversity jurisdiction under 28
U.S.C. §§ 1332(a) and 1441(a). [DE 1 at ¶ 5].
Lincoln alleges that there is diversity among Knoppe, who is
a citizen of the state of Kentucky, and Lincoln, a citizen of
the State of Indiana and Commonwealth of Pennsylvania. [DE 1
at ¶¶ 5-7]. Lincoln alleges that the Court should
disregard the Kentucky citizenship of the DOI and
Commissioner under the doctrine of fraudulent joinder.
[Id. at ¶ 8]. Lincoln asserts that the amount
in controversy is satisfied as to Knoppe's individual
claim, but even if it were not, it is satisfied as to the
class under the Class Action and Fairness Act. [DE 1 at
¶¶ 10, 13].
now moves to remand this matter to Nelson Circuit Court. [DE
6]. Knoppe argues that the DOI and Commissioner are not
fraudulently joined, so no diversity exists, and the
amount-in-controversy is not satisfied. [Id.].
Additionally, the DOI and Commissioner move to dismiss,
arguing Knoppe's failure to state a claim against them.
to federal court is proper for “any civil action
brought in a State court of which the district courts of the
United States have original jurisdiction.” 28 U.S.C.
§ 1441(a). Diversity jurisdiction gives “[t]he
district courts . . . original jurisdiction [over] 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.” 28 U.S.C.
§ 1332(a), (a)(1). A defendant removing a case has the
burden of proving jurisdiction. See Wilson v. Republic
Iron & Steel Co., 257 U.S. 92, 97 (1921). The Court
should determine federal jurisdiction in a diversity case at
the time of removal. Rogers v. Wal-Mart Stores,
Inc., 230 F.3d 868, 872 (6th Cir. 2000).
alleges that Knoppe fraudulently joined defendants DOI and
Commissioner. Thus, Lincoln asserts this Court has
subject-matter jurisdiction based on diversity of citizenship
of the properly joined parties, under 28 U.S.C. §§
1332(a) and 1441(a). [DE 1 at ¶ 5].
removing party bears the burden of proving fraudulent joinder
and removal statutes must be strictly construed in a light
most favorable to the non-removing party. Her Majesty the
Queen in Right of Province of Ontario v. City of
Detroit, 874 F.2d 332 (6th Cir. 1989). “In order
to establish that an in-state defendant has been fraudulently
joined, the removing party must show either that there is no
possibility that the plaintiff would be able to establish a
cause of action against the in-state defendant in state
court; or that there has been outright fraud in the
plaintiff's pleadings of jurisdictional facts.”
In re Welding Rod Prod. Liab. Litig., No.
1:03-CV-17000, 2004 WL 1179454, at *3 (N.D. Ohio May 21,
2004) (citing Wilson v. United States Dep't of
Agriculture, Food & Nutrition Service, 584 F.2d 137,
142 (6th Cir. 1978)).
joinder occurs when the non-removing party joins a party
against whom there is no colorable cause of action.”
Jerome-Duncan, Inc. v. Auto-By-Tel, L.L.C., 176 F.3d
904, 907 (6th Cir. 1999). To determine whether the
non-removing party has a colorable claim against a party, the
Court considers whether the claim is so baseless that it has
no hope of success. Saginaw Hous. Comm'n v. Bannum,
Inc., 576 F.3d 620, 624 (6th Cir. 2009). The Court's
task is not to provide an authoritative answer on the merits
of the case but determine whether the plaintiff has provided
a non-fraudulent basis for recovery against a non-diverse
party. In re Welding Rod Prod. Liab. Litig., No.
1:03-CV-17000, 2004 WL 1179454, at *3 (N.D. Ohio May 21,
2004). To determine whether a Plaintiff has provided a
non-fraudulent basis, the Court must find that a jury could
reasonably conclude that one of the non-diverse parties is
liable. Murriel-Don Coal Co. v. Aspen Ins. UK Ltd.,
790 F.Supp.2d 590, 598 (E.D. Ky. 2011).
and Commissioner argue that even assuming the
Commissioner's allegedly inadequate regulatory action
supports mandamus relief (which they argue it cannot), Knoppe
has no colorable cause of action against the DOI and
Commissioner because he failed to exhaust administrative