KATHLEEN McDONALD O'MALLEY, District Judge.
Before the Court are a number of pending motions. As explained below, Plaintiff Christopher Hrivnak's Motion to Remand (Doc. 17) is
On June 4, 2009, NCO Portfolio Management ("NCM") filed an action in Bedford Municipal Court against Christopher G. Hrivnak.
It appears that the Defendants then filed a motion before the municipal court seeking to dismiss Hrivnak's counterclaims. Rather than dismiss the claims, the Bedford Municipal Court transferred this action to the Cuyahoga County Court of Common Pleas, as the counterclaim sought monetary relief exceeding the Municipal Court's jurisdiction. The Defendants apparently renewed their motion to dismiss Hrivnak's counterclaim, which this time was denied.
On October 26, 2009, NPM filed an Answer to Hrivnak's counterclaim.
Some discovery was conducted, and, on January 8, 2010, NPM moved to dismiss its own complaint. This motion was granted, and, on January 19, 2010, Javitch filed a motion asking the state court to realign the parties. This motion was opposed by Hrivnak, who asserted that the motion to realign was an improper attempt to vest this Court with jurisdiction. On February 11, 2010, however, the Common Pleas Court granted Javitch's motion, and instructed Hrivnak to "file a complaint asserting his affirmative claims for relief."
On March 15, 2010, Hrivnak filed a complaint as instructed by the state court. Pursuant to the state court's realign order, Original-Defendant Hrivnak was now identified as the Plaintiff, and Original-Plaintiff NCM and Original-Counterclaim Defendants NPI, NGI, NFS, and Javitch were now identified as defendants.
On March 29, 2010, Javitch, with the consent of the other defendants (including Original-Plaintiff NCM), filed a removal notice with this Court. The pending motions followed.
The threshold issue before the Court is whether subject matter jurisdiction is proper, which is the subject of Hrivnak's Motion to Remand (Doc. 17). Hrivnak argues that this situation is indistinguishable from the one in which a plaintiff attempts to remove an action solely on the basis of a counterclaim; he asserts that jurisdiction cannot be conferred upon this Court simply because the state court realigned the parties. (See generally id.) Javitch's argument is that the state court realignment order distinguishes this case from one in which a party attempts to remove based upon a counterclaim, because the state court's realignment order transformed Hrivnak's counterclaim into a claim. (Doc. 21 at 5.)
On a motion for remand, the defendant bears the burden of establishing that removal was proper. Long v. Bando Mfg. of America, Inc., 201 F.3d 754, 757 (6th Cir.2000). Removal jurisdiction raises significant federalism concerns and, for this reason, federal courts must strictly construe such jurisdiction. See Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986); Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 104, 61 S.Ct. 868, 85 L.Ed. 1214 (1941). Accordingly, a federal court must resolve any doubt of its removal jurisdiction in favor of state court jurisdiction. Shamrock Oil, 313 U.S. at 108-09, 61 S.Ct. 868; Her Majesty the Queen in Right of the Province of Ontario v. City of Detroit, 874 F.2d 332, 339 (6th Cir.1989) (citation omitted).
The question before the Court is whether realignment by a state court can confer subject matter jurisdiction in federal court where none existed at the inception of the lawsuit. In the particular context of this case, to find that removal is proper would arguably limit two rather important jurisdictional principals. First, although the notice of removal was filed by Javitch, there is no escaping the fact that it is joined by NPM: in other words, there is a sense in which a plaintiff is attempting to remove its own lawsuit. Construed this way, there is a problem. See Abulkhair v. Liberty Mut. Ins. Co., Case No. 15-1580, 379 Fed.Appx. 130, 132, 2010 WL 1896422, at *1, 2010 U.S.App. LEXIS 9699, at *3 (3d Cir. May 12, 2010) ("[I]t is axiomatic that a plaintiff may not remove an action to federal court.") (quoting La Chemise Lacoste v. Alligator Co., 506 F.2d 339, 343 n. 4 (3d Cir.1974)); see also 14C Wright, Miller, Cooper, et al., Federal Practice and Procedure § 3730 (4th ed.2010) ("The federal courts . . . often speak[] of the right to remove as being limited to `true' defendants."). Second, although Hrivnak was realigned as the "plaintiff," the claim that forms the basis for removal began life as a counterclaim, and a counterclaim may not form the basis for removal. Capital One Bank (USA) N.A. v. Jones, Case No. 09-2833, 710 F.Supp.2d 630, 632, 2010 WL 1258110, at *1-2, 2010 U.S. Dist. LEXIS 29540, at *4 (N.D.Ohio Mar. 29, 2010), petition for review denied, CA 10-309 (6th Cir. June 17, 2010) ("§ 1441 does not allow removal by a counterclaim defendant. . . ."); Cross Country Bank v.
To order remand, however, is not without its own conceptual problems. First, remand would limit the rule that subject matter jurisdiction must be evaluated at the time of removal. See, e.g., Northup Props., Inc. v. Chesapeake Appalachia, L.L.C., 567 F.3d 767, 769-70 (6th Cir.2009). There is, after all, a way to view this case as no more complicated than any other case in which the filing of an amended complaint indicates for the first time that an action is removable. Second, an order of remand could only issue if this Court finds that the state court's realignment order does not really mean what it says, a troubling proposition in its own right.
No circuit appears to have considered this question outside of readily distinguishable contexts, the few district courts to have discussed this issue are not in agreement with each other, and most of those opinions are also arguably distinguishable from the unique facts presented here. In short, there is not a clear answer here, much less a binding one.
The question before the Court is fundamentally one of statutory interpretation. The federal removal statute explains, in relevant part:
28 U.S.C. § 1446(b). In this case, unfortunately, the statute does not answer the question, the statute is the question: should the Court consider all of the parties who removed this case to be "defendants" as the term is used in § 1446(b).
The Supreme Court has made clear that a district court must look beyond the case caption to determine whether removal was proper:
Indianapolis v. Chase Nat'l Bank, 314 U.S. 63, 70, 62 S.Ct. 15, 86 L.Ed. 47 (1941) (citations and quotation marks omitted); see also, e.g., Malison v. UPS, Case No. 09cv629, 2009 WL 4912172, at *4 n. 2, 2009 U.S. Dist. LEXIS 115241, at *14 n. 2 (N.D.Okla. Dec. 10, 2009) ("[W]hether diversity
This being said, Chase National Bank, like the removal statute itself, is not really of much guidance, because it does not explain whether the Court should look to the "principal purpose of the suit" at the time that it was originally filed in state court, or whether the Court should instead consider the "principal purpose" of the suit at the time of removal.
The few courts to have considered similar questions in the past have not reached uniform conclusions. Although there are more cases indicating that a state court's realignment order can confer federal jurisdiction where none before existed than those finding the contrary, those cases are also more easily distinguished. In particular, the Court has not located a single case in which a party who began an action as a plaintiff was later permitted to remove that action.
Most district courts have explained that a state court's realignment order can, at least in some situations, confer federal jurisdiction. In particular, there does not seem to be much dispute that, when a
The Court next considers a decision by a district court within this Circuit, which remanded an interpleader action when that court was unable to determine which party should be characterized as the defendant and which should be characterized as the plaintiff. See Tune, Entrekin & White, P.C. v. Magid, 220 F.Supp.2d 887, 890 (M.D.Tenn.2002) ("In an interpleader case, the nominal plaintiff is merely formal and should be disregarded for purposes of determining diversity. The real dispute is between the two defendants, Landowners and Tenant, so they can be realigned as opposing parties for determining diversity jurisdiction."). That Court reasoned that its jurisdiction would depend on the state court's alignment of the action, not upon its own alignment assessment:
Tune, 220 F.Supp.2d at 890-92 (emphasis added). There is merit Tune's reasoning, but the language in Tune indicating that a state court's determination of the proper alignment of parties can confer subject matter jurisdiction upon a federal court is arguably dicta since it referenced a hypothetical circumstance that had not yet occurred. Thus, it is arguable that Tune should be limited to its facts—a case in which the Court determined the proper characterization of the litigation from its inception without reference to subsequent realignment prior to removal.
Finally, the Court turns to Zea v. Avis Rent a Car Sys., 435 F.Supp.2d 603, 607 (S.D.Tex.2006). That case, like Tune, began as an interpleader action in state court. When the plaintiff in Tune filed a notice of non-suit as to its interpleader action, the parties that had been designated as third-party defendants asked the state court to realign the parties. See id. When the state court granted their motions, which had the effect of designating the third-party defendants as defendants, the now-defendants removed the action from state court. See id.
It appears that only two courts have considered situations in which a party who was originally a plaintiff later sought to remove the suit that it commenced in state court. Those courts ultimately answered this question in the negative, although, as discussed more fully below, neither of those courts confronted a state court realignment order. See Rodriguez v. Federal Nat. Mortg. Ass'n, 268 F.Supp.2d 87, 90 (D.Mass.2003) (citing Reiter Oldsmobile, Inc. v. General Motors Corp., 477 F.Supp. 125 (D.Mass.1979)). Nevertheless, those courts used fairly strong language to reason that:
Rodriguez, 268 F.Supp.2d at 91 (quoting Reiter, 477 F.Supp. 125) (emphasis added). The Rodriguez court further explained:
Id. at 90-91.
Rodriguez and Reiter employ a reasoned approach. Another court, indeed, although considering the readily distinguishable situation in which a party sought realignment as the defendant after removal, recently endorsed Rodriguez. See Palisades Collections LLC v. Shorts, Case No. 5:07cv098, 2008 WL 249083, at *6-7, 2008 U.S. Dist. LEXIS 6354, at *18 (N.D.W.Va. Jan. 29, 2008) ("[E]ven in actions in which the original claim filed by the plaintiff is settled or dismissed, the original plaintiff remains the plaintiff for purposes of removing the remaining counterclaims." (citing Rodriguez, 268 F.Supp.2d at 90)).
Even if this Court does assume that Rodriguez and Reiter are correct on their facts, moreover, there is a meaningful distinction between those cases and this one. In Rodriguez, the parties stipulated to realignment before the state court, in Reiter, the clerk realigned the docket, while, here, the state trial judge entered an order of realignment. This fact is material because the state order both removes any concerns regarding collusion between the parties from the equation and constitutes a formal, pre-removal, determination regarding the character of the action and the parties' respective roles. While the Court does not believe its reading of § 1446(b) depends upon this distinction, it is a distinction which arguably reconciles the judgment below with those in Rodriguez and Reiter.
This question is not susceptible to an easy answer, and jurists of reason
The Court can arrive at this same conclusion, too, in another way. This Court must exercise its own judgment to determine whether parties are truly opposed to each other, see Chase National Bank, 314 U.S. at 70, 62 S.Ct. 15, and it would be a strange limitation on this rule to hold that the Court must nevertheless consider the party who asserted all of the affirmative claims pending in this action at the time of removal to be a defendant, and that it must ignore the state court's formal assessment of the parties' roles in the litigation when doing so.
In sum, although it is true that the complaint that was removed to this Court was at one time, prior to removal, a counterclaim, the only dispute in controversy at the time of removal was one consisting of claims asserted by Hrivnak as a plaintiff against the Defendants. Accordingly, the Defendants were entitled to remove this action within 30 days of the filing of Hrivnak's complaint, itself filed in response to the state court order realigning parties. That the Defendants were not defendants at some point in the past does not change their status at the time of removal, which is the question the Court must answer.
Hrivnak's Motion to Remand (Doc. 17) is thus
On March 30, 2010, NPM and Javitch presented Hrivnak with what NPM and Javitch captioned an Offer of Judgment. (Doc. 18-2.) In response, Hrivnak filed what he terms a Motion to Strike an Offer of Judgment (Doc. 18). He contends that it is improper to tender an offer of judgment to a plaintiff who purports to bring a class action. (See id.) Javich, for its part, argues that such an Offer of Judgment is proper. (See Doc. 22 at 2; Doc. 29.)
As an initial matter, Hrivnak's Motion to Strike must be denied for the simple reason that his motion does not exist under the Federal Rules. See Tucker v. Potter, No. 06cv2359, 2009 WL 1954773, at *10, 2009 U.S. Dist. LEXIS 61060, at *33 (N.D.Ohio July 6, 2009). The procedural rule that discusses a court's authority to strike items from the record is Fed. R.Civ.P. 12(f), which permits striking matters only from pleadings. While some courts have employed Fed.R.Civ.P.12(f) to strike an affidavit or a brief, or portions thereof, there is no basis in the Federal Rules for doing so. McLaughlin v. Copeland, 435 F.Supp. 513 (D.Md.1977). In fact, a decision in this district, affirmed by the Sixth Circuit Court of Appeals, refused to employ Fed.R.Civ.P. 12(f) to strike an affidavit because "the rule relates only to pleadings and is inapplicable to other filings." Dawson v. City of Kent, 682 F.Supp. 920 (N.D.Ohio 1988), aff'd, 865 F.2d 257 (6th Cir.1988); see also Zerman v. City of Strongsville, No. 1:04cv2493, 2006 WL 2812173, at *7-9, 2006 U.S. Dist. LEXIS 70503, at *21-26 (N.D.Ohio Sept. 28, 2006), aff'd, 259 Fed.Appx. 723 (6th Cir.2008). In this case, there is not even anything on the docket of the Court to strike, even if the Court were empowered to do so. See McDowall v. Cogan, 216 F.R.D. 46, 52 (E.D.N.Y.2003) ("[T]here is nothing to strike here, as an offer of judgment is not filed with the court until accepted or until offered by a defeated party to prove costs . . . ." (citation omitted)).
Setting aside the fact that this Court cannot literally "strike" the Defendants' offer, a substantive question remains, which is the effect of an offer of judgment to a plaintiff in a putative class-action lawsuit prior to class certification. The rule is straight-forward: "an offer of judgment made to a named plaintiff prior to class certification `disappears' [if] the class is certified." Id. at 50 (quoting Kremnitzer v. Cabrera & Rephen, P.C., 202 F.R.D. 239, 244 (N.D.Ill.2001)). This rule is not "restricted to cases where the class has already been certified." McDowall, 216 F.R.D. at 50. Defendants should not:
Id. at 51; see also Weiss v. Regal Collections, 385 F.3d 337, 347 (3d Cir.2004) ("[I]n certain circumstances, to give effect to the purposes of Rule 23, it is necessary to conceive of the named plaintiff as a part of an indivisible class and not merely a single adverse party even before the class certification question has been decided."). Put simply, "a settlement offer will not moot the named plaintiffs' claims so long as the plaintiffs have not been dilatory in bringing their certification motion." Stewart v. Cheek & Zeehandelar, LLP, 252 F.R.D. 384, 386 (S.D.Ohio 2008).
Javitch's arguments that its Offer of Judgment acts to moot the Plaintiff's claim are unpersuasive. First, Javitch argues that Hrivnak was not sufficiently diligent in pursuing class certification. Second, despite citing the above caselaw with approval in briefing, Javitch has filed a Notice of Additional Authority, in which Javitch seems to suggest that the Court disregard cases such as Weiss and Stewart and find that an offer of judgment moots a putative class action plaintiff's claims even when a plaintiff has been diligent in pursuing certification. (Doc. 29) (citing Lucero v. Bureau of Collection Recovery, Inc., Case No. 09-0532, 716 F.Supp.2d 1085,
With respect to its claim of a lack of diligence on Hrivnak's part, Javitch initially acknowledged that:
(Doc. 22 at 4) (citation omitted). Javitch argues, however, that Hrivnak's conduct satisfies this "undue delay" standard:
(Doc. 22 at 3.) This argument is not persuasive. Javitch and NCM tendered their Offer of Judgment two days after the case was removed to federal court. Even assuming that Hrivnak should be able to tender a well-supported motion for class certification in the very near future, an assumption about which the Court does not rule at this time given its lack of familiarity with the state court proceedings, Hrivnak was not required to have a class certification motion "at the ready," on the chance that he lost his opposition to realignment before the state court. The Court observes, indeed, that the Offer of Judgment was filed even before the Defendants tendered their answers. See McDowall, 216 F.R.D. at 51 n. 5 ("Here . . . defendant interposed an offer of judgment immediately, even prior to answering. It left plaintiff no opportunity to move for class certification.").
Perhaps realizing belatedly that it could not establish undue delay on the part of Hrivnak, Javitch filed a Notice of Additional Authority after briefing on this motion was closed. (Doc. 29.) This filing contains a citation to a decision rejecting the above-cited caselaw and finding that, irrespective of diligence, a district court "does not have jurisdiction over a case where no class has been certified but the defendant has satisfied the plaintiff's demand for relief." (Doc. 29 at 1 (citing Lucero, 716 F.Supp.2d at 1097, 2010 WL 2301142, at *11, 2010 U.S. Dist. LEXIS 52288, at *15-19)).
The Court has considered Lucero, but adopts instead Judge Algenon L. Marbley's thorough reasoning in Stewart rejecting such holdings. The Court finds, in particular that: (1) "if the putative class representatives' claims could be mooted by a settlement offer tendered before the certification motion is filed—each side will endeavor to beat the other to the punch."; (2) "treating pre-certification settlement offers as mooting the named plaintiffs' claims would have the disastrous effect of enabling defendants to essentially opt-out of Rule 23."; (3) "with Rule 23 cast aside, those who have been harmed will be forced to file individual suits to obtain redress. . . . assuming that even a few of the thousands or tens of thousands of class members are driven to hire their own lawyers and take on the defendant, the courts will be forced to contend with multiple, largely identical lawsuits, thereby wasting judicial resources. Litigant resources too will be unnecessarily expended . . . ."; and (4) "Rule 68 offers of judgment prior to
Accordingly, although Hrivnak's Motion to Strike (Doc. 18) is
Javitch makes two additional points in its briefing in opposition to Hrivnak's Motion to Strike worthy of brief commentary. First, Javitch argues:
(Doc 5.) Although this may be correct (and it is in direct response to one of Hrivnak's arguments), it is something of a non-sequitur. For present purposes, the question is not whether this particular offer of judgment would moot Hrivnak's interest in this action if it were a valid offer, but whether it is a valid offer. As explained above, at this stage of the proceedings, it is not. See Stewart, 252 F.R.D. at 386; McDowall, 216 F.R.D. at 51.
(Doc. 22 at 6.) This argument is speculative and not ripe for adjudication at this time.
The Defendants have filed an Unopposed Motion that asks for "leave to amend notice of removal & consent to removal by interlineation to correct typographical error." (Doc. 20.) This motion is
Javich's Motion for Judgment on the Pleadings (Doc. 4) does not comply with this Court's standing order with respect to appropriate citation.
For the aforementioned reasons, Hrivnak's Motion to Remand (Doc. 17) is
Employers Ins. of Wausau v. Crown Cork & Seal Co., 905 F.2d 42, 46 (3d Cir. 1990) (emphasis added). When one looks closely at these cases and treatises, however, it is clear they are discussing situations in which parties file suit in federal court in the first instance. It is unclear whether these cases stand for the proposition that diversity jurisdiction is measured from the commencement of the lawsuit in federal court, or whether they stand for the more specific proposition that alignment of the parties is fixed from the filing of a lawsuit in any court at all.
Palisades, 2008 WL 249083 at *6-7, 2008 U.S. Dist. LEXIS 6354 at *18 (quoting Green Tree, 72 F.Supp.2d at 1282). This is arguably out of context. Green Tree considered whether a party designated as a plaintiff in state court could realign itself. See Green Tree, 72 F.Supp.2d at 1281. It appeared to reserve the question of whether a realignment by the state court might confer jurisdiction. Id. ("Green Tree did not obtain an order from state court or this court changing its status from plaintiff to defendant.").
