MELINDA HARMON, District Judge.
The above referenced cause, removed by Defendant Bees Brothers, LLC ("Bees
Because the Court must determine that it has subject matter jurisdiction before it can rule on other matters, the Court addresses HHI's motion to remand before numerous other pending motions. After reviewing the record and the applicable law, for the reasons state in this document, the Court concludes that the motion to remand should be granted.
HHI alleges that the Supplying Defendants made representations and warranties about the foreign origin of honey that they supplied to HHI, including but not limited to the following: (1) that the honey they supplied complied with the definition of origin in U.S. Customs law and other applicable regulations and statutes; (2) that the honey was not adulterated or misbranded within the meaning of the Federal Food, Drug & Cosmetic Act and any similar state or local statute or regulation; (3) that Supplying Defendants guaranteed, assured and indemnified HHI from all liability, loss, damages and expenses, including attorney fees, because of the failure of the supplied honey to conform to the promises and warranties in the purchase order; (4) that Supplying Defendants agreed, promised and warranted to hold HHI harmless from all loss, liability, damages and claims for damages, suits, recoveries, judgments or executions which may be brought or arise from the sale of the honey they supplied; and (5) that Supplying Defendants agreed, promised, warranted, and guaranteed to maintain comprehensive liability insurance, including products liability insurance.
HHI explains that there is a consolidated class action filed in the United States
The Original Petition, ¶ 17, p. 5, requests
Under 28 U.S.C. § 1441(a)
The removing party bears the burden of showing that subject matter jurisdiction exists and that removal was proper. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.2002). Any doubts are construed against removal because the removal statute is strictly construed in favor of remand. Id.
A district court has original federal question jurisdiction over "all civil actions arising under the Constitution, laws or treaties of the United States." 28 U.S.C. § 1331. Under the well-pleaded complaint rule, "a federal court has original or removal jurisdiction only if a federal question appears on the face of the plaintiff's well-pleaded complaint" and "generally there is no federal jurisdiction if the plaintiff properly pleads only a state law cause of action." Gutierrez, 543 F.3d at 251-52. "A federal question exists `only [in] those cases in which a well-pleaded complaint established either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law.'" Singh v. Duane Morris, LLP, 538 F.3d 334, 337-38 (5th Cir.2008), citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27-28, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983) (construing § 1331), and Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 809, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988) (construing § 1338(a)).
"`A corollary to the well-pleaded complaint doctrine is that Congress may so completely preempt a particular area that any civil complaint raising this select group of claims is necessarily federal in character.'" Gutierrez, 543 F.3d at 252, quoting Johnson v. Baylor Univ., 214 F.3d 630, 632 (5th Cir.2000). Complete preemption creates federal removal jurisdiction, while ordinary preemption, which is a federal defense and may arise by express statutory provision or by a direct conflict between the operation of federal and state law, but does not appear on the face of the complaint, does not create removal jurisdiction. Id. at 252.
Title 28 U.S.C. § 1331 gives federal courts subject matter jurisdiction over civil actions that inter alia "arise under" a treaty of the United States. Id. "A United States treaty is a contract with another nation which under Art. VI, Cl. 2 of the Constitution becomes a law of the United States." El Paso Water Improvement Dist. No. 1 v. International Boundary & Water Comm'n, 701 F.Supp. 121, 124 (W.D.Tex.1988), citing United States v. Reid, 73 F.2d 153, 155 (9th Cir.1934), cert. denied, 299 U.S. 544, 57 S.Ct. 44, 81 L.Ed. 400 (1936). More than the existence of a treaty, however, is required to make a lawsuit one "arising under" a treaty of the United States for purposes of 28 U.S.C. § 1331. Id. For federal question jurisdiction "arising under" a treaty of the United States, "`[c]ourts have . . . held consistently that only treaties with a specific provision permitting a private action, or one to be clearly inferred, may suffice as the basis for federal jurisdiction. Otherwise, no cause of action is stated and no federal law [is] applicable.'" Baker v. Bell Helicopter/Textron, Inc., 907 F.Supp. 1007, 1010-11 (N.D.Tex.1995), quoting El Paso Water Improvement Dist. No. 1, 701 F.Supp. at 124, quoting Hanoch Tel-Oren v. Libyan Arab Republic, 517 F.Supp. 542, 546 (D.D.C.1981) (collecting cases), aff'd, 726 F.2d 774 (D.C.Cir.1984), cert. denied, 470 U.S. 1003, 105 S.Ct. 1354, 84 L.Ed.2d 377 (1985).
The honey supplied to HHI came from countries which, like the United States, are signatories to the United Nations Convention on Contracts for the International Sale of Goods (the "CISG"). An intent to preempt state law has been found in the introductory text of the CISG, ratified by the United States Senate on December 11, 1986 and effective as of January 1, 1988,
Title 28 U.S.C. § 1441(c) creates what is known as "arising under" jurisdiction by permitting removal jurisdiction for "a claim arising under the Constitution, laws, or treaties of the United States (within the meaning of section 1331 of this title)." A case may be removed when a well-pleaded complaint presents a federal cause of action on its face or when the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law. Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 689-90, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006); Leaumont v. City of Alexandria, 582 Fed.Appx. 407, 409 (5th Cir.2014).
As noted, under 28 U.S.C. § 1332, a defendant may remove a case if there is (1) complete diversity of citizenship and (2) the amount in controversy is greater than $75,000, exclusive of interests and costs. Under 28 U.S.C. § 1441(b), when original federal jurisdiction is based on diversity, a defendant may remove a state court civil action only "if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." The doctrine of improper joinder, or fraudulent joinder,
Improper joinder may be established by showing (1) actual fraud in the pleading of jurisdictional facts or (2) an inability to establish a cause of action against the non-diverse defendant in state court. Gasch, 491 F.3d at 281; Smallwood, 385 F.3d at 573. Defendants claiming improper joinder based on the second type bear a heavy burden of showing that there is no possibility of recovery by the plaintiff against the in-state defendant, i.e., in other words that there is no reasonable basis for predicting that state law would
To determine whether a plaintiff has a "reasonable basis for recovery under state law," the court may "conduct a Rule 12(b)(6)-type analysis." Smallwood, 385 F.3d at 573; Anderson v. Georgia Gulf Lake Charles, 342 Fed.Appx. 911, 915 (5th Cir.2009). First the court should look at the pleadings to determine whether the allegations state a claim under state law against the in-state defendant. Smallwood, 385 F.3d at 573. If the "plaintiff has stated a claim, but has misstated or omitted discrete facts that would determine the propriety of joinder," the court may look beyond the pleadings and consider summary judgment-type evidence. Georgia Gulf, 342 Fed.Appx. at 915-16. Discovery should be restricted and the summary inquiry should be limited to identifying "discrete and undisputed facts that would bar a plaintiff's recovery against an in-state defendant; anything more risks `moving the court beyond jurisdiction and into the resolution of the merits. . . .'" Id. at 916, quoting Smallwood, 385 F.3d at 573-74. A defendant may submit and the court may consider affidavits and deposition transcripts in support of the defendant's removal petition. Carriere v. Sears, Roebuck & Co., 893 F.2d 98, 100 (5th Cir.1990). Furthermore, where the reasons for finding that there is no reasonable basis for recovery against the in-state defendant would also dispose of all claims against the diverse defendants, the entire case should be remanded because "there is no improper joinder; there is only a lawsuit lacking merit." Id. at 574.
Moreover, "the existence of even a single valid cause of action against the in-state defendants (despite the pleading of several unavailing claims) requires remand of the entire case to state court." Gray v. Beverly Enterprises-Mississippi, Inc., 390 F.3d 400, 412 & n. 11 (5th Cir.2004) (and cases cited therein).
The district court must resolve all contested fact issues and ambiguities of state law in favor of the plaintiff and remand. Gasch, 491 F.3d at 281. Because removal deprives the state court of an action properly before it, removal raises significant federalism concerns and the statute is therefore to be strictly construed, with any doubt about the propriety of removal resolved in favor of remand. Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir.2008). Furthermore, "[i]f at any time before final judgment it appears that the district court lacks jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).
In addition to satisfying jurisdictional requirements, a removing defendant must also satisfy procedural requirements. Under 28 U.S.C. § 1446(b),
In addition, "all defendants who have been properly joined and served must join in or consent to the removal of the action." 28 U.S.C. § 1446(b)(2)(A). The removal is procedurally defective if such consent is not timely obtained. Doe v. Kerwood, 969 F.2d 165, 167-69 (5th Cir. 1992). Moreover there must be "some timely written indication" of each served defendant's consent. Getty Oil Corp., a Div. of Texaco, Inc. v. Ins. Co. of N. America, 841 F.2d 1254, 1262 (5th Cir. 1988).
The Fifth Circuit used to follow the first-served defendant rule, which required all defendants to join in a removal within thirty days of the date on which the first defendant was served. The now controlling 2011 amendment to 28 U.S.C. § 1446(b), adopting the last-served defendant rule, provides that each defendant has "30 days after receipt by or service on that defendant of the initial pleading or summons . . . to file the notice of removal." 28 U.S.C. § 1446(b)(2)(B). Title 28 U.S.C. § 1446(b)(2)(C) states, "If defendants are served at different times, and a later-served defendant files a notice of removal, any earlier-served defendant may consent to the removal even though that earlier served defendant did not previously initiate or consent to removal." The earlier served defendant must consent to removal within the thirty day period of the later-served defendant's deadline to remove the action. Therefore as long as the earlier-served defendant files its consent within the removing defendant's thirty day removal period, the consent is timely. See, e.g., Gibbs v. Ocwen Loan Servicing, LLC, No. 3:14-CV-1153-M-BN, 2014 WL 2767206, at *2 (N.D.Tex. June 18, 2014); Felder v. Countrywide Home Loans, No. Civ. A. H-13-0208, 2013 WL 6805843, at *2 (S.D.Tex. Dec. 20, 2013).
The plaintiff must bring a motion to remand alleging a procedural defect in removal within 30 days of the defendant's filing of the notice of the removal. 28 U.S.C. § 1447(c).
HHI maintains that its single cause of action for a declaration of the parties' rights, remedies and obligations is brought under the Texas Declaratory
The federal Declaratory Judgment Act also does not create a substantive cause of action, but is a procedural vehicle that permits a party to obtain an early adjudication of an actual controversy arising under other substantive law. Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227, 240, 57 S.Ct. 461, 81 L.Ed. 617 (1937); Reid v. Aransas County, 805 F.Supp.2d 322, 339 (S.D.Tex. 2011). It states, "In a case of actual controversy within its jurisdiction . . . any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such a declaration. . . ." 28 U.S.C. § 2201(a). A declaratory judgment may issue only to resolve an actual controversy, a term identical to the requirement in Article III of the Federal Constitution, i.e., "a dispute that is `definite and concrete, touching the legal relations of parties having adverse legal interests' and that `can presently be litigated and decided and not hypothetic, conjectural, conditional' or based upon the possibility of a factual situation that may never develop." Val-Com Acquisitions Trust v. Chase Home Finance, LLC, 428 Fed.Appx. 364, 365 (5th Cir.2011) (citations omitted); Orix Credit Alliance v. Wolfe, 212 F.3d 891, 896 (5th Cir.2000). The party suing for declaratory relief bears the burden to allege facts showing the existence of an actual controversy between the parties. Id.; Orix Credit Alliance, 212 F.3d at 896-97.
The Declaratory Judgment Act "has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants." Wilton v. Seven Falls Co., 515 U.S. 277, 288, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995). The Act "confers a discretion on the courts rather than an absolute right upon the litigant." Id. at 287, 115 S.Ct. 2137; see also Public Affairs Assocs. v. Rickover, 369 U.S. 111, 112, 82 S.Ct. 580, 7 L.Ed.2d 604 (1962) (The Act "gave federal courts competence to make a declaration of rights; it did not impose a duty to do so."). The district court possesses "broad discretion to grant (or decline to grant) declaratory judgment." Wilton, 515 U.S. at 281, 115 S.Ct. 2137. "In the declaratory judgment context, the normal principle that federal courts should adjudicate claims within their jurisdiction yields to consideration of practicality and wise judicial administration." Id. at 288, 115 S.Ct. 2137. Nevertheless, it would be "uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues . . . between the same parties." Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 495, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942).
HHI argues that this case should be remanded for three reasons (1) some defendants served prior to removal failed to file a written consent to the removal;
In its motion HHI focuses on what it describes as a negotiated P.O. in November 2011 for over $1,129,592.00 of honey
Regarding its first reason for remand, HHI maintains that 28 U.S.C. § 1446(b)(2)(A), codifying the "rule of unanimity," states that in cases with multiple defendants "all defendants who have been properly joined and served must join in or consent to the removal of the action." Under the Federal Courts Jurisdiction and Venue Clarification Act of 2011 ("JVCA"), the deadline for defendants' consenting to removal is "30 days after receipt by or service on [a] defendant of the initial pleading or summons. . . ." 28 U.S.C. § 1446(b)(2)(B). Because Defendant China Industrial Manufacturing Group, Inc. ("CIMG"),
The venue selection clause in the Bees Brothers' P.O., Ex. 1-A, provides, "Venue for actions pursuant to or related in any way to this purchase order will be Chambers County, Texas." The language, "will be," insists HHI, identifies this clause as a mandatory one. HHI argues that Defendant waived its right to removal when it contractually agreed to a specific mandatory venue in a county that does not have a federal courthouse. City of New Orleans, 376 F.3d at 504; TruGreen Landcare, LLC v. Telfair Community Ass'n, Inc., No. Civ. a. H-12-514, 2013 WL 2147471, at *2 (S.D.Tex. May 14, 2013) ("`[W]hen a forum selection clause sets exclusive venue in a county in which no federal court is located, the clause cannot reasonably be interpreted to include a federal district court located in another county even though the designated county is within the district or division served by the federal court.'") (citation omitted); Collin County v. Siemens Bus. Servs., 250 Fed.Appx. 45, 52 (5th Cir.Oct.3, 2007); Alliance Health Group v. Bridging Health Options, 553 F.3d 397, 401-02 (5th Cir.2008) (where the venue provision limits a suit to a particular county, venue is proper in both the state and the federal district court if both are located in that county).
HHI insists federal question jurisdiction does not exist because none of the following three requirements for such jurisdiction is present here: (1) a federal right is an essential element of the state-law claim; (2) the interpretation of a federal right is necessary to resolve the case; and (3) the question of federal law is substantial. Budget Prepay, Inc. v. AT & T Corp., 605 F.3d 273, 278-79 (5th Cir.2010). "The declaratory judgment claim simply requests that the district court `constru[e]. . . the underlying contracts and law' and does not identify any specific federal statute or regulation from which the declaratory judgment claim arises." Id. at 278. Similarly HHI's prayer for relief under state-law claims arises out of the contract and not from a federal statute; i.e., it is for a determination of HHI's rights to separate and distinct duties (to defend and to indemnify) under the P.O., not under a federal statute.
Diversity jurisdiction is also lacking because HHI is a Texas citizen, as are at least six defendants: CIMG, Texas Boga, Tommy Burns, LP, Tommy Burns, Anna Burns, and Tommy Burns Investments, LLC.
In sum, argues HHI, this case should be remanded because not all served Defendants timely filed consent to removal, Bees Brothers waived its right to remove by agreeing to a mandatory venue in Chambers County, and the Court lacks federal question and diversity jurisdiction.
Together with HHI's Original Petition and Bees Brothers' Notice of Removal and attached exhibits (# 1-1 and copies of transactions with a number of Defendants, Exhibits A-1 through 0), Bees Brothers' response explains that Bees Brothers, which buys, sells, imports, and consigns raw honey from around the world, acted as consignee in arranging for HHI to purchase honey from the port in Nhava Sheva, India to be shipped to the port in Houston, Texas and delivered to HHI in Baytown, Texas. Bees Brothers states that as consignee, it only coordinated the transaction and was not a seller of any good.
Bees Brothers contends that HHI failed to attach a copy of the alleged indemnity agreement with Bees Brothers to the complaint, but instead attached a boilerplate indemnity agreement on an invoice to MYM Trading, LLC. HHI endeavors to correct this deficiency by attaching the second page of the complaint's purchase order to its motion to remand. # 26, Ex. 1. That second page requires Bees Brothers' signature, but lacks it. HHI includes an invoice ordered from MYM Trading LLC, which HHI attributes to Bees Brothers, with a provision choosing Texas law as the governing law and the venue provision mandating venue in Chambers County. As is evidenced by the documents attached to the Notice of Removal, HHI brought the instant suit based on similar clauses against its suppliers seeking indemnity for HHI's defense in the federal class action brought by domestic honey producers against HHI in Illinois. HHI filed this action in Chambers County based on this clause and joined Texas residents as Defendants.
Bees Brothers insists that the Court has federal question jurisdiction here. Most of the named Defendants (the "Supplier Defendants")
Presenting a very different picture of this dispute than HHI and with supporting documentation, Bees Brothers represents that HHI and its criminally convicted co-conspirators are defendants in the federal class action suit, In re Honey Transshipping Litig., No. 13-CV-02905 (N.D.Ill. Nov. 22, 2013), grounded in claims for false advertising under the Lanham Act, 15 U.S.C. § 1125(a) ("false designation of origin"), and challenges to the quality and origin of the goods (also at issue in the instant suit) under the Racketeer Influenced Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1964(a)(c), and (d), and alleging that HHI conspired with importers to avoid tariffs and antidumping duties by mislabeling the country of origin on Chinese honey and mislabeling adulterated honey as pure honey in violation of the Federal Food, Drug, and Cosmetic Act. Bees Brothers is not a party to, nor named in the Illinois suit. Furthermore, HHI entered into a deferred prosecution agreement # 43, Ex. 5 in a criminal action, U.S. v. Honey Holding I, Ltd, No. 13-CR-00138 (N.D.Ill. Feb. 12, 2013), admitting that it had knowingly mislabeled honey to avoid trade tariffs and had imported honey adulterated with antibiotics. Ex. 5 at 14-16. Bees Brothers was not named in the criminal action either.
Bees Brothers insists that HHI's single cause of action in the instant suit is a declaratory action for contractual indemnification based on similar clauses against its suppliers as those in the federal class action. Notice of Removal, # 1-1, at 15. The alleged indemnity clause provides,
Notice of Removal, # 1-2 at 4-5 (ordered from MYM Trading LLC, which HHI attributes to Bees Brothers without any explanation). This agreement is in the same font, font size, and color as the rest of the document, and is not in capital letters or emphasized by bold, italics or underlining. Id. Under Texas law, for a boilerplate indemnity clause to be accepted by performance, it must be sufficiently conspicuous to provide the indemnifying party with fair notice of the obligation. Dresser Indus.
Bees Brothers points out and lists the complex, interrelated provisions of the United States Code and Code of Federal Regulations that control the requirements and parameters of the designation of national origin for goods entering the United States and United States customs law, over violations of which federal courts have exclusive subject matter jurisdiction. The quality and origin of the goods at issue here are already pending on federal questions in the class action suit in federal court in Illinois. Moreover HHI's payer for indemnification implies that Bees Brothers breached its warranty by engaging in a pattern of racketeering activity in violation of RICO, 18 U.S.C. §§ 1964(a), (c), and (d). # 1-1 at 8. The class action RICO claim against HHI rests on the claim that HHI's mislabeling of honey was the conspiracy's overt act. Id. Federal treaty, customs, and advertising law will determine whether this overt act occurred. Since the instant suit's cause of action arises under the Constitution, treaties, or laws of the United States, this Court has federal question jurisdiction over each of the alleged overt acts.
Furthermore, argues Bees Brothers, although HHI seeks indemnification under an alleged breach of contract, it must prove that Bees Brothers breached the contract by violating federal law; whether a federal law was violated is a federal question and requires interpretation of a federal law by a federal court. Even when the complaint alleges only state law claims, there may still be federal question jurisdiction. Here HHI seeks indemnification under an alleged breach of contract, which in turn is allegedly based on numerous violations of federal law that are also being litigated in an Illinois federal court that claims federal subject-matter jurisdiction over them. The question in dispute here, i.e., whether a violation of federal law occurred, is a question of federal law that requires the interpretation of a federal court. The same is true of the indemnification claim implying that Bees Brothers breached its warranty by importing honey from other countries in violation of customs law.
As discussed previously, 28 U.S.C. § 1331(a) provides federal subject matter jurisdiction over civil actions that arise under a treaty of the United States. Bees Brothers also maintains that this action involves issues covered by the substantive law of CISG, Apr. 11, 1980, S. Treaty Doc. No. 98-9 (1983), a treaty ratified by the U.S. Senate in 1986. As indicated supra, this Court has federal subject-matter jurisdiction over cases relating to the CISG. BP Oil International Ltd. v. Empresa Estatal Petroleos de Ecuador, 332 F.3d 333, 336 (5th Cir.2003) (CISG "creates a private right of action in federal court" and "applies to contracts of sale of goods between parties whose places of business are in
Furthermore the Illinois federal class action's claim of false advertising under the Lanham Act in the mismarking of Chinese honey as honey of other countries' origin constituting a false designation of origin under 15 U.S.C. § 1125(a)(1), invokes federal question jurisdiction under 15 U.S.C. § 1121 and 28 U.S.C. § 1338(a), conferring original jurisdiction to federal district courts over actions arising under the trademark laws, including the Lanham Act. Water Technologies Corp. v. Calco, Ltd., 850 F.2d 660, 669-71 (Fed.Cir.1988), cert. denied, 488 U.S. 968, 109 S.Ct. 498, 102 L.Ed.2d 534 (1988). This Court must decide whether the purported mismarking of the origin of the honey in dispute constituted false advertising under the Lanham Act, 15 U.S.C. § 1125(a)(1), a determination of a federal statute.
Bee Brothers also argues that improper joinder fails to defeat diversity of jurisdiction here because HHI's claims against the nondiverse Defendants are not related to its claims against the other Defendants. A case can be removed even though a nondiverse party is present if the removing defendant shows that the nondiverse party was not properly joined. See, e.g., Salazar v. Allstate Tex. Lloyd's, Inc., 455 F.3d 571, 574 (5th Cir.2006) ("In the paradigmatic fraudulent joinder case, a plaintiff sues a nominal nondiverse/in-state defendant along with a diverse foreign defendant in an effort to make sure its claims against the diverse defendant state in state court. . . . [I]n a multi-defendant case, a nominal defendant can be disregarded in the jurisdictional analysis."); Larroquette v. Cardinal Health 200, Inc., 466 F.3d 373, 376 (5th Cir.2006). Joinder of parties, here of nondiverse Defendants, is only proper where the claims arise from the same transactions or occurrences and a common issue of law or fact arises; otherwise parties could be joined in an effort to deprive diverse defendants of their right to removal. Fed.R.Civ.P. 20(a); In re Benjamin Moore & Co., 309 F.3d 296, 298 (5th Cir.2002). Bees Brothers contends that because HHI's claims against each nondiverse Defendant are unrelated to HHI's claims against the others and have no real
As for the venue provision at issue here, "Venue for actions pursuant to or related in any way to this purchase order will be Chambers County, Texas," with similar clauses in the other P.O.s in dispute here, like HHI, Bees Brothers relies on this Court's opinion in TruGreen Landcare, 2013 WL 2147471, but comes to the opposite conclusion about its holding. In TruGreen, 2013 WL 2147471 at *2, the Court determined that the "key issue" was whether the venue selection clause was mandatory ("exclusive") or permissive. Agreeing with HHI that it is well established that such boilerplate venue selection clauses do not waive removal to federal court unless the waiver is "clear and unequivocal," Bees Brothers emphasizes this Court's determination that the venue selection clause in dispute in TruGreen, i.e., "parties stipulate and agree that venue for any action brought hereunder shall proper[ly] lie in the state and federal courts situated in Fort Bend County, Texas,"
HHI asserts four reasons why Bees Brothers' Response fails to defeat HHI's motion to remand.
First HHI argues that Bees Brothers has failed to meet its burden of pleading and proving the citizenship of all parties, including its own, to prove diversity jurisdiction exists here. A defendant removing on diversity grounds must distinctly and affirmatively assert the citizenship of the parties to the suit. Getty Oil Corp. v. Ins. Co. of N. Am., 841 F.2d 1254, 1259 (5th Cir.1988). The citizenship of a LLC is determined by the citizenship of all its members. Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1080 (5th Cir.2008). Bees Brothers fails to identify each of its members or their citizenship, nor does it identify the general and limited partners or HHI and their respective citizenship.
Second, Bees Brothers fails to meet its burden of proving improper joinder, a narrow exception to the rule of complete diversity. Cuevas v. BAC Home Loans Servicing, LP, 648 F.3d 242, 249 (5th Cir. 2011) ("To establish improper joinder, the removing party must demonstrate either: `(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.'"), quoting Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir.2004) (en banc). Although Bees Brothers attempts to satisfy the requirements of improper joinder by contending that the indemnity clause in the P.O. is unenforceable because it does not satisfy the conspicuous requirement, as discussed, more is at issue in this case than the indemnity provision. Bees Brothers has not shown there is no possibility
As for the unanimity of consent rule Bees Brothers does not address the deadline for prior served Defendants to consent to removal and the failure of all served Defendants to consent to removal, timely or otherwise. Not only did may fail to file a written consent by the deadline, but many never filed consent.
Finally HHI reiterates that the mandatory venue provision is a waiver of Bees Brothers' right to remove. In TruGreen, the venue provisions stated that "any action hereunder shall proper[ly] lie in the state and federal courts situated in Fort Bend County," and it concluded that this language identified Fort Bend County as a proper venue, but did not limit other proper venues. 2013 WL 2147471 at *2. In contrast, the provision in Bees Brothers' P.O. states that venue "will be" (not may be, might be, or could be) in Chambers County and the word "proper" is not used. "Will" does not leave open the possibility of another venue. When the exclusive forum is a county without a federal courthouse, the parties to the forum selection clause waive their rights to seek relief in federal court. Collin County v. Siemens Bus. Servs., Inc., 250 Fed.Appx. 45, 52 (5th Cir.2007).
This case is problematic in numerous ways, many of which do not relate to the removal issues. As a threshold matter, the Court finds that many of Bees Brothers' arguments go to the merits of claims against HHI, which are pending in the Illinois class action and not in this litigation. The Court's only focus here is whether Bees Brothers' removal was proper and thus whether this Court has subject matter jurisdiction to construe and declare the parties' the rights, remedies, and obligations under their respective P.O.s, all of which select Texas law and contain a provision for venue in Chambers County.
The Court emphasizes the long established precept that "[b]ecause removal raises significant federalism concerns, the removal statute is strictly construed `and any doubt as to the propriety of removal should be resolved in favor of remand.'" Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir.2008), quoting In re Hot-Hed, Inc., 477 F.3d 320, 323 (5th Cir.2007). As the removing Defendant, Bees Brothers bears the burden to show that the subject matter jurisdiction exists and that removal was proper. Manguno, 276 F.3d at 723. Because Bees Brothers has failed to do so in the following ways, the Court concludes that remand is required.
With regard to procedural deficiencies in the removal, the Court agrees that Bees Brothers has failed to show that all previously served Defendants who have appeared in this action filed timely written consents to the removal; specifically the record demonstrates that CIMG and Sunland Trading filed late consents. See footnote 13 of this Opinion and Order.
Regarding diversity jurisdiction, HHI perfunctorily states in a footnote in its motion to remand that "it is a Texas citizen and there are at least six Texas citizens named and served as of the date of removal—China Industrial Manufacturing Group, Inc., Texas Boga, Inc., Tommy Burns LP, Tommy Burns, Anna Burns and Tommy Burns Investments, LLC." # 26 at p. 23, n. 1. The original Petition identifies "[u]pon information and belief" Brightmin Enterprizes, LLC as a "Texas limited liability company" with "one or more of its members a citizen of the State of Texas." A limited liability company's citizenship is
The Court agrees with HHI that Bees Brothers has also not pleaded particular facts establishing improper joinder of any alleged in-state Defendants by showing that in its Original Petition HHI did not and cannot state a claim under Texas state law against them.
Regarding Bees Brothers' contention that federal question jurisdiction exists here, the Court finds that there is no federal right asserted on the face of the Original Petition, which seeks only a declaration requiring the Court to construe a contract. Construction of a purchase order between private parties is a matter of state law, and the various P.O.s state that construction "will be in accordance with the laws of the state of Texas." # 26, Ex. 1-A. Where the case deals with a contract negotiated and performed in several states and involves parties from different states, "`a federal court adjudicating a state law matter must apply the law of the forum, including that state's choice-of-law rules.'" Austin Elcon Corp. v. Avco Corp., 590 F.Supp. 507, 511-12 (W.D.Tex.1984), quoting System Operations, Inc. v. Scientific Games Development Corp., 555 F.2d 1131, 1136 (3d Cir.1977). Contract construction is a matter of state law. Restatement (Second) Conflict of Laws § 187 is applied by Texas to determine the enforceability of choice-of-law provisions. DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 677 (Tex.1990) (citing § 187 and UCC, Tex. Bus. & Com.Code Ann. § 1.105(a)); Aboussie v. Aboussie, 441 F.2d 150, 155 n. 6 (5th Cir.1971) ("[T]he Texas conflict of laws rule is that it will apply the law of the state expressly or by implication agreed upon by the contracting parties to govern. . . ."). Section 187 provides,
Here the various P.O.s. expressly state that Texas law will apply, HHI claims Texas citizenship, the honey in the P.O.s is to be delivered to and paid for in Texas, and none of the parties has objected to the choice of Texas law.
The Court disagrees with Bees Brothers' claim that the federal causes of action in the federal class action suit are at issue here. The P.O.s can be construed without any reference to the legal issues in the class action. At most, it could reasonably be argued that to have an actual controversy as defined under Article III of the Constitution for this action's declaratory action, HHI would first have to be found liable on at least one of the claims in the class action. Then res judicata would not bar a declaration of the rights, remedies, and obligations of the Defendants in this suit.
Since no federal claim is stated, the Court examines that argument that the CISG preempts the state law claims. Here, too, the CISG, if applicable, would apply to the state claims for damages in the federal class action, not to the declaration of rights under the P.O.s at issue here.
In sum, because "any doubt about the propriety of removal must be resolved in favor of remand," Gasch, 491 F.3d at 281-82, the Court
ORDERS that HHI's motion to remand (# 26) is GRANTED and this case is REMANDED to the 334th Judicial District Court of Chambers.
See also, Ensco Intern., Inc. v. Certain Underwriters at Lloyd's, 579 F.3d 442, 443-44 (5th Cir.2009).