United States District Court, D. Hawaii
ORDER ADOPTING THE FINDINGS AND RECOMMENDATION TO
GRANT IN PART AND DENY IN PART PLAINTIFF'S MOTION TO
C. Kay Sr. United States District Judge.
reasons set forth below, the Court Adopts the Findings and
Recommendation to Grant in Part and Deny in Part
Plaintiff's Motion for Remand, ECF No. 24, issued by
Magistrate Judge Kevin S.C. Chang on April 18, 2016.
December 24, 2015, Plaintiff Mark Bell
("Plaintiff") filed a Complaint in the Circuit
Court for the First Circuit of the State of Hawaii raising
claims of discrimination against Defendants the Terminix
International Company Limited Partnership, Terminix
International Inc. (collectively, "Terminix"),
ServiceMaster Consumer Services Limited Partnership
("ServiceMaster"),  and Kevin Mulcahy
("Mulcahy") (collectively "Defendants").
Notice of Removal, Ex. A, ECF No. 1-2. The Complaint alleges
that 1) Terminix violated Hawaii Revised Statutes
("HRS") § 378-2 by discriminating against
Plaintiff based on his age, religion, and or disability
(Count I); and 2) Terminix, ServiceMaster, and Mulcahy
"aided, abetted, incited, compelled, coerced, or
allowed" the alleged discriminatory and retaliatory
conduct in violation of HRS § 378-2 (Count II).
Id. ¶¶ 61-71.
January 12, 2016, Terminix removed the case to this Court.
Notice of Removal, ECF No. 1. Terminix asserted that this
court has jurisdiction over Plaintiff's claims because
the only non-diverse defendant, Mulcahy, was fraudulently
joined. Id. at 8. On January 20, 2016, Mulcahy and
ServiceMaster filed a Consent to the Notice of Removal. ECF
No. 8. On March 4, 2016, Plaintiff filed a motion to remand
to state court. ECF No. 17. On March 24, 2016, Defendants
filed an opposition. ECF No. 21.
April 18, 2016, Magistrate Judge Chang issued the Findings
and Recommendation to Grant in Part and Deny in Part
Plaintiff's Motion for Remand ("F&R").
Magistrate Judge Chang rejected Plaintiff's challenge to
removal based on the forum defendant rule and the failure to
join all Defendants in the removal. F&R, at 6-7, 17-18.
With respect to the issue of fraudulent joinder, Magistrate
Judge Chang found that Plaintiff's Complaint was
deficient in that it did not properly allege a claim against
Mulcahy, the only non-diverse defendant. Id. at
13-14. However, Magistrate Judge Chang granted
Plaintiff's Motion to Remand based on Defendants'
failure to prove that there was no possibility Plaintiff
could state a cause of action against Mulcahy by amending his
complaint in state court. Id. at 17. On this basis,
Magistrate Judge Chang determined that Mulcahy was not
fraudulently joined and recommended remand, citing a lack of
complete diversity between the parties. Id. Because
Magistrate Judge Chang found Mulachy had not been
fraudulently joined, he declined to determine whether the
amount in controversy exceeded $75, 000. Id.
Magistrate Judge Chang recommended that this Court deny
Plaintiff's request for fees and costs associated with
seeking remand. Id. at 19.
2, 2016, Defendants filed an objection to Magistrate Judge
Chang's F&R ("Obj."). ECF No. 26. On May
18, 2016, Plaintiff filed a response to the objection
("Resp.").ECF No. 28.
Court treats a motion to remand as a dispositive motion,
requiring the issuance of a findings and recommendation by
the magistrate judge." PSC Indus. Outsourcing, LP v.
Burlington Ins. Co., Civ. No. 10-00751, ACK-BMK, 2011 WL
1793333, at *3 (D. Haw. May 10, 2011) (citing Keown v.
Tudor Ins. Co., 621 F.Supp.2d 1025, 1029 (D. Haw.
party objects to a magistrate judge's findings or
recommendation, the district court must review de novo those
portions to which the objections are made and "may
accept, reject, or modify, in whole or in part, the findings
or recommendations made by the magistrate judge." 28
U.S.C. § 636(b)(1)(C); see also United States v.
Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en
banc) ("[T]he district court must review the magistrate
judge's findings and recommendations de novo if
objection is made, but not otherwise.").
de novo standard, a district court reviews "the matter
anew, the same as if it had not been heard before, and as if
no decision previously had been rendered." Freeman
v. DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006).
The district court need not hold a de novo hearing; however,
it is the court's obligation to arrive at its own
independent conclusion about those portions of the magistrate
judge's findings or recommendation to which a party
objects. United States v. Remsing, 874 F.2d 614, 618
(9th Cir. 1989).
within the district court's discretion to "receive
further evidence, recall witnesses, or recommit the matter to
the magistrate judge with instructions." Local Rule
74.2. Pursuant to Local Rule 74.2, this Court "may
consider the record developed before the magistrate judge,
" but the Court must make its "own determination on
the basis of that record."
object to the F&R's conclusion that Mulcahy was not
fraudulently joined and maintain that this court has
diversity jurisdiction over the instant case. Obj., at 2-3.
Specifically, Defendants argue that the F&R disregarded
established precedent in considering the possibility that
Plaintiff could amend his complaint to assert a viable claim
against Mulcahy. Id. at 6. In the alternative,
Defendants argue that they have established that the
"the deficiencies in Plaintiff's claim against
Mulcahy are incurable." Id. at 11.
are incorrect in their analysis of precedent regarding
consideration of amended pleadings in determining whether a
defendant has been fraudulently joined. While it is true that
an amended complaint typically is not considered to destroy
federal jurisdiction in cases in which federal jurisdiction
is facially apparent from the complaint, this rule has not
been extended to cases involving a claim of fraudulent
joinder. To the contrary, in analogous cases, many federal
courts have considered the possibility of a future amendment
in determining whether a defendant was fraudulently joined.
The Court agrees with these decisions and finds that on this
basis, the F&R did not err in determining that Defendants
did not prove "by clear and convincing evidence, that
there is no possibility that Plaintiff can state a cause of
action against Mulcahy." F&R, at 17. Accordingly,
the Court ADOPTS Magistrate Judge Chang's Findings and
Defendants Incorrectly Assert That Consideration of Possible
Future Amendments in Relation to a Fraudulent Joinder Claim
Is Contrary to Established Precedent
to 28 U.S.C. § 1441, an action may be removed to federal
court based on either federal question jurisdiction or
diversity jurisdiction. "However, '[i]t is to be
presumed that a cause lies outside [the] limited jurisdiction
[of the federal courts] and the burden of establishing the
contrary rests upon the party asserting
jurisdiction.'" Hunter v. Philip Morris
USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (alteration in
original) (quoting Abrego Abrego v. Dow Chem. Co.,
443 F.3d 676, 684 (9th Cir. 2006)). There is a "strong
presumption against removal jurisdiction, " and
accordingly, "the defendant always has the burden of
establishing that removal is proper." Id.
(quoting Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th
Cir. 1992) (per curiam)). "[T]he court resolves all
ambiguity in favor of remand to state court."
basis for diversity jurisdiction, at issue in the instant
case, is set forth in 28 U.S.C. § 1332, which states in
relevant part that "[t]he district courts shall 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 . . .
[c]itizens of different States[.]" 28 U.S.C. §
1332(a)(1). An action may be removed to federal court
"when there is complete diversity of citizenship."
Hunter, 582 F.3d at 1043. However, "one
exception to the requirement of complete diversity is where a
non-diverse defendant has been 'fraudulently
joined.'" Morris v. Princess Cruises, Inc.,
236 F.3d 1061, 1067 (9th Cir. 2001). Joinder is deemed
fraudulent "[i]f the plaintiff fails to state a cause of