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Bell v. The Terminix International Company L.P.

United States District Court, D. Hawaii

June 6, 2016

MARK BELL, Plaintiff,


          Alan C. Kay Sr. United States District Judge.

         For the 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.


         On 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"), [1] 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.

         On 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.[2]

         On 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.

         On May 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.").[3]ECF No. 28.


         "This 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. 2008)).

         When a 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.").

         Under a 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).

         It is 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."


         Defendants 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.

         Defendants 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 Recommendation.[4]

         I. Defendants Incorrectly Assert That Consideration of Possible Future Amendments in Relation to a Fraudulent Joinder Claim Is Contrary to Established Precedent

         Pursuant 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." Id.

         The 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 ...

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