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PEREZ v. ARCOBALENO PASTA MACHINES

May 7, 2003

LILIANA PEREZ, PLAINTIFF,
v.
ARCOBALENO PASTA MACHINES, INC., A FOREIGN NATIONAL CORPORATION, F/K/A A D PASTA MACHINES TECHNOLOGY INC., A FOREIGN NATIONAL CORPORATION, F/K/A A.D. ENGINEERING LTD., A FOREIGN NATIONAL CORPORATION, PERFECT PASTA, INC., AN ILLINOIS CORPORATION, BISON COMMERCIAL LEASING CORP., A NEW YORK CORPORATION, AND BISON COMMERCIAL LEASING, L.L.C., A NEW YORK LIMITED LIABILITY CORPORATION, DEFENDANTS. ARCOBALENO PASTA MACHINES, INC., A FOREIGN NATIONAL CORPORATION THIRD-PARTY PLAINTIFF, V. PERFECT PASTA, INC. THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: Morton Denlow, United States Magistrate Judge

MEMORANDUM OPINION AND ORDER

INTRODUCTION

This case is before the Court on plaintiff, Liliana Perez's ("Perez" or "Plaintiff"), motion to remand the case to the Circuit Court of Cook County, Illinois.*fn1 The issue is whether Plaintiff's second amended complaint asserting a direct claim against third-party defendant, Perfect Pasta, Inc. ("Pasta"), deprives this court of diversity jurisdiction under 28 U.S.C. § 1332 by reason of 28 U.S.C. § 1447(e). Defendant Arcobaleno Pasta Machines, Inc., ("Arcobaleno" or "Defendant") argues that the addition of Plaintiff's claim directly against Pasta was not a joinder for purposes of § 1447(e) because Pasta was previously joined in the action as a third-party defendant. For the reasons discussed herein, the motion to remand is granted.

II. FACTUAL BACKGROUND

Before addressing the merits of Plaintiff's motion, a review of the facts and procedural history is instructive. Plaintiff, a former employee of Pasta, alleges that on May 18, 2000 she was investigating a problem with a dough sheeter. During this investigation, her hand was pulled into the dough sheeter and crushed, causing permanent injury and requiring an amputation. Plaintiff, an Illinois citizen, initiated this action against Arcobaleno on April 17, 2002 in the Circuit Court of Cook County, Illinois. On May 8, 2002, she filed a two-count first amended complaint against Arcobaleno, a foreign corporation with its principal place of business in British Columbia, Canada. Arcobaleno is the alleged manufacturer and distributor of the dough sheeter.

On May 20, 2002, Arcobaleno removed this case to federal court. Arcobaleno filed a third-party complaint against Pasta, an Illinois corporation, on November 13, 2002.

On March 20, 2003, Plaintiff filed a motion to amend her complaint to add two additional parties: Bison Leasing ("Bison") and Pasta. Bison is a New York corporation allegedly involved in the design, distribution, and leasing of the dough sheeter. This Court granted Plaintiff's motion to amend on March 25, 2003, without objection, and she filed her second amended complaint adding Bison and Pasta as direct defendants on April 1, 2003.

III. DISCUSSION

The case is now before the Court on Plaintiff's motion to remand the case to the Circuit Court of Cook County. Plaintiff argues that the addition of Pasta as a direct defendant destroys diversity jurisdiction because Pasta and Plaintiff are both citizens of Illinois. The following issues are raised: 1) whether diversity jurisdiction can be destroyed by the joinder of a non-diverse party post removal, 2) whether Pasta was "joined" in the second amended complaint for purposes of 28 U.S.C. § 1447(e) when it was already a third-party defendant, and 3) whether the amendment was proper. The Court will address each in turn.

A. Diversity Jurisdiction Can Be Destroyed By The Joinder Of A Non-Diverse Party Post Removal.
1. Diversity jurisdiction is determined using the Second Amended Complaint at Law.
As a preliminary matter, the Court will address which complaint is to be used for determining whether diversity jurisdiction is proper. The Seventh Circuit has recognized that once an amended pleading is filed, the amended pleading supersedes the original one, and the original pleading has no function in the case. Wellness Community — National v. Wellness House, 70 F.3d 46, 49 (7th Cir. 1995) (quoting 6 CHARLES WRIGHT, ARTHUR MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 1476 at 556-57 (1990)). Where an amended complaint is filed, federal jurisdiction will be determined based on that complaint. Jass v. Prudential Healthcare Plan, Inc., 88 F.3d 1482, 1492 (7th Cir. 1996).

In this case, an amended complaint was filed in the Circuit Court of Cook County. After the case was removed, a second amended complaint was filed. Thus, the operative complaint for purposes of the jurisdictional issue is Plaintiff's Second Amended Complaint at Law.

2. Section 1447(e) governs the disposition of this case.

Defendant's first argument is that once established, diversity jurisdiction can not be divested. Defendant relies on Freeport-McMoRan v. K N Energy, Inc., for the proposition that diversity jurisdiction is determined at the time the case is filed, and subsequent acts of the parties do not affect the court's subject matter jurisdiction. 498 U.S. 426, 428 (1991). The Court agrees that this is the general rule. However, Freeport has been distinguished from cases in the present situation. Ingram v. CSX Transp., Inc., 146 F.3d 858, 861-62 (11th Cir. 1998) (stating that the holding in Freeport dealt with the substitution of a party under Fed.R.Civ.P. 25, not the addition of a party after the case had been removed); Williams v. Holiday Inn Worldwide, No. Civ. A 97-3385, 1998 WL 914258, at *2 (E.D.La. Dec. 29, 1998) (stating that Freeport dealt with a case originally filed in federal court, not one which was filed in state court and later removed).

The Seventh Circuit has recognized that when a party has been joined after the case has been removed, the Court should apply 28 U.S.C. § 1447, which addresses post-removal procedures. Jass, 88 F.3d at 1492. In addition, as Plaintiff argues, the First Circuit also recognized that section 1447(e) applies to cases in which a non-diverse defendant is added to the case after removal. Casas Office Machines, Inc. v. Mita Copystar Am., Inc., 42 F.3d 668, 673-75 (1st Cir. 1994). While that case dealt with substitution of fictitious defendants for named defendants, the court also recognized its application to the joinder context. Id. at 674-45 (stating, "under ยง 1447(e), the joinder or substitution of non-diverse defendants after ...


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