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Holland v. Schwan Food Co.

May 6, 2010


The opinion of the court was delivered by: Reagan, District Judge


A. Introduction

On November 17, 2009, Larry Holland filed suit in Illinois state court against The Schwan Food Company, Schwan's Home Service, Inc., Schwan's Shared Services, LLC, (collectively, "Schwan") and Gary Young seeking damages for retaliatory discharge and tortious interference with business opportunity or economic advantage. Holland alleges that he suffered a work-related injury on August 22, 2008. He exercised his rights under the Illinois Workers' Compensation Act, taking time off because of his work-related injuries and seeking medical care for them. On May 19, 2009, according to Holland, he was notified by his primary care physician that he would be able to return to work without restriction after a short period off for completing physical therapy. On May 20, 2009, Schwan terminated Holland from his managerial position.

In Count I of Holland's complaint, he alleges that Schwan terminated him from his managerial position in retaliation for exercising his rights under the Illinois Worker's Compensation Act. In Count II, Holland alleges that Gary Young, a management employee of The Schwan Food Company, announced that Holland was being removed from his position and solicited co-employees to take Holland's job despite being aware that Holland expected to return to work after being released by his physician. Holland seeks compensatory and punitive damages.

On December 31, 2009, Schwan, with Young's consent, removed the action to this federal district court, alleging that the citizenship of Young, a nondiverse defendant, must be disregarded because he was fraudulently joined.*fn1

Holland's motion to remand the action to state court is fully briefed and ready for disposition (Docs. 8, 9, 11).

B. Standard for Fraudulent Joinder

Courts presume that a plaintiff's choice of forum is valid and resolve all doubts regarding jurisdiction in favor of remand. See Doe v. Allied-Signal Inc., 985 F.2d 908, 911 (7th Cir. 1993). As an out-of-state Defendant seeking removal, Schwan must clear a high hurdle to show that Holland fraudulently joined Young. The Seventh Circuit has noted:

An out-of-state defendant who wants to remove must bear a heavy burden to establish fraudulent joinder. The defendant must show that, after resolving all issues of fact and law in favor of the plaintiff, the plaintiff cannot establish a cause of action against the in-state defendant. Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992).*fn2

In Schwartz v. State Farm Mutual Auto Ins. Co., 174 F.3d 875, 878 (7th Cir. 1999), the Seventh Circuit explained that although a plaintiff is normally free to choose his own forum, he may not join an in-state defendant solely to defeat federal diversity jurisdiction. "Such joinder is considered fraudulent, and is therefore disregarded, if the out-of-state defendant can show there exists no 'reasonable possibility that a state court would rule against the [in-state] defendant.'" Id. (quoting Poulos, 959 F.2d at 73).In other words, the federal district court must determine whether the plaintiff can state a cause of action against the nondiverse defendant. Gottlieb v. Westin Hotel Co., 990 F.2d 323, 328 (7th Cir. 1993).

As required by 28 U.S.C. § 1332, complete diversity of citizenship means that "none of the parties on either side of the litigation may be a citizen of a state of which a party on the other side is a citizen." Howell v. Tribune Entertainment Co., 106 F.3d 215, 217 (7th Cir. 1997). Here, it is undisputed that Plaintiff Holland and Defendant Young are citizens of Illinois. Schwan claims - and must bear the burden of establishing - that Young was fraudulently joined.

Schwan contends that Holland has fraudulently joined Young because Holland failed to allege a duty owed to him by Young and, even if Holland could establish a duty owed him by Young, there is no possibility that he can state a cause of action for Tortious Interference with Business Opportunity or Economic Advantage.

Holland points out that an employee acting within the scope of his employment can be individually liable even where the employer is also vicariously liable. Holland asserts that he had a reasonable expectation of continued employment, that Young knew of this expectation and purposefully interfered with Holland's continued employment, and that as a result Holland was damaged.

Under Illinois law, to state a claim for intentional interference with prospective economic advantage or business relationship, a plaintiff must allege: "(1) the existence of a valid business relationship or expectancy; (2) the defendants' knowledge of plaintiff's relationship or expectancy; (3) an intentional and unjustified interference by the defendant inducing or causing a breach or termination of the expectancy; (4) damages to plaintiff resulting from such interference." James v. Intercontinental ...

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