United States District Court, S.D. Illinois
RICHARD S. JONES, Sr., Plaintiff,
HEADWATERS CM SERVICES, LLC, and CHRIS BASSO, Defendants.
MEMORANDUM AND ORDER
Michael J. Reagan, United States District Judge
October 11, 2016, Richard S. Jones, Sr. filed a retaliatory
discharge lawsuit in the Circuit Court of Madison County,
Illinois naming two Defendants -- (1) his former employer,
Headwaters CM Services, LLC (“Headwaters”); and
(2) his former supervisor, Chris Basso. The complaint alleges
that Headwaters fired Jones after he sought workers
compensation for a disabling hand injury he sustained while
on the job (Complaint, Doc. 1-1, pp. 1-3). Jones alleges that
his termination was a violation of clearly mandated public
policies in the State of Illinois and the Illinois
Workers' Compensation Act, 820 ILCS 305/4(h)
(Id.). As a result of the termination, Jones alleges
that he has lost substantial wages and benefits, has suffered
emotion distress, and has suffered injury to his reputation
on November 14, 2016, Defendant Headwaters removed the case
to this Court, where it was randomly assigned to the
undersigned, who now undertakes threshold jurisdictional
review. Defendant Basso was served on December 4, 2016, and
is represented by the same counsel as Headwaters (Doc. 1 at
1). The removal notice indicates that subject matter
jurisdiction lies under the federal diversity statute (28
U.S.C. § 1332), which confers original jurisdiction over
suits in which the amount in controversy exceeds $75, 000
(exclusive of interest and costs), and the action is between
citizens of different states.
amount in controversy appears to suffice here. If the
plaintiff's complaint demands monetary relief of a stated
amount, as long as that amount was asserted in good faith, it
is deemed to be the amount in controversy. Dart Cherokee
Basin Operating Co., LLC v. Owens, -- U.S. --, 135 S.Ct.
547, 551 (2014); Mt. Healthy City Board of Education v.
Doyle, 429 U.S. 274, 276 (1977). In Carroll v.
Stryker Corp., 658 F.3d 675, 780-81 (7th Cir. 2011), the
Seventh Circuit clarified the proper approach to determining
whether the amount-in-controversy requirement has been
satisfied. The party seeking the federal forum bears the
initial burden of establishing by a preponderance of the
evidence facts that suggest the jurisdictional amount has
been satisfied. Once the party makes that showing,
"jurisdiction will be defeated only if it appears to a
legal certainty that the stakes of the lawsuit do not exceed
$75, 000." Id., citing Oshana v. Coca-Cola
Co., 472 F.3d 506, 611 (7th Cir. 2006), and Back
Doctors Ltd. v. Metro. Prop. and Cas. Co., Inc., 637
F.3d 827, 830 (7th Cir. 2011).
Plaintiff (as is the practice in Illinois state court) has
not specifically quantified his damages but seeks
“damages in an amount in excess of $50, 000, ”
and Illinois law permits a prevailing plaintiff in a
retaliatory discharge case to recover not only compensatory
damages (e.g., lost back pay, lost front pay, the value of
lost benefits, damages for emotional distress, etc.) but also
punitive damages (Doc. 1-1, p.4). Thus the amount in
controversy appears to suffice.
issue here is whether the parties are completely diverse. The
named parties, in fact, are not. Plaintiff is an Illinois
citizen. Defendant Headwaters is a citizen of Delaware
(incorporated there) and Utah (maintaining its principal
place of business there). But Defendant Basso - like
Plaintiff - is an Illinois citizen. That means that the
parties are not fully diverse, and jurisdiction does not lie
under Section 1332, unless Basso was fraudulently
joined - which is precisely what Defendant Headwaters
further discussed below, a removing defendant must clear a
high hurdle to demonstrate fraudulent joinder. In
Schwartz v. State Farm Mutual Auto Ins. Co., 174
F.3d 875, 878 (7th Cir. 1999), the United States Court of
Appeals for 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
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 v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir.
Seventh Circuit reiterated this principle in Morris v.
Nuzzo, 718 F.3d 660, 666 (7th Cir. 2013):
Under the fraudulent joinder doctrine …, an
out-of-state defendant's right of removal premised on
diversity cannot be defeated by joinder of a nondiverse
defendant against whom the plaintiff's claim has
“no chance of success.” Poulos v. Naas Foods,
Inc., 959 F.2d 69, 73 (7th Cir.1992); see also
Walton v. Bayer Corp., 643 F.3d 994 (7th Cir. 2011);
Schur v. L.A. Weight Loss Centers, Inc., 577 F.3d
752 (7th Cir. 2009); Schwartz v. State Farm Mut. Auto.
Ins. Co., 174 F.3d 875 (7th Cir. 1999); Gottlieb v.
Westin Hotel Company, 990 F.2d 323 (7th Cir. 1993). The
doctrine is designed to “strike a reasonable balance
among the policies to permit plaintiffs the tactical
prerogatives to select the forum and the defendants they wish
to sue, but not to reward abusive pleading by plaintiffs, and
to protect the defendants' statutory right to
fraudulent joinder in federal court is not easy. To establish
fraudulent joinder, the removing defendant must show that,
after resolving all issues of fact and law in
favor of the plaintiff, the plaintiff cannot establish
any cause of action against the in-state defendant.
Morris, 718 F.3d at 666, citing Poulos, 959
F.2d at 73.
If the removing defendant can meet this “heavy burden,
” … the federal district court considering
removal may “disregard, for jurisdictional purposes,
the citizenship of certain nondiverse defendants, assume
jurisdiction over a case, dismiss the nondiverse defendants,
and thereby retain jurisdiction.” Schur, 577
F.3d at 763. Because the district court may
“disregard” the nondiverse defendant, we have
described the fraudulent joinder doctrine as an
“exception” to the requirement of complete
diversity. See Walton, 643 F.3d at 999.
Morris, 718 F.3d at 666.
case at bar, the question is whether, after resolving all
factual and legal issues in Plaintiff's favor, Plaintiff
can establish any cause of action against Defendant Basso
(i.e., whether there exists “no reasonable
possibility” that a state court would rule against
Basso on Plaintiff's claims). Defendants (both
represented by the same counsel) have articulated their
position - Illinois law allows a retaliatory discharge action
only against an employer, not against individual agents or
employees -- in the removal notice. The Court DIRECTS
Plaintiff to file a “Jurisdictional Memorandum”
addressing the fraudulent joinder issue by January 5,
2017. Defendants may file a 3-page reply brief
no later than January 19, 2017.
undersigned determines that Basso was fraudulently
joined (i.e., diversity is complete and subject matter
jurisdiction lies), the case will be tracked and assigned a
firm trial date, which will trigger the entry of a Scheduling
Order by Magistrate Judge Donald Wilkerson. If the
undersigned determines that Basso was not
fraudulently joined (i.e., federal subject ...