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Lopez v. Continental Tire North America, Inc.

United States District Court, N.D. Oklahoma

June 4, 2018

NORMA LOPEZ, Individually and as Mother and Next of Kin on behalf of A.A., a minor; and as Personal Representative of the Estate of B.L., Deceased Minor, Plaintiff,



         Before the Court are Plaintiff's Motion for Remand (Doc. 14), Plaintiffs' Motion to Amend Complaint (Doc. 15), and Plaintiffs' proposed First Amended Complaint (Doc. 16).

         I. Background and Factual Allegations

         On August 1, 2015, Plaintiff Norma Lopez (“Lopez”) was a passenger in a vehicle traveling northbound on Highway 169 in Tulsa County, Oklahoma, when the tread belt separated from the vehicle's left rear tire, causing the vehicle to roll over several times, ejecting three passengers. On July 27, 2017, Lopez filed a Complaint in Tulsa County District Court, individually and on behalf of A.A., a minor, as A.A.'s mother and next of kin; and on behalf of B.L., a deceased minor, as personal representative of B.L.'s estate. The Complaint named as Defendants (1) Continental Tire North America, Inc. (“Continental”), (2) Latino Tires, and (3) Lalo's Custom Wheels. The Complaint alleges that the injuries to Plaintiff, A.A., and B.L. resulted from a manufacturing defect in the left rear tire of the subject vehicle, that Defendants “knew or should have known of the high probability of the defective nature of the tire prior to production and marketing and/or sale of the tire at issue, ” and that Defendants “with malice, manufactured[] and or sold the defective tire at issue, ” causing the accident. (Compl. ¶ 7.)

         On August 24, 2017, Continental removed the case to this Court on the grounds of diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(1). Plaintiff and A.A. are residents of Oklahoma, and B.L. was a resident of Oklahoma at the time of his death. Continental is a limited liability company formed in the State of Ohio with its principal place of business in South Carolina. Continental contends it is also a citizen of Delaware, the Netherlands, and Germany by virtue of its corporate ownership. Latino Tires and Lalo's Custom Wheels (hereinafter, the “Retail Defendants”) are domestic companies doing business in Oklahoma, and Continental does not dispute that the Retail Defendants are citizens of Oklahoma for the purpose of diversity jurisdiction. However, Continental contends the Retail Defendants were fraudulently joined and therefore their citizenship should be disregarded for the purpose of determining complete diversity. Plaintiff filed concurrently (1) a Motion to Amend Complaint, seeking to add allegations relating to the Retail Defendants, and (2) a Motion to Remand pursuant to 28 U.S.C. § 1447(c), based on a lack of subject-matter jurisdiction.

         II. Legal Standards

         A. Motion to Remand

         Federal courts are courts of limited jurisdiction, and the party seeking to invoke federal jurisdiction bears the burden of proving the exercise of such jurisdiction is proper. Southway v. Cent. Bank of Nigeria, 328 F.3d 1267, 1274 (10th Cir. 2003). Diversity jurisdiction requires the party to establish both complete diversity and a sufficient amount in controversy. 28 U.S.C. § 1332(a). Complete diversity exists where the citizenship of each plaintiff is diverse from the citizenship of each defendants. Id. The amount in controversy must exceed $75, 000. Id.

         A defendant may remove a civil action from state court where the federal court has original jurisdiction. 28 U.S.C. § 1441(a). However, “[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). There is a presumption against federal jurisdiction, and the removing party bears the burden to show by a preponderance of the evidence that jurisdiction exists. Dutcher v. Matheson, 840 F.3d 1183, 1189 (10th Cir. 2016) (citing Dutcher v. Matheson, 733 F.3d 980, 985 (10th Cir. 2013) (“Dutcher I”) (internal quotation omitted)).

         A defendant's “right of removal cannot be defeated by a fraudulent joinder of a resident defendant having no real connection to the controversy.” Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921). To successfully assert fraudulent joinder, the removing party bears the “heavy burden” of showing either: (1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court. Dutcher I, 733 F.3d at 988 (citing Cuevas v. BAC Home Loans Servicing, LP, 648 F.3d 242, 249 (5th Cir. 2011)). If a defendant satisfies this burden, the citizenship of the fraudulently joined party is disregarded for the purpose of determining whether complete diversity exists. Brazell v. Waite, 525 Fed.Appx. 878, 881 (10th Cir. 2013) (unpublished).[1]

         Continental seeks to establish fraudulent joinder by the second method.[2] Under that method, the removing defendant must demonstrate that “there is no possibility of recovery by the plaintiff against an in-state defendant, which stated differently means that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant.” Cuevas, 648 F.3d at 249 (citing Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004)). In determining whether there is any possibility of recovery, courts may “look beyond the pleadings to determine if the joinder, although fair on its face, is a sham or fraudulent device to prevent remand.” Smoot v. Chicago, R.I. & P.R. Co., 378 F.2d 879, 882 (10th Cir. 1967) (internal citations omitted). “The burden of persuasion placed upon those who cry ‘fraudulent joinder' is indeed a heavy one, ” Hart v. Bayer Corp., 199 F.3d 239, 246 (5th Cir. 2000) (quoting B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir.1981)), and the court “must initially resolve all disputed questions of fact and all ambiguities in the controlling law in favor of the non-removing party, ” id.; see also Montano v. Allstate Indemnity, No. 99-2225, 2000 WL 525592, at *5-*6 (10th Cir. Apr. 14, 2000) (unpublished) (citing same).

         B. Motion to Amend

         Under Federal Rule of Civil Procedure 15(a)(2), a court should “freely give leave [to amend] when justice so requires.” District courts generally deny leave to amend only on “a showing of undue delay, undue prejudice to the opposing party, bad faith or dilatory motive, failure to cure deficiencies by amendments previously allowed, or futility of amendment.” Duncan v. Manager, Dep't of Safety, City, and County of Denver, 397 F.3d 1300, 1315 (10th Cir. 2005) (internal quotation omitted).

         III. Analysis - ...

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