390 F. Supp. 3d 1323
U.S. Cir. Ct.2019Background
- Stephen Jamar Shanks was fatally injured at work; his parents and dependents sued in Alabama state court asserting worker's-compensation and multiple tort claims (including claims against fictitious co-employee defendants and third-party manufacturers A & G and Yale).
- Defendant A & G (with Globe and Yale's consent) removed the case to federal court based on diversity jurisdiction.
- After removal Plaintiffs substituted three named Alabama co-employees for previously pleaded fictitious co-defendants and filed a Second Amended Complaint within the Rule 15(a) period.
- Plaintiffs moved to remand, arguing that addition of non-diverse co-employees destroyed complete diversity; A & G argued the co-employee claims "arose under" the Alabama Workers’ Compensation Act and thus were non-removable or should be severed and remanded under Lamar.
- The Magistrate Judge recommended remand under 28 U.S.C. § 1447(e); the District Court independently analyzed whether the co-employee claims arise under the AWCA, concluded they do not, and remanded the entire action because joinder destroyed diversity and severance was inappropriate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the co-employee claims "arise under" Alabama's Workers' Compensation Act for § 1445(c) purposes | Co-employee claims are common-law torts; the AWCA is merely the vehicle to pursue them and therefore they do not arise under the AWCA | AWCA (esp. § 25-5-11 and § 25-5-11(c)(2)) creates/controls willful-conduct causes of action against co-employees, making them non-removable | Held: Co-employee claims do not arise under the AWCA; the Act preserves and limits common-law causes rather than creating them anew |
| Effect of post-removal substitution of named non-diverse co-defendants (replacement of fictitious defendants) on federal jurisdiction | Substitution was proper, timely (as of right), and not intended to defeat jurisdiction; remand required because substitution destroyed complete diversity | A & G contended remand of only AWCA-based claims (severance) was appropriate; removal initially proper for other claims | Held: Under § 1447(e) the Court may permit joinder and remand; the court permitted joinder and remanded the entire action because factors favored remand and severance was not warranted |
| Whether severance and partial remand (retain third-party manufacturer claims) is appropriate under Lamar | Plaintiffs opposed severance, arguing common factual overlap and judicial economy counsel against splitting the case | A & G urged severance of co-employee (AWCA) claims and retention of third-party diversity claims under Lamar | Held: Severance denied—co-employee and third-party claims involve common facts; remand in toto was ordered |
| Application of § 1447(e) factors (intent to defeat jurisdiction, dilatory conduct, prejudice, equities) | Amendment was timely, not dilatory, not intended to defeat jurisdiction; denying joinder would impose duplication and prejudice | Defendant favored preserving federal forum; argued AWCA made joinder irrelevant | Held: § 1447(e) factors favored permitting joinder and remanding the action to state court |
Key Cases Cited
- Lamar v. The Home Depot, 907 F. Supp. 2d 1311 (S.D. Ala. 2012) (discusses sever-and-remand approach where removable claims coexist with nonremovable AWCA claims)
- Reed v. Heil Co., 206 F.3d 1055 (11th Cir. 2000) (retaliatory-discharge claim under AWCA provision considered to arise under workers’ compensation law)
- P.R. Diamond Prods., Inc. v. Ala. Mun. Workers' Comp. Fund, 234 F. Supp. 3d 1165 (N.D. Ala. 2017) (AWCA-based tort causes of action by third parties are common-law claims and do not "arise under" AWCA for § 1445(c))
- Curry v. U.S. Bulk Transp., Inc., 462 F.3d 536 (6th Cir. 2006) (held that substitution of named nondiverse defendants after removal can divest federal jurisdiction)
- Hensgens v. Deere & Co., 833 F.2d 1179 (5th Cir. 1987) (articulates factors district courts should weigh under § 1447(e) when joinder would destroy jurisdiction)
- Am. Well Works Co. v. Layne, 241 U.S. 257 (1916) (general principle that a suit arises under the law that creates the cause of action)