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The Solid Waste Disposal Authority of City of Mobile v. WM Mobile Bay Environmental Center, Inc.

United States District Court, S.D. Alabama, Southern Division

August 6, 2019

THE SOLID WASTE DISPOSAL AUTHORITY OF THE CITY OF MOBILE, ALABAMA, Plaintiff,
v.
WM MOBILE BAY ENVIRONMENTAL CENTER, INC., et al., Defendants.

          REPORT AND RECOMMENDATION

          SONJA F. BIVINS, UNITED STATES MAGISTRATE JUDGE

         This matter is before the Court on Defendant Waste Away Group, Inc.'s motion to dismiss fraudulently-joined defendant (Doc. 2) and Plaintiff the Solid Waste Disposal Authority of the City of Mobile, Alabama's motion to remand. (Doc. 8). The motions, which have been fully briefed and are ripe for resolution, have been referred to the undersigned Magistrate Judge for a report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(B) and S.D. Ala. GenLR 72(a)(2)(S). Upon consideration of all matters presented, the undersigned RECOMMENDS, for the reasons stated herein, that Defendant Waste Away Group, Inc.'s motion to dismiss fraudulently-joined defendant (Doc. 2) be DENIED, that Plaintiff's motion to remand (Doc. 8) be GRANTED, and that this action be remanded to the state court where it was originally filed.

         I. BACKGROUND

         Plaintiff the Solid Waste Disposal Authority of the City of Mobile, Alabama (the “Authority”) filed the instant lawsuit in the Circuit Court of Mobile County, Alabama on August 28, 2018. (Doc. 1-1 at 2-7). The Authority's complaint names as Defendants WM Mobile Bay Environmental Center, Inc. (“WM Mobile Bay”) and Waste Away Group, Inc. (“Waste Away”). The Authority asserts claims for trespass, conversion, and nuisance against WM Mobile Bay, which operates the Chastang Landfill in Mobile County, Alabama, and against Waste Away, the lessee of the Chastang Landfill pursuant to a 2003 lease agreement with the Authority. The Authority's claims stem from actions allegedly taken by Defendants with respect to the “West Tract, ” a tract of land that is owned by the Authority and borders the Chastang Landfill, but, according to the Authority, is not a part of the landfill. Specifically, the Authority alleges that both Defendants trespassed upon the West Tract by physical ingress and egress of persons and equipment across the property line between the Chastang Landfill and the West Tract, and by diverting water onto the West Tract. The Authority further asserts that Defendants have converted large volumes of cover dirt and timber from the West Tract for their own use, and that Defendants' activities have interfered with the Authority's use and possession of the West Tract, amounting to a nuisance.

         Defendants WM Mobile Bay and Waste Away removed the action to this Court on October 11, 2018. (Doc. 1). In their notice of removal, Defendants assert the existence of diversity jurisdiction pursuant to 28 U.S.C. § 1332. (Id. at 1). According to Defendants, the Authority and Waste Away are both Alabama corporations and, as such, are residents of Alabama, and WM Mobile Bay is a foreign corporation, which is incorporated in the state of Delaware and has its principal place of business in Mississippi. (Id. at 1-2). Defendants assert that although both the Authority and Waste Away are Alabama corporations, Waste Away has been fraudulently joined in this action in an effort to defeat diversity jurisdiction. (Id.). Defendants thus argue that the Court should disregard Waste Away's Alabama citizenship in determining whether complete diversity of citizenship exists between the parties. (Id. at 5-6). Specifically, Defendants contend that “not one of Plaintiff's factual allegations involves any conduct of Waste Away” because Waste Away is not the operator of the Chastang Landfill. (Id. at 6, 8-9). Defendants further argue that although Plaintiff's complaint alleges the existence of a lease agreement between the Authority and Waste Away, the complaint does not “allege any act which Waste Away has done to cause or contribute to the tortious conduct alleged in the Complaint.” (Id. at 6).

         Waste Away filed its motion to dismiss fraudulently-joined defendant on October 18, 2018. (Doc. 2). In its motion, Waste Away argues that it was fraudulently joined because the Authority has failed to state a viable cause of action against it. (Id. at 4). Waste Away also contends that it has been fraudulently misjoined in this action because there is no common question of law or fact that connects the Authority's claims against WM Mobile Bay with the Authority's claims against Waste Away. (Id. at 6-7).

         Subsequent thereto, the Authority filed the instant motion to remand this case to state court. (Doc. 8). In its motion, the Authority notes that its complaint alleges that both Waste Away and WM Mobile Bay have their principal places of business in Alabama, and it contends that Defendants have not offered any evidence refuting those allegations. (Id. at 4-5). The Authority also contends that it will be able to establish that its claims against Waste Away are valid, and that it will be able to recover from Waste Away for its tortious conduct. (Id. at 4). In support of its assertions, the Authority cites to provisions from its 2003 lease agreement with Waste Away, including recitals that Waste Away is the operator of the Chastang landfill as successor to the 1993 Transamerican contract, and to other provisions charging Waste Away with making various improvements to the landfill. (Id. at 6). The Authority asserts that it “is also possible that Waste Away is the real party in interest with respect to WM Mobile Bay, and actually controls, manages and provides support for WM Mobile Bay's activities at the Chastang Landfill.” (Id.). The Authority further argues that it is an arm of the state of Alabama and not subject to the jurisdiction of this Court pursuant to the Eleventh Amendment. (Id. at 10-15).

         In its response in opposition to the Authority's motion to remand, WM Mobile Bay contends that it has refuted the Authority's assertion that WM Mobile Bay's principal place of business is in Alabama. (Doc. 11 at 3-5). WM Mobile Bay points out that the notice of removal states that WM Mobile Bay's principal place of business is in Mississippi, and WM Mobile Bay asserts that this allegation is borne out by the affidavit of its vice president, David Myhan, submitted in conjunction with its response to the Authority's motion. (Id. at 3-4). WM Mobile Bay also asserts that its Mississippi citizenship has been conclusively established in prior litigation between the parties. (Id. at 4). WM Mobile Bay further notes that the Authority's own complaint asserts that WM Mobile Bay, and not Waste Away, is the successor in interest to Transamerican and currently operates the Chastang Landfill under the 1993 contract between the Authority and Transamerican. (Id. at 3). WM Mobile Bay claims that this Court, in another case, previously determined that Waste Away is not a party to that 1993 contract, “and thus has no operational involvement in the landfill.” (Id. at 6). Finally, WM Mobile Bay argues that the Eleventh Amendment has no bearing on this case, since the Authority is the plaintiff and not a defendant. (Id. at 8-9).

         The sum of these pleadings is now before the Court for review.

         II. STANDARD OF REVIEW

         “A removing defendant bears the burden of proving proper federal jurisdiction.” Adventure Outdoors, Inc. v. Bloomberg, 552 F.3d 1290, 1294 (11th Cir. 2008) (quoting Leonard v. Enter. Rent a Car, 279 F.3d 967, 972 (11th Cir. 2002)). “Any doubts about the propriety of federal jurisdiction should be resolved in favor of remand to state court.” Adventure Outdoors, 552 F.3d at 1294. Because removal infringes upon state sovereignty and implicates central concepts of federalism, removal statutes must be construed narrowly, with all doubts resolved in favor of remand. See Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999); Burns v. Windsor Ins. Co., 31 F.3d 1092, 1095 (11th Cir. 1994). Furthermore, “once a federal court determines that is without subject matter jurisdiction, the court is powerless to continue.” Univ. of S. Ala., 168 F.3d at 410.

         Where the alleged basis for federal jurisdiction is diversity of citizenship under 28 U.S.C. § 1332, the removing defendant has the burden of demonstrating that there is (1) complete diversity of citizenship and (2) an amount in controversy greater than $75, 000.[1] See 28 U.S.C. § 1332(a); Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998); Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1357 (11th Cir. 1996), abrogated on other grounds by Cohen v. Office Depot, Inc., 204 F.3d 1069 (11th Cir. 2000). For complete diversity of citizenship to be present, “every plaintiff must be diverse from every defendant.” Palmer v. Hosp. Auth. of Randolph Cnty., 22 F.3d 1559, 1564 (11th Cir. 1994).

         Notwithstanding the requirement of complete diversity in cases removed under 28 U.S.C. § 1332, “[w]hen a plaintiff names a non-diverse defendant solely in order to defeat federal diversity jurisdiction, the district court must ignore the presence of the non-diverse defendant and deny any motion to remand the matter back to state court.” Henderson v. Washington Nat'l Ins. Co., 454 F.3d 1278, 1281 (11th Cir. 2006). In such an instance, “[t]he plaintiff is said to have effectuated a ‘fraudulent joinder,' and a federal court may appropriately assert its removal diversity jurisdiction over the case.” Id. (internal citation omitted). “Fraudulent joinder is a judicially created doctrine that provides an exception to the requirement of complete diversity.” Triggs, 154 F.3d at 1287.

         Under Eleventh Circuit precedent, a defendant seeking to demonstrate fraudulent joinder has the burden to prove the existence of at least one of the following three situations. “The first is when there is no possibility that the plaintiff can prove a cause of action against the resident (non-diverse) defendant.” Id. (citing Coker v. Amoco Oil Co., 709 F.2d 1433, 1440 (11th Cir. 1983), superseded by statute on other grounds as stated in Georgetown Manor, Inc. v. Ethan Allen, Inc., 991 F.2d 1533 (11th Cir. 1993)). “The second is when there is outright fraud in the plaintiff's pleading of jurisdictional facts.” Triggs, 154 F.3d at 1287 (citing Coker, 709 F.2d at 1440). The third situation, which was identified by the Eleventh Circuit in Tapscott, is “where a diverse defendant is joined with a nondiverse defendant as to whom there is no joint, several or alternative liability and where the claim against the diverse defendant has no real connection to the claim against the nondiverse defendant.” Triggs, 154 F.3d at 1287 (citing Tapscott, 77 F.3d at 1360). “The defendant must make such a showing by clear and convincing evidence.” Henderson, 454 F.3d at 1281. The removing party's burden “is a ‘heavy one.'” Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997) (quoting B, Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. Unit A Dec. 1981)).

         The Court must evaluate the parties' factual allegations and submissions in the light most favorable to the plaintiff and resolve any uncertainties about applicable state substantive law in favor of the plaintiff. Crowe, 113 F.3d at 1538 (citing B, Inc., 663 F.2d at 549). The Court's inquiry must be “based upon the plaintiff's pleadings at the time of removal, supplemented by any affidavits and deposition transcripts submitted by the parties.” Pacheco de Perez v. AT&T Co., 139 F.3d 1368, 1380 (11th Cir. 1998). Although “‘the proceeding appropriate for resolving a claim of fraudulent joinder is similar to that used for ruling on a motion for summary judgment under Fed.R.Civ.P. 56(b), '” the Eleventh Circuit has stressed that “the jurisdictional inquiry ‘must not subsume substantive determination' . . . [and that] federal courts are not to weigh the merits of a plaintiff's claim beyond determining whether it is an arguable one under state law.” Crowe, 113 F.3d at 1538 (quoting B, Inc., 663 F.2d at 549 n.9, 550). “The plaintiff need not have a winning case against the allegedly fraudulent defendant; he need only have a possibility of stating a valid cause of action in order for the joinder to be legitimate.” Triggs, 154 F.3d at 1287 (emphasis in original).

         III. DISCUSSION

         A. WM Mobile Bay's Principal Place of Business is in Mississippi.

         As noted supra, the Authority contends that diversity of citizenship does not exist because, regardless of whether Waste Away was fraudulently joined, the complaint alleges that WM Mobile Bay's principal place of business is in Alabama, and “[t]his allegation has not been disputed by Defendants.” (Doc. 8 at 3). For purposes of diversity jurisdiction, “a corporation shall be deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business[.]” 28 U.S.C. § 1332(c)(1). A corporation's principal place of business is the “nerve center” or “the place where a corporation's officers direct, control, and coordinate the corporation's activities.” Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010). That “nerve center” will normally be “the place where the corporation maintains its headquarters-provided that the headquarters is the actual center of direction, control, and coordination[.]” Id. at 93. The party asserting diversity jurisdiction has the burden of persuasion and, “[w]hen challenged on allegations of jurisdictional facts, the parties must support their allegations by competent proof.” Id. at 96-97.

         Here, Defendants' notice of removal states that “WM Mobile Bay is a foreign corporation, incorporated in the State of Delaware and having its principal place of business in Madison, Mississippi, that is qualified to do business in the State of Alabama.” (Doc. 1 at 2). In its response in opposition to the Authority's motion to remand, WM Mobile Bay attaches the March 20, 2017 affidavit of its vice president, David Myhan. (See Doc. 11-1). In his affidavit, Mr. Myhan avers that WM Mobile Bay's principal place of business, and “the actual center of WM Mobile Bay's direction, control, and coordination is 382 Galleria Parkway, Suite 107, Madison, Mississippi.” (Id. at 2-3). Attached as an exhibit to Mr. Myhan's affidavit is the business entity record from the Alabama Secretary of State, which lists a Madison, Mississippi principal address for WM Mobile Bay. (See id. at 5). The unchallenged Myhan affidavit suffices to demonstrate that WM Mobile Bay was incorporated in Delaware and has its principal place of business in Madison, Mississippi, not in Alabama, as alleged by the Authority. Thus, WM Mobile Bay has met its burden of establishing that it is a foreign corporation for the purposes of the diversity analysis.

         B. Eleventh Amendment Immunity.

         The Authority further argues that it is an independent instrumentality of the State of Alabama and, therefore, entitled to Eleventh Amendment immunity. (Doc. 8 at 10-15). WM Mobile Bay counters that the concept of Eleventh Amendment immunity is not applicable to this case because the Authority, the party claiming immunity, is the plaintiff. (Doc. 11 at 8-9).

         The Eleventh Amendment states: “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” U.S. Const. amend. XI. The Supreme Court has construed the Eleventh Amendment “to establish that an unconsenting State is immune from suits brought in federal courts by her own citizens as well as by citizens of ...


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