Summary
finding no complete preemption by the FDIA where underlying suit challenging “payday loans” was not asserted against the state-chartered bank
Summary of this case from Cmty. State Bank v. KnoxOpinion
Case No. 03-CV-359-K(C)
January 30, 2004
ORDER
Before the Court is Defendants' Objection to the Magistrate's Recommendation on Motion to Remand and Motion to Compel Arbitration (# 27). Upon review of the record, the Court concludes the Report should be affirmed in all respects. All dispositive issues have been accorded a de novo review in compliance with FED. R. Civ. P. 72(b).
The Tenth Circuit has held a remand order is a "final decision or dispositive action," First Union Mortg. Corp. v. Smith, 229 F.3d 992, 996 (10th Cir. 2000).
Discussion
The Court will not revisit all of the issues found in the Magistrate's Report. However, some issues objected to by Defendants merit brief but additional discussion.A. Diversity Jurisdiction
In their Objection, Defendants state that they "set forth that the Response [to Plaintiff's Motion to Remand] ("Response"), be deemed as an amendment to [the] Notice of Removal." Defs.' Obj. at 2, n. 1. Included in the Response is a "breakdown of costs," which provides information regarding the cost of injunctive relief to Defendants. Defendants seem to find fault with the fact that the Magistrate did not consider the "breakdown of costs" when determining whether the injunctive relief met the jurisdictional requirement for diversity jurisdiction. See Magistrate's Order at 9 ("The undersigned has not considered this belated `economic analysis' as it is not in the removal notice or submitted by way of attachment affidavit thereto."). The Court agrees with the Magistrate's conclusion that even if the "breakdown of costs" was considered, diversity jurisdiction would not exist. See Magistrate's Order at 9-10 (discussion regarding the relationship of Justice v. Atchison, Topeka Santa Fe, Ry. Co., 927 F.2d 503 (10th. Cir 1991) and the nonaggregation rule in Zahn v. International Paper Co., 414 U.S. 291, 300-02 (1973) and Snyder v. Harris, 394 U.S. 332, 335 (1969)), Thus, insomuch as Defendants' statement regarding the relationship of their Response and their Notice of Removal represented a request to amend their Notice of Removal with the "breakdown of costs," such a request is denied
The Court also notes the removing Defendant bears the burden of establishing federal court jurisdiction at the time of removal, and not by supplemental submission. See Laughlin, 50 F.2d at 873.
Defendants also argue the Magistrate erred in concluding the requisite amount in controversy does not exist regarding money damages. Specifically, Defendants maintain that if the parties are diverse and the putative class representative has an individual claim in which the amount in controversy exceeds $75,000, diversity jurisdiction would be established over the entire class. The Tenth Circuit has held each individual plaintiff in a class action diversity case must meet the $75,000 requirement, however. Leonhardt v. W. Sugar Co., 160 F.3d 631, 639 (10th Cir. 1998) (emphasis added); see Trimble v, Asarco, Inc., 232 F.3d 946, 962(8th Cir. 2000); Meritcare Inc. v. Sit. Paul Mercury Ins. Co., 166 F.3d 214 (3d. Cir. 1999). However, the Court does note the circuit split regarding this issue. See Rosmer v. Pfizer, Inc., 263 F.3d 110, 114 (4th Cir. 2001) (holding that if there is complete diversity and a sufficient amount in controversy for the named plaintiff, there is diversity jurisdiction over the class action); Gibson v. Chrysler Corp., 261 F.3d 927, 937 (9th Cir. 2001) (same); In re Brand Name Prescription Drugs Antitrust Litig., 123 F.3d 599 (7th Cir. 1997) (same); In re Abbott Labs., 51 F.3d 524, 529 (5th Cir. 1995), aff'd by an equally divided court sub nom. Free v. Abbott Labs., 529 U.S. 333, 120 S.Ct. 1578, 146 L.Ed.2d 306 (2000) (per curiam) (same). Because the Supreme Court affirmed Abbot without opinion by an equally divided vote, Defendants argue that Leonhardt is no longer valid. See Free v. Abbott Labs., 529 U.S. 333, 120 S.Ct. 1578, 146 L.Ed.2d 306 (2000) (per curiam) (4-4 vote). However, "an affirmance by an equally divided Court is not entitled to precedential weight." Ark, Writers `Project, Inc. v. Ragland, 481 U.S. 221, 234 n. 7 (1987). This Court is thus hound b y Leonhardt, and concludes that each individual plaintiff in a class action diversity case must meet the $75,000 requirement. See Leonhardt, 160 F.3d at 639. Because Defendants have not established that each class member can meet the jurisdictional amount, the Court agrees with the Magistrate's finding that diversity jurisdiction has not been established.
B. Federal Question Jurisdiction
In Defendants' Objection to the Magistrate's Recommendation, Defendants argue that Beneficial National Bank v. Anderson, 123 S.Ct. 2058 (2003) and Krispin v. May Deptartment Stores, 218 F.3d 919 (8th Cir. 2000) are dispositive of removal Specifically, Defendants argue that "[i]n reaching its conclusion, the Court in Beneficial expressly adopted the complete preemption approach applied in Krispin. . . . [where] the Eighth Circuit held that a non-bank defendant could remove a state law usury case to federal court, even though the bank was not a party, and the plaintiff alleged that the non-bank defendant was the one who extended the credit at issue." Defs.' Obj. at 4. The Court agrees with the Magistrate's finding that Defendants' reliance on Beneficial and Krispin is misplaced. See Magistrate's Order at 12-18.
The Court also notes that Defendants' characterization of Beneficial in their Objection is misleading. Contrary to Defendants' assertion, the Supreme Court did not expressly adopt Krispin in Beneficial In fact, Krispin is cited only once in Beneficial, and this citation is in no way related to a non-bank defendant's ability to remove a state law usury case to federal court. See Beneficial, 123 S.Ct at 2061. As stated by the Magistrate, the bank involved in Beneficial was a named defendant and "the question of the National Bank Act's complete pre-emption of state claims against the national bank was squarely at issue from the face of the complaint." Magistrate's Order at 17. The Supreme Court's holding in Beneficial was in no way related to the portion of Krispin dealing with a non-bank defendant. Rather, the "dispositive question in [the] case [was] [d]oes the National Bank Act provide the exclusive cause of action for usury claims against national banks?" Beneficial, 123 S.Ct, at 2063 (emphasis added). Thus, contrary Defendants' statement, Beneficial does not "expressly [adopt] the complete preemption approach applied in Krispin" relating to non-bank defendants. Defs.' Obj. at 4.
Instead, the sole reference to Krispin related to whether the National Bank Act provides the exclusive cause of action for usury claims against national banks. As found in Beneficial;
The [Eleventh Circuit] held that under our "well-pleaded complaint" rule, removal is generally not permitted unless the complaint expressly alleges a federal claim and that the narrow exception from' that rule known as the "complete preemption doctrine" did not apply because it could "find no clear congressional intent to permit removal under §§ 85 and 86," Id., at 1048. Because this holding conflicted with an Eighth Circuit decision, Krispin v. May Dept. Stores Co., 218 F.3d 919 (2000), we granted certiorari,Beneficial, 123 S.Ct, at 2061.
Defendants also argue the Magistrate's reliance on Colorado, et rel. Kern Salazar v. Ace Cash Express, Inc., 188 F. Supp.2d 1282 (D. Colo 2002) is faulty. Despite Defendants' objections, the Court agrees with the Magistrate's reliance on Salazar. Salazar is the only Tenth Circuit authority found by the Court which addresses Krispin and whether a usury claim against a non-bank defendant is completely preempted by the National Bank Act. The Salazar court stated, "Krispin determined that the case invoked federal jurisdiction under the National Bank Act because the store and the national bank at issue were related based on an `assignment shifting of contractual rights and duties to another' because the national bank was a wholly-owned subsidiary of the store." Salazar, 188 F. Supp.2d at 1284-85 (citing Krispin, 218 F.3d at 923). The court distinguished Krispin from the facts before it, because the defendant and the national bank in Salazar were separate entities that did not have same relationship as the parties in Krispin. The Salazar court "agree[d] with [p]laintiff's argument that . . . the [c]omplaint strictly [was] about a non-bank's violations of state law and . . . alleges no claims against a national bank under the National Sank Act." Salazar, 188 F. Supp.2d at 1285. Similarly, the Magistrate correctly found Plaintiff's petition only asserted claims against EZPawn and EZCorp, which are separate entities from County Bank. See Magistrate's Order at 15-18.
Again, the Court notes that Defendants present a misleading portrayal of case law in their Objection. Defendants argue "[t]he Magistrate quoted the portion of Salazar which states that the plaintiff in that case `alleges no claims against a national bank under the NBA,' . . . but this quote is out of context. The court in Salazar was quoting the plaintiff's own argument [as opposed to the court's finding]." Defs'. Obj, at 6. While the court in Salazar was indeed quoting plaintiff's argument, the court also stated that it "agree[d] with Plaintiffs' argument," a fact that Defendants omitted in their description of this quotation in their Objection. Salazar, 188 F. Supp.2d at 1285.
Defendants also request leave to amend the Notice of Removal to plead additional facts or attach additional evidentiary documents. See Defs.' Obj. at 10. A court has discretion to permit a defendant leave to amend its notice of removal. See CBS, Inc., v, Snyder, 762 F. Supp. 71, 73 (S.D.N.Y. 1991). The Court declines to exercise such discretion in the instant case, however. As stated above, the Court agrees with the Magistrate's analysis of Beneficial., Krispin, and Salazar and fails to find that these cases mandate removal. Amendment of Defendant's notice of removal is unlikely to change this conclusion. Further, allowing amendment at this time would prejudice Plaintiff as Defendant's motion for removal has been fully briefed and decided by the Magistrate. See LeNeave v. N. American Life Assur. Co., 632 F. Supp. 1453, 1456 (D.Minn. 1986) (considering whether permitting defendant to amend its notice of removal would prejudice plaintiff).
Conclusion
It is the Order of the Court that the Report and Recommendation (#26) is hereby affirmed and adopted. Defendants' Objection to Magistrate's Recommendation on Motion to Remand and Motion to Compel Arbitration (# 27) is DENIED, Plai Motion Remand (#8) is GRANTED and Defendants' Motion to Compel Arbitration (#3) and Defendants' Motion to Continue and/or Strike the February 4, 2004 Pretrial Conference (#30) are deemed MOOT. This case is hereby remanded to the District Court of Tulsa County for further proceedings pursuant to 28 U.S.C. § 1447(c).