Opinion
CIVIL ACTION NO: 02-2533, SECTION: "A" (4)
February 25, 2003
Before the Court is plaintiff Input/Output Marine Systems, Inc.'s Motion for Remand (Rec. Doc. 4). The motion is before the Court on the briefs without oral argument. Defendants oppose the motion.
The plaintiff alleges that Input/Output and defendant Wilson Greatbatch Technologies, Inc. are both Delaware corporations and thus there is no basis for federal jurisdiction under 28 U.S.C. § 1332. The defendant does not deny that Input/Output and Wilson Greatbatch Technologies, Inc. are both Delaware corporations. Rather, defendants argue that Wilson Greatbatch Technologies, Inc. was fraudulently joined to defeat diversity jurisdiction.
At first reading it is confusing to distinguish between the two Greatbatch defendants. Therefore, the Court will refer to Wilson Greatbatch Technologies, Inc. as WGTI and Wilson Greatbatch, Ltd. as WGL.
28 U.S.C. § 1332 states in pertinent part: "(a) The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between — (1) citizens of different States. . . ."
BACKGROUND
Plaintiff is in the business of providing seismic instrumentation and surveying products to land and marine mineral exploration industries. In late 1996 and early 1997, Plaintiff allegedly contacted several battery manufacturers, including defendant WGL, regarding the possibility of these manufacturers developing a specialized long-term life battery for exclusive distribution to plaintiff and limited use with plaintiff's marine seismic exploration product, the "Bird." Because Plaintiff would share alleged confidential information and trade secrets with defendant in developing the battery, defendant was required to sign a Mutual Confidential Disclosure and Trust Agreement on April 24, 1997. The agreement was executed by WGL and DigiCOURSE, Inc., and allegedly precluded the defendant from disclosing plaintiff's confidential information and trade secrets and prohibited defendant from relying on the information for its own benefit.
The "Bird" controls the depth and position of a towed marine seismic cable as a vessel navigates. This particular battery powers the "Bird" (see Plaintiff's petition).
Plaintiff's Exhibit A. Plaintiff later merged with DigiCOURSE, Inc. and allegedly succeeded to all the rights of DigiCOURSE.
After the execution of the Confidentiality Agreement and after plaintiff shared its alleged confidential information and trade secrets with defendant, negotiations fell through and plaintiff did not use the defendant as vendor for the battery. Plaintiff later learned that defendant, WGL (and/or WGTI) allegedly continued to develop the battery and allegedly marketed a competing battery for use in the "Bird" at a price undercutting the price charged by plaintiff for plaintiff's battery.
Allegedly negotiations fell through for failure to agree upon a price (see plaintiff's petition).
Plaintiff originally filed suit against WGTI and WGL d/b/a Electrochem in the Twenty-Fourth Judicial District Court of the State of Louisiana for the Parish of Jefferson. Plaintiff alleged in its state court petition that: (1) defendants breached their fiduciary duty to plaintiff; (2) defendants breached a Mutual Confidentiality Disclosure and Trust Agreement; (3) defendants violated the Uniform Trade Secrets Act; (4) defendants violated the Louisiana Unfair Trade Practices Act; (4) defendants were unjustly enriched through their misappropriation of plaintiff's confidential information; and, (5) defendants' misappropriation constituted conversion.
Plaintiff's exhibit "D" and defendants' exhibit "H".
Defendants removed the action on the basis of diversity jurisdiction. Defendants allege that WGTI was fraudulently joined to frustrate the Court's diversity jurisdiction. Plaintiff Input/Output and defendant WGTI both acknowledge that they are Delaware corporations. WGL d/b/a Electrochem is a limited partnership formed under the laws of the state of New York. The shared citizenship of plaintiff Input/Output and defendant WGTI would destroy diversity jurisdiction should WGTI fail to establish fraudulent joinder.
THE PARTIES' CONTENTIONS
Plaintiff argues that WGTI is a proper party to this suit and there is no basis for federal jurisdiction. Plaintiff alleges that WGTI now markets and sells the battery developed by plaintiff for use in the Bird. Plaintiff also argues that WGTI claims to be the successor of WGL according to WGTI's public filing with the SEC. Plaintiff's state law claims of violations of Louisiana Uniform Trade Secrets Act and Louisiana Unfair Trade Practices Act are also alleged.
See Plaintiff's Exhibit A1, a WGTI website allegedly marketing the battery on-line.
See Plaintiff's Exhibit C, Tabs 3, 6 and 7.
In order to recover damages under Louisiana's Uniform Trade Secrets Act, the complainant must prove (1) the existence of a trade secret, (2) misappropriation of the trade secret by another, and (3) actual loss caused by the misappropriation. LSA-R.S. 51:1431 et seq. and Computer Management Assistance Company v. Robert F. DeCastro, 220 F.3d 396, (5 Cir. 2000).
"To recover under Louisiana Unfair Trade Practices Act (LUTPA), plaintiff must prove fraud, misrepresentation or other unethical conduct." Id. at 404.
In opposition, WGTI and WGL argue that only by impermissibly disregarding their corporate structures can plaintiff state a cause of action against WGTI. Defendants also argue that all of plaintiff's claims share the same nucleus of facts.
Pampillonia v. R.J.R. Nabisco, Inc., 138 F.3d 459 (2 Cir. 1998).
". . . that WGL entered into a Confidentiality Agreement with plaintiff, and that it breached the agreement by misappropriating confidential information to develop and market its own competitive battery." Defendants' memorandum at p. 8.
DISCUSSION
28 U.S.C. § 1441(a) provides that "any civil action brought in State court of which the district courts of the United States have original jurisdiction, may be removed by defendant . . . to the district court." See 28 U.S.C. § 1441(a) (1994). District courts have original jurisdiction of all civil actions between citizens of different states in which the matter in controversy exceeds $75,000.The Fifth Circuit has consistently held that "To establish that a non-diverse defendant has been fraudulently joined for the purpose of defeating diversity jurisdiction, the removing party must prove either that there has been actual fraud in the pleading of jurisdictional facts or that there is absolutely no possibility that the plaintiff will be able to establish a cause of action against that party in state court." (emphasis added) The burden of so proving is a heavy one. Courts are not to "determine whether the plaintiff will actually or even probably prevail on the merits of the claim," but should "look only for the possibility that the plaintiff might do so."
Travis v. Irby, 2003 WL 23102, (5 Cir. 2003) citing Griggs v. State Farm Lloyds, 181 F.3d 694, (5 Cir. 1999). In Badon v. R J R Nabisco, Inc., 236 F.3d 282, (5 Cir. 2000) the Fifth Circuit stated, "What we do hold is that there is at least an arguably reasonable basis for predicting that Louisiana would allow redhibition or article 2475 recovery against the wholesalers." (emphasis added).
Sid Richardson Carbon Gasoline Co., v. Interenergy Resources, Ltd., 99 F.3d 746, (5 Cir. 1996); B., v. Miller Brewing Co., 663 F.2d 545, (5 Cir. 1981).
Burden v. General Dynamics Corp., 60 F.3d 213 (5 Cir. 1995).
In determining whether the joinder of a non-diverse party was fraudulent, the court must consider all factual allegations in the light most favorable to the plaintiff, and resolve all contested issues of substantive fact in favor of plaintiff.
Travis v. Irby, 2003 WL 23102, (5 Cir. 2003).
Based on the foregoing, the Court concludes that WGTI and WGL have failed to meet their heavy burden of establishing fraudulent joinder. The Court can find no evidence of outright fraud on the part of plaintiff. Defendants have failed to show that plaintiff has absolutely no possibility of establishing causes of action against them. To the contrary, there are several theories upon which plaintiff has sued WGTI and WGL that are recognized causes of action under Louisiana law such as LUTSA, LUTPA, breach of contract, unjust enrichment, conversion and breach of fiduciary duty. Further, defendants' attempt to argue the merits of their claim are unpersuasive. Nor is such a determination on the merits appropriate in a fraudulent joinder analysis.
In sum, the Court concludes that complete diversity of citizenship is lacking thereby depriving this Court of subject matter jurisdiction. Remand pursuant to 28 U.S.C. § 1447(c) is appropriate.
Accordingly,
IT IS ORDERED that the Motion to Remand (Rec. Doc. 4) filed by plaintiff should be and is hereby GRANTED. This matter is REMANDED to the Twenty-Fourth Judicial District Court of the State of Louisiana for the Parish of Jefferson.