Summary
In Tucker, the Court determined that this factor weighed in favor of the motion to amend because "all parties with an interest [could] be brought into the same suit and avoid the costs of litigating two cases in tandem and the risks of inconsistent judgements."
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Civil Action No. 1:21-cv-1301 Civil Action No. 1:21-cv-1359
2022-02-10
Lisa TUCKER, Plaintiff, v. MASSAGE ENVY FRANCHISING, LLC, Defendant Misty Finical, Plaintiff, v. Massage Envy Franchising, LLC, Defendant
Kevin Biniazan, Breit Biniazan, PC, Virginia Beach, VA, Lee Adair Floyd, Breit Biniazan, Richmond, VA, for Plaintiff. Bradley David Shwer, Pro Hac Vice, Thomas Derek Ulreich-Power, Pro Hac Vice, ThorpeShwer, Phoenix, AZ, Charles Stephen Setliff, Setliff Law PC, Glen Allen, VA, for Defendant in 1:21-cv-1301. Thomas Derek Ulreich-Power, Pro Hac Vice, ThorpeShwer, Phoenix, AZ, Charles Stephen Setliff, Setliff Law PC, Glen Allen, VA, for Defendant in 1:21-cv-1359.
Kevin Biniazan, Breit Biniazan, PC, Virginia Beach, VA, Lee Adair Floyd, Breit Biniazan, Richmond, VA, for Plaintiff.
Bradley David Shwer, Pro Hac Vice, Thomas Derek Ulreich-Power, Pro Hac Vice, ThorpeShwer, Phoenix, AZ, Charles Stephen Setliff, Setliff Law PC, Glen Allen, VA, for Defendant in 1:21-cv-1301.
Thomas Derek Ulreich-Power, Pro Hac Vice, ThorpeShwer, Phoenix, AZ, Charles Stephen Setliff, Setliff Law PC, Glen Allen, VA, for Defendant in 1:21-cv-1359.
ORDER
T. S. Ellis, III, United States District Judge
These two cases, which involve essentially identical claims brought by two different plaintiffs against the same defendant, are before the Court on (i) the plaintiffs’ motions to amend the complaints and remand the cases to state court and (ii) the defendant's motions to compel arbitration. A telephonic oral argument on these cases was heard jointly on February 9, 2022. For the reasons stated by the Court at the conclusion of the telephonic argument, which are summarized in this Order, the motions to amend the complaint in both cases must be granted, and thus both cases must be remanded to state court for lack of diversity jurisdiction.
I.
Before addressing the merits of the pending motions, it is appropriate to summarize the allegations and procedural history of both cases. Both suits arise out of assaults that occurred at franchise locations of defendant Massage Envy Franchising, LLC (hereinafter "Massage Envy"). The plaintiffs in both cases, Lisa Tucker and Misty Finical, allege in separate suits that they were each sexually assaulted on separate occasions by the same massage therapist while visiting a Massage Envy franchise location in Manassas, Virginia.
Tucker filed two suits in Virginia state court related to her assault, only one of which was removed to federal court. On September 23, 2021, Tucker filed suit against three defendants: (i) Relaxnation of Manassas LLC, the Massage Envy franchisee operating the Manassas location; (ii) Harold Olmos, the massage therapist who assaulted Tucker; and (iii) Charles Stovall, the owner and operator of Relaxnation. On October 27, 2021, Tucker filed a separate suit in Virginia state court against the franchisor, Massage Envy. On November 23, 2021, Massage Envy filed a notice of removal in Virginia state court and removed the case to federal court on the basis of diversity jurisdiction, as the franchisor Massage Envy is a Georgia corporation and plaintiff Tucker is a Virginia resident. Once in federal court, Massage Envy filed a motion to compel arbitration (Dkt. 3) and Tucker filed a motion for leave to file an amended complaint to add Olmos, Stovall, and the franchisee Relaxnation as defendants in this case and to remand the case to state court (Dkt. 5). Because Relaxnation and Olmos are both Virginia citizens, as is Tucker, amendment would destroy diversity jurisdiction under 28 U.S.C. § 1332 and therefore if amendment is granted, the case must be remanded to Virginia state court.
As both plaintiffs allege in their complaints and as counsel for plaintiffs noted during the telephonic hearing, the assailant Olmos has been tried and convicted of sexual battery for these incidents in Virginia state court proceedings.
Like Tucker, Finical also filed two suits in Virginia state court related to Finical's assault, only one of which was removed to federal court. On August 20, 2021, Finical filed suit in Virginia state court against the franchisee Relaxnation, Olmos, and Stovall. On November 23, 2021, Finical filed a separate suit in Virginia state court against Massage Envy. On December 3, 2021, Massage Envy filed a notice of removal and removed the case to federal court on the basis of diversity jurisdiction, as Massage Envy is a Georgia corporation and Finical is a Virginia resident. Once in federal court, Massage Envy filed a motion to compel arbitration (Dkt. 3) and Finical filed a motion for leave to file an amended complaint to add Relaxnation, Olmos, and Stovall as defendants in this case and to remand the case to state court (Dkt. 11). Because Relaxnation and Olmos are both Virginia citizens, as is Finical, amendment would destroy diversity jurisdiction under 28 U.S.C. § 1332 and therefore if amendment is granted, the case must be remanded to Virginia state court.
Tucker and Finical are represented in these cases by the same counsel, and defendant Massage Envy is also represented by the same counsel in both cases. Further, both Tucker and Finical seek to amend their complaints to join the same parties—Relaxnation, Olmos, and Stovall. In light of these overwhelming factual similarities between the two cases, all parties agreed that the pending motions in both cases could be heard simultaneously.
II.
It is appropriate first to address plaintiffs’ motions to amend their respective complaints and thus to remand these cases to state court, for if these motions are granted it will be unnecessary to reach or decide Massage Envy's motions to compel arbitration.
There are three decisional sources implicated in this analysis: (1) Rule 15 of the Federal Rules of Civil Procedure, (2) 28 U.S.C. § 1447(e), and (3) the Fourth Circuit's decision in Mayes v. Rapoport , 198 F.3d 457, 461 (4th Cir. 1999). Rule 15, Fed. R. Civ. P., provides that a district court "should freely give leave" to amend a complaint "when justice so requires" and provides the plaintiff the ability to amend as a right if amendment is sought within 21 days of when the complaint is served on the defendant. Fed. R. Civ. P. 15. Section 1447(e) confirms that courts retain discretion to order amendment even in diversity cases removed from state court, as that section provides that "[i]f after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder or permit joinder and remand the action to the State court." 28 U.S.C. § 1447(e). In Mayes , the Fourth Circuit confirmed that in § 1447(e) cases, "the actual decision on whether or not to permit joinder of a defendant under these circumstances to the sound discretion of the district court." Mayes , 198 F.3d at 462. In Mayes , the Fourth Circuit identified several factors to guide district courts in identifying cases where justice requires amendment. These factors include "[1] the extent to which the purpose of the amendment is to defeat federal jurisdiction, [2] whether the plaintiff has been dilatory in asking for amendment, [3] whether the plaintiff will be significantly injured if amendment is not allowed, and [4] any other factors bearing on the equities." Id. Here, a consideration of the Mayes factors points convincingly to the conclusion that plaintiffs’ motions to amend the complaints must be granted.
During the telephonic argument on these motions, counsel for the plaintiffs noted that the defendant had not yet been served in either case, and argued that Rule 15(a)(1)(A), Fed. R. Civ. P., provided plaintiffs with a right to amend their complaints as a matter of course before a defendant was served. But § 1447(e) permits courts to deny or permit joinder without reference to Rule 15(a)(1)(A) and therefore leaves open the question of whether the statute explicitly modifies Rule 15(a)(1)(A). In this case, any potential conflict between Rule 15(a)(1)(A) and § 1447(e) makes no difference in the outcome, as a consideration of § 1447(e) and the Mayes factors leads to the conclusion that amendment is warranted.
Consideration of the first Mayes factor—"the extent to which the purpose of the amendment is to defeat federal jurisdiction"—favors a ruling that permits plaintiffs to amend their complaints and to join the additional defendants. Mayes , 198 F.3d at 462. It is clear that plaintiffs seek to amend their complaints so that one suit can be litigated against all potential defendants, and plaintiffs do not seek amendment for the principally purpose of defeating federal jurisdiction. Indeed, both Tucker and Finical sued Relaxnation, Olmos, and Stovall in Virginia state court and continue to litigate those cases. The plaintiffs seek to amend their complaints to consolidate these defendants into single cases and to avoid the unnecessary costs and potential risks of parallel suits. Plaintiffs do not seek amendment primarily to defeat federal jurisdiction. Thus, the first factor favors permitting the plaintiffs to amend their complaints.
The second Mayes factor—whether plaintiffs have been dilatory in seeking amendment or naming the additional defendants—also favors allowing plaintiffs to amend their complaints. Both Tucker and Finical filed suits against the defendants they seek to join (Relaxnation, Olmos, and Stovall) in Virginia state court before filing suit against Massage Envy. Thus, plaintiffs were diligent in suing the additional defendants in state court in cases already pending when defendants removed the instant actions. Thus, plaintiffs cannot be accused of being dilatory in seeking amendments to their complaints after their suits were removed to federal court; both Tucker and Finical promptly moved to amend their complaints within a month of removal to federal court. Plaintiffs have not been dilatory, and this factor therefore weighs firmly in favor of permitting the plaintiffs to amend their complaints.
The third Mayes factor, whether the plaintiff will suffer serious injury if amendment is refused, also clearly favors allowing amendments so that all parties with an interest in this case can be brought into the same suit and avoid the costs of litigating two cases in tandem and the risks of inconsistent judgments. In Mayes , the Fourth Circuit acknowledged the "danger of parallel lawsuits in federal and state court, which may spawn inconsistent results and inefficient use of judicial resources." Mayes , 198 F.3d at 463. This danger is present in the instant cases, and amendment and remand are therefore appropriate.
The fourth Mayes factor, which requires consideration of "any other factors bearing on the equities," also favors amendment. Mayes , 198 F.3d at 463. Plaintiffs seek amendment to avoid the burden of maintaining separate actions in state and federal court. Consideration of judicial resources also favors amendment, as it is wasteful and unnecessary for the two suits to proceed separately when the two suits could be more efficiently adjudicated in one action. Furthermore, allowing the cases to proceed separately creates a risk of inconsistent judgments in the federal and state actions. A consideration of the equities therefore favors amendment and remand.
A consideration of the Mayes factors clearly favors a ruling allowing amendments and ordering remand in these cases. Massage Envy makes several arguments opposing amendments, but none of these arguments are convincing.
First, Massage Envy argues in its briefing that remand will result in a needless waste of judicial resources. Massage Envy speculates that even if the cases were remanded to state court, Massage Envy might still have to petition a federal court to compel arbitration under 9 U.S.C. § 4. This argument is belied, however, by Massage Envy's own supplemental authority, which includes a recent ruling by a Virginia state court finding that an arbitration agreement between a different plaintiff and Massage Envy was a valid and enforceable arbitration agreement. Virginia courts, therefore, are fully capable of assessing the validity of an arbitration agreement and ordering arbitration.
In addition, Massage Envy relies primarily on two unpublished district court opinions to argue against joinder. See Taft v. Siegwerk USA Inc. , No. 1:11CV002, 2011 WL 4459116, at *1 (W.D.N.C. Sept. 26, 2011) ; Smith v. Computer Task Grp., Inc. , No. 1:06CV00907, 2007 WL 1447699 (M.D.N.C. May 10, 2007). Neither Taft nor Smith is controlling precedent or factually apposite. In Taft the plaintiff had first filed suit against one set of defendants and then moved to dismiss voluntarily that first suit without prejudice. The Taft plaintiff then sued a second defendant and that defendant removed the case to federal court, at which point the Taft plaintiff sought to re-join the previously dismissed defendants and remand the case to state court. The district court rejected the effort to re-join the previously dismissed defendants, and concluded that "timing of the Plaintiffs’ motion suggests that the sole purpose of the present motion for joinder is to destroy diversity jurisdiction." Taft , 2011 WL 4459116, at *3. The timing in the instant cases, however, suggests no such thing, as the plaintiffs in both cases have long maintained suits against the non-diverse defendants (Relaxnation, Olmos, and Stovall).
The other case on which Massage Envy relies, Smith , is also distinguishable. In Smith , the plaintiff filed suit against his employer in state court, alleging workplace harassment. The employer promptly removed the case to federal court, and only after remand did the plaintiff seek to join two additional parties. Unlike in Smith , both Tucker and Finical have maintained suits against the non-diverse defendants since the inception of this litigation. Thus, the conclusion of the Smith court that any "potential dilemma was created solely by" the plaintiff's own action is inapplicable to the instant cases. Smith , 2007 WL 1447699, at *3.
III.
For the foregoing reasons, plaintiffs’ pending motions to amend the complaints will be granted. The amended complaints in both cases include non-diverse defendants, thus depriving the Court of subject matter jurisdiction under 28 U.S.C. § 1332 to address Massage Envy's pending motions to compel arbitration. Therefore, the recent decision from a Virginia state court in a related case, which found that a third plaintiff and Massage Envy had formed a valid and enforceable arbitration agreement has no bearing on the issues decided here.
Accordingly,
It is hereby ORDERED that plaintiff Lisa Tucker's motion for leave to amend her complaint and remand the case to state court (Case No. 1:21-cv-1301, Dkt. 5) is GRANTED. It is further ORDERED that Tucker's amended complaint (Case No. 1:21-cv-1301, Dkt. 5, Ex. 1) is hereby FILED, replacing the original complaint. It is further ORDERED that the matter is REMANDED to the Circuit Court of Prince William County, Virginia.
It is further ORDERED that plaintiff Misty Finical's motion for leave to amend her complaint and remand the case to state court (Case No. 1:21-cv-1359, Dkt. 11) is GRANTED. It is further ORDERED that Finical's amended complaint (Case No. 1:21-cv-1359, Dkt. 11, Ex. 1) is hereby FILED, replacing the original complaint. It is further ORDERED that the matter is REMANDED to the Circuit Court of Prince William County, Virginia.
Defendant Massage Envy's motions to compel arbitration in these two cases are neither reached nor decided here.