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Reynolds v. Encompass Health Corp.

United States District Court, S.D. West Virginia, Charleston Division

April 26, 2019

SHERRY REYNOLDS Plaintiff,
v.
ENCOMPASS HEALTH CORP., et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          Thomas E. Johnston, Chief Judge.

         Pending before the Court is Plaintiff's motion to remand.[1] (ECF No. 3.) For the reasons discussed herein, the Court GRANTS IN PART and DENIES IN PART the motion. (ECF No. 3.)

         I. BACKGROUND

         Plaintiff Sherry Reynolds (“Reynolds”) filed the present action in the Circuit Court of Wood County, West Virginia, against her former employer, HealthSouth, which was absorbed by Defendant Encompass Health Corporation (“Encompass”), alleging a claim for retaliation in violation of the West Virginia Patient Safety Act (“WVPSA”). (See ECF No. 1-2.) Reynolds also named her former job trainers, Freda McVay (“McVay”) and Pam Douglas (“Douglas”), as defendants. (See id.)

         On January 11, 2019, Encompass removed the present action to this Court invoking the Court's diversity jurisdiction. (ECF No. 1.) Reynolds is a resident of West Virginia and Encompass is a Delaware corporation with its principal place of business in Alabama. (Id. at 2, ¶ 7.) Although McVay and Douglas are both West Virginia residents, Encompass asserted in their Notice of Removal that they were fraudulently joined and, thus, federal jurisdiction is proper. (Id. ¶ 8.)

         Reynolds filed the present motion to remand on January 16, 2019. (ECF No. 3.) Encompass timely responded to the motion, (ECF No. 11), and Reynolds timely replied, (ECF No. 12). As such, the motion is fully briefed and ripe for adjudication.

         II. LEGAL STANDARD

         Congress has provided a right of removal from state to federal court if a case could have originally been brought in federal court. 28 U.S.C. § 1441(a). Generally, this right exists in suits that involve a federal question or citizens of different states and where the amount in controversy exceeds $75, 000, exclusive of interest and costs. See 28 U.S.C. § 1332(a)(2). However, because removal of civil cases from state to federal court infringes upon state sovereignty, federal courts strictly construe the removal statute and resolve all doubts in favor of remanding cases to state court. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 109 (1941); see also Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994) (“Because removal jurisdiction raises significant federalism concerns, we must strictly construe removal jurisdiction.” (citation omitted)). The party asserting federal jurisdiction bears the burden of proof. See Landmark Corp. v. Apogee Coal Co., 945 F.Supp. 932, 935 (S.D. W.Va. 1996). In evaluating a party's claim to federal jurisdiction, a court should look toward the circumstances as they existed at the time the notice of removal was filed. See Dennison v. Carolina Payday Loans, Inc., 549 F.3d 941, 943 (4th Cir. 2008).

         The Supreme Court has long “read the statutory formulation ‘between . . . citizens of different States'” in § 1332(a)(1) “to require complete diversity between all plaintiffs and all defendants.” Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005) (citing Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996)). Thus, under this “complete diversity” rule, jurisdiction is permitted “only when no party shares common citizenship with any party on the other side.” Mayes v. Rapoport, 198 F.3d 457, 461 (4th Cir. 1999) (citation omitted). “This . . . rule . . . makes it difficult for a defendant to remove a case if a nondiverse defendant has been party to the suit prior to removal.” Id.

         However, the doctrine of fraudulent joinder permits a district court to “disregard, for jurisdictional purposes, the citizenship of certain nondiverse defendants, assume jurisdiction over a case, dismiss the nondiverse defendants, and thereby retain jurisdiction.” Mayes, 198 F.3d at 461. The Fourth Circuit lays a “heavy burden” upon a defendant claiming fraudulent joinder. Johnson v. Am. Towers, LLC, 781 F.3d 693, 704 (4th Cir. 2015) (quoting Hartley v. CSX Transp., Inc., 187 F.3d 422, 424 (4th Cir. 1999)). To establish that a nondiverse defendant has been fraudulently joined, the removing party must establish either: “[t]hat there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court; or [t]hat there has been outright fraud in the plaintiff's pleading of jurisdictional facts.” Mayes, 198 F.3d at 464 (quoting Marshall v. Manville Sales Corp., 6 F.3d 229, 232 (4th Cir. 1993)). Thus, a plaintiff need only demonstrate a “glimmer of hope” of success in order to have the case remanded. Hartley, 187 F.3d at 425.

         Given this rigorous standard, “fraudulent joinder is typically only found in cases of legal impossibility.” Flores v. Ethicon, Inc., 563 Fed.Appx. 266, 269 (4th Cir. 2014). However, a complaint may be “so inadequate and the record so entirely lacking in factual support that [a court] can only reasonably conclude that the non-diverse defendants were added to defeat jurisdiction.” Id. In such cases, a finding of fraudulent joinder is also appropriate where the plaintiff fails to make any allegations in which a court can reasonably infer a cause of action. Id. at 70.

         III. DISCUSSION

         The jurisdictional facts in this case are not in dispute. Rather, Encompass asserts that McVay and Douglas were fraudulently joined as there is no possibility that Reynolds can establish a cause of action against either of them under the WVPSA. (See ECF No. 11 at 1.) Encompass specifically argues that Reynolds has not alleged any actual or inferred retaliatory conduct by Douglas or McVay. (See Id. at 2.)

         A. Fraud ...


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