KAY v. COVERT

NORAH KING, Magistrate Judge

This matter is before the Court for consideration of the Plaintiffs' Motion to Remand, Doc. No. 11, and the Defendants' Motion to Consolidate Cases, Doc. No. 8. For the reasons that follow, it is recommended that the Plaintiffs' motion be granted. Defendants' motion is denied.

I.

Plaintiffs Alaine Kay and her mother Fay Kay ["Plaintiffs"] originally filed this action in the Court of Common Pleas for Perry County, Ohio on April 21, 2010 against Jessica Covert and two John Doe defendants. On May 18, 2010, the action was removed to this Court on the basis that, by suing Defendant Covert in her capacity as an agent of the American National Red Cross ["Red Cross"], Plaintiffs have effectively sued the Red Cross, which is entitled to invoke this Court's original jurisdiction pursuant to 36 U.S.C. § 300105(a)(5).

As Defendant Covert points out in her Notice of Removal, Doc. No. 2, the instant action follows an earlier action that Plaintiffs filed against the Red Cross and which is currently pending in this court. Kay, et al. v. American National Red Cross, et al., 2:09-CV-351. That case was also originally filed in the Court of Common Pleas for Perry County, Ohio and was removed to this Court on May 1, 2009. The Court has original jurisdiction over that action pursuant to 36 U.S.C. § 300105(a)(5), which provides that the Red Cross has "the power to sue and be sued in courts of law and equity, State or Federal, within the jurisdiction of the United States." In American National Red Cross v. S.G., 112 S. Ct. 2465 (1992), the United States Supreme Court held that § 300105(a)(5) authorizes the Red Cross to remove to federal courts actions pending against it in state courts.

This action, Kay, et al. v. Covert, et al., 2:10-CV-433, was designated by the court as related to Kay, et al. v. American National Red Cross, et al., 2:09-CV-351. The Complaints in both cases involve identical facts and claims.

In the earlier action, which names only the Red Cross, Plaintiffs allege that, on April 22, 2008, the Red Cross conducted a blood drive at New Lexington High School in Perry County, Ohio. Complaint, Doc. No. 3, at ¶ 1, 2:09-CV-351. Plaintiff Alaine Kay volunteered to donate blood during the blood drive. Id. at ¶ 3. Plaintiffs claim that she suffered injury to her right arm as a result of the negligence of "Defendant John Doe No. 1" who is identified as "an employee or agent of the Defendant Red Cross." Id. at ¶¶ 2, 4. Plaintiffs claim that, as a result of the alleged negligence of Defendant John Doe No. 1, Plaintiff Alaine Kay has suffered "serious injuries of the mind and body, some of which may be permanent in nature and all of which have been painful and disabling." Id. at ¶ 5.

In Kay, et al. v. Covert, et al., 2:10-C-433, Plaintiffs identify Jessica Covert as an employee of the Red Cross and allege that she acted negligently in drawing Alaine Kay's blood and in attempting to extract the needle from her arm. Complaint, Doc. No. 3, at ¶¶ 1, 4-6, 2:10-CV-433. Plaintiffs again allege that, as a result of such negligence, Plaintiff Alaine Kay suffers from serious injuries, some of which may be permanent. Id. at ¶ 7. In both cases, Plaintiff Alaine Kay's mother brings a separate claim for recovery of expenses associated with the care of her minor child.

Plaintiffs have filed a Motion to Remand this case. Defendants oppose the motion and move to consolidate this case with the earlier filed case. The Court will now address the merits of these motions.

II. A. Motion to Remand

In the Motion to Remand, Doc. No. 11 (2:10-CV-433), Plaintiffs argue that they are entitled to sue Defendant Covert in state court even though the circumstances surrounding the suit "involve the same incident as does the suit against the Red Cross." Id., at 3. Plaintiffs concede that this court has original jurisdiction over Plaintiffs' claims against the Red Cross but maintain that removal is not appropriate in an action where the Red Cross is not named as a Defendant.

In response, Defendant Covert observes that the Complaint in this action identifies her as an employee of the Red Cross and alleges that she was acting within the course and scope of her employment during the blood drive on April 22, 2008 at New Lexington High School. Thus, Defendant Covert argues, the suit is in effect a suit against the Red Cross. Defendant Covert argues that Plaintiffs should have amended the Complaint in 2:09-CV-351 to identify her as the defendant referred to in that case only as John Doe No. 1, rather than file a separate suit against her in state court. According to Defendant Covert, by filing a second action in state court and by failing to name the Red Cross as a defendant, Plaintiffs are attempting to circumvent 28 U.S.C. § 1446(d) and 36 U.S.C. §§ 300101- 300111.

As the removing party, it is the Defendant that bears the burden of establishing the propriety of removal. Eastman v. Marine Mechanical Corp., 438 F.3d 544, 550 (6^th Cir. 2006). The removal statute is to be strictly construed to promote comity and to preserve the jurisdictional boundaries between state and federal courts. Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949 (6^th Cir. 1994). "[A]ll doubts as to the propriety of removal are resolved in favor of remand." Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6^th Cir. 1999).

In this case, Defendant Covert argues that removal is appropriate because "Plaintiffs have effectively sued the Red Cross, which is both entitled to federal jurisdiction and obligated to indemnify Defendant Covert for her actions taken as its agent." Notice of Removal, Doc. No. 2, at ¶ 11. It is, however, undisputed that the Red Cross itself was not named as a defendant in the action.

Defendant Covert nevertheless argues that, under the "artful pleading doctrine," Plaintiffs should not be allowed to avoid federal jurisdiction. That doctrine is a corollary to the "well-pleaded complaint rule," which provides that, "[i]f a federal claim is presented by the complaint, there is a question of federal jurisdiction even if the complaint is phrased in state law terms . . ." Kerr-McGee Chemical Corp. v. Illinois, 459 U.S. 1049 (1982). The artful pleading doctrine permits removal of an action in circumstances where it is obvious that the plaintiff has artfully pled the complaint to avoid implicating federal law. See Franchise Tax Bd. of State of California v. Construction Laborers Vac. Trust for So. California, 463 U.S. 1, 22 (1983). In this case, however, removal is not based upon the assertion of a claim arising under federal law; the claims presented in this action are governed solely by state law and removal of the action was based only on the removal authority granted by Congress to the Red Cross. For these reasons, the Court finds the artful pleading doctrine inapplicable.

Defendant Covert also argues that, in general, a plaintiff should not be permitted to file a second state court action after a suit has been removed to federal court. See Memorandum contra, Doc. No. 13, at 3-4. The cases upon which Defendant relies in making this argument, however, involve two actions with the same parties. See Riley v. Carson Pirie Scott Co., 946 F.Supp. 716 (E.D. Wise. 1996); Roberts v. Hollandsworth, 616 P.2d 1058 (Idaho 1980). In this case, Plaintiffs have sued two different defendants — Jessica Covert and the Red Cross — in two different actions. While Defendant Covert urges the Court to find that the action against her is effectively a suit against the Red Cross, there is simply no basis upon which this Court could permit a non-party to remove a case to this Court.

In the Court's view, the situation at bar is analogous to that presented in Jana Master Fund, Ltd. v. JPMorgan Chase Co., 490 F.Supp.2d 325 (S.D. N.Y. 2007). There, certain investor plaintiffs brought suit in state court against a securities firm and holding company as well as individual employees, alleging state law fraud claims. A non-party, federally chartered bank, Chase N.A., removed the action to federal court pursuant to the Edge Act, 12 U.S.C. § 611, et seq. In ruling on the plaintiff investors' motion to remand, the district court concluded that the Edge Act did not provide a basis for subject matter jurisdiction because "Chase N.A. is not a party to this action." 490 F.Supp.2d at 330. "The removal provision is explicit that only a `defendant' is authorized to remove an Edge Act case." Id. The court concluded that it would be contrary to the plain language of the statute to permit a non-party to remove the action to federal court.

The Edge Act permits removal if: (1) the case is civil in nature; (2) one of the parties is a corporation organized under the laws of the United States; and (3) the suit arises out of certain transactions involving international banking or international financial obligations. See 12 U.S.C. § 632.

Similarly, in the case at bar, there is no authority permitting the Red Cross, a non-party, to remove an action to this court under the authority of 36 U.S.C. § 300105(a)(5). There is likewise no authority that would permit Jessica Covert, an individual, to remove the action based on that statute. As previously noted, the removal statute is to be strictly construed, Alexander v. Elec. Data Sys. Corp., 13 F.3d at 949, and "all doubts as to the propriety of removal are resolved in favor of remand." Coyne v. Am. Tobacco Co., 183 F.3d 493. Because the Red Cross is not named as a defendant in this action, there is no basis for removal of the action to this Court.

(A) The Court expresses no opinion as to whether and to what extent this action, if remanded to state court, should proceed. In SFM Holdings, Ltd. v. Fisher, No. 08-81177-CIV, 2009 WL 2425760 (S.D. Fla. August 6, 2009), the district court found that a second state court action involving identical facts to an earlier action filed in state court and removed to federal court, but adding defendants as a means of defeating a second removal. The district court enjoined the second state action, finding that it had been improperly filed as a means of evading jurisdiction properly invoked in the first lawsuit.

B. Motion to Consolidate

In light of the foregoing, the Motion to Consolidate Cases is denied.

III.

It is RECOMMENDED that Plaintiffs' Motion to Remand, Doc. No. 11, be GRANTED. Defendants' Motion to Consolidate Cases, Doc. No. 8, is DENIED.

If any party seeks review by the District Judge of this Report and Recommendation, that party may, within fourteen (14) days, file and serve on all parties objections to the Report and Recommendation, specifically designating this Report and Recommendation, and the part thereof in question, as well as the basis for objection thereto. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). Response to objections must be filed within fourteen (14) days after being served with a copy thereof. Fed.R.Civ.P. 72(b).

The parties are specifically advised that failure to object to the Report and Recommendation will result in a waiver of the right to de novo review by the District Judge and of the right to appeal the decision of the District Court adopting the Report and Recommendation. See Thomas v. Arn, 474 U.S. 140 (1985); Smith v. Detroit Foundation of Teachers, Local 231, etc., 829 F.2d 1370 (6^th Cir. 1987); United States v. Walters, 638 F.2d 947 (6^th Cir. 1981).

October 1, 2010 DATE