Qiao et al v. Chan et al, No. 2:2020cv01821 - Document 30 (W.D. Wash. 2021)
Court Description: ORDER granting Plaintiffs' 5 Motion for Remand. This case is hereby REMANDED to the Superior Court of Washington State for King County. Plaintiffs are entitled to an award of fees and costs associated with bringing this Motion. Plaintiffs s hall file a supplemental motion in this Court requesting such relief no later than twenty-one (21) days from the date of this Order. Signed by Judge Ricardo S. Martinez. Per LCR 3(i), case will be remanded 14 days from the date of this Order, on 1/29/2021. (PM)
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on based on diversity of citizenship pursuant to 28 8 U.S.C. § 1332(a). Dkt. #1. Diversity jurisdiction requires diversity of citizenship between the 9 parties and an amount in controversy exceeding $75,000. 28 U.S.C. § 1332(a). Diversity of 10 citizenship requires “complete diversity,” meaning that “each defendant must be a citizen of a 11 12 different state from each plaintiff.” In re Digimarc Corp. Derivative Litigation, 549 F.3d 1223, 13 1234 (9th Cir. 2008). “[D]iversity jurisdiction does not encompass a foreign plaintiff suing 14 foreign defendants.” Nike, Inc. v. Comercial Iberica de Exclusivas Deportivas, S.A., 20 F.3d 15 987, 991 (9th Cir. 1994) (citing Cheng v. Boeing Co., 708 F.2d 1406, 1412 (9th Cir.), cert. denied, 16 464 U.S. 1017, 104 S. Ct. 549, 78 L.Ed.2d 723 (1983). The presence of a United States citizen 17 18 in such an action “does not salvage jurisdiction because diversity must be complete.” Id. (citing 19 Faysound Ltd. v. United Coconut Chem., Inc., 878 F.2d 290, 294 (9th Cir. 1989)). 20 21 C. Lack of Complete Diversity Defendants advance two theories of federal diversity jurisdiction, neither of which is 22 23 legally supported. First, Defendants’ removal notice argues that Plaintiff Ambleside, a 24 Washington citizen, is a “sham plaintiff,” and the remaining plaintiffs—Qiao and De Xian 25 Holding, Ltd.—are a Canadian citizen and Samoan corporation, respectively. Dkt. #1 at 3-4. 26 Defendants also contend that the Washington-based corporate defendants are “nominal parties” 27 and should not be considered, leaving only Defendant Chan—a Canadian citizen. Id. at 4-5. 28 ORDER GRANTING PLAINTIFFS’ MOTION FOR REMAND - 3 Case 2:20-cv-01821-RSM Document 30 Filed 01/15/21 Page 4 of 6 1 Defendants alternatively argue that even if these corporate defendants are considered, 2 forthcoming corporate disclosure statements will reveal that these companies are owned by 3 various combinations of Chinese, Hong Kong, and Canadian citizens. Id. at 5. As the Court 4 pointed out in its previous order, even if it accepts Defendants arguments that the Washington 5 6 defendant corporations are “nominal defendants” and should not be considered, a lawsuit by 7 foreign plaintiffs against foreign defendants does not meet the “complete diversity” requirement. 8 Nike, Inc., 20 F.3d at 991; see also Dkt. #15 at 5. Consequently, Defendants’ basis for removal 9 as stated in their removal notice fails as a matter of law. 10 In their Response, Defendants amend their theory of removal by abandoning their claim 11 12 that Ambleside is a sham plaintiff. See Dkt. #26 at 6 (“Defendants would concede that if both 13 Plaintiff Ambleside and the corporate Defendants were all treated as nominal, then the case 14 would involve solely alien plaintiffs suing an alien defendant, thus vitiating diversity 15 jurisdiction.”). Under their revised theory, Defendants argue that this matter concerns an alien 16 individual (Qiao), an alien corporation (De Xiang) and a domestic corporation (Ambleside) suing 17 18 an alien individual (Chan). Id. Defendants argue that “the presence of aliens on even both sides 19 of a case” does not defeat complete diversity. Id. at 3-4 (emphasis in original). Defendants rely 20 on a case from the Northern District of Georgia, Samincorp, Inc. v. Southwire Co., Inc., which 21 found that “[t]he statute [28 U.S.C. § 1332(a)] does not provide that diversity is destroyed if 22 23 citizens of foreign states are both plaintiffs and defendants . . . ‘the language of Section 24 1332(a)(3) is broad enough to allow aliens to be additional parties on both sides of the dispute.’” 25 531 F. Supp. 1, 2 (N.D. Ga. 1980) (quoting C. Wright, A. Miller, and E. Cooper, Federal Practice 26 and Procedure § 3604 (1975)). Under Defendants’ new reasoning, complete diversity exists 27 because Plaintiff Ambleside is a Washington corporation. 28 ORDER GRANTING PLAINTIFFS’ MOTION FOR REMAND - 4 Case 2:20-cv-01821-RSM Document 30 Filed 01/15/21 Page 5 of 6 1 Again, Defendants have grossly misconstrued the law on federal diversity jurisdiction. 2 As the Samincorp court stated, diversity exists under Section 1332(a) where “the controversy is 3 between ‘citizens of different States and in which citizens or subjects of a foreign state are 4 additional parties.’” Samincorp, 531 F. Supp. at 2 (quoting 28 U.S.C. § 1332(a)) (emphasis 5 6 added). Jurisdiction would therefore exist if a New Yorker sued a Californian, notwithstanding 7 alien parties on both sides of the dispute “assuming, of course, that there was a legitimate dispute 8 between the two Americans.” Id. (emphasis added) (internal quotations omitted). The Ninth 9 Circuit in Nike reached the same conclusion that complete diversity exists in cases with aliens on 10 both sides of the litigation, provided that there are “citizens of [the] United States on both sides 11 12 who satisfy diversity requirements.” Nike, Inc., 20 F.3d at 991 (emphasis added). Here, 13 Defendants identify only one U.S. citizen in this dispute: Plaintiff Ambleside. The remaining 14 parties, under Defendant’s theory of removal, are all alien individuals or entities. Because there 15 is no citizen defendant to create complete diversity with Plaintiff Ambleside, Defendants’ theory 16 of diversity jurisdiction fails as a matter of law. 17 18 19 20 21 For these reasons, the Court finds no proper basis for federal diversity jurisdiction. Accordingly, remand is warranted. D. Costs and Fees Plaintiffs request costs and fees under 28 U.S.C. § 1447(c). Dkt. #5 at 8. Under 28 U.S.C. 22 23 §1447(c), “an order remanding the case may require payment of just costs and any actual 24 expenses, including attorney fees, incurred as a result of the removal.” The standard for awarding 25 fees turns on the reasonableness of the removal. Martin v. Franklin Capital Corp., 546 U.S. 132, 26 141 (2005). Courts may award attorney’s fees under 28 U.S.C. §1447(c) where the removing 27 party lacked an objectively reasonable basis for seeking removal. Id. 28 ORDER GRANTING PLAINTIFFS’ MOTION FOR REMAND - 5 Case 2:20-cv-01821-RSM Document 30 Filed 01/15/21 Page 6 of 6 1 The Court has reviewed the Complaint, the Notice of Removal, and the briefing of the 2 parties, and concludes that Defendants did not have an objectively reasonable basis for removal. 3 The complaint is solely a state law action between non-diverse parties, yet Defendants 4 attempted—unsuccessfully—to create diversity jurisdiction through changes of ownership 5 6 among the Defendant entities. Defendants also contend that Plaintiffs “were afforded an 7 opportunity to stipulate to remand” on January 8, 2021. Dkt. #27 at ¶ 5. Defendants’ offer to 8 stipulate to a remand, which occurred only after the Court identified the deficiencies in 9 Defendants’ removal notice, is irrelevant to the question of whether Defendants lacked an 10 objectively reasonable basis for seeking removal in the first instance. 11 12 13 14 15 For these reasons, Plaintiffs are entitled to an award of fees and costs associated with Defendants’ removal. IV. CONCLUSION The Court, having considered Plaintiffs’ Motion, the declarations and exhibits in support 16 thereof, and the remainder of the record, hereby finds and ORDERS: 17 18 19 20 21 (1) Plaintiffs’ Motion for Remand, Dkt. #5, is GRANTED. This case is hereby REMANDED to the Superior Court of Washington State for King County. (2) Plaintiffs are entitled to an award of fees and costs associated with bringing this Motion. Plaintiffs shall file a supplemental motion in this Court requesting such relief no later 22 23 24 25 26 27 than twenty-one (21) days from the date of this Order. DATED this 15th day of January, 2021. A RICARDO S. MARTINEZ CHIEF UNITED STATES DISTRICT JUDGE 28 ORDER GRANTING PLAINTIFFS’ MOTION FOR REMAND - 6
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