United States District Court, S.D. Indiana, New Albany Division
ENTRY ON MOTION TO REMAND
RICHARD L. YOUNG, District Judge.
Plaintiff, Lawrence Lee Reis, brought suit against Defendants, Mike Robbins, Steve Willan, American Family Mutual Insurance Company ("AFMIC"), American Family Life Insurance Company ("AFLIC"), and American Standard Insurance Company of Wisconsin ("ASICW"), for breach of contract, unjust enrichment, and intentional interference with a contractual relationship. Reis originally filed his complaint in state court; Defendants removed the action to this court. Reis now moves to remand the case alleging this court lacks subject matter jurisdiction. For the reasons set forth below, the court GRANTS Reis's motion.
Reis, an Indiana resident, operated an insurance agency for AFMIC, AFLIC, and ASICW for eighteen years. (Complaint ¶¶ 7, 8). During that time, Reis's agency was very successful. (Id. at ¶ 8). In December of 2011, Robbins, the Agency Sales Manager overseeing the district Reis was located in, approached Reis about a Performance Improvement Plan ("PIP"), which Reis was required to abide by for one year. (Id. at ¶ 10). During the next year, Reis alleges that Robbins undertook steps to impede Reis's ability to succeed under the PIP. (Id. at ¶ 14). Specifically, Robbins and Willan, the former State Director of Indiana, changed the PIP guidelines and mandates, affirmatively misrepresented about Reis's requirements for ongoing agency with AFMIS, AFLIC, and ASICW. (Id. at ¶ 15). Robbins, allegedly, engaged in conduct outside the scope of his employment to intentionally interfere with Reis's contractual relationship. Willan, allegedly, acquiesced in this behavior. On November 15, 2012, Reis's contract with AFMIC, AFLIC, and ASICW was terminated.
As a result of the above events, Reis filed the present lawsuit in the Circuit Court of Clark County, State of Indiana, on June 18, 2014. On July 9, 2014, Defendants filed their notice of removal. At that time, the Defendants filed for removal based on diversity jurisdiction, alleging that Robbins, an Indiana resident, was a sham defendant, and federal question jurisdiction due to an age discrimination claim. Reis amended his complaint and dropped the age discrimination claim; thus, the only possible basis for subject matter jurisdiction is diversity jurisdiction.
Federal courts have original jurisdiction over "all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, " between citizens of different states. 28 U.S.C. § 1332(a)(1). There must be complete diversity between the plaintiff and defendants, meaning that the plaintiff and any one defendant cannot be citizens of the same state. Pursuant to 28 U.S.C. § 1447, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded."
"Under the doctrine of fraudulent joinder, an out-of-state defendant's right of removal premised on diversity cannot be defeated by joinder of a nondiverse defendant against whom the plaintiff has no chance of success.'" Zotec Partners, LLC v. Herald, No. 1:13-cv-00792-JMS-DKL, 2013 WL 3989424, * 3 (S.D. Ind. Aug. 1, 2013) (quoting Morris v. Nunzo, 718 F.3d 660 (7th Cir. 2013)). "Fraudulent joinder is difficult to establish-a defendant must demonstrate that, after resolving all issues of fact and law in favor of the plaintiff, the plaintiff cannot establish a cause of action against the in-state defendant.'" Schur v. L.A. Weight Loss Centers, Inc., 577 F.3d 752, 764 (7th Cir. 2009) (quoting Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992)). Stated differently, the court must determine whether there is "any reasonable possibility" that the plaintiff could prevail against the non-diverse defendant. Poulos, 959 F.2d at 73.
In evaluating fraudulent joinder, a defendant faces a heavy burden. See Schur, 577 F.3d at 764. The Seventh Circuit has suggested "that the burden is even more favorable to the plaintiff than the standard that applies to a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)." Id. (noting the suggestion and citing several cases in support); see also Batoff v. State Farm Ins. Co., 977 F.2d 848, 852 (3d Cir. 1992) (stating that a Rule 12(b)(6) inquiry "is more searching than that permissible when a party makes a claim of fraudulent joinder").
A. Motion to File Surreply and Motion to Strike
Defendants allege that Reis improperly submitted new arguments for the first time in his reply brief, thus Defendants seek leave to file a surreply. Additionally, Defendants argue in that surreply that Reis's new arguments should be stricken. The court will first address the motion to file a surreply and then the motion to strike.
As Defendants argue, new arguments and evidence may not be raised for the first time in a reply brief. See Gold v. Wolpert, 876 F.2d 1327, 1331 n. 6 (7th Cir. 1989). "Reply briefs are for replying, not raising new arguments or arguments that could have been advanced in the opening brief." Autotech Technologies Ltd. Partnership v. Automationdirect.com, Inc., 249 F.R.D. 530, 536 (N.D. Ill. 2008). A party, however, may expand upon and clarify arguments in its reply brief. See Ripberger v. Corizon, Inc., No. 1:11-cv-01394-TWPMJD, 2012 WL 4340716, * 1 (S.D. Ind. Sept. 20, 2012). In addition, this serves to prevent the nonmoving party from being sandbagged. See Medical Assur. Co., Inc. v. Miller, No. 4:08-cv-29, 2010 WL 2710607, * 4 (N.D. Ind. Jul. 7, 2010).
The court finds that the arguments made in Section A concerning whether Defendants Robbins and Willan are sham defendants are not new arguments, but rather are in response to the arguments raised by Defendants. Reis's arguments in Section B, alleging that in the alternative, Defendants Robbins and Willan interfered with Reis's contracts with AFLIC and ASICW, are new arguments that were set forth for the first time in the reply brief. As such the court finds it equitable to ...