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Land v. International Business MacHines Corporation

United States District Court, S.D. Indiana, Indianapolis Division

May 26, 2015

SHARON LAND, Plaintiff,
v.
INTERNATIONAL BUSINESS MACHINES CORPORATION, STATE OF INDIANA, INDIANA FAMILY AND SOCIAL SERVICES ADMINISTRATION, Defendants.

ENTRY ADOPTING THE MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

RICHARD L. YOUNG, Chief District Judge.

The Magistrate Judge recommended that the court grant the Plaintiff's Motion to Remand. For the reasons set forth below, the court ADOPTS the Report and Recommendation and REMANDS this action to the Marion Superior Court.

I. Factual Background

In 2006, the Indiana Family and Social Services Administration ("FSSA") and International Business Machines Corporation ("IBM") entered into a Master Services Agreement, whereby IBM agreed to carry out many of the administrative responsibilities formerly carried out by FSSA and the State of Indiana. The following year, Plaintiff's adult son, Seth Land, was diagnosed with schizophrenia at the age of 20. Land applied for and received Medicaid coverage to help pay for his medications.

In 2009, Land's Medicaid coverage was terminated. Acting as Land's legal guardian, Plaintiff attempted to reinstate Plaintiff's Medicaid coverage, but was unsuccessful. Without his Medicaid coverage, Plaintiff had no means to obtain the medications necessary to treat his illness. On May 15, 2009, Land attacked and seriously injured Plaintiff.

On May 13, 2011, Plaintiff filed a lawsuit under 42 U.S.C. § 1983 against Anne Murphy, individually and in her capacity as Secretary of the FSSA, IBM, and John and Jane Doe, arising out of the personal injuries she sustained from her son. On September 29, 2011, the court dismissed Plaintiff's § 1983 claims, declined to exercise supplemental jurisdiction over Plaintiff's state law claims for, inter alia, negligence, and dismissed the state law claims without prejudice. (Filing No. 21-3 at 7). Plaintiff appealed the court's decision, but the Seventh Circuit affirmed. Land v. Int'l Bus. Machines, Inc., 485 Fed.App'x 830, 831 (7th Cir. 2012).

On September 19, 2014, Plaintiff filed a Complaint in the Marion Superior Court against IBM, the FSSA, and the State of Indiana. Plaintiff explained that in re-filing her claims, she "named the state entities responsible for the conduct alleged rather than the individuals who were named in the original federal court complaint, as required by Ind. Code § 34-13-3-5." The substance of Plaintiff's allegations remained the same, in that Plaintiff asserted that Defendants' negligence in administering Indiana's Medicaid program resulted in the attack that caused her injuries.

On October 22, 2014, IBM removed the action to this court. In its Notice of Removal, IBM asserted that the case was properly removable because Plaintiff's claims raise a substantial federal question and because complete diversity exists among all parties who were properly joined. Although neither the FSSA nor the State joined the Notice of Removal, IBM asserted that their joinder in the action was fraudulent, such that their joinder in the Notice was not required.

On November 21, 2014, Plaintiff moved to remand this case to state court. The court referred the motion to the Magistrate Judge on February 2, 2015. Soon thereafter, the Magistrate Judge issued his Report and Recommendation finding that FSSA's joinder was proper, thus destroying diversity jurisdiction. The Magistrate Judge therefore recommended that the court grant Plaintiff's Motion to Remand. IBM timely objected.

II. Standard of Review

Under the doctrine of fraudulent joinder, "an out-of-state defendant's right of removal premised on diversity jurisdiction cannot be defeated by joinder of a nondiverse defendant against whom the plaintiff's claim has no chance of success.'" Morris v. Nuzzo, 718 F.3d 660, 666 (7th Cir. 2013) (quoting Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992)). The doctrine is designed to "protect the defendant's statutory right to remove, " and therefore does not allow a plaintiff to "join a nondiverse defendant simply to destroy diversity jurisdiction." Id.

The defendant asserting fraudulent joinder bears "a heavy burden." Poulos, 959 F.2d at 73. "The defendant must show 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." Id. (emphasis in original). If the removing defendant can meet its burden, the court may "disregard, for jurisdictional purposes, the citizenship of certain nondiverse defendants, assume jurisdiction over a case, dismiss the nondiverse defendants, and thereby retain jurisdiction.'" Morris, 718 F.3d at 666 (quoting Schur v. L.A. Weight Loss Centers, Inc., 577 F.3d 752, 763 (7th Cir. 2009)). Fraudulent joinder is therefore "an exception' to the requirement of complete diversity." Id (quoting Walton v. Bayer Corp., 643 F.3d 994, 999 (7th Cir. 2011)).

III. Discussion

The Magistrate Judge concluded that the Journey's Account Statute operated to extend the statute of limitations and preserve Plaintiff's claims against the FSSA, meaning the FSSA was properly joined. Because Plaintiff and the FSSA are citizens of Indiana, the Magistrate Judge concluded that the FSSA's presence[1] in the action destroyed diversity jurisdiction. The court reviews the Magistrate Judge's ruling de ...


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