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Perry v. Higgins-Ballas

United States District Court, N.D. Indiana, Hammond Division

June 27, 2018

CATHY PERRY, Plaintiff,
v.
ALLISON HIGGINS-BALLAS, et al., Defendants.

          OPINION AND ORDER

          JAMES T. MOODY JUDGE UNITED STATES DISTRICT

         This matter is before the court on plaintiff's motion to remand (DE # 9) and defendants' motion to dismiss defendant Higgins-Ballas pursuant to Federal Rule of Civil Procedure 21. (DE # 15.) For the reasons identified below, plaintiff's motion to remand will be granted, and defendants' motion to dismiss will be denied.

         I. BACKGROUND

         Plaintiff Cathy Perry originally filed her complaint in the Lake County Superior Court. (DE # 4.) Defendants, Wal-Mart Stores East, LP (“Wal-Mart”), and Allison Higgins-Ballas, removed this case to federal court based on diversity jurisdiction, [1] and then filed a motion to dismiss Higgins-Ballas (a non-diverse defendant) pursuant to Federal Rule of Civil Procedure 21, for fraudulent joinder. (DE ## 1, 2.) Plaintiff then filed a motion to remand (DE # 9) and an amended complaint. (DE # 14.) Defendants responded by filing a second motion to dismiss for fraudulent joinder. (DE # 15).

         Plaintiff's amended complaint alleges that, while visiting a Wal-Mart store in Merrillville, Indiana, plaintiff slipped and fell in a puddle of chicken juice near the meat counter. (DE # 14 at 1.) Plaintiff claims that the injuries she sustained as a result of her fall were caused by the negligence of Higgins-Ballas (the manager on duty) and/or other Wal-Mart employees. (Id.) According to plaintiff, Wal-Mart is vicariously liable for the negligent acts of Higgins-Ballas. (Id. at 2.) She also alleges that Wal-Mart is liable for failing to properly train its employees, failing to have proper safety policies in place, and failing to maintain and/or inspect its property. (Id. at 1.)

         In their motion to dismiss, defendants argue that plaintiff improperly named Higgins-Ballas in an attempt to evade diversity jurisdiction. (DE # 15 at 1.) According to defendants, there is no reasonable possibility that plaintiff could prevail against Higgins-Ballas because the negligence alleged in plaintiff's amended complaint may only be imputed to Wal-Mart - for two reasons. (Id.) First, plaintiff does not allege that Higgins-Ballas directly participated in, authorized, or directed, the tort alleged in plaintiff's complaint. Second, the omissions plaintiff attributes to Higgins-Ballas (failure to train, failure to implement safety policies, failure to inspect and maintain the property, failure to clear the floor of hazardous materials) are related to duties Higgins-Ballas owed only to Wal-Mart, not to a third-party such as plaintiff. (Id. at 3-6.)

         II. LEGAL STANDARD

         “Defendants may remove an action on the basis of diversity of citizenship if there is complete diversity between all named plaintiffs and all named defendants, and no defendant is a citizen of the forum State.” Lincoln Prop. Co. v. Roche, 546 U.S. 81, 84 (2005). A defendant who seeks to remove an action to federal court has the burden of establishing that the complete diversity requirement was met. Schur v. L.A. Weight Loss Centers, Inc., 577 F.3d 752, 758 (7th Cir. 2009); Meyerson v. Showboat Marina Casino P'ship, 312 F.3d 318, 321 (7th Cir. 2002). District courts are to “interpret the removal statute narrowly, ” and any doubts regarding jurisdiction should be resolved in favor of remand to state court. Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993). See also Schur, 577 F.3d at 758.

         The fraudulent joinder doctrine arises out of Federal Rule of Civil Procedure 21, which provides in relevant part: “[o]n motion or on its own, the court may at any time, on just terms, add or drop a party.” “When speaking of jurisdiction, ‘fraudulent' is a term of art. Although false allegations of jurisdictional fact may make joinder fraudulent, in most cases fraudulent joinder involves a claim against an in-state defendant that simply has no chance of success, whatever the plaintiff's motives.” Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992) (internal citations omitted).

         The Seventh Circuit Court of Appeals has stated that “[f]raudulent joinder is difficult to establish” and a defendant attempting the feat faces a “‘heavy burden.'” Schur, 577 F.3d at 764 (quoting Poulos, 959 F.2d at 73). A defendant claiming fraudulent joinder “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.'” Id. (quoting Poulos, 959 F.2d at 73). “Framed a different way, the district court must ask whether there is ‘any reasonable possibility' that the plaintiff could prevail against the non-diverse defendant.” Id. (quoting Poulos, 959 F.2d at 73.).

         The court must examine state law to determine whether the plaintiff has any reasonable possibility of success. Id. Here, the parties do not dispute that Indiana law governs this case. In applying Indiana law, the court must apply the law that would be applied by the Indiana Supreme Court. Lodholtz v. York Risk Servs. Grp., Inc., 778 F.3d 635, 639 (7th Cir. 2015). If the Indiana Supreme Court has not spoken on the issue, the court should treat decisions by the Indiana courts of appeal as authoritative, unless there is a compelling reason to believe that the Indiana Supreme Court would decide the issue differently. Id.

         III. ANALYSIS

         This court's analysis of the pending motions begins and ends with the fact that neither the Indiana Supreme Court nor the Indiana Court of Appeals has addressed the extent to which a store manager can be held personally liable to a third-party for injuries the third-party sustained on her employer's premises. While defendants argue that the issue is definitively resolved under Indiana agency principles, the law is not nearly as clear as defendants claim.

         Defendants argue that Higgins-Ballas, as an agent of Wal-Mart, owed duties solely to Wal-Mart and therefore cannot be held individually liable under Indiana agency law. However, this argument fails to capture two important caveats in Indiana agency law. Generally, an agent is not liable for actions taken on behalf of the principal. Lodholtz v. York Risk Servs. Grp., Inc., 778 F.3d 635, 642 (7th Cir. 2015) (applying Indiana law). However, the Indiana Supreme Court has adopted two exceptions to this general rule. “‘An agent is not liable for harm to a person other than his principal because of his failure adequately to perform his duties to his principal, unless physical harm results from reliance upon performance of the duties by the agent, or unless the agent has taken control of land or other tangible things.'” Greg Allen Const. Co. v. Estelle, 798 N.E.2d 171, 174 (Ind. 2003) (quoting Restatement (Second) of Agency § 352 (1958)). Therefore, it is possible that Higgins-Ballas could be liable on the basis that Wal-Mart relied on a promise she made to maintain the safety of its store. Alternatively, Higgins-Ballas could be liable on the basis that she was in control of the store in her capacity as manager. See e.g. Marshall v. Erie Ins. Exch., 923 N.E.2d 18, ...


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