United States District Court, D. Alaska
ORDER MOTION TO REMAND
H.
RUSSEL HOLLAND UNITED STATES DISTRICT JUDGE
Plaintiffs
move to remand this matter to state court.[1] This motion is
opposed.[2] Oral argument was not requested and is not
deemed necessary.
Background
Plaintiffs
are William Curtis, M.D., and Pedro Valdes, M.D., both of
whom are alleged to be citizens of Alaska.[3] Defendants are
Providence Health & Services (PH&S), Providence
Health & Services - Washington (PH&S-Washington), and
Bruce Lamoureux. PH&S is alleged to be “a
Washington non-profit corporation whose principal place of
business is Anchorage, Alaska.”[4] PH&S-Washington is
alleged to be “a Washington nonprofit corporation whose
principal place of business is Anchorage,
Alaska.”[5] Lamoureux is alleged to be “the
Alaska Regional Chief Executive of” PH&S-Washington
and “a citizen of Alaska[.]”[6]
Plaintiffs
are cardiothoracic surgeons who had medical staff privileges
at Providence Alaska Medical Center (PAMC).[7] Plaintiffs allege
that PAMC is owned and operated by PH&S-Washington and
that PH&S is PH&S-Washington's “principal
or sole ‘member.'”[8]
Plaintiffs
allege that in August 2016, PAMC completed a review of its
cardiothoracic program, which revealed some coverage issues
due to the small number of cardiothoracic surgeons with
privileges at PAMC.[9] In response, plaintiffs proposed hiring a
third cardiothoracic surgeon “if PAMC would guarantee a
salary for the third surgeon, making up any shortfall in
revenue between collections and $1.5 million, if such a
shortfall occurred.”[10]Plaintiffs allege that
“PAMC did not respond to [their]
proposal.”[11]
Instead,
plaintiffs allege that PAMC was pursuing an exclusive
contract with Starr-Wood Cardiac Group of Portland,
P.C.[12] Plaintiffs allege that “Starr-Wood
sought to affiliate with [them], but the arrangement proposed
by Starr-Wood would have made them subordinate to Starr-Wood
and given Starr-Wood the power to exclude them from PAMC at
any time.”[13] Plaintiffs allege that they
“rejected Starr-Wood's
proposal.”[14]
Plaintiffs
allege that on May 22, 2017,
Lamoureux wrote that he was disappointed to learn that [they]
had not been able to reach mutually acceptable terms under
which they would join with Starr-Wood. The letter stated:
“[s]hould PAMC's negotiations with Starr-Wood or a
Starr-Wood-affiliated entity end successfully, only surgeons
affiliated with the contracting entity will have related
privileges at PAMC.”[15]
Plaintiffs allege that
[o]n June 1, 2018, PAMC wrote to [them] that PAMC had entered
into an exclusive agreement for CT services and notified them
that their clinical privileges to perform cardiac and
thoracic surgery services at [PAMC] would automatically
terminate on the ‘CT Start Date' unless they became
employees of NorthStar Cardiothoracic Surgery, LLC,
Starr-Wood's contracting subsidiary.[16]
Plaintiffs allege that PAMC later informed them that their
privileges would terminate on September 4,
2018.[17]
Plaintiffs
commenced this action on September 4, 2018. In their original
complaint, plaintiffs only asserted claims against PH&S.
On October 4, 2018, PH&S-Washington removed the matter to
this court.[18] Plaintiffs moved to remand, and on
November 8, 2017, this court granted plaintiffs' motion
to remand because the case had been improperly removed by a
non-party.[19] Upon remand, plaintiffs filed an amended
complaint. In their amended complaint, they assert an
antitrust claim against PH&S, a breach of contract claim
that appears to be asserted against PH&S-Washington, a
breach of implied covenant of good faith and fair dealing
claim against PH&S-Washington, a breach of the Alaska
Unfair Trade Practices Act claim against PH&S-Washington,
an intentional interference with prospective economic
advantage claim against PH&S-Washington and Lamoureux,
and a piercing the corporate veil claim.
On
December 6, 2018, PH&S-Washington again removed the
action to this court on the basis of diversity jurisdiction.
PH&S and Lamoureux consent to and join in the
removal.[20]
Pursuant
to 28 U.S.C. § 1447(c), plaintiffs now move to remand
this matter to state court on the grounds that diversity
jurisdiction does not exist because Lamoureux and
PH&S-Washington are both citizens of
Alaska.[21]
Discussion
Section
1447(c) provides, in relevant part, that “[i]f at any
time before final judgment it appears that the district court
lacks subject matter jurisdiction, the case shall be
remanded.” “A federal court has [diversity]
jurisdiction over the underlying dispute if the suit is
between citizens of different states, and the amount in
controversy exceeds $75, 000 exclusive of interest and costs.
. . .” Geographic Expeditions, Inc. v. Estate of
Lhotka ex rel. Lhotka, 599 F.3d 1102, 1106 (9th Cir.
2010). Here, there is no dispute that the amount in
controversy has been met. The dispute here is whether
“the suit is between citizens of different
states[.]” Id.
“[I]n
a case that has been removed from state court to federal
court under 28 U.S.C. § 1441 on the basis of diversity
jurisdiction, ” such as this one, “the proponent
of federal jurisdiction-typically the defendant in the
substantive dispute-has the burden to prove, by a
preponderance of the evidence, that removal is proper.”
Id. at 1106-07. “The preponder- ance of the
evidence standard applies because removal jurisdiction ousts
state-court jurisdiction and ‘must be rejected if there
is any doubt as to the right of removal in the first
instance.'” Id. at 1107 (quoting Gaus
v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992)).
“This gives rise to a ‘strong presumption against
removal jurisdiction [which] means that the defendant always
has the burden of establishing that removal is
proper.'” Id. (quoting Gaus, 980
F.2d at 566). “For these reasons, ‘[the court]
strictly construe[s] the removal statute against removal
jurisdiction.'” Id. (quoting
Gaus, 980 F.2d at 566). Although “a plaintiff
seeking remand has the burden to prove that an express
exception to removal exists[, ]” Luther v.
Countrywide Home Loans Servicing LP, 533 F.3d 1031, 1034
(9th Cir. 2008), “any doubt about the right of removal
requires resolution in favor of remand.”
Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d
1241, 1244 (9th Cir. 2009).
“Diversity
removal requires complete diversity, meaning that each
plaintiff must be of a different citizenship from each
defendant.” Grancare, LLC v. Thrower by and through
Mills, 889 F.3d 543, 548 (9th Cir. 2018). There is no
dispute that plaintiffs and Lamoureux are all citizens of
Alaska. But “[i]n determining whether there is complete
diversity, district courts may disregard the citizenship of a
non-diverse defendant who has been fraudulently
joined.” Id. PH&S-Washington contends that
Lamoureux has been fraudulently joined.
“There
are two ways to establish fraudulent joinder: ‘(1)
actual fraud in the pleading of jurisdictional facts, or (2)
inability of the plaintiff to establish a cause of action
against the non-diverse party in state court.'”
Id. (quoting Hunter v. Philip Morris USA,
582 F.3d 1039, 1044 (9th Cir. 2009)). PH&S-Washington
relies on the second way here.
“Fraudulent
joinder is established the second way if a defendant shows
that an ‘individual[] joined in the action cannot be
liable on any theory.'” Id. (quoting
Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th
Cir. 1998)). “But ‘if there is a
possibility that a state court would find that the
complaint states a cause of action against any of the
resident defendants, the federal court must find that the
joinder was proper and remand the case to the state
court.'” Id. (quoting Hunter, 582
F.3d at 1046). “A defendant invoking federal court
diversity jurisdiction on the basis of fraudulent joinder
bears a ‘heavy burden' since there is a
‘general presumption against [finding] fraudulent
joinder.'” Id. (quoting Hunter,
582 F.3d at 1046).
“[T]he
test for fraudulent joinder and for failure to state a claim
under Rule 12(b)(6) are not equivalent.” Id.
at 549. “A claim against a defendant may fail under
Rule 12(b)(6), but that defendant has not necessarily been
fraudulently joined.” Id. “[A] federal
court must find that a defendant was properly joined and
remand the case to state court if there is a
‘possibility that a state court would find
that the complaint states a cause of action against any of
the [non-diverse] defendants.'” Id.
(quoting Hunter, 582 F.3d at 1046). “If a
plaintiff's complaint can withstand a Rule 12(b)(6)
motion with respect to a particular defendant, it necessarily
follows that the defendant has not been fraudulently
joined.” Id. at 550. “But the reverse is
not true. If [a plaintiff's complaint] cannot withstand a
Rule 12(b)(6) motion, the fraudulent [joinder] inquiry does
not end there.” Id. “[T]he district
court must consider . . . whether a deficiency in the
complaint can possibly be cured by granting the plaintiff
leave to amend.” Id.
PH&S
Washington first argues that plaintiffs' claim against
Lamoureux cannot withstand a Rule 12(b)(6) motion, and
contrary to plaintiffs' contention, the Rule 12(b)(6)
standard is not irrelevant to the fraudulent joinder
analysis. The court may consider whether plaintiffs have
stated a plausible intentional interference with prospective
economic advantage claim against Lamoureux. If they have,
then “it necessarily follows that” Lamoureux
“has not been fraudulently joined.” Id.
If they have not, then the court must consider whether they
could “possibly” cure this deficiency by amending
their complaint. Id.
“‘To
survive a [Rule 12(b)(6)] motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to state
a claim to relief that is plausible on its face.'”
Zixiang Li v. Kerry, 710 F.3d 995, 999 (9th Cir.
2013) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009)). “A claim is facially plausible ‘when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.'” Id. (quoting
Iqbal, 556 U.S. at 678).
To establish a claim for tortious interference with a
prospective business opportunity, a plaintiff must show: (1)
an existing prospective business relationship between it and
a third party; (2) defendant's knowledge of the
relationship and intent to prevent its fruition; (3) failure
of the prospective relationship to culminate in pecuniary
benefit to the plaintiff; (4) conduct of the defendant
interfering with the prospective relationship; (5) ...