Keller Logistics Grp., Inc. v. Navistar, Inc.
391 F. Supp. 3d 774 (2019)
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Rule of Law:
A plaintiff acts in bad faith under 28 U.S.C. § 1446(c)(1) when their intent to prevent removal to federal court is the but-for cause of joining and retaining a non-diverse defendant against whom the plaintiff has no genuine intention of pursuing a judgment.
Facts:
- In 2011 and 2012, Keller Logistics Group, Inc. and its related companies ('Keller') purchased or leased sixty-five commercial trucks manufactured by Navistar, Inc.
- The trucks were acquired from Defiance Truck Sales & Service, Inc. ('the Dealer'), an authorized Navistar dealer based in Ohio.
- Shortly after being put into service, the trucks allegedly began to experience frequent mechanical breakdowns.
- Before filing the initial lawsuit in 2015, Keller's principal met with the Dealer's principal and his attorney.
- During this meeting, Keller's principal admitted that he had no issue with the Dealer but was advised by his lawyer to name them as a defendant specifically 'in order to keep the suit in Ohio instead of Federal Court.'
Procedural Posture:
- In 2015, Keller Logistics Group sued Navistar, Inc. and the non-diverse Defiance Truck Sales & Service, Inc. ('the Dealer') in an Ohio state trial court.
- Later in 2015, Keller voluntarily dismissed the lawsuit.
- In 2016, Keller refiled the lawsuit against the same defendants in the same Ohio state court.
- The case proceeded in state court for over two years, involving motions and discovery.
- In March 2019, while a motion for summary judgment was pending, Keller voluntarily dismissed its claims against the Dealer.
- After the Dealer's dismissal created complete diversity, Navistar removed the case to the U.S. District Court for the Northern District of Ohio.
- Keller then filed a Motion to Remand the case back to state court, arguing the removal was untimely as it occurred more than one year after the action commenced.
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Issue:
Does a plaintiff act in 'bad faith' under 28 U.S.C. § 1446(c)(1), permitting removal more than one year after commencement of an action, when the plaintiff admits to joining a non-diverse defendant solely to defeat federal diversity jurisdiction and subsequently fails to actively litigate against that defendant?
Opinions:
Majority - Zouhary, J.
Yes. A plaintiff acts in bad faith to prevent removal when their desire to remain in state court is the but-for cause of retaining a non-diverse defendant. The court found clear evidence of bad faith based on two main factors. First, there was an undisputed admission from the plaintiff's principal that the non-diverse defendant (the Dealer) was joined for the sole purpose of defeating diversity jurisdiction. Second, the plaintiff's litigation conduct demonstrated no genuine intent to pursue a claim against the Dealer; the plaintiff conducted no depositions of Dealer employees, engaged in minimal discovery directed at the Dealer, never entered settlement discussions, and only dismissed the Dealer when challenged on the merits during summary judgment. The court reasoned that even a theoretically valid claim against a non-diverse party does not shield a plaintiff from a finding of bad faith when the evidence shows the party was joined and kept in the case solely to manipulate jurisdiction.
Analysis:
This decision clarifies the 'bad faith' exception to the one-year limit on removal in diversity cases, emphasizing that courts will look beyond the face of the pleadings to the plaintiff's subjective intent and objective litigation conduct. It establishes that a combination of direct evidence of improper motive (like an admission) and a pattern of inaction against the non-diverse defendant is sufficient to prove bad faith. The ruling serves as a warning to plaintiffs against strategic joinder intended solely to defeat federal jurisdiction, empowering defendants to remove cases even after the one-year mark by presenting evidence of the plaintiff's forum-shopping tactics.
