United States District Court, S.D. Mississippi, Eastern Division
MEMORANDUM OPINION AND ORDER
KEITH STARRETT, District Judge.
For the reasons stated below, the Court finds that Defendant Southern Hens, Inc. was improperly joined, and Plaintiff's claims against it are dismissed without prejudice. The Court denies Plaintiff's Motion to Remand , and denies as moot Defendant Southern Hens, Inc.'s Motion to Dismiss .
This is a worker's compensation insurance dispute. Plaintiff was an employee of Defendant Southern Hens, Inc. In September 2012, one of her coworkers fell into an uncovered auger, suffering severe injuries. Plaintiff witnessed the accident and comforted the victim for over an hour until he died. After the incident, Plaintiff attempted to return to work, but was unable to do so because of emotional trauma. She sought treatment, and a health care professional deemed her unable to return to work and prescribed medication and counseling.
Plaintiff's employer, Southern Hens, had a worker's compensation insurance policy in place at the time of Plaintiff's injury. The policy was issued by Defendant Liberty Mutual Fire Insurance Company. In October 2012, Plaintiff submitted a "disability form" to Southern Hens, but Plaintiff claims that Defendants delayed her claim for worker's compensation benefits.
In July 2013, Plaintiff filed a petition with the Mississippi Workers' Compensation Commission. In October 2013, the ALJ granted Plaintiff's Motion to Compel payment of benefits, and ordered the payment of worker's compensation benefits to Plaintiff until she reached maximum medical improvement. Plaintiff claims, though, that Defendants ceased payment of benefits less than four weeks after the ALJ's order. Plaintiff filed motions with the Commission seeking enforcement of the ALJ's order, but she did not allege the outcome of those motions. Likewise, it is not clear from Plaintiff's Complaint when or if the worker's compensation payments ever resumed.
Plaintiff filed her Complaint [1-2] in the Circuit Court of Jones County, Mississippi, on April 9, 2014. She claims that Defendants delayed and denied her claim for worker's compensation benefits in bad faith, and that they were grossly negligent in their investigation of Plaintiff's claim. She seeks compensatory damages for past, present, and future mental injuries; past and future medical expenses; and punitive damages.
Defendants removed the case on May 13, 2014, arguing that Defendant Southern Hens, Inc. was improperly joined. Plaintiff filed a Motion to Remand , which is ripe for review.
"Federal courts are courts of limited jurisdiction, having only the authority endowed by the Constitution and that conferred by Congress." Halmekangas v. State Farm Fire & Cas. Co., 603 F.3d 290, 292 (5th Cir. 2010). This Court has removal jurisdiction in any case where it has original jurisdiction, 28 U.S.C. § 1441(a), and it has "original jurisdiction of all civil matters where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between... [c]itizens of different States...." 28 U.S.C. § 1332(a).
For diversity jurisdiction, the parties must be completely diverse. Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1079 (5th Cir. 2008). "Complete diversity requires that all persons on one side of the controversy be citizens of different states than all persons on the other side." Id. Here, the parties are not completely diverse because both Plaintiff and Defendant Southern Hens, Inc. are citizens of Mississippi. Defendants contend that Southern Hens was improperly joined.
A. Improper Joinder Standard
There are two ways to prove improper 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." Smallwood v. Ill. Cen. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004); see also Howard v. CitiFinancial, Inc., 195 F.Supp.2d 811, 817-18 (S.D.Miss. 2002). Only the second prong is relevant here. Under that test, the Court must determine "whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant, which stated differently means that there is no reasonable basis for the... court to predict that the plaintiff might be able to recover against an in-state defendant." Smallwood, 385 F.3d at 573. "This means that there must be a reasonable possibility of recovery, not merely a theoretical one." Campbell v. Stone Ins., Inc., 509 F.3d 665, 669 (5th Cir. 2007).
The Fifth Circuit established a procedure for district courts to address improper joinder arguments. See, e.g. Smallwood, 385 F.3d at 573; Mumfrey v. CVS Pharm., Inc., 719 F.3d 392, 401-02 (5th Cir. 2013). First, the Court looks "at the allegations of the complaint to determine whether the complaint states a claim under state law against the in-state defendant. Ordinarily, if a plaintiff can survive a Rule 12(b)(6) challenge, there is no improper joinder." Smallwood, 385 F.3d at 573. "However, where a complaint states a claim that satisfies 12(b)(6), but has misstated or omitted discrete facts that would determine the propriety of joinder... the district court may, in its discretion, pierce the pleadings and conduct a summary inquiry." Mumfrey, 719 F.3d at 401 (quoting Smallwood, 385 F.3d at 573). "The purpose of the inquiry is limited to identifying the presence of discrete and undisputed facts that would preclude plaintiff's recovery against the in-state defendant." Id. "In conducting this inquiry, the court must also ...