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STAN WINSTON CREATURES, INC. v. TOYS "R" US

April 14, 2003

STAN WINSTON CREATURES, INC. AND STAN WINSTON, PLAINTIFFS,
v.
TOYS "R" US, INC., WARREN KORNBLUM, ANDREW R. GATTO, GREG STALEY, JOHN EYLER, JAMES FELDT AND DOES 1-25, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Gerard B. Lynch, United States District Judge

OPINION AND ORDER

Plaintiffs Stan Winston and his company, Stan Winston Creatures, Inc. ("SWC"), creators of Hollywood film industry special-effects creatures, sued defendants Toys"R"Us, Inc. ("Toys"), and various executives and unknown agents of that company, in the Supreme Court of the State of New York, alleging that defendants engaged in fraud and breached a contract concerning the marketing and sales of toy action figures based on the plaintiffs' creations.

Defendants removed the action to this Court based on diversity jurisdiction under 28 U.S.C. § 1332 and 1441(a). Plaintiffs now move pursuant to 28 U.S.C. § 1447 (c) to remand the case to state court, contending that the presence of a served New York resident defendant defeats removal jurisdiction under 28 U.S.C. § 1441 (b). Defendants oppose the motion to remand, arguing that the New York defendant (a) was not properly served; and (b) was fraudulently joined. For the following reasons, plaintiffs' motion to remand is granted.*fn1

BACKGROUND

Stan Winston, an individual residing in California. is an award-winning creator of special-effects creatures for the film industry, and owns 100% of the stock of SWC, a company organized under the laws of California that has its principal place of business in that state. Defendant Toys is a Delaware corporation with its principal place of business in New Jersey. None of the Toys executives named in the complaint (the "Executive Defendants") are residents of California, and one of them, John Eyler, is a resident of New York.

The instant lawsuit concerns an agreement between plaintiffs and defendants to market, promote and sell toys based on creatures created by the plaintiffs. Plaintiffs filed a complaint in the Supreme Court of the State of New York on or about November 15, 2002. A copy of the summons and complaint was served upon Eyler by leaving the documents with an employee at his office in Paramus, New Jersey, on November 18, 2002, and by mailing a copy of the documents to that office on November 22, 2002. Plaintiffs filed proof of service with the Clerk of the state court on December 11, 2002. Defendant Toys filed a notice of removal one day later, on December 12, 2002, stating that the motion was not filed on behalf of Byler or of any of the other Executive Defendants because "service as to them is not complete." (Notice of Removal ¶ 5.) Plaintiffs' motion for remand was filed one week later, on December 19, 2002.

DISCUSSION

I. Legal Standard for Remand

When the removal of an action to federal court is contested, "the burden falls squarely upon the removing party to establish its right to a federal forum by `competent proof.'" R.G. Barry Corp. v. Mushroom Makers, Inc., 612 F.2d 651, 655 (2d Cir. 1979) (quoting McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936)). Out of respect for the independence of state courts, and in order to control the federal docket, "federal courts construe the removal statute narrowly, resolving any doubts against removability." Somlyo v. J. Lu-Rob Enterprises, Inc., 932 F.2d 1043, 1045-46 (2d Cir. 1991) (citing Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108 (1941)).

An action based on state law is removable to federal court when the district court would have original diversity jurisdiction (because the amount in controversy exceeds $75,000 and, inter alia, there is complete diversity of citizenship between plaintiffs and defendants), 28 U.S.C. § 1332; when none of the parties properly joined and served at the time of removal are residents of the forum state, 28 U.S.C. § 1441 (b); and when the plaintiff has not attempted to defeat removal by fraudulently "joining as defendants parties with no real connection with the controversy," Pampillonia v. RJR Nabisco, Inc., 138 F.3d 459, 461 (2d Cir. 1998).

A. Subject Matter Jurisdiction under 28 U.S.C. § 1332

It is well established that an action based on state law cannot be removed to federal court if any non-diverse defendant is joined in the complaint, regardless of whether that defendant has been served. See Pullman Co. v. Jenkins, 305 U.S. 534 (1939). In this case, there is complete diversity among the parties, since both plaintiffs, and none of the named defendants, are citizens of California. It is undisputed that the amount in controversy exceeds $75,000. Thus, the requirements for subject matter jurisdiction are met.

B. Removability under 28 U.S.C. § 1441 (b)

In addition to the original jurisdiction requirements of 28 U.S.C. § 1332, a diversity case is "removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." 28 U.S.C. § 1441 (b). Plaintiffs argue that this statute precludes removal here, since defendant Eyler is a New York resident. Defendants respond, however, that § 1441(b) is not an obstacle to removal ...


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