Air Starter Components, Inc. v. Molina

442 F. Supp. 2d 374, 2006 U.S. Dist. LEXIS 38400, 2006 WL 1662952
CourtDistrict Court, S.D. Texas
DecidedJune 9, 2006
DocketC.A. H-05-4326
StatusPublished
Cited by6 cases

This text of 442 F. Supp. 2d 374 (Air Starter Components, Inc. v. Molina) is published on Counsel Stack Legal Research, covering District Court, S.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Air Starter Components, Inc. v. Molina, 442 F. Supp. 2d 374, 2006 U.S. Dist. LEXIS 38400, 2006 WL 1662952 (S.D. Tex. 2006).

Opinion

MEMORANDUM AND ORDER

ROSENTHAL, District Judge.

This case was filed in state court in 2002 and removed to federal court in 2005. Not surprisingly, the plaintiff challenged the removal and moved to remand. (Docket Entry No. 20). This court agrees, for the reasons explained below.

I. Background

Plaintiff Air Starter Components, Inc. (“ASC”) sued David Molina, Filiberto Fuentes, and Specialized Components, Inc. (“SCI”) in state court in October 2002, alleging misappropriation of trade secrets, conversion, and breach of contract. Two defendants, ABCO Products, Inc. and Andrew Bennet Boyd, were added in February 2003 in a First Amended Petition. On October 23, 2003, ASC filed a Second Amended Petition adding two defendants — Richard Kellogg and James Glattly — and adding a claim under the federal *376 Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1961. (Docket Entry No. 25, Ex. A). No defendant removed. The RICO claim was based on allegations that shortly before Molina resigned from ASC, he copied confidential plans, specifications, and other information about ASC’s business and formed an agreement with SCI, ABCO, Boyd, Glattly, and Kellogg to exploit this information.

From October 2003 to November 2004, ASC filed a Third, then a Fourth, Amended Petition, adding defendants — Brian Lee Wilson, Jerry Ward, David Fink, and Bill Joyce — and later nonsuiting two of those defendants — Joyce and Fink. The RICO claim remained in the case as to all defendants. New factual information was added in support of that claim, including allegations that Molina had induced another ASC employee to bring him confidential drawings belonging to ASC and that SCI had hired Wilson and used his knowledge of ASC trade secrets in furtherance of the conspiracy to defraud ASC. The Fourth Amended Petition alleged that Fuentes, while still working for ASC, was paid by SCI and ABCO to develop a customer list for SCI. ASC also added to the Fourth Amended Petition allegations that Fuentes’s actions resulted in eighteen new customers for SCI, seventeen of which were also customers of ASC. In November 2004, the state court judge granted defendants’ motions for partial summary judgment as to the RICO claim. (Docket Entry No. 25, Ex. B). In March 2005, ASC filed a Fifth Amended Petition, adding three defendants — Miguel Matamoros, Gary Mills, and Above & Beyond Compression, Inc. — and reasserting the RICO claim despite the earlier ruling granting defendants’ partial summary judgment motion as to this claim. (Docket Entry No. 25, Ex. C). The Fifth Amended Petition added detail to the RICO claim by identifying three additional members of the alleged conspiracy and by dividing the overarching “scheme to defraud” into four subparts, including: (1) a scheme to deprive ASC of the faithful services of its employer; (2) a scheme to deprive ACS of the right to exclusive enjoyment of its own property; (3) a scheme to deprive ASC of its trade secrets; and (4) a scheme to induce ASC employees to divert sales to SCI and to reveal the names of ASC customers. According to ASC, each of these four related schemes merged into a larger scheme of entering the air starter business and ASC out. The Fifth Amended Petition included allegations that Fuentes and Molina bribed Matamoros to divert sales from ASC and allegations explaining ABC’s role in the conspiracy. These new allegations provided a more detailed factual basis for the previously pleaded (and dismissed) RICO claim.

Although the RICO claim included some factual allegations that appeared for the first time in the Fifth Amended Petition, the RICO claim itself has the same focus as that asserted in the Second, Third, and Fourth Amended Petitions — that the defendants conspired to defraud ASC of confidential information and to exploit that information for competitive advantage. ASC contends that Matamoros was served with the Fifth Amended Petition on August 22, 2005. (Docket Entry No. 20). Matamoros contends that he was not properly served with process. (Docket Entry No. 25). The other two defendants named for the first time in the Fifth Amended Petition were Canadian companies that had not been served when this case was removed in December 2005.

On November 23, 2005, the state court judge granted ASC’s motion to rehear the defendants’ motion for partial summary judgment on the RICO claim and set aside his earlier summary judgment ruling. *377 (Docket Entry No. 25, Ex. H). On December 22, 2005, Matamoros filed an appearance in the state court case and removed it to federal court. (Docket Entry No. 1). Each of the other defendants that had been served filed a notice of consent to removal on that same date. The defendants who had been named and served before Matamoros had also filed counterclaims and third-party claims in the state court.

ASC timely moved to remand. (Docket Entry No. 20). ASC argues that removal was improper because it was filed long after the RICO claim was first asserted and the resulting removal opportunity waived. ASC argues that neither the addition of Matamoros as a party nor the state judge’s reversal of his order granting summary judgment as to the RICO claim allowed removal two years later. ASC also asks for attorney’s fees for improvident removal under U.S.C. § 1447(c). (Docket Entry No. 29). Defendants respond that Matamoros was not effectively served with the Fifth Amended Petition, making his removal timely; that the earlier-named and served defendants had not waived their ability to consent to his notice of removal to meet the unanimity requirement; and that the state judge’s November 2005 ruling reinstating the RICO claim revived the time for removal under 28 U.S.C. § 1446(b). (Docket Entry No. 25).

Each argument is addressed below.

II. The Motion To Remand

A. The Applicable Legal Standards

A defendant has the right to remove a case to federal court when federal jurisdiction exists and the removal procedure is properly followed. 28 U.S.C § 1441. The removing party bears the burden of establishing that a state court suit is properly removable to federal court. Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362, 365 (5th Cir.1995). Doubts about the propriety of removal are to be resolved in favor of remand. See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214 (1941).

28 U.S.C. § 1446 governs the procedure for removal. Section 1446(b) provides that “[t]he notice of removal ... shall be filed within thirty days after the receipt by the defendant ... of a copy of the initial pleading.” 28 U.S.C. § 1446(b).

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Bluebook (online)
442 F. Supp. 2d 374, 2006 U.S. Dist. LEXIS 38400, 2006 WL 1662952, Counsel Stack Legal Research, https://law.counselstack.com/opinion/air-starter-components-inc-v-molina-txsd-2006.