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Knit With v. Yarns

March 11, 2010

THE KNIT WITH, PLAINTIFF,
v.
AURORA YARNS, FREDERIKKA THEODORA PAYNE, AND DONNA MCGRANAHAN, DEFENDANTS.



The opinion of the court was delivered by: Buckwalter, S. J.

MEMORANDUM

Currently pending before the Court is the Motion for Remand by Plaintiff The Knit With. For the following reasons, the Motion is granted and the case is remanded to the Pennsylvania Court of Common Pleas for Philadelphia County.

I. FACTUAL AND PROCEDURAL BACKGROUND

According to the facts set forth in Plaintiff's Complaint, Defendant Aurora Yarns ("Aurora") supplied Plaintiff The Knit With ("TKW") with Cashmerino yarn between August 2004 and January 2006. (Compl. ¶ 9.) These various transactions came about when Defendant Donna McGranahan, an independent representative for yarn wholesalers, conducted a sales call to Plaintiff, during which she described Cashermino as "a high-quality, high-cashmere-content yarn appropriately stocked by a high-end shop which could be economically inventoried because it was soon to be closed-out." (Id. ¶¶ 5, 10.) Subsequently, on July 6, 2006, TKW learned by rumor that an unidentified handknitting yarn labeled to contain the identical fiber percentages as Cashmerino had actually been found to contain no cashmere. (Id. ¶ 12.) Pursuant to 13 Pa.C.S. § 2609, TKW requested that Aurora furnish a Guaranty of Compliance indicating that labeling of Aurora-sourced wool complied with the Wool Products Labeling Act of 1939, 11 U.S.C. § 68 et seq. (Id. ¶ 14.) Defendant Frederikka Payne, the proprietor of Aurora, originally promised to furnish the Guaranty, but subsequently expressed some reservations to Plaintiff about doing so. (Id. ¶ 16.)

Meanwhile, TKW retained Kenneth D. Langley, a professor of materials science at the University of Massachusetts, to ascertain the cashmere content of three "suspect" yarns (other than Cashmerino) matching the fiber content of the rumored yarn. (Id. ¶ 17.) On July 18, 2006, Dr. Langley's analyses found that the three "suspect" yarns had no cashmere at all. (Id.) By July 21, 2006, Aurora had yet to furnish the requested Guaranty and Defendant Payne expressed doubt about her receiving the necessary verification concerning the Cashmerino's fiber content from her supplying Italian manufacturer before the manufacturer's one month close on July 31st. (Id. ¶¶ 19-20.) She also "expressed reticence" in requesting that the manufacturer provide this information. (Id. ¶ 20.)

Given all of these events, Plaintiff began to suspect whether the Cashmerino labeling properly stated the cashmere content of the yarn. (Id. ¶ 21.) Thus, on July 24, 2006, TKW removed Cashmerino from sale and submitted samples to Dr. Langley for fiber analysis, which revealed that the yarn was spun of 7% cashmere instead of the labeled 20% cashmere. (Id. ¶ 22.) TKW informed Aurora of these results, but Defendant Payne disputed Dr. Langley's reliability and challenged TKW's intent in performing these fiber analyses. (Id. ¶¶ 23-24.) Although Payne indicated that she trusted the manufacturer (Ornaghi Filati), she offered to take back TKW's remaining inventory for her own re-sale. (Id. ¶ 24.) On August 3, 2006, Payne informed Plaintiff that the manufacturer stood by Cashmerino's labeling and would furnish a report to prove the labeling's accuracy. (Id. ¶ 25.)

Despite the Langley report, Payne executed a Guaranty for Cashmerino, dated August 14, 2006, challenging Plaintiff's integrity and good faith in testing the wool product. (Id. ¶ 26.) On August 15, 2006, Payne and TKW initially agreed that TKW would "quietly" recall the yarn, return remaining stock to Aurora, and forego litigation in exchange for Aurora's promise to make TKW whole. (Id. ¶ 27.) On November 29, 2006, however, Payne stated that Ornaghi's testing reached "the same result" found by Langley -- that Cashmerino was spun of just 7% cashmere. (Id. ¶ 29.) Aurora thus requested that TKW indicate to consumers that the importer and manufacturer were participating in the recall as well. (Id.)

Via correspondence dated July 10, 2007, TKW informed Aurora of the status of its recall, presented an itemized schedule of costs and losses incurred, and requested reimbursement of those losses pursuant to the August 15, 2006 agreement. (Id. ¶ 30.) Aurora then issued a call tag, on August 1, 2007, for TKW's return of all remaining Cashmerino product, as well as sixty labels received from consumers during the recall. (Id. ¶ 31.) On September 1, TKW demanded that Aurora complete "meaningful and substantial performance [to make TKW whole] by the date certain of September 17" or the August 15, 2006 agreement would be deemed void. (Id. ¶ 32.) Despite TKW's demand for damages totaling $19,445.70, Aurora sent TKW a check for only $2,497.14. (Id. ¶ 33.) Because this amount was less than requested, TKW deemed the August 2006 agreement repudiated. (Id. ¶ 33.)

On December 1, 2009, TKW brought the instant litigation in the Pennsylvania Court of Common Pleas for Philadelphia County against Defendants Aurora Yarns, Frederikka Payne, and Donna McGranahan. The Complaint alleged, against both Defendants Payne and Aurora, false advertising pursuant to the Lanham Act, breach of contract for failure to supply product requested, breach of contract for breach of the duty to provide assurances, and breach of contract for repudiation of the "quiet" recall agreement. (Id. ¶¶ 35-45, 65-88.) Additionally, it claimed breach of express warranty and breach of implied warranty against Defendants Aurora, Payne, and McGranahan. (Id. ¶¶ 46-64.) On December 16, 2009, Defendants Aurora and Payne removed the case to the United States District Court for the Eastern District of Pennsylvania. On December 23, 2009, Defendant McGranahan filed a Motion to Dismiss. Defendants Aurora and Payne answered the Complaint on December 28, 2009.

Shortly after the case was transferred to federal court, Plaintiff filed the current Motion for Remand, together with an Amended Complaint -- both of which were docketed on January 13, 2010. The Amended Complaint added as plaintiffs James and Dawn Casale, proprietors of TKW, in order to cure some of the pleading defects identified by Defendant McGranahan's Motion to Dismiss.*fn1 Defendants Aurora and Payne ("Removing Defendants") answered the Amended Complaint and McGranahan filed a new Motion to Dismiss. Additionally, Aurora and Payne filed a Memorandum in Opposition to the Motion to Remand and, on February 5, 2010, Plaintiffs filed a Reply Brief. The Court now turns to a discuss of the pending Remand Motion.

II. STANDARD OF REVIEW

Under 28 U.S.C. § 1441(a), a defendant may remove a civil action filed in a state court if the federal court would have had original jurisdiction over the action. 28 U.S.C. § 1441(a). A defendant seeking removal of an action must file a petition for removal with the district court within thirty days of plaintiff's service of the complaint upon defendant. See 28 U.S.C. § 1446(b). "The defendants bear the burden of establishing removal jurisdiction and compliance with all pertinent procedural requirements." Winnick v. Pratt, No. CIV.A.03-1612, 2003 WL 21204467, at *2 (E.D. Pa. May 20, 2003) (citing Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990)); see also Palmer v. Univ. of Med. and Dentistry of N.J., 605 F. Supp. 2d 624, 627 (D.N.J. 2009) ("A party opposing remand must show that removal was proper.").

Once an action is removed, a plaintiff may challenge removal by moving to remand the case back to state court. Cook v. Soft Sheen Carson, Inc., No. CIV.A.08-1542, 2008 WL 4606305, at *1 (D.N.J. Oct. 15, 2008). Remand to the state court is appropriate for "(1) lack of district court subject matter jurisdiction or (2) a defect in the removal process." PAS v. Travelers Ins. Co., 7 F.3d 329, 352 (3d Cir. 1993). Remand is mandatory and can occur at any time during the litigation if the court determines that it lacks federal subject matter jurisdiction. Kimmel v. DeGasperi, No. CIV.A.00-143, 2000 WL 420639, at *1 (E.D. Pa. Apr. 7, 2000) (citing 28 U.S.C. § 1447(c)). A motion to remand the case on the basis of any defect in the removal procedure, however, must be submitted within thirty days after filing of the notice of removal under section 1446(a). 28 U.S.C. § 1447(c); N. Penn Water Auth. v. Bae Sys. Aerospace Elec., Inc., No. CIV.A.04-5030, 2005 WL 1279091, at *5 (E.D. Pa. May 25, 2005). Upon a motion to remand, "it is always the removing party's burden to prove the propriety of removal, and any doubts about the existence of federal jurisdiction must be resolved in favor of remand." Lumbermans Mut. Cas. Co. v. Fishman, No. CIV.A.99-929, 1999 WL 744016, at *1 (E.D. Pa. Sep. 22, 1999) (citing Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir.1992)); see also Boyer, 913 F.2d at 111 (The removal statutes "are to be strictly construed against removal and all doubts should be resolved in favor of remand.") (quoting Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir.1987)).

III. DISCUSSION

In the current Motion, Plaintiff concedes that this Court has subject-matter jurisdiction over this case pursuant to 28 U.S.C. § 1331.*fn2 It seeks remand, however, based on a purely procedural defect. Specifically, it argues that Removing Defendants have failed to comply with the "unanimity rule" because Defendant McGranahan neither joined in the notice of removal nor otherwise consented to the removal.

The right to remove a case from state to federal court is vested exclusively in "the defendant or defendants." 28 U.S.C. § 1441(a). Section 1446, which governs removal, "has been construed to require that when there is more than one defendant, all must join in the removal petition." Lewis v. Rego Co., 757 F.2d 66, 68 (3d Cir. 1985); Granovsky v. Pfizer, Inc., 631 F. Supp. 2d 554, 559 (D.N.J. 2009). This requirement that all defendants agree to the removal is known as the "unanimity rule." Balazik v. County of Dauphon, 44 F.3d 209, 213 n.4 (3d Cir. 1995). "Although the question arises more frequently in diversity cases, the 'unanimity rule' is also applicable in federal question cases." State Med. Equip. Co. v. Farber, No. CIV.A.95-2596, 1995 WL 339024, at *2 (E.D. Pa. Jun. 1, 1995). Unanimity may be expressed by defendants either jointly filing the notice of removal or consenting to the removal by separate filing. Balazik, 44 F.3d at 213; Weinrach v. White Metal Rolling and Stamping Corp., No. CIV.A.98-3293, 1999 WL 46627, at *1 (E.D. Pa. Jan. 6, 1999). The rule does not apply to any defendant which has not been served or is not otherwise in receipt of the complaint at the time of removal. Reeser v. NGK Metals Corp., 247 F. Supp. 2d 626, 631 (E.D. Pa. 2003). "[T]he failure of all defendants to remove creates a 'defect in removal procedure' within the meaning of § 1447(c)," but is deemed to be a procedural defect, not a jurisdictional one. Balazik, 44 F.3d at 213; see also McGlinchey v. Hartford Accident and Indem. Co., 866 F.2d 651, 653 (3d Cir. 1989)).*fn3

In the case at bar, the Notice of Removal was filed on December 15, 2009, on behalf of Defendants Aurora and Payne. (Pl.'s Mot. for Remand, Ex. 5.) Although it was timely filed within thirty days after these Defendants received the Complaint, the Notice was not joined by Defendant McGranahan and did not include an explicit consent form signed by her. (Id.) Under plain application of the rule of unanimity, the removal was thus procedurally defective, thereby requiring remand to state court.

Defendants attempt to rebut this conclusion with four arguments. First, they aver that McGranahan was fraudulently joined and, as such, her consent was unnecessary. Second, they assert that Plaintiff invoked the jurisdiction of this Court by filing the Amended Complaint and thus cannot claim that a now-abandoned complaint was incorrectly removed. Third, Defendants contend that the removal was not defective since McGranahan's consent was evidenced by both the initial Notice of Removal and her subsequent Motion to Dismiss. Finally, Defendants argue that policy reasons, including judicial ...


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