Where Exactly Do You Live?


This may seem to be an unimportant question, but for federal jurisdiction it may make all the difference. In the case of Eberle v. Overdrive, Inc., No. 19-cv-466-jdp (W.D. Wisconsin January 28, 2020), the plaintiff filed suit against a former employer in Wisconsin state court. Overdrive sought to move the case to Ohio based on a forum clause. In response Eberle filed an affidavit that stated that he was a long-term resident of Wisconsin with deep ties to the state. Overdrive then removed the case to federal court. Eberle then moved to remand and filed a new affidavit that he was a citizen of Ohio and was raising children there. The court held an evidentiary hearing and determined that Eberle was, in fact, a citizen of Ohio and dismissed the case because both litigants were citizens of Ohio.

The more important question was: would Eberle face consequences for filing an affidavit in Wisconsin that contradicted the affidavit he later filed in federal court?

Sadly, Eberle did not face any adverse consequences because the arguably problematic affidavit was filed in the state court, not the federal court. The court held that Eberle would not be sanctioned. The explanation:

At the hearing, the court expressed concern that Eberle’s state-court affidavit regarding his ties to Wisconsin had been misleading. The affidavit portrayed Eberle as a current Wisconsin resident who stood to be inconvenienced by any transfer of his case to Ohio. See, e.g., Dkt. 1-3, at 11 (“I am a longtime resident of Wisconsin, having been born and raised here, and lived here most of my adult life. Until Defendant hired me in 2017, I lived in Gleason, Wisconsin where I have been residing since 2008.”); id. at 12 (“I still maintain a residence at W1446 Bear Trail Road, Gleason, WI 54435. I filed my taxes earlier this year as a Wisconsin resident.”). After the hearing, the court ordered Eberle to show cause why he should not be sanctioned under Federal Rule of Civil Procedure 11(c)(3).

Eberle contends that all his statements were and are factually accurate. That’s not true in every detail: as of the date of the affidavit, May 24, 2019, he had not yet filed his taxes for the year. But the main problem is not affirmative false statements; it is that Eberle intentionally omitted material facts. Eberle failed to disclose in state court that he had been a nearly fulltime resident of Ohio since 2017, that he had moved his family there, continued to work there, and intended to remain there permanently. It is inconceivable that Eberle was unaware of these facts, or that he and his counsel did not realize that these facts were highly material to Overdrive’s motion to stay the state case in favor of litigation in Ohio.

The court will decline to impose sanctions under Rule 11, but not because Eberle’s statements are factually accurate. The court would impose sanctions under Rule 11 for intentional material omissions in an appropriate case. But Eberle’s intentional material omissions related to statements made to the state court, not to this court. If Eberle had relied on his state-court affidavit in advocating for remand, I would consider Rule 11 sanctions for his counsel. See Fed. R. Civ. P. 11 advisory committee’s note to 1993 amendment (“[I]f after a notice of removal is filed, a party urges in federal court the allegation of a pleading filed in state court ([including] in disputes regarding removal or remand), it would be viewed as `presenting’—and hence certifying to the district court under Rule 11—those allegations.”). As it stands, I have found that Eberle was honest with this court; it was the state court whose dignity was insulted by the material omissions that made Eberle’s state-court submissions so misleading.

The court did award Overdrive its legal fees in removing the case under 28 USC 1447(c).

But that’s not the end of the matter. Under 28 U.S.C. § 1447(c), courts remanding an improperly removed case “may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” Eberle asked the court to shift costs and expenses to Overdrive for removing the case without an “objectively reasonable basis.” Dkt. 7, at 8-9 (quoting Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005)). That request is denied; Eberle’s state-court affidavit gave Overdrive a reasonable basis to infer that Eberle was a Wisconsin citizen. The court will, however, grant Overdrive’s request that Eberle be ordered to pay its removal-related fees and expenses. Although § 1447(c) is more commonly invoked against the defendant, there is “no party-based limitation in § 1447(c) on a district court’s discretion to award fees and costs.” Micrometl Corp. v. Tranzat Techs., Inc., 656 F.3d 467, 470 (7th Cir. 2011). Fee-shifting is appropriate here. Eberle’s misleading representations in state court prompted unnecessary expenditure of time and resources addressing a reasonable but ultimately flawed removal. See Martin, 546 U.S. at 141 (“a plaintiff’s . . . failure to disclose facts necessary to determine jurisdiction may affect the decision to award attorney’s fees”).

This is an excellent example of how removal issues can be confusing and complicated.

http://www.clintonlaw.net

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