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ROSKIND v. MORGAN STANLEY DEAN WITTER & COMPANY

April 11, 2001

JAMES ROSKIND, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
MORGAN STANLEY DEAN WITTER & COMPANY, DEFENDANT.



The opinion of the court was delivered by: Conti, U.S. District Judge.

ORDER GRANTING PLAINTIFF'S MOTION FOR REMAND

I. INTRODUCTION

Before the Court is Plaintiff's motion, filed on March 8, 2001, to remand this case to the Superior Court of California, County of San Francisco, where it was originally filed. Specifically, Plaintiff contends Defendant's removal on January 17, 2001 was untimely and there is no federal subject matter jurisdiction over his claims. Plaintiff also seeks to recover the costs incurred as a result of the removal.

II. BACKGROUND

The procedural and substantive history of this case spans two and a half years. In brief, Plaintiff filed a class-action suit in the Superior Court of California for the County of San Francisco on September 8, 1998. The complaint alleges that Defendant breached its fiduciary duty and engaged in unfair business acts by failing to execute sell orders at the best available price and by trading ahead of its clients. Complaint ¶ 2. According to the complaint, on February 8, 1996, Plaintiff instructed Defendant, his broker, to sell 14,000 shares of Netscape for at least $65 per share at market open. Complaint ¶ 21. Although Defendant received the order prior to the market's opening, Defendant waited 77 minutes, during which time Defendant sold its own shares and the market price dropped $2.50, before offering Plaintiff's shares for sale. Complaint ¶ 21-26. Defendant then purchased Plaintiff's shares at a price lower than the price it had just sold its shares. Complaint ¶ 26. Plaintiff alleges that this conduct breached fiduciary duties owed to Plaintiff. Complaint ¶ 18. Plaintiff also alleges that Defendant's conduct in conjunction with statements that it obtains the best price for its clients violates California Business and Professions Code §§ 17200 et seq. and §§ 17500 et seq. Complaint ¶ 33-36.*fn1

In September 1998, Defendant timely removed the action to federal court asserting diversity jurisdiction, however, the district court remanded finding the amount in controversy requirement was not met. Roskind v. Morgan Stanley Dean No. 98-3712 (N.D.Cal. filed Dec. 21, 1998).*fn2 Defendant then demurred on the grounds that the state claims were preempted by federal law and violated the commerce clause. The district court found the state claims preempted, however the Court of Appeals reversed finding that the state claims did not conflict with the federal scheme for regulating securities trading. Roskind v. Morgan Stanley Dean Witter & Co., 80 Cal.App.4th 345, 95 Cal.Rptr.2d 258 (2000), cert. denied, 531 U.S. 1119, 121 S.Ct. 868, 148 L.Ed.2d 781 (2001). Defendant then sought and was denied a rehearing before the Court of Appeals, depublication of the opinion, review by the California Supreme Court, and finally, review by the United States Supreme Court, which was denied on January 16, 2001.

On January 17, 2001, Defendant filed a Second Notice of Removal, this time asserting federal jurisdiction based on the existence of a federal question raised in Plaintiff's Brief in Opposition to Petition for Certiorari. Plaintiff filed the present motion for remand on March 7, 2001 asserting both procedural and jurisdiction grounds. Specifically, Plaintiff contends the Defendant's removal was not timely, that Defendant waived its right to remove, that Defendant is estopped from removing the action, and that federal question jurisdiction is lacking. Plaintiff also seeks to recover the costs incurred as a result of the removal under 28 U.S.C. § 1447 (c).

III. DISCUSSION

A. Legal Standard for Removal

With some exceptions not at issue here, a defendant may remove a civil action brought in state court to a federal district court so long as the district court has original jurisdiction. 28 U.S.C. § 1441 (a). In the Ninth Circuit, section 1441 is construed strictly against removal jurisdiction. Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979). "Federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992). Consequently, the defendant bears the burden of establishing federal jurisdiction. See Ethridge v. Harbor House Restaurant, 861 F.2d 1389, 1393 (9th Cir. 1988).

A defendant must remove the action within thirty days of receipt of the initial pleading. 28 U.S.C. § 1446 (b). If the case stated by the initial pleading is not removable, "a notice of removal may be filed within thirty days after receipt by the defendant . . . of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable." 28 U.S.C. § 1446 (b).

B. Remand Based on a Defect in Removal Procedure

A plaintiff may seek to have the district court remand the case to the state court from which it was removed if the district court lacks jurisdiction or if there is a defect in the removal procedure. 28 U.S.C. § 1447 (c). A motion to remand on the basis of a defect in removal procedure must be made within 30 days after the filing of the notice of removal. 28 U.S.C. § 1447 (c). In the Ninth Circuit, a "district court ha[s] no authority to remand . . . on the basis of a defect in removal procedure raised for the first time more than 30 days after the filing of the notice of removal." Northern California District Council of Laborers v. Pittsburg-Des Moines Steel, 69 F.3d 1034, 1038 (9th Cir. 1995); see also Maniar v. FDIC, 979 F.2d 782, 784-85 (9th Cir. 1992) (holding that a court's sua sponte remand must take place within the thirty day period).

Plaintiff's Motion to Remand was not filed until March 7, 2001, which is forty-nine days after Defendant filed its Second Notice of Removal on January 17, 2001.*fn3 Since more than thirty days have elapsed, this Court no longer has the authority to remand based on procedural defects. Three of Plaintiff's grounds for remand are potentially procedural: (1) that Defendant's removal was untimely; (2) that Defendant ...


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