United States District Court, N.D. California
GREGG S. WALSH, et al., Plaintiffs,
PROBIOTIC SODA, LLC, et al., Defendants.
ORDER DENYING APPLICATION TO PROCEED IN FORMA
PAUPERIS AND ORDER TO SHOW CAUSE WHY THE CASE SHOULD NOT BE
REMANDED RE: DKT. NOS. 1, 2
NATHANAEL M. COUSINS United States Magistrate Judge.
26, 2017, Kelly Elley filed a notice of removal and
complaint, removing this case from Santa Cruz County Superior
Court and alleging that plaintiffs Gregg S. Walsh, et al.,
violated the federal Real Estate Settlement Procedures Act
(RESPA), 12 U.S.C. §§ 2601-2617. Dkt. No. 1. Elley
also filed an application to proceed in forma pauperis. Dkt.
No. 2. Elley did not follow the procedural requirements for
removal, see 28 U.S.C. § 1446, and in part
because of those deficiencies, it is not clear that Elley has
any right to remove the case in the first place. Most
notably, Elley is not a named defendant, or else is
improperly attempting to appear pro se as defendant Probiotic
Soda, LLC. Furthermore, Elley does not establish, and the
Court is unable to find, a valid basis for subject matter
jurisdiction. For all of these reasons, the Court ORDERS
Elley to show cause why the case should not be remanded to
Santa Cruz County Superior Court and DENIES the motion to
proceed in forma pauperis.
APPLICATION TO PROCEED IN FORMA PAUPERIS
district court may authorize the commencement of a civil
action in forma pauperis if it is satisfied that the would-be
plaintiff cannot pay the filing fees necessary to pursue the
action. 28 U.S.C. § 1915(a)(1). Elley submitted the
required documentation, and it is evident from the
application that Elley's listed assets and income
preclude Elley from paying the filing fees. However, as
explained below, this action was improperly removed to
federal court, so the Court finds that granting Elley's
application is not appropriate at this time.
SCREENING UNDER 28 U.S.C. 1915(e)(2)
payment of any filing fee or portion thereof, a complaint
filed by any person proceeding in forma pauperis pursuant to
28 U.S.C. § 1915(a) is subject to a mandatory and sua
sponte review and dismissal by the Court if it is frivolous,
malicious, fails to state a claim upon which relief may be
granted, or seeks monetary relief from a defendant who is
immune from such relief. 28 U.S.C. § 1915(e)(2)(B);
Calhoun v. Stahl, 254 F.3d 845, 845 (9th Cir. 2001).
As it should do at all times, the Court must also ascertain
that it has subject matter jurisdiction over the action.
See Fed. R. Civ. P. 12(h)(3); see also Arbaugh
v. Y&H Corp., 546 U.S. 500, 506-07 (2006).
sua sponte review, the Court has identified at least three
problems with Elley's Notice of Removal. First, Elley
does not appear to be a party to the case and therefore has
no basis for removing it to federal court. If Elley is
appearing as named defendant Probiotic Soda, LLC, this too is
improper, because an LLC requires counsel and may not appear
pro se. Second, Elley did not attach the state pleadings to
the removal documents, which is necessary to remove a case to
federal court. Finally, and critically, the absence of state
pleadings precludes the Court from evaluating whether there
is a basis for subject matter jurisdiction.
primary concern, Elley cannot remove the case. A civil action
brought in state court may be removed to federal court only
“by the defendant or the defendants” in the state
court case. 28 U.S.C. § 1441(a). By its plain terms, the
statute does not confer removal power to a non-party. See
Id . Elley is not a party to the state court case and
thus cannot remove it to federal court.
Elley is appearing as Probiotic Soda, LLC, this too is
improper, because an LLC cannot appear pro se. “A
corporation . . . can appear only by attorney.”
Osborn v. Bank of U.S., 22 U.S. 738, 830 (1824);
accord Rowland v. California Men's Colony, Unit II
Men's Advisory Council, 506 U.S. 194, 201-202 (1993)
(“It has been the law for the better part of two
centuries ... that a corporation may appear in the federal
courts only through licensed counsel”); D-Beam Ltd.
v. Roller Derby Skates, Inc., 366 F.3d 972, 973-74 (9th
Cir. 2004). Although Probiotic Soda is not a true
corporation, the principle “applies equally to all
artificial entities, ” including LLCs.
Rowland, 506 U.S. at 202; see Lattanzio v.
COMTA, 481 F.3d 137, 140 (2d Cir. 2007) (per curiam);
Best Deals on TV, Inc. v. Naveed, No.
07-cv-1610-SBA, 2008 WL 178254, at *1 (N.D. Cal. Jan. 18,
2008). As an LLC, Probiotic Soda requires licensed counsel to
appear in federal court, so Elley cannot validly appear on
Elley's attempt at removal is procedurally deficient. A
notice of removal must include “a short and plain
statement of the grounds for removal, together with a copy of
all process, pleadings, and orders” served on the
defendant(s) in the state action. 28 U.S.C. § 1446(a).
Elley did not include such a statement in the removal notice
and did not attach the state proceedings. Removal statutes
are strictly construed, so these failures make the removal
inadequate and warrant remand. See Shamrock Oil and Gas
Corp. v. Sheets, 313 U.S. 100, 108- 09 (1941).
there appears to be no basis for federal subject matter
jurisdiction. It is well established that a case may be
removed to federal court from state court if the action could
have been brought in federal court at the outset.
E.g., Snow v. Ford Motor Co., 561 F.2d 787,
789 (9th Cir. 1977). The plaintiff's complaint, not a
defense or counterclaim, establishes removal jurisdiction.
Franchise Tax Board of State of Calif. v. Constr.
Laborers Vacation Trust for S. Calif., 463 U.S. 1, 10
(1983). Because Elley did not attach the state court
proceedings, it is impossible for the Court to determine
whether the plaintiff's complaint establishes federal
jurisdiction. The notice of removal establishes that the
parties are not diverse, Dkt. No. 1 at 2, so jurisdiction
under 28 U.S.C. § 1332 is foreclosed. And there is no
indication of some other form of subject matter jurisdiction.
A defendant seeking removal has the burden to show that
federal jurisdiction exists and that removal requirements
have been met, and Elley clearly failed to meet this burden.
Accordingly, the Court finds that removal was improper
because there has been no establishment of subject matter
Elley has no right to remove the state court case, because of
the procedural deficiencies in Elley's notice of removal,
and because the Court cannot find a basis for subject matter
jurisdiction, the Court ORDERS Elley to show cause why the
action should not be remanded to Santa Cruz County Superior
Court. Because removal was improper, the Court DENIES
Elley's application to proceed in forma pauperis. Elley
must respond to this order in writing, addressing the
problems noted above, by June 29, 2017.
is warned that an order remanding to state court "may
require payment of just costs and any actual expenses,
including attorney fees, incurred as a result of ...