Cruz v. Costco Wholesale Corporation

Background

In August 2023, Libertad Cruz fell and was injured at a Costco on East 117th Street in New York City. She later sued Costco Wholesale Corporation, Tiago Holdings, LLC, East River Plaza, LLC, and Blumenfeld Development Group, LTD. in New York State Supreme Court in Bronx County. The opinion states that Costco leases its warehouse space from Tiago and that Blumenfeld Development was involved in managing the property. Cruz, Tiago, East River Plaza, and Blumenfeld Development are all citizens of New York.

On May 27, 2025, Cruz agreed to dismiss Tiago, East River, and Blumenfeld without prejudice. Costco then notified Cruz that it intended to remove the case to federal court, and Costco filed its notice of removal on June 9, 2025. Cruz later moved in federal court to add Tiago, East River, and Blumenfeld back into the case, along with FC East River Associates LLC, RRG East River LLC, and DWD Associates LLC. She also sought remand, meaning a return of the case to state court.

The Parties’ Arguments

Costco argued that Cruz’s proposed joinder—the addition of parties to the lawsuit—was fraudulent because the proposed defendants had no real connection to the dispute. Costco relied partly on portions of a lease that it said made Costco solely responsible for the accident area, and on an affidavit from a current Costco employee.

Cruz argued that further discovery could show that the proposed non-New York defendants remained responsible for the area where she fell. She also pointed out that Costco’s lease submission was incomplete, including at least 50 missing pages and the signature page. The portions provided indicated that Tiago and Blumenfeld could have had responsibilities involving inspection, maintenance, or repairs.

Court’s Analysis

The court held that Costco had not met its heavy burden of proving fraudulent joinder. Costco did not claim that Cruz committed outright fraud in her pleadings, and it did not show that there was no possibility that Cruz could state a claim against Tiago, East River Plaza, or Blumenfeld Development under New York law.

The court explained that an out-of-possession property owner generally is not liable for injuries on the property unless the owner retained control or had a contractual duty to perform repairs or maintenance. The court found that the incomplete lease materials did not eliminate the possibility that the proposed defendants had such responsibilities. The lease provisions also reduced the weight the court could give Costco’s employee affidavit.

The court then considered whether adding the non-diverse defendants was fundamentally fair under 28 U.S.C. § 1447(e). The court found that all four relevant factors favored or did not defeat joinder: Cruz moved to join the defendants less than one month after removal; the case had not yet reached discovery; denying joinder could require parallel state and federal litigation; and, although Cruz’s timing suggested possible gamesmanship, she also identified legitimate reasons for adding the defendants.

Ruling and Disposition

The court granted Cruz’s motion. Because joinder was proper and the added defendants destroyed diversity jurisdiction, the court remanded the case to the Supreme Court of the State of New York, Bronx County. The Clerk of Court was directed to terminate the motion at Docket 11 and close the federal case.