TRACY LYNN SCHNEIDER v. CHIPMAN

Background

Tracy Lynn Schneider proceeded without a lawyer and was allowed to file without paying court fees. She alleged that Richard Chipman, Leonard Tierney, Coast to Coast Staffing LLC, StaffInvest Holding LLC, Madison Resources Funding LLC, NESC Staffing Corp., NESC Staffing LLC, Partners Personnel Management Services, and “others” wrongfully deprived her of ownership, control, and financial interests in Chartwell Staffing Services, Inc., which she said she co-founded and in which she retained a 25% minority ownership interest. She alleged coercion, misuse of company funds and records, breach of agreements, fiduciary-duty violations, corporate oppression, fraudulent concealment, self-dealing, and improper handling of insurance and Paycheck Protection Program funds.

Schneider also alleged that she was removed from company health insurance without receiving continuation coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). She asserted a Fourteenth Amendment due-process claim and state-law claims, and sought damages, injunctive relief, and declaratory relief. She invoked diversity jurisdiction, but the complaint gave inconsistent information about her citizenship and did not adequately allege the citizenship of the individual defendants, limited liability company members, or corporations.

Federal claims

The court dismissed the due-process claims brought under 42 U.S.C. § 1983 for failure to state a claim. Section 1983 generally requires action under state law, and the complaint identified only private parties and did not allege that any defendant acted for a state or other government body.

The court also dismissed the COBRA claims for failure to state a claim. Schneider did not allege facts showing that she was an employee of a defendant, had employment-related group health coverage, experienced a qualifying event, or that the responsible parties failed to provide the required notices. The court granted her 30 days’ leave to replead the COBRA claims if she could allege sufficient supporting facts.

State-law claims and jurisdiction

The court held that Schneider had not adequately alleged diversity of citizenship jurisdiction. It was unclear where she was domiciled, and the complaint did not sufficiently allege the citizenship of the individual defendants, the members of the limited liability companies, or the states where the corporations were incorporated. The court granted leave to amend to allege facts establishing diversity jurisdiction.

Because the court dismissed the federal claims over which it had original jurisdiction, it declined to exercise supplemental jurisdiction—the authority to hear related state-law claims—over any state-law claims Schneider intended to assert.

Request for counsel and disposition

The court denied Schneider’s application for the court to request volunteer counsel without prejudice to renewal later if she filed an amended complaint. The court dismissed the complaint, granted 30 days’ leave to replead, and directed the clerk to keep the matter open until a civil judgment is entered. If Schneider does not file an amended complaint within the permitted time, the court stated that the clerk will be directed to enter judgment.