Fight Club Kitty Hawk 94551, Inc. v. Omni Fight Club Franchising, LLC

Background

The plaintiffs—Fight Club Kitty Hawk 94551, Inc., Fight Club Del Prado 33904, LLC, and Fight Club USA, Inc.—filed a state-court complaint against Omni Fight Club Franchising LLC, Dennis Dumas, Amanda Dumas, Scott Kelly, Michael Kahn, and Nick Duarte. The complaint initially asserted only state-law claims. A second amended complaint later added claims under the Racketeer Influenced and Corrupt Organizations Act, a federal law commonly called RICO.

The plaintiffs alleged that, since 2017, the defendants had conspired to defraud Omni Fight Club Franchising franchisees of money or property by opening competing locations nearby in violation of the franchise agreement. Omni Fight Club Franchising then removed the case to federal court based on federal-question jurisdiction. The removal notice was signed by counsel for Omni Fight Club Franchising, Michael Kahn, and Scott Kelly, but the remaining defendants did not sign or appear in the notice.

Motion to Remand

The plaintiffs argued that removal was procedurally defective because Omni Fight Club Franchising had not obtained Dennis Dumas’s consent and had not explained in the removal notice why his consent was absent. Omni argued that Dumas’s consent was unnecessary because he was allegedly fraudulently joined or was a nominal party.

The court applied the rule of unanimity, which generally requires all properly joined and served defendants to join in or consent to removal when a case is removed based on federal-question jurisdiction. Exceptions can apply to nominal, unknown, or fraudulently joined parties. The removing defendant also had to explain affirmatively in the removal notice why any co-defendant had not joined.

The court found that the initial removal notice was facially defective because it did not explain the absence of Dumas’s consent. Omni filed an amended removal notice nearly three months after service of the second amended complaint and after briefing on the remand motion had ended. The court held that the amended notice came too late to cure the defect within the statutory thirty-day period.

The court acknowledged Omni’s concern that the plaintiffs may have engaged in gamesmanship involving Dumas, but held that any such conduct did not excuse Omni’s failure to comply with the removal requirements. The court also concluded that an exception allowing some procedural defects to be cured before judgment did not apply here.

Disposition

The court GRANTED the plaintiffs’ motion to remand and directed the Clerk to return the case to Alameda County Superior Court and close the federal case. The court DENIED the plaintiffs’ request for attorneys’ fees, finding that Omni had raised nonfrivolous arguments about removal. The defendants’ motion for further discovery and motion to dismiss were DENIED AS MOOT.