Fouad v. The Milton Hershey School and School Trust

Background

F. Frederic Fouad originally filed the action in New York County Supreme Court, asserting state-law claims against The Milton Hershey School, certain board members, Elliott Greenleaf P.C., and one of its partners. The defendants removed the case to the Southern District of New York. On February 6, 2019, that court found federal subject-matter jurisdiction and transferred the case to the Middle District of Pennsylvania instead of remanding it.

After extensive proceedings in Pennsylvania, the case was reassigned to Judge Jennifer P. Wilson. She reconsidered whether federal jurisdiction existed and concluded that it did not. On September 28, 2020, she remanded the case to the New York County Supreme Court. The Pennsylvania federal court and the United States Court of Appeals for the Third Circuit denied requests to stay that remand and petitions seeking extraordinary appellate relief.

After the New York state court reopened the case, the defendants removed it again to the Southern District of New York. They argued that the Southern District should enforce its earlier finding that federal jurisdiction existed. Fouad moved to remand, arguing that reviewing the Pennsylvania court’s remand decision was barred by 28 U.S.C. § 1447(d).

Court’s reasoning

Section 1447(d) generally provides that a remand order returning a case to state court for lack of subject-matter jurisdiction cannot be reviewed on appeal or otherwise. The Court explained that the Second Circuit interprets this rule to bar federal district courts from reconsidering such remand orders, even when a party argues that the order was wrong.

The Court held that the second removal was based on the same grounds as the first. The defendants argued that a later amended complaint had added a federal claim, but the Court concluded that the amended complaint became legally ineffective when the Pennsylvania court remanded the case for lack of jurisdiction. The Court also noted that Judge Wilson had already considered that asserted federal claim and found that it did not establish jurisdiction.

The Court rejected the defendants’ argument that they were merely asking it to enforce its own earlier jurisdictional ruling rather than review Judge Wilson’s remand order. The Pennsylvania remand had nullified the federal proceedings, including the Southern District’s earlier order denying remand. Deciding jurisdiction again would require reviewing the same facts, arguments, and legal analysis that Judge Wilson had considered.

The Court further held that, even if § 1447(d) did not apply, the general rule against successive removals on the same grounds required remand. Although successive removals are not always forbidden, the Court explained that a second removal generally cannot rely on the same pleadings and grounds unless circumstances have changed or a genuinely different basis for removal exists. The defendants had not shown such a different basis.

Rulings

The Court found that § 1447(d) barred it from revisiting federal subject-matter jurisdiction and stated that it lacked jurisdiction to review the Pennsylvania remand order. It therefore granted Fouad’s motion to remand and directed the Clerk of Court to send a certified copy of the remand order to the New York County Supreme Court.

The Court denied Fouad’s motion for sanctions, including attorneys’ fees and costs under § 1447(c), because it found that the defendants’ second removal was objectively reasonable given the unusual procedural history and lack of clear guidance. The Court also declined to impose sanctions under its inherent authority.

The Court denied Fouad’s motion for an order amending the caption and directing the method of service on Navada Hatfield. It left to the New York County Supreme Court the questions of who was currently a defendant and how Fouad should serve Hatfield. The Court directed Mr. Joe H. Tucker, Jr. to provide Hatfield with a copy of the order, without taking a position on their attorney-client relationship.

Disposition

The case was remanded to the New York County Supreme Court. Fouad’s motion for remand was granted; his motion for sanctions was denied; and his motion concerning the caption and service on Navada Hatfield was denied.