Broad Coverage Service, Inc. v. Oriska Insurance Company

Background

Broad Coverage Service, Inc. and Dynamic Claim Services, Inc. sued Oriska Insurance Company and Rashbi Management, Inc. in the Supreme Court of the State of New York, County of Rockland. Rashbi later filed a third-party complaint asserting claims against Donna Hodge, Annette Hall, Karen Grant Williams, and Alexi Arias as class representatives of a class of employees of employer defendants. The third-party defendants removed the action to the U.S. District Court for the Southern District of New York.

In a January 11, 2021 remand order, the court sent the action back to state court. It held, among other things, that a third-party defendant cannot remove a case under 28 U.S.C. § 1441(a). The third-party defendants then moved for reconsideration under Local Civil Rule 6.3.

Reconsideration Standard

The court explained that reconsideration is an exceptional remedy. It may be appropriate when the moving party identifies controlling decisions or information the court overlooked, an intervening change in controlling law, new evidence, clear error, or a need to prevent serious unfairness. A reconsideration motion is not a vehicle for repeating arguments already decided or presenting arguments that could have been made earlier.

Court’s Analysis

The third-party defendants argued that the court had wrongly relied on the Supreme Court’s decision in Home Depot U.S.A., Inc. v. Jackson because they were third-party defendants rather than counterclaim defendants. They also argued that they were the real parties in interest and therefore should be allowed to remove the case.

The court rejected those arguments. It read Home Depot as requiring the federal court to examine whether the action could originally have been filed in federal court based on the plaintiff’s complaint. Under that analysis, the relevant defendants are the defendants named in the original complaint. Because the third-party defendants were not defendants in the original action, they were not defendants permitted to remove under § 1441(a).

The court also stated that neither the original complaint nor the amended complaint filed in state court provided a basis for federal jurisdiction. The fact that the third-party complaint included claims under the Employee Retirement Income Security Act did not change whether the third-party defendants could remove the original state-court action. The third-party defendants had not identified controlling authority that the court overlooked.

Disposition

Judge Philip M. Halpern denied the third-party defendants’ motion for reconsideration. The clerk was directed to terminate the motion. The opinion does not state any additional disposition of the underlying state-court action beyond the prior remand.