Josh Raffaelli V Brookfield Asset Management Llc Et Al

Key Facts

Issues

• The plaintiff sought to amend the complaint to add new claims, allegations, and defendants. The court granted the motion to amend, which would add new defendants (BBU, Sammut, and Pinegrove entities) to the case. The court then remanded the case to state court because joinder of these defendants would destroy diversity jurisdiction.
• The court evaluated six factors under 28 U.S.C. § 1447(e) to determine whether to permit joinder of new defendants (BBU, Sammut, and Pinegrove entities) whose addition would destroy diversity jurisdiction. The court applied the standard for joinder under Section 1447(e), which is less restrictive than Rule 19 joinder. Most factors weighed in favor of joinder, including the defendants' connection to the claims, no unexplained delay in the request, facial validity of claims, and prejudice from requiring separate lawsuits. However, the statute of limitations factor weighed against joinder. Ultimately, the court exercised its discretion to permit joinder because the factors favored it.

Holdings

Remedies

• The case was remanded to the Superior Court for the County of San Mateo because joining the new defendants would destroy diversity jurisdiction.
• The court permitted joinder of Brookfield Business Partners L.P., Nicholas Sammut, and Pinegrove entities as defendants despite diversity concerns.
• The court granted the plaintiff's motion to amend the complaint to add new claims, allegations, and name new defendants.

Legal Principles

• Under 28 U.S.C. § 1447(e), when joinder of additional defendants would destroy subject matter jurisdiction after removal, courts have discretion to either deny joinder or permit joinder and remand the action to state court. Courts evaluate six factors: (1) whether the party is needed for just adjudication under Rule 19(a); (2) whether statute of limitations would preclude original action; (3) whether there's unexplained delay in requesting joinder; (4) whether joinder is intended solely to defeat federal jurisdiction; (5) whether claims against new defendant appear valid; and (6) whether denial of joinder will prejudice the plaintiff.
• Facial validity of claims is assessed under a different standard than Rule 12(b)(6) motion to dismiss. A 'glimmer of hope' that plaintiff can establish claim is sufficient. Mere preference for one forum over another does not weigh in § 1447(e) analysis. When denial of joinder would require plaintiff to pursue two substantially similar lawsuits in two different forums, prejudice factor weighs in favor of joinder.

Precedent Name

• Soto v. Nissan N. Am., Inc.
• Roblin v. Costco Wholesale Corp.
• Malijen v. Ford Motor Co.
• Newcombe v. Adolf Coors Co.
• McKines v. Costco Wholesale Corp.
• Franco v. Costco Wholesale Corp.
• Found. Bldg. Materials, LLC v. Action Gypsum Supply

Cited Statute

• 28 U.S.C. § 1447(e)
• Federal Rule of Civil Procedure 19(a)
• Federal Rule of Civil Procedure 15

Judge Name

Passage Text

• For the foregoing reasons, the motion to amend is GRANTED, BBU, Sammut, and the Pinegrove entities are joined, and the case is REMANDED to the Superior Court for the County of San Mateo.
• Because almost all the factors weigh in favor of joinder, the Court exercises its discretion to permit joinder of BBU, Sammut, and the Pinegrove entities. And because Raffaelli and these defendants are citizens of California for purposes of diversity jurisdiction, joinder destroys diversity, and the Court must remand the action.
• Pinegrove and Sammut, however, are more closely connected to Raffaelli's claims. As for Pinegrove, it allegedly lied to investors about its financial position to encourage investment as part of a scheme to integrate the Brookfield funds on which Raffaelli worked into Pinegrove, which Raffaelli says affected his compensation and ongoing employment. As for Sammut, he allegedly led two instances of Pinegrove usurping investment opportunities originally intended for Raffaelli's funds, which affected Raffaelli's compensation. Thus, Pinegrove and Sammut are more than tangentially related to Raffaelli's interference with contract and aiding and abetting breach of fiduciary duty claims. Accordingly, the first factor weighs in favor of permitting joinder.