William J. Brown v. Jevic

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 08-4789
WILLIAM J. BROWN; LYNN D. BROWN; GRISEL
CAIRS; NOEMI CAMACHO;
LINDA ANSTIC; DONALD E. MCCOY; THOMAS K.
TURNER; RON WAYNE,
Individually and on behalf of all others similarly situated,
Appellees,
v.
JEVIC; JEVIC TRANSPORTATION, INC.; JEVIC
TRANSPORTATION SERVICES, INC.; JEVIC HOLDING
CORPORATION; DAVID H. GORMAN, PRESIDENT/CEO
of JEVIC TRANSPORTATION, INC.; GERALD
PAULSON, VICE PRESIDENT of JEVIC
TRANSPORTATION, INC.; HARRY MUHLSCHLEGEL,
PRESIDENT of JEVIC TRANSPORTATION SERVICES,
INC.; KAREN MUHLSCHLEGEL, VICE PRESIDENT of
JEVIC TRANSPORTATION SERVICES, INC.; MICHAEL
T. GILLEN, AS OTHER OFFICER OF JEVIC
TRANSPORTATION, INC.; SUN CAPITAL PARTNERS
INC; MICHAEL T. GILLEN, MANAGING DIRECTOR OF
SUN CAPITAL PARTNERS, INC.; F. DIXON MCELWEE,
JR., AS VICE PRESIDENT OF SUN CAPITAL

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The Honorable Louis H. Pollak, Senior District Judge*
for the United States District Court for the Eastern District of
Pennsylvania, sitting by designation.
2
PARTNERS, INC.; GARY TALARICO, MANAGING
DIRECTOR OF SUN CAPITAL PARTNERS, INC.; YRC
WORLDWIDE, INC.; WILLIAM D. ZOLLARS,
PRESIDENT/CEO OF YRC WORLDWIDE, INC.;
STEPHEN L. BRUFFETT, EXECUTIVE VICE
PRESIDENT/CHIEF FINANCIAL OFFICER OF YRC
WORLDWIDE, INC.
Sun Capital Partners, Inc., Michael T. Gillen,
F. Dixon McElwee, Jr., Gary M. Talarico,
Appellants
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 08-cv-03341)
District Judge: Honorable Renee M. Bumb
Argued March 6, 2009
Before: SLOVITER and HARDIMAN, Circuit Judges
and POLLAK, District Judge*

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(Filed: July 31, 2009)
Robert F. O'Brien [Argued]
O'Brien, Belland & Bushinsky
1526 Berlin Road
Cherry Hill, NJ 08003
Ronald A. Graziano
Suite 650
1040 North Kings Highway
Cherry Hill, NJ 08034-0000
Nicholas M. Centrella
Vincent T. Cieslik
Conrad O'Brien Gellman & Rohn, P.C.
1515 Market Street
16th Floor
Philadelphia, PA 19102-0000
Attorneys for Appellees William J. Brown,
Lynn D. Brown, Grisel Cairs, Noemi Camacho,
Linda Anstic, Donald E. McCoy, Thomas K.
Turner and Ron Wayne
Christopher Landau [Argued]
Scott M. Abeles
Gary D. Anderson
Kirkland & Ellis
655 15th Street, N.W.
Suite 1200
Washington, DC 20005-0000

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Richard J. DeFortuna
Morgan, Lewis & Bockius
1701 Market Street
Philadelphia, PA 19103-0000
Nathan R. Mather
Morgan, Lewis & Bockius
502 Carnegie Center
Princeton, NJ 08540-0000
John C. Gillespie
Parker McCay
700l Lincoln Drive West
3 Greentree Centre, P.O. Box 974
Marlton, NJ 08053-0000
Attorneys for Appellants Michael T. Gillen,
Sun Capital Partners Inc., F. Dixon McElwee, Jr.,
and Gary Talarico
OPINION OF THE COURT
HARDIMAN, Circuit Judge.
In this appeal implicating the Class Action Fairness Act
of 2005, we consider whether a defendant is precluded from
removing a class action to federal court because a co-defendant
is in bankruptcy. We hold that it is not.

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Brown also sued numerous individuals and corporations1
affiliated with Sun and/or JEVIC. Their status as Defendants is
immaterial to the issues raised on appeal.
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I
The essential facts and procedural history of the case are
undisputed. Appellant Sun Capital Partners, Inc. (Sun) is the
parent company of JEVIC Transportation, Inc., which filed for
Chapter 11 bankruptcy protection in the United States
Bankruptcy Court for the District of Delaware on May 20, 2008,
following the closure of its transportation facility in Delanco,
New Jersey. The day after JEVIC’s bankruptcy filing, William
J. Brown and several other former JEVIC employees
(collectively “Brown”) filed an adversary proceeding in the
Bankruptcy Court, which was styled as a class action and
alleged violations of the Millvale Dallas Airmotive Plant Jobs
Loss Notification Act (known as the New Jersey WARN Act),
N.J.S.A. § 34:21-1 et seq. See Czyzewski v. JEVIC Transp.,
Inc., Adv. Pro. 08-50662 (BLS) (Bankr. D. Del. 2008). Like its
federal counterpart, the New Jersey WARN Act requires
advance notice of a plant closing under certain circumstances.
One week after the JEVIC bankruptcy filing and despite
the automatic stay provided for in 11 U.S.C. § 362(a)(1), Brown
filed a class action against JEVIC and Sun in the Superior Court
of New Jersey; this class action also alleging violation of the1
New Jersey WARN Act, replicated Brown’s claim in
Bankruptcy Court.

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On June 27, 2008 — also in derogation of the automatic
stay of § 362(a)(1) — JEVIC removed the case to the United
States District Court for the District of New Jersey. In support
of federal jurisdiction, JEVIC invoked the general removal
statutes (28 U.S.C. §§ 1441 and 1446), the bankruptcy removal
statutes (28 U.S.C. §§ 157, 1334 and 1452), and the minimal
diversity provisions of the Class Action Fairness Act of 2005
(CAFA) (28 U.S.C. § 1332(d)).
On July 2, 2008, the District Court sua sponte remanded
the action to state court, stating: “The law is clear that ‘when an
action is filed post-petition, in violation of the stay, the debtor
must wait until the stay is lifted before filing a petition to
remove.’” Pusatere v. JEVIC Transp., Inc., No. 08-3224, 2008
WL 2676599, at *1 (D.N.J. July 1, 2008) (quoting Easley v.
Pettibone Mich. Corp., 990 F.2d 905, 908 (6th Cir. 1993)).
The day after the District Court remanded the case to
state court, Sun – which was not in bankruptcy – removed the
case to federal court, invoking the general removal statutes and
CAFA. The District Court, after ordering Sun to show cause
why the action should not be remanded, once again remanded
the case to state court, stating: “[w]hen an action is initiated
after the filing of a Chapter 11 petition, in violation of the
accompanying stay, removal is not available.” Brown v. JEVIC,
No. 08-3341, Remand Order (Sept. 12, 2008) (emphasis added)
(citations omitted).
Sun then filed a petition for leave to appeal the District
Court’s remand order, which we granted. Thus, we exercise
jurisdiction pursuant to 28 U.S.C. § 1453(c).

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II.
Our review of “issues of subject matter jurisdiction,
including cases arising under CAFA, is plenary.” Frederico v.
Home Depot, 507 F.3d 188, 193 (3d Cir. 2007) (citation
omitted). The removing party — in this case, Sun — carries a
heavy burden of showing that at all stages of the litigation the
case is properly before the federal court. See Packard v.
Provident Nat’l Bank, 994 F.2d 1039, 1045 (3d Cir. 1993).
Removal statutes are to be strictly construed, with all doubts to
be resolved in favor of remand. See Batoff v. State Farm Ins.
Co., 977 F.2d 848, 851 (3d Cir. 1992).
In finding removal improper, the District Court (1)
characterized Sun’s claim as one for partial removal, and (2)
relied solely on cases dealing with debtor defendants who
attempted to remove actions. This was problematic because Sun
is neither a debtor in bankruptcy nor did it seek partial removal.
As we shall explain, Sun’s removal was proper because: (1)
JEVIC was a fraudulently joined party; and (2) JEVIC was
never served with legal process, so its status as a defendant was
of no effect and could not destroy federal jurisdiction.
A.
Brown sued JEVIC in state court on May 27, 2008, just
one week after JEVIC had filed for bankruptcy protection. This
was plainly improper under the automatic stay, 11 U.S.C.
§ 362(a)(1). Because Brown improperly joined JEVIC in the
action, that joinder cannot prevent Sun from removing the
action.

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As the Supreme Court stated long ago: “Federal courts
should not sanction devices intended to prevent a removal to a
Federal court where one has that right.” Wecker v. Nat’l
Enameling & Stamping Co., 204 U.S. 176, 186 (1907). We
have adhered to this principle in the context of fraudulent
joinder used to defeat diversity jurisdiction. See In re Briscoe,
448 F.3d 201, 216 (3d Cir. 2006) (“[A] defendant may still
remove the action if . . . non-diverse defendants were
‘fraudulently’ named or joined solely to defeat” federal
jurisdiction.) (citation omitted).
“Joinder is fraudulent where there is no reasonable basis
in fact or colorable ground supporting the claim against the
joined defendant, or no real intention in good faith to prosecute
the action against the defendants or seek a joint judgment.” Id.
at 217. In the diversity context, we have stated: “The doctrine
of fraudulent joinder represents an exception to the requirement
that removal be predicated solely upon complete diversity.” Id.
at 215-16.
[I]f there is even a possibility that a state court
would find that the complaint states a cause of
action against any one of the resident defendants,
the federal court must find that joinder was proper
and remand the case to state court . . . .
In evaluating the alleged fraud, the district court
must focus on the plaintiff’s complaint at the time
the petition for removal was filed. In so ruling,
the district court must assume as true all factual
allegations of the complaint. It also must resolve

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any uncertainties as to the current state of
controlling substantive law in favor of the
plaintiff.
Id. at 217 (quoting Batoff, 977 F.2d at 851-52 (punctuation and
citations omitted)).
Although this appeal does not involve a plaintiff that
fraudulently named a non-diverse party to defeat diversity
jurisdiction, the principle enunciated in In re Briscoe applies
with equal force to the facts of this case. It was plainly
improper for Brown to sue JEVIC in state court after JEVIC had
filed for bankruptcy protection. To the extent JEVIC’s status as
a debtor not subject to removal deprived Sun and the other
Defendants of a federal forum to which they were otherwise
entitled, Brown’s joinder of JEVIC was fraudulent.
This case is akin to the situation where the statute of
limitations bars an action against a defendant who is joined in
the action to defeat diversity jurisdiction. We, along with our
sister circuits, have recognized that a statute of limitations
defense is properly considered in connection with a fraudulent
joinder inquiry. See In re Briscoe, 448 F.3d at 219 (citing
LeBlang Motors, Ltd. v. Subaru of Am., Inc., 148 F.3d 680, 690
(7th Cir. 1998) (“If the time to bring the cause of action had
expired, then the district court was correct in dismissing Wright
and Knight as fraudulently joined.”) (citation omitted)).
In sum, because Brown had no reasonable basis to
believe that JEVIC was amenable to suit, we hold that JEVIC

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was a fraudulently joined party and its status as a Defendant
could not be used to defeat otherwise proper federal jurisdiction.
B.
A second, independent reason leads us to conclude that
the District Court erred in remanding the case to state court:
JEVIC was not before the District Court because it was never
served with legal process.
In the typical case, where all defendants must consent to
removal, a defendant who has not been served need not consent
to removal. See, e.g., Lewis v. Rego Co., 757 F.2d 66, 68-69 (3d
Cir. 1985). This rule has even more force under CAFA, where
Congress provided that a single defendant may remove an action
without the consent of other defendants. See 28 U.S.C.
§ 1453(b). Here, JEVIC could not have been served with legal
process once it was protected by the automatic stay. See 11
U.S.C. § 362(a)(1) (the automatic stay “extends to the issuance
. . . of process of a judicial . . . action”).
Sun claims that debtor defendants to whom the automatic
stay applies are “akin to unserved defendants in a multi-
defendant case,” see Gee v. Lucky Realty Homes, Inc., 210 F.
Supp. 2d 732, 736 (D. Md. 2002), and thus their consent is not
required. We agree and hold that a non-debtor defendant in a
multi-defendant action may remove the case to federal court
when a debtor defendant is not amenable to service of legal
process. See id. at 736 (“[T]he rule is not that the case may not
be removed until all defendants have been served. Rather, the
rule is that only those defendants who have been served must

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file or join in a timely removal petition.”); see also 14C WRIGHT
& ARTHUR MILLER, FEDERAL PRACTICE & PROCEDURE § 3731
(3d ed. 2008) (“[A]s many cases have held, defendants who are
not served may be ignored, both for jurisdictional purposes and
for the purpose of requiring their joinder in the notice of
removal.”) (emphasis added). Therefore, remand was improper
for this reason as well.
C.
Our decision here comports with the holdings of other
courts who have considered this issue and found that the
presence of claims against a debtor defendant protected by the
automatic stay does not preclude removal by a non-debtor
defendant. See, e.g., Chilton Private Bank v. Norsec-Cook, Inc.,
99 B.R. 402, 403 (N.D. Ill. 1989) (“As improper joinder of a
non-diverse party cannot defeat the right of removal, it follows
that a plaintiff should in no way profit from improper joinder of
a defendant who, when the complaint was filed, was in
bankruptcy.”); Consumers Distrib. Co. v. Tele-Save Merch. Co.,
553 F. Supp. 974, 976 (D.N.J. 1982) (“[T]he filing of the
complaint against [the defendant] was unlawful and must be
deemed a nullity. This is analogous to removal by one
defendant without the joinder of another defendant who was not
served.”).
Additionally, courts have held that the automatic stay
provision does not apply generally to non-debtor parties. See
Williford v. Armstrong World Indus., Inc., 715 F.2d 124 (4th
Cir. 1983) (a stay under § 362(a)(1) applies only to the debtor
and not to the debtor’s solvent co-defendants); Austin v. Unarco

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Indus., Inc., 705 F.2d 1, 4 (1st Cir. 1983) (same); Pitts v.
Unarco Indus., 698 F.2d 313, 314 (7th Cir. 1983) (“The clear
language of Section 362(a)(1) . . . extends the automatic stay
provision only to the debtor filing bankruptcy proceedings and
not to nonbankrupt co-defendants. This interpretation has been
adopted by several reviewing courts.”).
Finally, we note that our decision has the salutary effect
of preventing a plaintiff from inappropriately defeating federal
jurisdiction by bringing a class action in state court and naming
as a defendant a debtor in bankruptcy protected by the automatic
stay. To hold otherwise would do violence to both the
Bankruptcy Code and CAFA.
III.
In support of the District Court’s decision to remand the
case to state court, Brown proffers three arguments. First,
Brown asserts that the District Court’s jurisdiction over the case
was terminated by the initial remand order. We agree that once
the District Court remanded the action, federal jurisdiction over
the entire case was terminated. See Doe v. Am. Red Cross, 14
F.3d 196, 199 (3d Cir. 1993); Hunt v. Acromed Corp., 961 F.2d
1079, 1091 (3d Cir. 1992); see also Browning v. Navarro, 743
F.2d 1069, 1078 (5th Cir. 1984). This does not mean, however,
that federal jurisdiction could not be established later. “The
removal statute, 28 U.S.C. §§ 1441-[14]52, does not
categorically prohibit the filing of a second removal petition
following remand.” Doe, 14 F.3d at 200. “If subsequent
pleadings or conduct by the parties or various other
circumstances brings a case that was not previously removable

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within the removal jurisdiction of the federal courts, a second
notice of removal is permissible.” 14C WRIGHT ET AL., supra,
§ 3739, at 495-96.
Second, Brown argues that Sun’s sole remedy was to
appeal the District Court’s order remanding the first JEVIC
removal. In general, “an order remanding a case to the State
court from which it was removed is not reviewable on appeal or
otherwise.” 28 U.S.C. § 1447. A limited exception to this
principle is provided under CAFA, whereby a court of appeals
“may accept an appeal from an order of a district court granting
or denying a motion to remand a class action to State court from
which it was removed if application is made to the court of
appeals” within seven days after the entry of the order. Morgan
v. Gay, 466 F.3d 276, 277, 279 (3d Cir. 2006). These provisions
are irrelevant, however, because Sun was not trying to appeal
the District Court’s order remanding JEVIC’s removal. Sun
merely filed its own notice of removal and to characterize it
otherwise is incorrect.
Finally, Brown argues that the District Court’s initial
remand order applied to the entire action — including Sun’s
claims — because even under CAFA actions are removed, not
individual claims. We agree with this point because “[u]nder
removal practice, the entire lawsuit is removable or not
removable, not merely the claims against particular defendants.”
Lowery v. Ala. Power Co., 483 F.3d 1184, 1197 (11th Cir.
2007); see also Braud v. Transp. Serv. Co., 446 F.3d 801, 808
(5th Cir. 2006). Once again, however, this principle is not
dispositive here because JEVIC was never a proper party to the
lawsuit as it was fraudulently joined and not amenable to service

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of process. Had JEVIC been a proper defendant, Brown would
be correct that the first remand would bar Sun from removing
the case. As we have explained, this was not the case.
IV.
For all the aforementioned reasons, we will reverse the
judgment of the District Court and remand the case for further
proceedings consistent with this Opinion.

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