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ARcare Inc v. Qiagen North American Holdings Inc

United States District Court, E.D. Arkansas, Western Division

January 9, 2018

ARCARE INC., PLAINTIFF
v.
QIAGEN NORTH AMERICAN HOLDINGS INC. and QIAGEN, INC., DEFENDANTS

          ORDER

         Plaintiff ARcare, Inc.'s motion to remand [Doc. No. 12] is granted except as to the issue of attorneys' fees and costs.

         I. BACKGROUND

         ARcare, Inc. (“ARcare”) initially filed this lawsuit in the United States District Court for the Central District of California, alleging Qiagen North American Holdings (“QNAH”) violated the Telephone Consumer Protection Act (“TCPA”), 47 U.S.C. section 227, et seq. See ARcare v. Qiagen North American Holdings, Inc., Case No. 2:16-CV-7638, ECF No. 1 (C.D. Cal. Oct. 13, 2016). ARcare claimed that QNAH violated the TCPA by sending ARcare and other plaintiffs (1) unsolicited faxes to parties with which it had no preexisting business relationship (“unsolicited fax claim”) and (2) by sending faxes that did not comply with the statute's opt-out notice requirement (“opt-out notice claim”). QNAH moved to dismiss, asserting that ARcare lacked Article III standing. See id., ECF No. 14 (C.D. Cal. Nov. 23, 2016). The Central District of California granted the motion to dismiss without prejudice because ARcare's injury was not traceable to Qiagen's alleged violations of the TCPA. See id., ECF No. 31 (C.D. Cal. Jan. 19, 2017).

         ARcare refiled its complaint in Lonoke County Circuit Court. Despite its previous assertion that a federal court lacked jurisdiction, QNAH removed the case to federal court. See ARcare v. Qiagen North American Holdings, Inc., Case No. 4:17-cv-00120-BSM, ECF No. 1 (E.D. Ark. March 2, 2017). ARcare moved to remand based on issue preclusion and judicial estoppel, and the motion was granted. Id., ECF Nos. 5, 6, 20 (E.D. Ark. March 2, 2017).

         QNAH has once again removed to federal court. See Doc. No. 1. QNAH argues that federal jurisdiction is now proper because ARcare has fundamentally changed its theory of recovery under the TCPA, thus removing the issue identified and ruled upon by the Central District of California in dismissing the original complaint. Moreover, QNAH argues that ARcare amended the complaint to include Qiagen, Inc. (“Qiagen”), a separate corporate entity, which cannot be precluded or estopped by a prior case to which it was not a party.

         Remand, however, is proper because both issue preclusion and judicial estoppel still prevent defendants from arguing that a federal court has jurisdiction. This is because Qiagen is a party in privity with QNAH for preclusion purposes, the issue of subject matter jurisdiction over the unsolicited fax claim is common to both cases, and it is inequitable to foreclose preclusion based on the Ninth Circuit's decision in Van Patten v. Vertical Fitness Grp., LLC, 847 F.3d 1037 (9th Cir. 2017).

         II. DISCUSSION

         Three things have changed since this case was previously remanded to Lonoke County Circuit Court. First, plaintiff has joined QNAH's wholly owned subsidiary, Qiagen, as a defendant. Second, plaintiff has amended its complaint to drop its opt-out notice claim. Third, QNAH argues that a change in Ninth Circuit case law independently forecloses issue preclusion and judicial estoppel. See id.

         Rather than engaging in another analysis of the individual factors for issue preclusion and judicial estoppel, the discussion herein simply addresses these three new developments. Because none of these changes prevents the application of issue preclusion or judicial estoppel, defendants are still precluded from arguing that federal jurisdiction is proper and are bound by the prior order remanding the case to Lonoke County Circuit Court. ARcare v. Qiagen North American Holdings, Inc., Case No. 4:17-cv-00120-BSM, ECF No. 20 (E.D. Ark. March 2, 2017).

         A. Addition of Qiagen as a Defendant

         Issue preclusion requires that “the party sought to be precluded in the second suit must have been a party, or in privity with a party, to the original lawsuit.” Ginters v. Frazier, 614 F.3d 822, 826 (8th Cir. 2010). Defendants argue that the inclusion of Qiagen as a defendant defeats issue preclusion because Qiagen was not a party in the Central District of California. This argument, however, is unpersuasive because Qiagen is a party in privity with QNAH.

         The Supreme Court has identified six instances in which a nonparty may be in privity with a party in a prior lawsuit. Taylor v. Sturgell, 553 U.S. 880, 893-95 (2008). One of the factors identified in Taylor is relevant here, namely, whether the nonparty was “adequately represented by someone with the same interests who [wa]s a party to the suit.” Id. at 894 (citations omitted); see also Continental Western Ins. Co. v. Federal Housing Finance Agency, 83 F.Supp.3d 828, 833-36 (S.D. Iowa 2015). “A party's representation of a nonparty is ‘adequate' for preclusion purposes only if, at a minimum: (1) the interests of the nonparty and her representative are aligned . . .; and (2) either the party understood herself to be acting in a representative capacity or the original court took care to protect the interests of the nonparty.” Taylor, 553 U.S. at 900. Adequate representation may also require that a nonparty had notice of the original suit. Continental Western Ins. Co., 83 F.Supp.3d at 834. Explicit evidence showing that the original party acted in a representative capacity for the nonparty is unnecessary, and it can be inferred from the party's conduct. Id. at 834-35.

         First, the interests of QNAH and its wholly owned subsidiary, Qiagen, are aligned. QNAH sought dismissal of the California lawsuit on a number of grounds, including subject matter jurisdiction, a failure to state a valid claim under the TCPA, and the improper allegation of a “fail-safe” class. ARcare, Case No. 2:16-CV-7638, ECF No. 14 (C.D. Cal. Nov. 23, 2016). Although QNAH now argues that Qiagen was entirely responsible for sending the faxes at issue and is the proper defendant in this lawsuit, QNAH vigorously defended the case in the Central District of California, seemingly on behalf of its subsidiary, and obtained a dismissal. See Continental Western Ins. Co., 83 F.Supp.3d at 834-35. Moreover, the close corporate relationship between QNAH, a parent holding company, and Qiagen, its wholly owned subsidiary, supports a finding that their interests are extremely similar, if not identical. See Id. Finally, that QNAH and Qiagen are now jointly defending this case, are represented by the same counsel, and are advancing similar arguments to those previously raised in California further supports a finding that the defendants' interests are aligned. See id.; Doc. No. 14.

         Second, QNAH effectively acted as Qiagen's representative for due process purposes. Unlike Taylor, in which the Supreme Court rejected a theory of “virtual representation” between two plaintiffs who “were legal and actual strangers to one another, ” QNAH and Qiagen are far from strangers. Continental Western Ins. Co., 83 F.Supp.3d at 836. The preexisting legal relationship between defendants as holding company parent and wholly owned subsidiary, while not dispositive, weighs in favor of finding that QNAH knowingly acted as a representative of Qiagen in the prior case. C.f. FastVDO LLC v. LG Electronics Mobilecomm U.S.A., Inc., Case No.: 16-cv-02499-H-WVG, 2016 WL 9526400, at *4 (S.D. Cal. Dec. 13, 2016). But see Continental Western Ins. Co., 83 F.Supp.3d at 837. Moreover, considering defendants' near-identical interest in the outcome of the litigation and ...


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