United States District Court, W.D. Arkansas, Texarkana Division
WARREN HANSON, individually; and SWS ENGRAVING, L.L.C., by and through Warren Hanson, a Member of SWS Engraving, L.L.C. PLAINTIFFS
STEVEN K. RANDALL; and JENNIFER RANDALL DEFENDANTS
O. Hickey, United States District Judge.
the Court is a Motion to Remand filed by Separate Defendant
Steven K. Randall (“Randall”). ECF No. 11.
Plaintiffs Warren Hanson and SWS Engraving, L.L.C.
(collectively “Plaintiffs”) have filed a response
in opposition to the motion. ECF No. 21. Randall has filed a
reply. ECF No. 23. Separate Defendant Jennifer Randall has
filed an Objection to Removal, which incorporates
Randall's filings and raises additional concerns
regarding the Court's subject matter jurisdiction over
this matter. ECF No. 18. The Court finds this matter fully
briefed and ripe for consideration. For the reasons explained
below, Randall's motion is granted in part and denied in
initially commenced this action in the Circuit Court of
Hempstead County, Arkansas, on December 20, 2017, seeking
damages for multiple state law claims, including breach of
fiduciary duty, conversion, conspiracy, fraud, and civil
action by a crime victim pursuant to Ark. Code Ann. §
16-118-107. ECF No. 3. Plaintiffs amended their complaint in
state court on February 9, 2018, raising substantially
similar claims as those asserted in the original complaint,
with the exception of an additional request for judicial
dissolution pursuant to Ark. Code Ann. § 4-32-902. ECF
No. 4. The amended complaint also includes additional facts
in support of its claims and is accompanied by the Operating
Agreement for SWS Engraving, L.L.C. (“SWS
Engraving”), and a felony information concerning
charges filed in the Circuit Court of Hempstead County,
Arkansas, against Separate Defendant Jennifer Randall
(“Jennifer Randall”). Id.
amended complaint alleges that Hanson and Randall were the
only members of SWS Engraving, an Arkansas limited liability
company with its principal place of business located in Hope,
Arkansas. Id. at ¶ 14. According to the amended
complaint, Randall hired his wife, Jennifer Randall, in
February 2011 to work as the office manager for SWS
Engraving. Id. at ¶ 15. The amended complaint
further alleges that, during the course of her employment,
Jennifer Randall embezzled approximately $150, 000 from the
business by forging Hanson's signature on multiple SWS
Engraving checks and, in turn, “exchang[ing] the checks
from banks, financial institutions, and other goods and
services from other vendors.” Id. at
¶¶ 18-20. It is alleged that Hanson maintained sole
authority to sign checks on behalf of SWS Engraving.
Id. at ¶ 17.
amended complaint asserts that Jennifer Randall was
subsequently charged with multiple felonies for her alleged
embezzlement of company funds, including theft of property
and forgery. Id. at ¶ 22. It is alleged that
Randall enabled and financially benefited from the
embezzlement of company funds by his wife and breached his
fiduciary duty by failing to properly hire, supervise, or
monitor the activities she performed as an office manager for
SWS Engraving. Id. at ¶¶ 23-28. The
amended complaint further alleges that the parties have come
to “disagree as to the management of the business
affairs” of SWS Engraving, which has “obstructed
the purposes” of the company and “prevent[ed] it
from operating pursuant to [the company's] Operating
Agreement.” Id. at ¶¶ 29-32.
Court will next provide a brief recitation of the ensuing
state court proceedings to place the instant motion in its
proper context. On January 12, 2018, in response to
Plaintiffs' original complaint, Randall filed two motions
to dismiss and a motion for more definite statement. ECF No.
1-1 at 18. Randall also asserted a counterclaim for judicial
dissolution of the company, as well as a counterclaim
pursuant to Ark. Code Ann. § 4-32-402(1), which sought
to hold Hanson liable for losses the company sustained as a
result of his alleged failure to routinely monitor the
company's checking account. Id. at 43-46. In
addition, Randall's filings asserted a state tort claim
of outrage against Hanson and sought the appointment of a
receiver to conduct the dissolution and winding up of the
company. Id. at 25. On the same date, Randall filed
a motion for appointment of a receiver, as well as for a
preliminary injunction to “assist the receiver in
preserving [the company's] assets and preventing waste
during the pendency of [the] proceedings.” Id.
at 61. Jennifer Randall filed her answer to the original
complaint on January 26, 2018, which did not assert any
counterclaims. Id. at 92.
on February 13, 2018, Randall filed a motion for a temporary
restraining order against Plaintiffs pursuant to the Arkansas
Trade Secrets Act, Ark. Code Ann. § 4-75-604.
Id. at 152. Randall's motion asserted that
Hanson removed several items owned by Randall, including an
external hard drive, without his knowledge or permission.
Id. at 153. Randall averred that the hard drive
contained “computer programs and unique proprietary
artwork” that he owned. Id. The motion further
asserted that Plaintiffs' counsel admitted that his
client took the hard drive and offered to return it once its
contents had been deleted. Id.
February 13, 2018, the state court issued a temporary
restraining order, which ordered Plaintiffs to
“immediately cease and desist from attempting to gain
possession, control, or otherwise misappropriate any trade
secrets owned, or arguably owned, by [Randall], or in which
[Randall] individually holds rights of use, including any
personal property on which those trade secrets may be
maintained or stored, including electronic equipment or
devices, and any other forms or tangible or intangible
personal property.” Id. at 168. The court
scheduled a hearing on the matter for February 22, 2018.
Id. In response, Plaintiffs filed a motion to
dissolve the temporary restraining order on February 14,
2018. Id. at 169. Plaintiffs subsequently filed a
motion on February 16, 2018, which sought a stay of the
proceedings pending an appeal of the order. Id. at
February 21, 2018, Plaintiffs filed a Notice of Removal in
this Court, asserting that this Court has original
jurisdiction over this matter pursuant to 28 U.S.C.
§§ 1331 (federal courts have original jurisdiction
over civil actions arising under federal law) and 1338
(federal courts have original jurisdiction over disputes
arising under the Copyright Act). ECF No. 1, p. 2.
Plaintiffs' removal petition also claims that this action
may be removed pursuant to 28 U.S.C. §§ 1441(a)
(defendant may remove civil action brought in state court
when federal court has original jurisdiction), 1446(a)
(procedure for removal) and 1454(a) (copyright claims
removable by any party). Id. at 3.
response to Plaintiffs' removal petition, Randall filed
the instant motion requesting that the Court abstain from
hearing this matter or, alternatively, remand the matter to
the Hempstead County Circuit Court. Specifically, Randall
urges the Court to abstain from exercising its jurisdiction
pursuant to the Younger and Rooker-Feldman
abstention doctrines. Randall further contends that the Court
should remand this action based on various procedural defects
in Plaintiffs' removal petition. In addition, Randall
avers that removal was improper because the Court lacks
federal question jurisdiction. Randall also seeks an award of
attorneys' fees and costs incurred as a result of
bringing the instant motion pursuant to 28 U.S.C. §
1447(c). The Court will consider each of the arguments raised
in Randall's motion in turn.
Court finds that Randall's Younger abstention
argument is inapplicable to the case at bar and declines to
consider whether the Rooker-Feldman doctrine
applies. However, the Court concludes that remand to the
Hempstead County Circuit Court is warranted because the Court
lacks federal question jurisdiction over this action. In
addition, the Court finds that Plaintiffs' basis for
removal was ...