was released from prison and did become the number 1 contender.
Plaintiffs claim that in violation of its promises and rules, the WBC sanctioned the first title bout between McCall and Tyson, with Lewis slated to challenge the winner of that fight. Counsel for plaintiffs has represented that this fight is currently scheduled for the 16th of March, 1996. In their complaint, plaintiffs further allege that they relied to their detriment on the WBC's promise by promoting and participating in the elimination bout between Lewis and Lionel Butler. The complaint seeks declaratory relief that Lewis is entitled to the next WBC Heavyweight Title Bout, injunctive relief preventing the WBC or its agents from sanctioning or furthering a Title Bout in which Lewis is not a participant, specific performance, damages, and punitive damages.
Plaintiffs argue that the Court should remand the case to state court, where plaintiffs originally filed it, because the WBC is a non-diverse defendant. In particular, plaintiffs argue that although the WBC incorporated in 1991, it has failed to observe corporate formalities, and thus the WBC as an unincorporated association continues to exist despite the formation of a WBC corporate shell. This unincorporated association, plaintiffs argue, has members in New Jersey and in England and therefore is not "diverse" for purposes of jurisdiction. See United Steelworkers of America, AFL-CIO v. R.H. Bouligny, Inc., 382 U.S. 145, 15 L. Ed. 2d 217, 86 S. Ct. 272 (1965); Lovell Mfg. v. Export-Import Bank of the United States, 843 F.2d 725, 729, n. 5 (3d Cir. 1988) (diversity between plaintiffs and defendants must be complete).
Congress has determined that "if at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). When a non-diverse party has been joined as a defendant, then in the absence of a substantial federal question, the removing defendant may avoid remand "only by demonstrating that the non-diverse party was fraudulently joined." Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir. 1992). The burden of proving that federal jurisdiction exists rests with the defendant, the party urging jurisdiction upon the Court. See Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990), cert. denied, 498 U.S. 1085, 112 L. Ed. 2d 1046, 111 S. Ct. 959 (1991). Furthermore, the removal statutes "are to be strictly construed against removal and all doubts should be resolved in favor of remand." Boyer, 913 F.2d at 111, citing, Steel Valley Auth. v. Union Switch and Signal Div., 809 F.2d 1006, 1010 (3d Cir. 1987), cert. dismissed, 484 U.S. 1021 (1988). The defendant carries a "heavy burden of persuasion" that the non-diverse party was fraudulently joined. Id., citing, Steel Valley, 809 F.2d at 1012, n.6.
In order to prove that plaintiffs' joinder of the WBC as an unincorporated association was fraudulent, defendant must prove that "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." Batoff, 977 F.2d at 851; Boyer, 913 F.2d at 111. "If 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." Batoff, 977 F.2d at 851, Boyer, 913 F.2d at 111.
The Third Circuit has directed that, in evaluating joinder for alleged fraud, a 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 relevant factual allegations of the complaint." Batoff, 977 F.2d 848 at 851, quoting, Steel Valley, 809 F.2d at 1010 (citations omitted). The Court of Appeals has specifically warned that the standard to be applied is not the standard applicable to a motion to dismiss for failure to state a claim, but rather, is even less searching, amounting to a determination of whether the claims asserted against the non-diverse defendant are "wholly insubstantial and frivolous." See Batoff, 977 F.2d at 852.
Under this standard, the Court must focus not on the submissions of the parties but rather upon the allegations in the amended complaint in order to determine if remand is appropriate.
The amended complaint alleges that:
defendant World Boxing Council was for most of its existence clearly an unincorporated association. In 1991 incorporation papers were filed in Puerto Rico, but based upon tax and other records obtained by plaintiff the unincorporated association continued to conduct its business and did not convert itself to the corporate form. This certainly appears to be so with respect to financial transactions. Both the unincorporated association and the corporation are joined as defendants, and collectively are hereinafter referred to as "WBC." The WBC has members both in New Jersey and England.