United States District Court, E.D. Louisiana
JOSEPH TODESCO, ET AL.
GLENDA WAINRIGHT, ET AL.
ORDER AND REASONS
the Court is “Plaintiffs' Motion for Remand and
Attorney's Fees.” Rec. Doc. 8. After an extension,
Defendants timely filed an opposition memorandum. Rec. Doc.
18. Plaintiffs then requested, and were granted, leave to
file a reply memorandum. Rec. Doc. 23. Defendants also
requested leave to file a supplemental memorandum. Rec. Doc.
24. For the reasons discussed below, IT IS ORDERED that the
motion to remand (Rec. Doc. 8) is GRANTED.
FURTHER ORDERED that the motion for leave (Rec. Doc. 24) is
DISMISSED AS MOOT.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
case arises out of a family business dispute. On August 13,
1990, Plaintiff Joseph Todesco (“Todesco”) filed
articles of incorporation in Louisiana to establish Haelan
Products, Inc. (“Haelan”), a company focused on
developing fermented soy products for health purposes. Rec.
Doc. 3-1 at 3, 5. In 1991, Todesco hired his father-in-law,
Walter Wainright (“Wainright”), as a salesman.
Id. at 3. In 2003, Wainright requested a greater
role in the company and his daughter/Todesco's wife,
Lesly Todesco, encouraged Todesco to give her parents, Walter
and Glenda Wainright, a share in the company. Id. On
November 11, 2003, the Todescos agreed to “gift”
50% of the company's shares to the Wainrights.
Id. at 4. Eventually, Wainright became an officer or
director of the company. Id. at 5.
Wainright died on August 20, 2013, the Todescos discovered
that Wainright systematically diverted company products,
research, and profits for his own personal gain. Rec. Doc.
3-1 at 5. According to Plaintiffs, Wainright created
corporations that he used to sell Haelan products to
individuals in exchange for cash and to communicate with
Haelan's distributors and third-party researchers.
Id. at 7. For example, Wainright purportedly sold
forty-three (43) cases of Haelan products to Paul Emerson and
five (5) cases to Robert Brown in exchange for cash that was
not given to Haelan. Id. at 12-13. Wainright
subsequently agreed to sell fifty (50) cases to Brown.
Id. at 14. When Wainright failed to deliver the
cases, he used Haelan proceeds to repay Brown part of his
purchase price. Id.
Wainright incorporated the Vienna Stress Relief Clinic
(“VSRC”) on September 17, 2011 and purportedly
hired researchers to publish articles under VSRC's name,
using research and product information developed by Haelen.
Rec. Doc. 3-1 at 6- 7. Similarly, Haelan Research Foundation
(“HRF”), Wainright Haelan, L.L.C., Haelan
Products International, Inc., and HPA, Inc. were companies
created by Wainright to misappropriate Haelan's corporate
funds and products. Id. at 9, 11. For example, on
September 1, 2009, through Todesco's efforts, Dr. Anca
Gocan agreed to conduct a study using a Haelan product.
Id. at 6. However, on September 30, 2009,
“unbeknownst to Haelan, ” Wainright informed Dr.
Gocan that Haelan was withdrawing its support, but that HRF
would like to participate. Id. at 8. When funds and
research from Haelan were then sent to Dr. Gocan, Wainright
convinced Dr. Gocan that they were coming from HRF.
Id. On December 8, 2011, Wainright, Dr. Gocan, and
Dr. Gocan's peer, Dr. Uwe Rohr, applied for a United
States patent for a fermented soy formulation, FSWW08, which
Plaintiffs maintain is the product developed by Haelan and
used in the study conducted by Dr. Gocan. Id. at 10.
On July 15, 2002, Wainright allegedly used Haelan Products
International, Inc. to enter into an agreement with Beso
Biological Research, Inc., Haelan's primary manufacturer,
giving Wainright the exclusive right to sell fermented soy
products. Id. at 12. Haelan discovered this scheme
and forced Wainright to assign the agreement to Haelan on
December 18, 2003. Id.
point, Haelan provided funds to Aoqili Cosmetics, Inc., a
company owned by Todesco, to purchase 300, 000 bars of
specialty soap. Rec. Doc. 3-1 at 14. Wainright then secretly
stored the soap in a warehouse in Washington State, sold the
soap, and kept the proceeds for himself. Id. After
Wainright died, the owner of the storage unit filed suit in
Whatcom County Superior Court to determine ownership of the
remaining soap. Id. at 15.
to Plaintiffs, by competing directly with Haelan, using his
Haelan resources, and undermining Haelan's efforts,
Wainright breached his fiduciary duty to Haelan and its
shareholders under Louisiana Revised Statute § 12:91.
Rec. Doc. 3-1 at 7, 16. Consequently, on June 18, 2014, the
Todescos and Haelan filed suit in the 24th Judicial District
Court for Jefferson Parish against the succession of Walter
Wainright, Glenda Wainright, HRF, Wainright Haelan, L.L.C.,
and VSRC. Id. at 2-3. After a hearing on September
26, 2016, the court granted Plaintiffs' exception of no
right of action by written judgment Dated: October 27, 2016.
Rec. Doc. 3-2 at 70.
December 9, 2016, Defendants removed the matter to this Court
by filing a lengthy notice of removal containing numerous
allegations of misconduct. Rec. Doc. 3. They claim that the
“case became removable . . . when the state court ruled
that the Wainrights were dispossessed without notice
of their 50% shareholder interest in Haelan by an
undisclosed and never served Washington State
lawsuit.” Id. at ¶¶ 6-7 (emphasis in
original). According to Defendants, securities fraud and due
process issues predominate, but this Court “would have
exclusive jurisdiction if this case was filed anew pursuant
to § 27 of the 1934 Exchange Act . . . 15 U.S.C. §
78(a)aa.” Id. at ¶ 9.
remainder of the notice of removal contains largely
unsubstantiated allegations of unethical conduct and due
process violations. Defendants explain that when the Whatcom
County court determined that the owner of the storage unit
was entitled to rent from Wainright's estate and that
Todesco owned the soap, Todesco and the owner of the storage
unit entered into an agreement whereby the former would pay
$15, 000.00 to the latter in exchange for an assignment of
the latter's judgment creditor rights against
Wainright's estate. Rec. Doc. 3 at ¶¶ 16, 19. A
judgment totaling $87, 323.26 was then entered against
Wainright's estate. Id. at ¶¶ 22, 28.
On November 24, 2015, proceedings to execute the judgment
were started in King County, Washington. Rec. Doc. 3 at
¶ 29. The sheriff was instructed to seize the personal
property of Glenda Wainright, as the representative of her
husband's estate, including the Haelan stock certificates
issued to the Wainrights more than a decade earlier.
Id. at ¶ 31. According to Defendants, though,
the sheriff has no record of the writ, did not serve it on
any Defendant, and took no steps to execute a seizure and
sale. Id. at ¶ 34.
now claim that Glenda Wainright was not provided notice of
the sale of litigious rights until around September 26, 2016
(id. at ¶ 25) and that the failure to provide
notice raises “fundamental due process issues under
Mennonite Board of Missions v. Adams, 462 U.S. 791
(1983) . . .” (id. at ¶
They maintain that Louisiana Civil Code article 2652
prohibits the sale of litigious rights (id. at
¶ 26) and that the assignment is void under 15 U.S.C.
§ 78cc(b) (id. at ¶¶
49-50). Ultimately, though, they ask this Court to
declare that Glenda Wainright can satisfy her debt by
depositing $15, 000.00, the amount of the assignment, plus
interest in the Court's registry. Id. at ¶
They also argue that because the Louisiana state court
judgment was obtained by “fraud and ill-practices,
” it is null under Louisiana Code of Civil Procedure
article 2004 and should be declared null by this Court.
Id. at ¶¶ 37, 80.
THE PARTIES' CONTENTIONS
their motion to remand, Plaintiffs maintain that (1)
Defendants failed to timely remove this action and (2) there
is no basis for federal question or diversity jurisdiction.
Rec. Doc. 8 at 2. They also request attorney's fees
because there was no reasonable basis for removal. Rec. Doc.
8-1 at 21.
opposition memorandum largely reflects the arguments made in
their notice of removal. Rec. Doc. 18.
LAW AND ANALYSIS
civil action brought in a State court of which the district
courts of the United States have original jurisdiction, may
be removed by the defendant . . . to the district court of
the United States for the district . . . embracing the place
where such action is pending.” 28 U.S.C. §
1441(a). However, “[t]he removing party bears the
burden of establishing that federal jurisdiction
exists” (De Aguilar v. Boeing Co., 47 F.3d
1404, 1408 (5th Cir. 1995) (citing Gaitor v. Peninsular
& Occidental S. S. Co., 287 F.2d 252, 253 (5th Cir.
1961))), and “[a]ny ambiguities are construed against
removal because the removal statute should be strictly
construed in ...