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7th Circuit dismisses ex-bank worker's appeal of district court remand to state court

February 7, 2019

A former bank employee lost his appeal of a remand order that moved his lawsuit from federal to state court and imposed sanctions for wrongful removal, with the 7th Circuit Court of Appeals finding there was no abuse of discretion and that the untimeliness of the initial removal to federal court was not made in ignorance.

After working for Indiana state-chartered Jackson County Bank, Mathew DuSablon was assigned to assist the bank in identifying and establishing an investment business with a new third-party broker-dealer.  When he failed to perform his duties and abruptly resigned in January 2018, JCB realized DuSablon had transferred customers’ accounts from JCB’s former third-party broker-dealer into his own name and had started a business to compete with JCB.

Thus, in February 2018, JCB filed suit seeking a preliminary injunction and asserting various state law claims against DuSablon, including theft of property and breach of contract. DuSablon moved to dismiss but was denied when JCB contended it had standing to enforce its rights and was not subject to Financial Industry Regulatory Authority, Inc. rules.

DuSablon then removed the case to the U.S. District Court for the Southern District of Indiana, asserting the federal district court had “exclusive jurisdiction pursuant to 15 U.S.C. § 78aa and the Securities and Exchange Act of 1934.” He added that although JCB did not plead a federal claim, its response to DuSablon’s motion raised federal questions.

The bank responded by moving to remand for lack of jurisdiction, arguing, among other things, that DuSablon used the removal statute inappropriately to postpone preliminary injunction proceedings in state court and “run the clock” on his non-compete. The district court granted the motion, finding it lacked jurisdiction and that the removal was untimely. The court, thus, remanded the case to state court and additionally ordered DuSablon to pay JCB costs and fees of $9,035.61 under 28 U.S.C. § 1447(c).

DuSablon appealed, but the 7th Circuit dismissed the appeal, which challenged both the district court’s order remanding the case to state court for lack of jurisdiction and the award of costs and fees to JCB pursuant to 28 U.S.C. § 1447(c).

Specifically, the 7th Circuit Court found no abuse of discretion in the award of sanctions and agreed with the lower court that DuSablon lacked an objectively reasonable basis to remove the case to federal court.

“The impropriety of removal, as the district court observed, was ‘not a close question,’” Circuit Judge Amy J. St. Eve wrote.  “JCB did not plead any federal claim nor is any federal question apparent from the face of its complaint.”

To support its decision, the court noted DuSablon cited no cases supporting his position, nor did he attempt to apply controlling law, namely Grable & Sons Metal Prods., Inc. v. Darue Eng’r & Mfg., 545 U.S. 308, 314–15 (2005). The 7th Circuit further considered that DuSablon’s conduct suggested “removal was undertaken at least in part to delay a resolution of the noncompete issues to his benefit and to allow for a second bite at the apple after losing his motion to dismiss in state court.”

The appellate court also found the untimeliness of his removal was not made in ignorance and that DuSablon was or should have been aware of his asserted grounds for removal more than 30 days prior to his notice of removal.

The 7th Circuit Court additionally affirmed JCB’s award of costs and fees it incurred in Jackson County Bank v. Mathew DuSablon, 18-2809.

 

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