Opinion
CIVIL ACTION NO. 00-2539, SECTION "C" (1)
April 12, 2001
In September 2000, this Court stayed all proceedings in this matter until the United States Fifth Circuit Court of Appeals issued its Mandate under the provisions of Federal Rules of Appellate Procedure Rule 41 in the case of Badon v. R.J.R. Nabisco, Inc., No. CV98-0215 (W.D. La. 4/17/98), appeal docketed, No. 98-30942 (5th Cir. 8/28/98), question certified to Louisiana Supreme Court (8/16/00). This Court hoped to receive some guidance from the Fifth Circuit on the issue of whether Plaintiffs could actually sustain a cause of action for redhibition against in-state cigarette distributors, in order to determine whether Plaintiffs had fraudulently joined non-diverse parties to their litigation so as to render the case non-removable. The Fifth Circuit certified this very question to the Louisiana Supreme Court, but the Supreme Court denied the certificate. See Badon v. R.J.R. Nabisco. Inc., 236 F.3d 282, 285 (5th Cir. 2000) As a result, the Fifth Circuit was required to assess the viability of the redhibition claim based on its best estimate of what state law would support. After reviewing the relevant Louisiana authorities, the Fifth Circuit "conclude[d] that there is arguably a reasonable basis for predicting that plaintiffs might establish redhibition or article 2475 liability against the Louisiana wholesalers under Louisiana law as it stands today." Id. at 286.
In light of the Fifth Circuit's opinion, IT IS ORDERED that Plaintiffs' Motion to Remand is hereby GRANTED. Defendant have argued that they are entitled to demonstrate that Plaintiffs' redhibition claim is precluded by certain affirmative defenses — namely, that the state claim is preempted under federal law ( i.e., the Federal Cigarette Labeling Advertising Act, 15 U.S.C. § 1334) or, in the alternative, that the claims have prescribed. Defendants also seek limited discovery so as to determine whether the decedents actually purchased any cigarettes distributed by the in-state wholesaler defendant. See Defendants' Motion to Set Status Conference. The Court held a status conference with counsel on March 30, 2001, and at that time, Defendants cited Sid Richardson Carbon Gasoline v. Interenergy Resources, Ltd., 99 F.3d 746 (5th Cir. 1996), and Yates v. Southwestern Life Ins. Co., 1998 WL 61033 (E.D. La.) (Vance, J.), in support of their position that Defendants were entitled to additional briefing on the question of whether Plaintiffs' claims against the non-diverse defendants were viable.
After reviewing Sid Richardson and Yates, the Court finds that remand is appropriate. The Fifth Circuit "pierced the pleadings" in Sid Richardson in order not only to determine whether joinder had been fraudulent, but also to assess whether the trial judge had properly entered summary judgment in favor of the non-diverse defendant. Therefore, the Fifth Circuit analyzed the merits of the case to a degree that is normally not permitted when merely addressing an allegation of fraudulent joinder. Likewise, in Yates, Judge Vance "pierced the pleadings," relying on Sid Richardson. However, pending before her at the time were both plaintiff's motion to remand and the motion for summary judgment filed by the non-diverse defendant that had allegedly been fraudulently joined. As a result, her decision to "pierce the pleadings" to assess the fraudulent joinder claim was perhaps more understandable in light of the fact that she was simultaneously considering the defendant's motion for summary judgment. See Yates, 1998 WL at *7 (finding that non-diverse defendant had been fraudulently joined because state law claims were perempted and had prescribed, which rendered the defendant's motion for summary judgment moot).
Finally, the Court notes that the first time Defendants mentioned the possible existence of these affirmative defenses was in the context of attempting to stave off a decision on the motion to remand in light of a ruling by the Fifth Circuit that was clearly unfavorable to their position. Defendants have not even filed an answer to the complaint, let alone specifically pled the existence of these affirmative defenses. See Fields v. Keith, 2000 WL 748152 at n. 2 (N.D. Tex. 2000). In light of all of these considerations, the Court refuses to deviate from standard practice with regard to fraudulent joinder, and shall not raise the bar any higher for the Plaintiffs than has been set by the Fifth Circuit. The question remains: has the defendant demonstrated "that there is no possibility that the plaintiff will be able to establish a cause of action against the in-state defendant in state court"? Richardson, 99 F.3d at 752; see also Badon, 236 F.3d at 285 — 86. The Fifth Circuit has provided us with the answer — no.
Because Defendants have not met their burden of proving fraudulent joinder, the Court hereby REMANDS this case to state court. However, the Court finds that Defendants were not objectively unreasonable in believing that removal was legally proper, and therefore the Court orders each party to bear their own costs related to these Removal and Remand proceedings.