Opinion
Civil Action No. 3-03-CV-2879-P.
September 30, 2004
MEMORANDUM OPINION AND ORDER
Now before the Court are the following Motions:
1. Defendant Sigma-Aldrich, Inc.'s Motion to Dismiss, filed December 5, 2003,
2. Defendant Eli Lilly and Company's ("Lilly") Motion to Dismiss, filed December 8, 2003,
3. Defendant The Dow Chemical Company's ("Dow Chemical") Motion to Dismiss or Alternatively to Stay, filed December 8, 2003,
4. Defendant Dow Chemical's Rule 12(b)(6) Motion to Dismiss and Motion for Summary Judgment, filed December 8, 2003,
5. Vaccine Defendants' Rule 9(b), 12(b) and 12(c) Motion to Dismiss or, in the Alternative, to Stay the Proceedings, filed December 8, 2003,
6. Defendant Lilly's Motion for Leave to File Amended Notice of Removal and Brief in Support, filed December 17, 2003,
7. Plaintiffs' Motion to Remand, and Consolidated Response to Defendants' Motions to Dismiss ("Plaintiffs' Motion to Remand"), filed December 23, 2003,
8. Defendant Lilly's Motion to Stay Proceedings, filed January 12, 2004,
9. Defendant Jerry K. Johnson, M.D.'s ("Dr. Johnson") Motion for Leave to File Motion to Dismiss Under Rules 12(b) and (c) of the Federal Rules of Civil Procedure ("Dr. Johnson's Motion to Dismiss"), filed February 9, 2004, and
10. Defendants Aventis Pasteur Inc., Baxter Healthcare, Inc., Merck Co., Inc., SmithKline Beecham Corporation d/b/a GlaxoSmithKline, Wyeth, and Lilly's Motion for Leave to File a Notice of Supplemental Authority, filed March 16, 2004.
The "Vaccine Defendants" are Aventis Pasteur Inc., Baxter Healthcare, Inc. (incorrectly named as Baxter International, Inc.), Merck Co., Inc., SmithKline Beecham Corporation d/b/a GlaxoSmithKline (incorrectly named as GlaxoSmithKline, individually and as successor in interest to SmithKline Beecham Corp.), and Wyeth (incorrectly named as American Home Products d/b/a Wyeth, Wyeth Laboratories, Wyeth-Ayerst, Wyeth-Ayerst Laboratories, Wyeth Lederle, Wyeth Lederle Vaccines, and Lederle Laboratories).
Lilly filed a Reply to Plaintiffs' Consolidated Response to Defendants' Motion to Dismiss on January 6, 2004. Vaccine Defendants' filed a Reply in Support of their Rule 9(b), 12(b), and 12(c) Motion to Dismiss, or, Alternatively, to Stay these Proceedings ("Vaccine Defendants' Reply") on January 12, 2004. Lilly filed a Response to Plaintiffs' Motion to Remand on January 12, 2004, and Plaintiffs' filed their Reply on January 29, 2004.
After considering the parties' arguments and briefing, and the applicable law, the Court hereby GRANTS Plaintiffs' Motion to Remand.
I. Background and Procedural History
Plaintiffs Cory and Kim Tenbrook, individually and on behalf of their minor child, Tyler Tenbrook ("Tyler"), originally brought this case in the 44th Judicial District Court, Dallas County, Texas, on May 29, 2003. In that forum, they alleged that Tyler sustained neurological injuries from exposure to the preservative thimerosal. Specifically, Plaintiffs claimed that Tyler received vaccines that contained thimerosal, and that such exposure led to neuro-developmental disorders. In their Original Petition, Plaintiffs' sought causes of action for strict liability, negligence, breach of warranty, fraud and misrepresentation, and civil conspiracy against the numerous Defendants.
The Defendants include the following parties: (1) Wyeth, f/k/a American Home Products Corporation (incorrectly named as American Home Products d/b/a Wyeth, Wyeth Laboratories, Wyeth-Ayerst, Wyeth-Ayerst Laboratories, Wyeth Lederle, Wyeth Lederle Vaccines, and Lederle Laboratories), (2) Aventis Pasteur, Inc., Individually and as Successor in Interest to Connaught Laboratories, Inc., Pasteur Merieux and Pasteur Merieux Connaught, (3) SmithKline Beecham Corporation d/b/a GlaxoSmithKline (incorrectly named as GlaxoSmithKline, individually and as Successor in Interest to SmithKline Beecham Corp.), (4) Merck Co., Inc., (5) Baxter Healthcare, Inc. (incorrectly named as Baxter International, Inc.) Individually and as Successor in Interest to North American Vaccine, Inc., (6) The Dow Chemical Company, (7) Eli Lilly and Company, (8) Sigma-Aldrich, Inc. (incorrectly named as Sigma-Aldrich), (9) Oribi, Inc., Individually and d/b/a Meridian Chemical Equipment, Inc. and d/b/a Global Fine Chemicals and d/b/a National Association of Compounding Pharmacists, and (10) Jerry K. Johnson, M.D.
Defendant Lilly then removed the case to this Court on December 1, 2003, pursuant to 28 U.S.C. § 1332 and fraudulent joinder. Thereafter, with the exception of Oribi, Inc., ("Oribi"), all Defendants filed motions to dismiss. After Plaintiffs filed their Motion to Remand, nearly all Defendants filed opposing motions alleging federal jurisdiction was in fact proper. As a court may not rule on a motion to dismiss without subject matter jurisdiction, this Court must first consider Plaintiffs' Motion to Remand. See Heaton v. Monogram Credit Card Bank of Ga., 231 F.3d 994, 1000 (5th Cir. 2000) (finding a lack of subject matter jurisdiction to preclude dismissal of the case); cf. Boudlache v. Conoco Oil Corp., 615 F.3d 687, 689 (5th Cir. 1989) (finding it improper to grant summary judgment without subject matter jurisdiction).
In accordance with new Fifth Circuit precedent, this Opinion will use the term "improper joinder" rather than the phrase "fraudulent joinder." Infra note 8.
Individually and d/b/a Meridian Chemical Equipment, Inc. and d/b/a Global Fine Chemicals and d/b/a National Association of Compounding Pharmacists.
II. Plaintiffs' Motion to Remand
Removal of a state court action to federal court is proper when the complaint falls within the original subject-matter jurisdiction of the federal district court. See 28 U.S.C. § 1441(a). The burden of establishing that federal jurisdiction exists lies with the removing party. See St. Paul Reinsurance Co., Ltd. v. Greenburg, 134 F.3d 1250, 1253 (5th Cir. 1998). Under 28 U.S.C. § 1332(a), a federal court has diversity jurisdiction when (1) the action involves citizens of different states, and (2) the amount in controversy exceeds $75,000. Furthermore, "diversity jurisdiction is not to be available when any plaintiff is a citizen of the same State as any defendant." Owen Equip. Erection Co. v. Kroger, 437 U.S. 365, 374 (1978); Freeman v. Northwest Acceptance Corp., 754 F.2d 553, 555 (5th Cir. 1985) ("each plaintiff must have citizenship different from that of each defendant").
Plaintiffs now move to remand this case to state court because two of the named defendants, Oribi and Dr. Johnson, claim Texas citizenship. Defendants respond that remand is improper because Plaintiffs improperly joined Oribi and Dr. Johnson, as the National Vaccine Injury Compensation Act ("Vaccine Act") precludes civil actions alleging vaccine related injuries "in a State or Federal court" until the plaintiff has exhausted all administrative remedies. See 42 U.S.C. § 300aa-11(a)(2)(A). Therefore, in order to decide the Motion to Remand, the Court must determine if there has been improper joinder.
While not all Defendants filed actual motions to oppose remand, those making such arguments effectively did so for all parties involved. Compare Lilly's Opp'n to Remand at p. 3 (alleging that Plaintiffs' remand evidence is "entirely insufficient to deprive the diverse Defendants of a federal forum") (emphasis added) with Vaccine Defendants' Reply at p. 2 (noting that Plaintiffs' arguments "against those non-diverse defendants has no bearing on the propriety of the removal in the first instance") (emphasis added) (original emphasis removed). Moreover, if this Court finds subject matter jurisdiction lacking, it must remand the entire case to state court. As there are a plethora of defendants involved with regard to this Opinion, as well as numerous motions, the Court will use the general term "Defendants" where applicable.
It is undisputed that Plaintiffs have not yet exhausted their administrative remedies under the Vaccine Act.
a. Improper Joinder
"The burden of proving a[n] [improper] joinder is a heavy one." Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 259 (5th Cir. 1995) (quoting Green v. Amerada Hess Corp., 707 F.2d 201, 205 (5th Cir. 1983). Previous to Smallwood v. Ill. Cent. R.R. Co., ___ F.3d ___, (5th Cir. 2004) (en banc) ( Smallwood III), the doctrine of improper joinder required the removing party to prove "that there [was] no possibility that a plaintiff [would] be able to establish a cause of action against the in-state defendant in state court, or that there [had] been outright fraud in the plaintiff's pleadings of jurisdictional fact." Cavallini, 44 F.3d at 259 (quoting Green, 707 F.2d at 205); see also Travis v. Irby, 326 F.3d 644, 646-47 (5th Cir. 2003). While "outright fraud in the plaintiff's pleadings of jurisdictional fact" remains unchanged, recent decisions altered causes of action against in-state defendants. Notably, the Fifth Circuit's holdings in Smallwood v. Ill. Cent. R.R. Co., 342 F.3d 400 (5th Cir. 2003) ( Smallwood I), panel reh'g denied, 352 F.3d 220 ( Smallwood II), reh'g en banc granted, 335 F.3d 357, and Collins v. American Home Products Corp., 343 F.3d 765 (5th Cir. 2003), mandated a new standard of evaluating improper joinder where a common-defense existed among all plaintiffs.
Although courts often use the term "fraudulent joinder" rather than the phrase "improper joinder," the Fifth Circuit recently adopted a preference for the latter. As such, for purposes of this Opinion, the Court utilizes "improper joinder." See Smallwood v. Ill. Cent. R.R. Co., ___ F.3d ___, ___, Maj. Op. at 1 n. 1 (5th Cir. 2004) (en banc) ( Smallwood III) ("We adopt the term `improper joinder' as being more consistent with the statutory language than the term `fraudulent joinder,' which has been used in the past. Although there is no substantive difference between the two terms, `improper joinder' is preferred.").
In Smallwood I, the Fifth Circuit recognized and promulgated the "common-defense" rule. That case dealt with a locomotive striking an automobile and injuring a motorist. 342 F.3d at 401. After the accident, the plaintiff brought negligence claims against the railroad company and the Mississippi Department of Transportation (MDOT) in state court. Id. The railroad company, however, "removed the case to federal court on the basis of diversity jurisdiction and fraudulent joinder," claiming improper joinder because the Federal Railroad Safety Act (FRSA) preempted any claims against MDOT. Id. at 401-02. Finding such reasoning to be persuasive, the district court not only denied plaintiff's request to remand, but subsequently dismissed the case against MDOT and the railroad company, finding the FRSA to preempt all of the negligence claims. Id.
On appeal, the Fifth Circuit reversed. Therein, the appellant (plaintiff) successfully argued that the question of preemption was not an issue of fraudulent joinder, but rather a merits determination for the state court to make. Borrowing a page from the Third Circuit, Smallwood I stated:
[W]here there are colorable claims or defenses asserted against or by diverse and non-diverse defendants alike, the court may not find that the non-diverse parties were fraudulently joined based on its views of the merits of those claims or defenses. Instead, that is a merits determination which must be made by a state court.342 F.3d at 405 (quoting Boyer v. Snap-On Tools Corp., 913 F.2d 108, 109-10 (3d Cir. 1990) (emphasis added). The Fifth Circuit found further justification for its holding through century-old precedent that required "fraudulent joinder allegations be directed toward the joinder, not to `the merits of the action as an entirety.'" Smallwood I, 342 F.3d at 407 (quoting Chesapeake O.R. Co. v. Cockrell, 232 U.S. 146, 153 (1914). Thus, the "common-defense" rule mandated that where diverse and non-diverse defendants shared a common defense, courts could not find fraudulent joinder based on the merits of that common defense.
The Fifth Circuit reiterated the "common-defense" rule in Collins, which this Court finds to be factually analogous to the case at hand. Therein, "the plaintiffs brought claims on behalf of their minor children seeking to recover for injuries allegedly suffered by the children as a result of vaccinations containing thimerosal." Collins, 343 F.3d at 768. As in Smallwood I, the district court denied remand, concluding "that the Mississippi defendants had been fraudulently joined and that the claims against the remaining defendants must be dismissed because the plaintiffs had failed to comply with the [Vaccine Act]." Id. Once again, the Fifth Circuit reversed. It found the district court in error by ruling on a "common defense under the pretense of determining whether the Mississippi defendants had been fraudulently joined." Id. at 769. Specifically, Collins noted that "this use of fraudulent joinder frustrates the overarching principle of the well-pleaded complaint rule, that state courts are equally competent to decide federal defenses." Id. (internal citations omitted).
Although the Fifth Circuit briefly stayed the mandate of the "common defense" rule pending a rehearing en banc for Smallwood I, ( see Smallwood, reh'g en banc granted, 355 F.3d 357) Smallwood III, solidified the previous decisions. Writing for the majority, Judge Higginbotham laid the foundation by noting that "the purpose of the improper joinder inquiry is to determine whether or not the in-state defendant was properly joined," meaning that "the focus of the inquiry must be on the joinder, not the merits of the plaintiff's case." Smallwood III, ___ F.3d at ___, Maj. Op. at 5 (emphasis added). The majority then applied this analysis to the facts of Smallwood I, finding that:
The mandates of both Smallwood I and Collins were stayed pending the rehearing en banc of Smallwood I. See Collins v. American Home Products Corp., No. 02-60736 at p. 2 (5th Cir. Oct. 9, 2003) (order staying "the mandate pending the outcome of the petitions for rehearing en banc").
[W]hen, on a motion to remand, a showing that compels a holding that there is no reasonable basis for predicting that state law would allow the plaintiff to recover against the in-state defendant necessarily compels the same result for the nonresident defendant, there is no improper joinder; there is only a lawsuit lacking in merit.Smallwood III, ___ F.3d at ___, Maj. Op. at 8-9 (emphasis added).
Applying Smallwood III and the "common defense" rule to the case at hand, the Court finds remand to the state court necessary. Although Defendants' argument of dismissal may be legally sound, it goes to the merits of the case, rather than the issue of improper joinder. In short, this Court cannot analyze the validity of the Vaccine Act argument, because it is common to all Defendants. Consequently, this Court need not concern itself with the validity of Plaintiffs' claims; such analysis would be gratuitous in light of Smallwood III and Supreme Court precedent. See id. at ___, Maj. Op. at 9-10 (noting that "although the plaintiff's petition `may have disclosed an absence of good faith on the part of the plaintiff in bringing the action at all, . . . it did not show a fraudulent joinder . . .") (quoting Cockrell, 232 U.S. at 153). The Fifth Circuit makes clear that "[w]hen the only proffered justification for improper joinder is that there is no reasonable basis for predicting recovery against the in-state defendant, and that showing is equally dispositive of all defendants rather than to the in-state defendants alone, the requisite showing has not been made." Smallwood III, ___ F.3d at __, Maj. Op. at 10. No sentence in Smallwood III describes more perfectly the matter this Court faces. Therefore, this case must be remanded.
The Court also notes that while the decision mandated the "common defense" rule, Smallwood III was not a unanimous decision, instead producing three dissenting opinions. See generally Smallwood III ___ F.3d at __, Min. Op. at 18 (Jolly, Jones, Smith, Barksdale, Garza, Clement and Prado, JJ., dissenting) (finding it "always `improper' — professionally and ethically — to join any party to a suit if there is no basis of recovery, a point that apparently has no place in the reasoning of the majority").
Defendants' contention — that remand is redundant because Plaintiffs' claims are without merit in either forum — circumvents the real issue. "When a defendant removes a case to federal court on a claim of improper joinder, the district court's first inquiry is whether the removing party has carried its heavy burden of proving that the joinder was improper." Id. at ___, Maj. Op. at 13. However tempting it may be to dispense with the essence, until the defendant substantiates its onus, "the court does not have the authority to do more; it lacks the jurisdiction to dismiss the case on its merits. It must remand to state court." Id. at ___, Maj. Op. at 14 (emphasis added).
Moreover, claims of judicial economy in this case seem dubious at best. After all, Defendants removed this case to federal court before asserting statutory preemption. If Plaintiffs' claims are in fact preempted, the state court is no less qualified to make that determination. To now argue extraneous legal proceedings ignores the whole of the procedural history.
While Defendants do make some attempts to prove improper joinder, those attempts fail to meet the heavy burden required for remand. Defendants first assertion directly attacks the joinder of Oribi. To wit, Plaintiffs state in their Original Petition that "Oribi, Inc. is a proper defendant in this case in that it distributed one or more of the vaccines or component parts of the vaccines in question." Pl.'s Original Pet. at p. 3-4, Defendants offer counter-evidence that precludes Oribi liability. Specifically, Defendants attach the affidavit of Oribi's president, John Rains, to prove the company's needless presence. That affidavit states that "Oribi, Inc. Did not manufacture Thimerosal, alter Thimerosal, or manufacture vaccines. Additionally, Meridian did not sell Thimerosal to pharmaceutical companies that manufacture vaccines." Attach. to Lilly's Notice of Removal, Aff. of John Rains at p. 1. The parties then dispute exactly how much the affidavit proves. While Defendants maintain such evidence leaves no doubt that Oribi is improperly joined, Plaintiffs assert such an averment fails to "conclusively establish [that] Oribi is not part of the stream of commerce." Pl.'s Rep. to Def. Lilly's Opp'n to Remand at p. 3.
Because the Oribi argument does not involve the "common defense" rule, the Court must recognize improper joinder if there is an "inability of the plaintiff to establish a cause of action against the non-diverse party in state court." Travis, 326 F.3d at 647. Stated differently, this test means that the district court can find no reasonable basis "to predict that the plaintiff might be able to recover against an in-state defendant." Smallwood III, ___ F.3d at ___, Maj. Op. at 6. Smallwood III clarified this examination by listing two options for courts considering reasonable basis recovery. First, courts could examine the complaint and conduct a Rule 12(b)(6)-type analysis, analyzing whether the plaintiffs claims "under state law against the in-state defendant" would survive as Rule 12(b)(6) challenge. Ordinarily, if a plaintiff's claims met this burden, joinder would be proper. Id.
The second option available, and a much more infrequent choice, would be where a "plaintiff has stated a claim, but has misstated or omitted discrete facts that would determine the propriety of joinder." Id. at ___, Maj. Op. at 6-7. In these situations, the court may decide to "pierce the pleadings and conduct a summary inquiry." The Fifth Circuit emphasized however, that courts should exercise great discretion in taking this avenue, and that any piercing should be severely constrained. Id. at ___, Maj. Op. at 7 ("Attempting to proceed beyond this summary process carries a heavy risk of moving the court beyond jurisdiction and into a resolution of the merits.").
In this case, Plaintiffs' complaint more than meets the standard to survive a Rule 12(b)(6)-type analysis. However, even were the Court to "pierce the pleadings" and add the affidavit to its consideration, there would still be a lack of evidence for improper joinder. When determining improper joinder, the district court must evaluate the plaintiff's factual allegations in the light most favorable to the plaintiff and resolve all contested issues of substantive fact in favor of the plaintiff. Cavallini, 44 F.3d at 259. Smallwood III did not alter this mandate. Indeed, "[i]f there is any possibility that the plaintiff has stated a cause of action against any non-diverse defendant, the federal court must conclude that joinder is proper, thereby defeating complete diversity, and the cause must be remanded." Sid Richardson Carbon Gasoline Co. v. Interenergy Resources, Ltd., 99 F.3d 746, 751 (5th Cir. 1996) (emphasis added). The court's examination should not focus on whether the plaintiff will or is likely to prevail on the merits of the claim, but rather on whether there exists any possibility that the plaintiff might do so. Burden v. General Dynamics Corp., 60 F.3d 213, 216 (5th Cir. 1995) (emphasis added).
After viewing the evidence in a light most favorable to Plaintiffs, the Court is not convinced that Plaintiffs improperly joined Oribi. While the affidavit illustrates strong arguments for the Defendants, more evidence could be presented through the discovery process that might alter the current findings. The present time however, is not the forum to conduct this inquiry.
Conversely, even if improper joinder occurred with respect to Oribi, complete diversity would still not exist because Dr. Johnson claims Texas citizenship. Defendants only contention regarding Dr. Johnson is that joinder was improper because the Vaccine Act "prohibits the filing of a civil action `against a vaccine administrator or manufacturer in a State of [sic] Federal court for damages arising from a vaccine-related injury' prior to proceeding in a specially-designated court of the U.S. Court of Federal Claims ("Vaccine Court"). Def. Lilly's Opp'n to Remand at p. 6 (quoting 42 U.S.C. § 300aa-11(a)(2)(A)). However, under Smallwood III and the "common defense" rule, such a proposition goes to the merits of the issue rather than the joinder itself. As such, Plaintiffs' Motion to Remand must be granted as Defendants have failed to prove complete diversity.
Dr. Johnson also asserts this defense himself. See Dr. Johnson's Mot. to Dismiss at p. 2.
IV. Conclusion
For the foregoing reasons, the Court hereby GRANTS Plaintiffs' Motion to Remand, and this case is remanded to the 44th Judicial District Court, Dallas County, Texas.
IT IS SO ORDERED.