Opinion
Civil Action No. 00-3615, Section "K"(5)
March 7, 2001.
Before the Court is a Motion to Remand filed by plaintiffs Julius Jackson and Shirley Jackson ("Jackson") (Doc. 7). Defendants Pneumatic Production Corporation ("PPC") removed this action to federal court based on diversity jurisdiction. 28 U.S.C. § 1441 and 1332. Claiming that there is no complete diversity among defendants, Jackson moved the Court to remand this action back to the 25th Judicial District Court for the Parish of Plaquemines, State of Louisiana, pursuant to 28 U.S.C. § 1447(c). Having reviewed the pleadings, memoranda, affidavit and the applicable law, the court finds as follows.
Shirley Jackson is Julius Jackson's wife, and brings a loss of consortium claim against the Defendants.
Background
This suit arises out of an incident on November 1, 1999, in which plaintiff Julius Jackson was allegedly injured on the job by a defective strap or ring that came loose from a nearby air dryer due to an allegedly defective nut or bolt. Defendants PPC, and AWC, Inc. ("AWC"), are alleged to have manufactured, designed, constructed, distributed, sold and/or marketed the ring/strap and nut/bolt (Doc. 1). PPC, a Delaware Corporation with its principal place of business in Florida, is diverse from plaintiffs, who are Louisiana citizens. AWC, however, is a Louisiana corporation with its principal place of business in Louisiana and thus not diverse from Jackson.
PPC contends that AWC's citizenship should be disregarded for purposes of determining jurisdiction under 28 U.S.C. § 1441 (b), because AWC has been fraudulently joined as a defendant solely for the purpose of defeating diversity jurisdiction. Jackson, on the other hand, contends that AWC was not fraudulently joined because they assert a valid cause of action against it. Jackson thus maintains that this matter was improperly removed and should be remanded.
Burden of Proof and Standard of Review with Respect to Fraudulent Joinder
The burden is on defendant, as the removing party, to prove that jurisdiction exists for removal purposes. See Dodson v. Spillada Maritime Corp., 951 F.2d 40 (5th Cir. 1992); B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981). Where there have been allegations of "fraudulent joinder", it is clear that the burden is on the removing party to prove the alleged "fraud". See id. The burden of persuasion placed upon those who "cry fraudulent joinder" is indeed a heavy one. See id; In re Gas Water Heater Products Liability Litigation, 1996 WL 732525, 1 (E.D.La.)(Duval, J.).
In determining removal jurisdiction, the district courts have been cautioned against conducting a full evidentiary hearing or virtually pre-trying a case in doing so. See Carriere v. Sears, Roebuck Co., 893 F.2d 98, 100 (5th Cir. 1990), cert. denied, 498 U.S. 817 (1990); Ford v. Elsbury, 32 F.3d 931, 935 (5th Cir. 1994). However, as discussed inB., Inc. v. Miller Brewing Co., fraudulent joinder claims can be resolved by "piercing the pleadings" and considering summary judgment-type evidence such as affidavits and deposition testimony as well as the controlling state law. See Burden v. General Dynamics Corp., 60 F.3d 213, 217 (5th Cir. 1995); Carriere v. Sears, Roebuck Co., 893 F.2d 98, 100 (5th Cir. 1990); Keating v. Shell Chemical Co., 610 F.2d 328, 333 (5th Cir. 1980); In re Gas Water Heater Products Liability Litigation, 1996 WL 732525, 1 (E.D.La.)(Duval, J.). In considering the appropriate documentation in addition to the pleadings, district courts should resolve all disputed questions of fact and substantive law in favor of the plaintiff. See id.
"In support of their removal petition, the defendants may submit affidavits and deposition transcripts; and in support of their motion for remand, the plaintiff may submit affidavits and deposition transcripts along with the factual allegations contained in the verified complaint." 663 F.2d 545, 549.
Fraudulent Joinder
In order to establish that an in-state defendant has been fraudulently joined, the removing party must show either that there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court; or that there has been outright fraud in the plaintiffs pleadings of jurisdictional facts. See B., Inc. v. Miller Brewing Co., 663 F.2d at 549 (citing Keating v. Shell Chemical Co., 610 F.2d 328). There have been no allegations of fraud in the plaintiff's pleading of jurisdictional facts. Therefore, in order to defeat the plaintiffs motion to remand, the defendants in this case must show that Jackson has no reasonable basis for recovery against AWC, the non-diverse defendant, as a matter of law. See id. at 549 n. 8; Burden v. General Dynamics Corp., 60 F.3d at 217. If there is an arguable and reasonable basis for predicting that the state law might impose liability on the facts involved, then there will be no fraudulent joinder, and the case will be remanded back to state court. See In re Gas Heater Products Liability Litigation, 1996 WL at 2 (citing Jernigan v. Ashland Oil Inc., 989 F.2d 812, 816 (5th Cir.) cert. denied, 114 S.Ct. 192 (1993)).
Possibility of Recovery Against AWC
Jackson's Petition for Damages (Doc. 1) against the defendants alleges that PPC and AWC manufactured, designed, constructed, distributed, sold and/or marketed the defective subject ring or strap which allegedly caused plaintiffs injuries. These claims against the defendants arise out of the Louisiana Products Liability Act ("LPLA"). La.R.S. 9:2800.51 et seq. The LPLA provides a cause of action against manufacturers for damages cause by their products. La.R.S. 9:2800.52. It defines a manufacturer as (1) a person who labels a product as his own or otherwise holds himself out to be the manufacturer of the product; (2) a seller who exercises control over or influences a characteristic of the design, construction or quality of the product that causes damage; (3) one who incorporates into the product a component or part manufactured by another manufacturer; or (4) a seller who is in the business of importing or distributing a product for resale and is the alter ego of a foreign manufacturer. La.R.S. 9:2800.52(1). See also Floyd v. Wall Rope Indus., 2000 WL 306681, 2 (E.D.La.)(Livaudais, J.) (quoting Zehner v. Nordskog Indus., 1992 WL 233984, 2 (E.D.La.) (Feldman, J.)). "Louisiana jurisprudence instructs that a non-manufacturer seller of a defective product may also be responsible for damages, but only if he knew or should have known that the product sold is defective. See La. C.C. 2545." See id; Ferruzi, U.S.A., Inc. v. R.J. Tricon Co., Inc., 645 So.2d 685 (La.App. 4th Cir. 1994).
While plaintiffs' Petition (Doc. 1) seeks to hold AWC liable as a manufacturer and/or seller of the defective product, defendants contend that AWC was merely the non-manufacturing distributor of the product in question. In addition, defendants claim that AWC, "had no knowledge or any reason to believe that any PPC product it sold and distributed contained any vice or defect" (Doc. 8). As such, defendants assert that neither the LPLA nor Louisiana jurisprudence would impose liability upon AWC. In support of their factual contentions, defendants submit the affidavit of David Honeycutt(Doc. 8), chief financial officer of AWC, who states, in effect, that AWC is a non-manufacturing distributor that had no knowledge or reason to believe any PPC product it sold had a defect. Plaintiffs' have not submitted any evidence other than the allegations in their complaint to rebut the defendant's assertions. Nevertheless, they argue that their allegations and the contrary contentions in the affidavit of Mr. Honeycutt constitute a disputed fact regarding AWC's potential liability. That being the case, plaintiffs assert, the defendants have failed to show that there is no possibility that the Jackson's have stated a cause of action against AWC.
Plaintiffs petition alone is not sufficient to rebut the affidavit of Mr. Honeycutt. See Jernigan v. Ashland Oil Inc., 989 F.2d 812, 816 (5th Cir.), cert. denied, 114 S.Ct. 192 (1993) (citing Matsushita v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 1356 (1986) (the "mere assertion of metaphysical doubt" as to material facts is insufficient to create an issue if there is no basis for those facts)); Sullivan v. Gen-Corp., Inc., 1995 WL 321743, 2 (E.D.La) (Duval, J.). That being the case, the contentions of the defendants are at this point undisputed. In other cases where a motion to remand has been granted in the face of a claim of fraudulent joinder, the Court has been presented with substantial summary judgment-type evidence (deposition transcripts, affidavits, etc.) along with the factual allegations in the pleadings to demonstrate a disputed fact to support the notion that the plaintiff has some possibility of recovery against the non-diverse defendant. See Floyd v. Wall Rope Indus., 2000 WL 306681, 2 (E.D.La.)(Livaudais, J.); Tramonte v. Chrysler Corp., 1999 WL 440456, 2 (E.D.La.)(Fallon, J.); Peck v. Black Decker (U.S.), Inc., et al, 1993 WL 441808, 2 (E.D.La.)(Mentz, J.);Morreale v. Surgitek, Inc., 1992 WL 193489, 1 (E.D.La.) (Arceneaux, J.). In Floyd Wall Rope Indus., supra, which the plaintiff cites in support of their position, there was compelling affidavit testimony on both sides, defendant and plaintiff, beyond just the pleadings that lead the Court to conclude that, "There is patently a dispute of fact" regarding the defendants knowledge of a defect in the product in question. The defendant failed to meet its burden of showing that plaintiff had no possibility of recovery against the non-diverse defendant. See id. In the instant case, however, the Court has been presented with only the petition, which is controverted by one affidavit, as evidence of the plaintiffs possibility of recovery against AWC.
In fact, even in cases where a motion to remand was denied due to a claim of fraudulent joinder, substantial summary judgment-type evidence was presented by both parties. See Kientz v. Bohn Brothers Toyota and Toyota Sales, U.S.A., Inc., 2000 WL 1808496 (E.D.La.)(Berrigan, J.);Fleming v. Standard Furniture Mfg., 1997 WL 180478 (E.D.La.)(Berrigan, J.); In re Gas Water Heater Products Liability Litigation, supra; Zehner v. Nordskog Indus., supra.
On this record, the Court is inclined to hold that the defendants have shown that plaintiffs have no possibility of recovering against AWC. However, plaintiff represents to the Court the need for more discovery. Thus, akin to the procedural vehicle available in the context of a motion for summary judgment under Fed.R.Civ.P. 56(f) to request a continuance, plaintiff has asked that the Court hold the matter in abeyance. Because at this juncture the Court finds that justice requires it grant this request, the Court will allow the plaintiffs time to conduct depositions and propound discovery necessary to demonstrate that they have some possibility of recovering against AWC. See Sullivan v. Gen-Corp., 1995 WL 321743, 3 (E.D.La)(Duval, J.); Wright Miller,Federal Practice and Procedure, § 3739, p. 470 (citing Institute of Pennsylvania Hosp. v. Travelers Ins. Co., 817 F. Supp. 24 (D.C.Pa.)(1993) (when disputed or material issues of fact exist such that motion for remand cannot be decided, court may defer its ruling until evidentiary hearing, discovery, or further presentation by parties renders sufficient and conclusive evidence to enable informed decision; alternatively court may postpone decision until evidence is submitted at trial)).
IT IS ORDERED that a ruling on the Motion to Remand is DEFERRED for thirty days. Plaintiff must file no later than April 5, 2001 a supplemental memorandum in support of the subject motion, at which time the Court will rule thereon.