Opinion
CIVIL ACTION NO. 02-2995
August 8, 2003
ORDER AND REASONS
Before the Court is plaintiffs' Motion to Remand. For the reasons that follow, the motion is DENIED.
I. BACKGROUND
Peter Walker died of lung cancer on July 20, 2001. He had smoked Marlboro and Marlboro Light brand cigarettes from 1962 until he quit smoking in 1996. On July 19, 2002, his wife Katherine Anne Walker (on behalf of herself and her two minor children) filed this wrongful death and survival action in Louisiana state court. In addition to suing the maker of Marlboro cigarettes, Philip Morris USA Inc. (formerly known as Philip Morris Incorporated) and Philip Morris Companies (collectively, "Philip Morris"), plaintiffs also sued three local wholesale distributors of Philip Morris cigarettes: Quaglino Tobacco and Candy Co., Inc., J R Vending Service, Inc., and George W. Groetsch, Inc. (the "distributor defendants"). Philip Morris removed the case to this Court on diversity grounds, asserting that the distributor defendants were fraudulently joined. Plaintiff promptly filed the instant Motion to Remand. The hearing initially was noticed for December 11, 2002, but was continued multiple times to accommodate discovery directed to the issues surrounding subject matter jurisdiction — twice at Philip Morris' request with plaintiffs' consent, and once at plaintiffs' request with defendants' consent. See Rec.Docs. 10, 12, 14, 17, The motion was heard at last on August 6, 2003, with oral argument.
II. LAW AND ANALYSIS
Philip Morris argues that the Court should not consider the distributor defendants' citizenship in determining subject matter jurisdiction because: (1) the distributor defendants have lock-cinch affirmative defenses against plaintiffs' redhibition claim — namely, prescription under Louisiana's redhibition law and preemption under the Federal Cigarette Labeling and Advertising Act; and (2) plaintiffs have no viable cause of action against the distributor defendants under any other theory, whether in tort, express warranty, or under the Louisiana Products Liability Act ("LPLA").
A. The Standard and Procedure for Determining Fraudulent Joinder in the Fifth Circuit:
To establish that the distributor defendants were fraudulently joined, defendants bear the heavy burden of showing either that there is outright fraud in plaintiffs' allegations or that '"there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the in-state defendant in state court.'" Sid Richardson Carbon Gasoline Co. v. Interenergy Resources, Ltd., 99 F.3d 746, 751 (5th 1996) (quoting Cavallini v. State Farm Mut. Auto Ins. Co., 44 F.3d 256, 259 (5th Cir. 1995)). "In reviewing a claim of fraudulent joinder, the district court must evaluate all factual allegations and ambiguities in the controlling state law in favor of the plaintiff." Id. at 751. However, the Court is not bound to accept the petition's allegations in the face of countervailing evidence. To the contrary, even if the petition facially states a claim against an in-state defendant, the Court may pierce the pleadings to examine affidavits and other summary judgment-type evidence. Id. In such a case, removal jurisdiction is established if, in light of the evidence presented, construing all disputed questions of fact and ambiguities in state law in plaintiffs' favor, the Court finds that "there is no reasonable basis for predicting that plaintiffs might establish liability in their . . . claim against the in-state defendants." Badon v. R J R Nabisco Inc., 224 F.3d 382, 393 (5th Cir., 2000) (Badon I).
The Fifth Circuit not only has sanctioned use of this summary judgment-like procedure, it has urged it. See Sid Richardson, 99 F.3d at 751 ("We have consistently held that claims of fraudulent joinder should be resolved by a summary judgment-like procedure whenever possible.") (emphasis added); Badon I, 224 F.3d at 393 ("our precedent establishes that 'a removing party's claim of fraudulent joinder to destroy diversity is viewed as similar to a motion for summary judgment.' ") (quoting LeJeune v. Shell Oil Co., 950 F.2d 267, 271 (5th Cir. 1992)). "While such a procedure requires that 'all disputed questions of fact' be 'resolved in favor of the nonremoving party,' 'in determining diversity the mere assertion of "metaphysical doubt as to the material facts" is insufficient to create an issue if there is no basis for those facts.'" Badon I, 224 F.3d at 393 (emphasis in original) (quoting Carriers v. Sears, Roebuck and Co., 893 F.2d 98, 100 (5th Cir.), cert. denied, 498 U.S. 817 (1990), and Jernigan v. Ashland Oil Inc., 989 F.2d 812, 816 (5th Cir. 1993)). The Court must" 'resolve factual controversies in favor of the [plaintiff], but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts.'" Badon I, 224 F.3d at 393-94 (emphasis in original) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc)). B. Plaintiffs' Redhibition Claims:
Philip Morris concedes, as it must, that plaintiffs may be able to state a redhibition cause of action against the distributor defendants under Louisiana law as it stands today. See Badon v. RJR Nabisco Inc., 236 F.3d 282, 286 (5th Cir., 2000) (Badon II) ("there is arguably a reasonable basis for predicting that plaintiffs might establish redhibition . . . liability against the Louisiana [cigarette] wholesalers under Louisiana law as it stands today"). However, the analysis does not end here. As the Fifth Circuit explained in Sid Richardson, supra, the analysis extends to affirmative defenses that would operate to preclude the possibility of recovery against the non-diverse defendants. Sid Richardson, 99 F.3d at 753. If there is "absolutely no possibility" that plaintiffs might overcome the affirmative defenses, then the joinder was fraudulent and removal jurisdiction is proper. Id. at 743, 746. On the other hand, "if there is any possibility that [plaintiffs] might survive the affirmative defenses," then the case must be remanded to state court. Id.
Philip Morris argues that plaintiffs' redhibition claims are prescribed under the undisputed facts of this case. The most lenient prescriptive period for redhibition claims for purchases made before January 1, 1995 is one year from the date of discovery of the defect. See Potts v. RJ.R. Reynolds Tobacco Co., 2001 WL 1230650 *1 (E.D. La. 2001); see also Scott v. RJ. Reynolds Tobacco Co., 2001 WL 797992 (E.D. La. 2001) (analyzing former Civil Code articles 2534 and 2546). With regard to purchases made after January 1, 1995, the prescriptive period for redhibition claims against a seller "who did not know of the existence of a defect" is four years from the date of sale or one year from the date of discovery of the defect, whichever occurs first. See La. Civ. Code art. 2534(A). For sellers who knew or are presumed to have known of the defect, the prescriptive period is one year from the date of discovery of the defect, without regard to the date of sale. See La. Civ. Code art. 2534(B).
Where a smoker or ex-smoker had knowledge more than one year prior to filing suit that cigarettes are addictive and harmful to health, that person's redhibition claim is prescribed. See Potts, 2001 WL 1230650 (Beer, J.) (redhibition claims against local cigarette distributors were prescribed and therefore fraudulently joined); Scott, 2001 WL 797992 (Clement, J.); cf. Lanzas v. The American Tobacco Co., Inc., 2001 WL 474281 (E.D. La. 2001) (Vance, J.)
Here, plaintiffs allege that the cigarettes were defective because they were addictive in nature and had harmful health effects. Philip Morris has introduced Ms. Walker's deposition transcript, in which she testifies that her husband quit smoking for good in late 1996. See Walker Depo. at pp. 32-45, 55-56. Thus, his last date of purchase would have been some time during that year. She also testifies that her husband made statements prior to quitting, in which he referred to himself as "addicted" to cigarettes and stated that he could not quit smoking because he was addicted. Id. at pp. 49-51. Plaintiff believes her husband quit smoking because he had an understanding that smoking was bad for his health. Id. at p. 30. He had supported her in quitting smoking in 1993 and stopped smoking inside their home while she was pregnant in 1994. Id. at pp. 25-28, 53-55. He was diagnosed with lung cancer in July 1999.
Plaintiffs have introduced no evidence to dispute these facts. Nor have they proffered any arguments tending to refute Philip Morris' analysis showing that Peter Walker bought his last cigarette more than four years before suit was filed and knew of the defects complained of more than one year before suit was filed. Indeed, at oral argument, plaintiffs' counsel conceded the weakness of his redhibition claim in light of the prescription defense. Under these circumstances, the Court is unable to find any possibility that plaintiffs might survive the defense of prescription. Accordingly, the Court finds that the redhibition claims against the distributor defendants were fraudulent. Consequently, the Court need not address the defense of preemption. C. Express Warranty:
Although plaintiffs assert a conclusory allegation in their petition regarding an express warranty, they have presented no facts or arguments regarding an express warranty by the distributor defendants. Indeed, at oral argument, in response to questioning from the Court, plaintiffs' counsel was unable to describe or point to any express warranty made by the distributor defendants. Given that each of the distributor defendants has attested in a sworn affidavit that it has never made any representations or warranties concerning cigarettes, and considering that plaintiffs have proffered no evidence to dispute this fact, the Court can find no reasonable basis for predicting that plaintiffs might establish liability against the distributor defendants based on any express warranty theory.
D. Louisiana Products Liability Act ("LPLA"):
Nor have plaintiffs presented any facts or arguments supporting liability under the LPLA. Liability under the LPLA is limited to "manufacturers." See La.Rev.Stat. § 2800.54 (imposing liability only on the "manufacturer" of a product that is unreasonably dangerous). Each of the distributor defendants has attested in a sworn affidavit that it has never engaged in designing, manufacturing, packaging, or labeling cigarettes; has never labeled, packaged, or advertised cigarettes as its own product, or otherwise held itself out as the manufacturer of cigarettes; does not incorporate any cigarettes it purchases into any other product; has never exercised any influence over any characteristic of the design, composition, construction, or quality of cigarettes; and is an independent company that is not controlled by any cigarette manufacturer, Plaintiffs have presented no evidence to dispute these facts. Accordingly, the Court finds that there is no reasonable basis for predicting that plaintiffs might establish liability against any of the distributor defendants as a "manufacturer" of cigarettes under the LPLA. See La.Rev.Stat. § 2800.53 (defining the term "manufacturer" as used in the LPLA). E. Tort Claims:
Plaintiffs' primary arguments in opposition to Philip Morns' assertion of fraudulent joinder are grounded in tort. They are: (1) that in distributing and promoting Marlboro and Marlboro Light brand cigarettes, the distributor defendants acted as agents of Philip Morris in carrying out Philip Moms' alleged scheme of fraudulently concealing information regarding the addictiveness and health effects of cigarettes, particularly "light" cigarettes, and therefore that the distributor defendants are liable for any damages caused by this alleged fraudulent concealment; and (2) that the distributor defendants are liable as sellers of a defective product under Louisiana tort law, as articulated in Ard v. Kraft, Inc., 540 So.2d 1172 (La.App. 1st Cir. 1989), because they knew or should have known that the cigarettes they sold were defective.
1. Agency:
Plaintiffs' agency argument is flawed in two respects. First, plaintiffs' petition contains no allegations that even suggest an agency relationship between Philip Morris and any distributor defendant, much less hint at a claim of liability based on an agency theory. This failure alone dooms the agency theory as a basis for overcoming the claim of fraudulent joinder, for removal jurisdiction must be determined "on the basis of claims in the state court complaint as it exists at the time of removal." See Cavallini v. State Farm Mut. Auto Ins. Co., 44 R3d 256, 264 (5th Cir. 1995).
Second, even if the claim of agency had been alleged in the petition, it nevertheless fails because, based on the record, there exists no reasonable basis for predicting that plaintiffs might succeed in establishing liability based on the theory. Each of the distributor defendants has attested in a sworn affidavit that it is not an agent of Philip Morris (or any other tobacco manufacturer) and is not controlled by any cigarette manufacturer. Plaintiffs have presented no evidence to dispute these facts. Under the summary judgment-type procedure endorsed in Sid Richardson and Badon I, supra, this failure is disastrous to plaintiffs' remand attempt.
At oral argument, the Court explicitly asked plaintiffs' counsel if he was requesting additional time to conduct any discovery needed to dispute the defendants' evidence. He assured the Court that he was not seeking to conduct additional discovery at this time. Instead, counsel repeatedly asserted that he is not required to produce contradictory evidence under Sid Richardson and Badon I. The Court disagrees. Badon I made clear what previous Fifth Circuit decisions had suggested: even though a plaintiff's petition may allege a cause of action against an in-state defendant, such a claim will not survive a fraudulent joinder challenge if the defendants produce evidence showing that there is no reasonable possibility of plaintiffs recovering on that claim and the plaintiff fails to proffer any countervailing evidence in response. Badon I, 224 F.3d at 392-94. In Badon, the Fifth Circuit found the plaintiffs' tort claim against the local cigarette distributors to be fraudulent despite the fact that the plaintiffs in that case had alleged a conspiracy cause of action against the distributors — a cause of action that theoretically would have been viable under Louisiana law. There, as here, affidavits of the distributors negated the plaintiffs' allegations. Id. at 393. And, there, as here, the plaintiffs never tendered any summary judgment type evidence either to refute the affidavits or to support their own allegations. "[I]n light of the plaintiffs' lack of evidence," the Fifth Circuit found that there was no reasonable basis for predicting that the plaintiffs might succeed in their conspiracy claim. The court emphasized that in determining fraudulent joinder, a court" 'resolve[s] factual controversies in favor of the [plaintiff], but only when there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts." Id. at 393-94 (emphasis in original) (quoting Liquid Air, 37 F.3d at 1075).
Thus, in light of Badon I, the plaintiffs were required to present evidence in response to the distributors' affidavits refuting the existence of any agency relationship. Given plaintiffs' failure to do so, the Court finds plaintiffs' agency claim (to the extent one has been alleged) to be fraudulent.
2. Ard v. Kraft:
Plaintiffs' claim under Ard v. Kraft falls for the same reason. Under Louisiana law, a distributor or retailer who did not manufacture, design, or alter prior to sale a defective product is not liable in tort for damages resulting from the product absent a showing that he knew or should have known that the product was defective. Ard v. Kraft. Inc., 540 So.2d 1172, 1177 (La.App. 1st Cir. 1989) ("A grocery store owner who did not manufacture a defective product is not responsible for injury and damages resulting from such product in the absence of a showing that he knew or should have known that the product was defective."); see also Wilson v. State Farm Fire and Caves. Ins. Co., 654 So.2d 385, 387 (La.App. 3d Cir.) ("The non-manufacturing seller of a defective product is not responsible for damages in tort absent a showing that he knew or should have known the product was defective and failed to declare it."), writ denied, 661 So.2d 476 (La. 1995). Other sections of this Court have held that wholesale cigarette distributors cannot be held liable under this theory where they have no knowledge regarding the nature of the cigarettes beyond that generally known to the community. See Barrett v. R.J. Reynolds Tobacco Co., 1999 WL 460778 *2 (E.D. La. June 29, 1999) (Sear, J.) (Where plaintiff had introduced no evidence to contradict Quaglino's affidavit attesting that the only knowledge that Quaglino possessed regarding the nature of Salem cigarettes was that generally known to the community, Court found that there was no possibility the plaintiffs would be able to establish a cause of action against Quaglino under Ard.); Jackson v. Brown Williamson Tobacco Corp., 2003 WL 548920 *1 (E. D. La. 2003) (Fallon, J.) ("This Court agrees with the holding of Barrett and finds that the plaintiffs have failed to state a cause of action against Quaglino."). This Court agrees with Judge Fallon and Judge Sear in this regard.
At oral argument, plaintiffs' counsel argued against such a holding. According to plaintiffs' counsel, if the smoker himself necessarily must have known of the defects (as shown by the defendants' evidence on the issue of prescription), then the distributors likewise must have known. However, plaintiffs have failed to point this Court to any authority suggesting that a Louisiana court might impose liability on a non-manufacturer seller whose knowledge of the defect was the precisely the same as that of the buyer.
Each of the distributor defendants has attested in a sworn affidavit that it has never received information concerning the health risks associated with smoking, nicotine addition, nicotine levels in cigarettes, or the manipulation of nicotine levels, aside from that generally available to smokers and the public at large, and that it has not had any specialized knowledge concerning these matters that was not available to the general public. Plaintiffs have proffered no evidence to dispute these facts. Given this failure, in light of Badon I, discussed supra, the Court is unable to find any basis for predicting that Louisiana law might impose liability under Ard against any of the distributor defendants.
III. CONCLUSION
Accordingly, for these reasons, IT IS ORDERED that plaintiffs' Motion to Remand is DENIED.