Longden v . Philip Morris, et a l . CV-03-353-M 08/19/03 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Julian Longden and Sheila Longden, Plaintiffs

v. Civil N o . 03-353-M Opinion N o .

Philip Morris, Inc.; Liggett Grou Inc.; TBI Corporation, Inc., Defendants

O R D E R

This case has been removed from the New Hampshire Superior

Court (Hillsborough County, Northern District). It was

originally filed on June 2 1 , 2000. Trial was to begin on October

6, 2003. Defendants removed the case after the Superior Court

(Smukler, J.) granted summary judgment to the last non-diverse

defendant, TBI Corporation, Inc. (“TBI”). Defendants contend

that jurisdiction in this court is proper under

.

Before the Court is plaintiffs’ Emergency Motion for Remand. For

the reasons given below, plaintiffs’ motion for remand is

granted. Plaintiffs argue for remand on grounds that more than one

year has passed since the commencement of suit, and the non-

diverse defendants (since dismissed) were not fraudulently

joined. Defendants counter that the one-year statutory limit on

removal does not apply where, as here, plaintiffs (allegedly)

fraudulently joined in-state defendants solely for the purpose of

defeating diversity and preventing removal.

Federal law provides that “any civil action brought in a

State court of which the district courts of the United States

have original jurisdiction, may be removed by the defendant or

the defendants, to the district court of the United States for

the district and division embracing the place where such action

is pending.”

(a). It is well established that

“removal statutes are strictly construed” against removal. Danca

v . Private Health Care Sys., Inc.,

, 4 (1st Cir. 1999)

(citing Shamrock Oil & Gas Corp. v . Sheets,

0 0 , 108-09

(1941)). Procedurally:

If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be

2 ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.

28 U . S . C . § 1446(b). When a defendant removes a case from state

court, he or she has “the burden of showing the federal court’s

jurisdiction.” Danca,

(citing B I W Deceived v .

Local S 6 , Indus. Union of Marine & Shipbuilding Workers,

(1st Cir. 1997)). When a plaintiff moves to remand,

“the burden of proving the propriety of removal [remains] on the

party who removed.” Societa Anonima Lucchese Olii E . Vini v .

Catania Spagna Corp., 440 F . Supp. 4 6 1 , 464 (D. Mass. 1977)

(citing 1 A J . MOORE, FEDERAL PRACTICE P 0.168 (4.-1) at 5 2 9 ) .

Two separate aspects of § 1446(b) bar removal of this case

and require remand: (1) no event has occurred triggering

defendants’ statutory right of removal; and (2) even if

equitable considerations allow exceptions to the one-year limit

on removing a case not removable when initially filed, the

circumstances of this case do not warrant application of such

exceptions.

3 It is not at all clear that a state court order, issued over

plaintiffs’ objection, qualifies as a “paper from which it may

first be ascertained that the case is one which is or has become

removable.” In Maine Employers Mutual Insurance C o . v . Yates

Insurance Agency, the court explained that “a defendant has the

right to remove an initially nondiverse case when diversity is

created by voluntary actions taken by a plaintiff that are not

within the control of the removing defendant.”

(D. M e . 1999) (emphasis added) (citing Yarnevic v .

Brink’s, Inc.,

(4th Cir. 1996); DeBry v .

Transamerica Corp.,

8 0 , 486-88 (10th Cir. 1979);

Pepsico, Inc. v . Wendy’s Int’l, Inc.,

8 , 40-41

(S.D.N.Y. 1987)).

Neither of the two kinds of voluntary action discussed by

the court in Maine Employers is present in this case. First, TBI

was dismissed from the case over plaintiffs’ objection, not at

their request. See

(explaining that under the

traditional rule, “only dismissals initiated by the plaintiff

count as voluntary”) (citing Poulos v . Naas Foods, Inc.,

9 , 71-72 (7th Cir. 1992)); see also Bearup v . Milacron, N o . 01-

4 CV-74455-DT,

(E.D. Mich. 2002) (“Removal is

improper where diversity is created by court order, not by

voluntary dismissal of the non diverse defendant.”) (citing

O’Rourke v . Communique Telecommunications, Inc.,

(E.D. Mich. 1989)). 1 Second, the appeal period

applicable to Judge Smukler’s (partial) summary judgment order

has not run, so plaintiffs cannot be said to have voluntarily

accepted it by failing to appeal. See Maine Employers,

(explaining “the so-called appealability/finality

rationale,” under which a court-ordered dismissal of a non-

diverse defendant is voluntary as to the plaintiff when the

plaintiff fails to appeal the dismissal) (citing Quinn v . Aetna

Life & Cas. Co.,

8 , 40 (2d Cir. 1980)).

Because plaintiffs objected to dismissing TBI from the case,

and because the time for appealing Judge Smukler’s summary

judgment order has not yet run, there has been no qualifying

1 In Mill-Bern Associates., Inc. v . Dallas Semiconductor Corp., the court explained, albeit in dictum, that “[t]he elimination of nondiverse parties over the objection of the plaintiff, such as by a ruling on a defendant’s motion for summary judgment, would not make the case removable.”

4 0 , 245 (D. Mass. 1999) (citing Am. Car & Foundry C o . v . Kettelhake,

1 1 , 315-16 (1915); Powers v . Chesapeake & Ohio Ry. Co.,

(1898)).

5 event, in the form of a voluntary act by plaintiffs, that would

allow removal under § 1446(b). However, even assuming that Judge

Smukler’s summary judgment order was sufficient to trigger

defendants’ removal right, remand i s , nevertheless, required

because defendants removed the case more than three years after

it was commenced.

District courts across the country disagree as to whether §

1446(b)’s one-year limit is absolute or subject to equitable

exceptions. Tedford v . Warner-Lambert Co.,

(5th Cir. 2003) (footnotes omitted). The court of appeals

opinion on point holds that “[w]here a plaintiff has attempted to

manipulate the statutory rules for determining federal removal

jurisdiction, thereby preventing the defendant from exercising

its rights, equity may require that the one-year limit in §

1446(b) be extended.” Id. at 428-29. That i s , the one-year

limit may give way if the removing defendant can establish that

plaintiff fraudulently joined an in-state party solely for the

purpose of defeating diversity. See also Hardy v . Ajax

Magnathermic Corp.,

5 7 , 759 (W.D. Ky. 2000)

(“the one-year limitation does not bar removal if Plaintiffs

6 fraudulently joined the nondiverse defendants). Within this

circuit, Judge Woodlock, of the District of Massachusetts, has

ruled that “the one-year bar is absolute.” Santiago v . Barre

Nat’l, Inc.,

0 8 , 510 (D. Mass. 1992). But he did

so in a case that involved neither accusations nor evidence of

fraudulent joinder or any other improper manipulation of the

judicial process. See

at 5 1 1 , 512.

In the context of fraudulent joinder, “‘fraudulent’ is a

term of art” that applies to the joinder of an in-state defendant

against whom plaintiff “simply has no chance of success, whatever

the plaintiff’s motives.” Hardy,

(citing

Poulos,

9 ) .

In order to show that naming a non-diverse defendant is a “fraudulent joinder” effected to defeat diversity, the defendant must demonstrate, by clear and convincing evidence, either that there has been outright fraud committed in the plaintiff’s pleadings, or that there is no possibility, based on the pleadings, that the plaintiff can state a cause of action against the non- diverse defendant in state court.

Mills v . Allegiance Healthcare Corp.,

, 5 (D.

Mass. 2001) (quoting Whitaker v . Am. Telecasting, Inc.,

7 196, 207 (2d Cir. 2001)). Regarding a claim of fraudulent

joinder based upon the baselessness of a plaintiff’s claims:

There can be no fraudulent joinder unless it be clear that there can be no recovery under the law of the state on the cause alleged or on the facts in view of the law . . . One or the other at least would be required before it could be said that there was no real intention to get a joint judgment, and that there was no colorable ground for so claiming.

Hardy,

-60 (quoting Alexander v . Elec. Data

Sys. Corp.,

4 0 , 949 (6th Cir. 1994)). Somewhat more

pointedly, “joinder [is] not fraudulent if [a] case can withstand

a 12(b)(6) motion directed to [the] sufficiency of the cause of

action.” Ritchey v . Upjohn Drug Co.,

(9th

Cir. 1998) (citing Sessions v . Chrysler Corp.,

, 760-

61 (9th Cir. 1975)).

Here, of course, there is more than the mere probability

that plaintiffs’ claims against TBI could survive a 12(b)(6)

motion to dismiss; those claims did survive a motion to dismiss.

Accordingly, it does not plainly appear that TBI was sued upon

baseless claims. See Ritchey,

(finding in-state

physician to be a fraudulently joined “sham defendant” in action

8 against drug manufacturer when statute of limitations had run as

to physician prior to suit being filed); In re Diet Drugs

(Phentermine, Fenfluramine, Dexfenfluramine) Products Liability

Litigation,

1 4 , 422-23 (E.D. P a . 2002) (finding

fraudulent joinder of defendant pharmacies when Mississippi law

plainly barred recovery under legal theories advanced by

plaintiffs); Gabrielle v . Allegro Resorts Hotels,

2 , 69-70 (D.R.I. 2002) (finding fraudulent joinder when

plaintiff sued in-state travel agent for injuries sustained while

traveling, even though Rhode Island law plainly precluded travel-

agent liability for such injuries); Mills,

(finding fraudulent joinder when plaintiff sued in-state

distributor of latex gloves, even though his injury was diagnosed

before he ever wore gloves supplied by distributor).

Moreover, while defendants may take issue with plaintiffs’

litigation tactics, they have identified no conduct that rises to

the level of rascality necessary to support a finding of

fraudulent joinder or otherwise to warrant an equitable exception

to the one-year limitation. See, e.g., Wilson v . Republic Iron &

Steel Co.,

2 , 94 (1921) (in suit by employee against

9 coemployee and employer, coemployee was fraudulently joined when

plaintiff “personally and intimately knew every person who could

by any possible chance have caused his injuries, and knew the

coemployee was not in any degree whatsoever responsible therefor

. . .”); Tedford,

(finding fraudulent joinder

when plaintiff sued in-state doctor for adverse drug reaction,

then signed and post-dated a notice of non-suit as to the

physician, but did not serve it on co-defendant drug company

until more than one year after filing suit); In re Diet Drugs,

220 F. Supp. 2d at 421 (nationwide pattern of settling with drug

company defendants in exchange for agreement to refuse consent to

removal supported finding of fraudulent joinder of drug

companies); Leslie v . Banctec Serv. Corp.,

4 1 , 346-

47 (S.D.N.Y. 1996) (declining to enforce the one-year limit when,

among other things, plaintiff defeated first removal by dropping

federal claim, defeated second removal by agreeing not to seek

damages in excess of $50,000, then reneged on that agreement,

thus precipitating third removal); Saunders v . Wire Rope Corp.,

(E.D. V a . 1991) (declining to strictly enforce

the one-year limit when plaintiff waited nearly one year after

filing case to serve diverse defendant and settled with

10 nondiverse defendant without seeking entry of order of

dismissal); Kite v . Richard Wolf Med. Instrs. Corp.,

(S.D. Ind. 1989) (granting exception to one-year limit

when defendant removed, plaintiff added in-state defendant six

months later and won remand, only to dismiss that defendant, by

agreement, three years later).

Finally, plaintiff’s prosecution of its claim against TBI

has not been dilatory enough to warrant an equitable extension of

the one-year limit. See Hardy,

(finding fraudulent joinder when plaintiff had no facts to

support a claim against in-state defendant, failed to respond to

case management order, and did not oppose defendant’s motion for

summary judgment.)

Because no qualifying event has occurred that would allow

removal under

(b), and because the facts of this

case do not support an equitable exception to the one-year limit

on removal, plaintiff’s Emergency Motion for Remand (document n o .

5 ) is granted. The Clerk of Court shall enter judgment in

accordance with this order and close the case.

11 SO ORDERED.

Steven J. McAuliffe United States District Judge

August 1 9 , 2003

cc: Charles G. Douglas, I I I , Esq. Laurence W . Getman, Esq. Thomas J. Griffin, Jr., Esq. Robert J. Gallo, Esq.

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