United States Court of Appeals

Fifth Circuit



## FILED

January 13, 2006

Charles R. Fulbruge III

Clerk 

## In the 

# United States Court of Appeals

for the Fifth Circuit

_______________



### m 04-41584

_______________



### J OHNNY 

### C ROCKETT



### , ET 

### A L



### .,

Appellants,



### J OHNNY 

### C ROCKETT



### ,

I NDIVIDUALLY

, AND AS H EIRS TO THE E STATE OF V ERONICA F AYE C ROCKETT ;



### A NDRA 

### K

ITCHEN



### ,

I NDIVIDUALLY

, AND AS H EIRS TO THE E STATE OF V ERONICA F AYE C ROCKETT ;



### R OBERT 

### K

ITCHEN



### ,

I NDIVIDUALLY

, ANS AS H EIRS TO THE E STATE OF V ERONICA F AYE C ROCKETT

,



### Plaintiffs-Appellants,

VERSUS

R.J. R EYNOLDS 

### T OBACCO 

### C OMPANY



### , ET 

### A L



### .,

Defendants,



### R.J. R EYNOLDS 

### T OBACCO 

### C OMPANY 

### ; R.J.R. N ABISCO



### , I NC 

### .;

P HILIP 

### M ORRIS 

### USA I NC 

### .; P HILIP 

### M ORRIS 

### C OMPANIES



### , I NC 

### .;

B ROWN AND 

### W ILLIAMSON 

### T OBACCO 

### C ORPORATION 

### ;

B ATUS 

### T OBACCO 

### S ERVICES



### , I NC 

### .; B&W J APAN



### , I NC 

### .;

H.E.B. B UTT 

### G ROCERY 

### C OMPANY



### ,

Defendants-Appellees.2 _________________________

Appeal from the United States District Court

for the Southern District of Texas

______________________________

Before G ARWOOD

, S MITH , and D E M OSS

, Circuit Judges.

J ERRY E. S MITH , Circuit Judge:

Johnny Crockett and other heirs of the estate of Veronica

Faye Crockett (collectively

“Crockett”) challenge the remova l t o federal

court of their wrongful death and survival suit

against R.J. Reynolds Tobacco Company and

other tobacco companies (collectively the “tobacco defendants”). Concluding that there is

jurisdiction, we a f

firm the judgment on the

merits.

I.

Crockett filed a wrongful death and survival

suit against t he tobacco defendants and Dr.

William Peterek and the Gulf Coast Medical

G r oup (collectively the “health care defendants”) in state court seeking damages for the

cancer-related death of Veronica Faye Crockett, a long-time smoker. Crockett alleges that

the toba cco defendants’ defective cigarettes

and the he a lth care defendants’ negligence in

failing to diagnose the decedent’s cancer combined to cause her death.

Because Crockett and the health care defendants a re citizens of Texas, there is not

complete diversity of citizenship. Federal jurisdiction also is barred by the fact that the

health care defendants are citizens of the state

in which the action is bro ught. The tobacco

defendants nevertheless removed, claim i ng that the non-diverse health ca r e defendants had

been fraudulently joined to defeat removal

jurisdiction. The district court determined that

there had been no fraudulent joinder and rem anded to state court.

On remand, the tobacco defen dants, over

Crockett’s objection, successfully moved to

sever Crockett’s claims against the health care

defendants. Upon issuance of the severance

order, the tobacco defendants again removed,

arguing that the severa n ce of the non-diverse

parties cured the lack of complete di versity.

Immediately after filing their notice of removal, the tobacco defendants also filed a motion

for judgment on the pleadings.

Once back in federal court, Crockett moved

to remand, arguing that the tobacco d efendants’ second attempt to remove was improper

because diversity had not been created through

a v oluntary act of the plaint iffs. Instead of

first ruling on Crockett’s motion, the district

court held against him on the merits by granting the tobacco defendant’s motion for judgment on the pleadings, then denied as moot the

motion to remand. 1 Crockett appeals, claiming

1 Although it reached the correct result, the district court should not have decided to bypass the

jurisdictional question presented in the motion to

remand and proceed directly to the merits. S ee

Steel Co. v. Citizens for a Better Env’t , 523 U.S.

83, 94-95 (1998) (rejecting the notion that a court

(continued...)3

the district cour t lacked subject matter jurisdiction.

II.

“We review questions of subject matter jurisdiction de novo .” B issonnet Invs., LLC v

. Quinlan

, 320 F.3d 520, 522 (5th Cir. 2003).

Because Crockett does not contest the district

court’s decision on the merits, so the only issue on appeal is whether the district court had

removal jurisdiction, leading us to apply the de

novo standard.

As a general matter,

any civil action brought i

n 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.

28 U.S. C. § 1441(a). If jurisdiction is based

on diversity of citizenship, however, the action

is removable only if there is complete diversity

an d “none of the parties in interest properly

joined and served as defendants is a citizen of

the State in which such action is brought.” I d.

§ 1441(b). If an action is not initially removable, but later becomes removable,

a notice of removal

may be filed within

thirty days after receipt by th e defendant

. . . of a copy of an amended pleading, motion, order or other paper from w hich it

may first be ascertained that the case is one which is or has become removable, except

that a case may not be removed on the basis of [diversity of citizenship] more than

one year after commencement of the action.

Id.

This suit w as initially nonremovable because the health care defendants were non-diverse and were citizens of Texas, in which the

action was brought. The tobacco defendants

argue, however, that the state court’s order

s evering Crockett’s claims against the health

care defendants produced complete div ersi ty

and obviated the “in-state de fendant” barrier

posed by § 1446(b). The tobacco defendants

assert that a severance order qualifies as an

“order or other paper from which it may first

be ascertained that the case is one which

. . . has become removable.” § 1446(b).

C rockett contends, to the contrary, t hat

§ 1446(b) was enacted against the backdrop

of, and without the intent to abrogate, the judicially-created “voluntary-involuntary” rule

whereby “an action nonremovable when commenced may become removable th ereafter only

by th e vo luntary act of the plaintiff.” W eems

v. Louis Dreyfus Corp.

, 380 F.2d 545, 547

(5th Cir. 1967). Because this suit became

arguably removable only after the issuance of

a severance order that was entered o ver

Crockett’s objection, Crockett claims removal

was improper under the voluntary-involuntary

rule.

The tobacco defendants counter that the

v oluntary-involuntary rule is inapplicable because the health care def endants were not

properly-joined parties. We agree.

Courts have long recognized an exception

to the voluntary-involuntary rule where a claim

against a nondiverse or in-sta t e defendant is 1 (...continued)

can “assume” jurisdiction for the pu rpose of deciding the merits, because such an approach “carries the courts bey ond the bounds of authorized

judicial action and thus offends fundamental principles of separation of powers”).4

dismissed on account of fraudulent joinder. 2

Fraudulent joinder can be established by demonstrating either “(1) actual fraud in the pleading of jurisdictional facts, or (2) inabilit y of the

plaint iff to establish a cause of action against

the non-diverse party in state court.” T ravis v.

Irby , 326 F.3d 644, 646-47 (5th Cir. 2003). 3

On the tobacco defendants’ first attempt to

remove, the district court, aft er deciding that

the health care defendants had not been fraudulently joined, remanded on that basis. Crocket t notes correctly that that decision is made

u nreviewable by 28 U.S.C. § 1447(d). 4 In

addition, the severance order issue d by the

state court cannot be considered equivalent to

a finding of actual fraud in the pleadings or an

inabilit y of the plaint iffs to establish a cause of

action aga i nst the health care defendants.

Rather, that order merely e s tablished that

Crockett ’s claims against the health care defendants should be tried in separate suits.

Crockett elected not to appeal tha t ruling.

Fraud u lent joinder is therefore no longer an

issue in this case.

A party, however, can be improperly joined

without being fraudulently joined. Under fede ral law, defendants are properly joined if

(1) “there is asserted against them joint ly, seve rally, or in the alternative, any right to re lief

in respect of or arising out of the same transaction, occurrence, or series of transactions or

occurrences” and (2) “any question of law or

fact common to all defendants will arise in the

action.” F E D

. R. C IV

. P. 2 0(a). Texas has

adopted the same requirements for proper

joinder. S ee T EX

. R. C IV

. P. 40(a). If these

requirements are not met, joinder is improper

even if there is no fraud i n t he pleadings and

the plaint iff does have the abilit y to r ecover

against each of the defendants. 5

The state court severed Crockett’s claims

against the health care defendants from his

claims against the tobacco defendants because

“the medical negligence and malpractice claim

and the burden of proof to sustain [that] claim

is totally different [from] the burden of proof

. . . necessary to secure judgment for product

liabilit y.” 6 To the extent the severance decision was tantamount to a finding of improper

joinder, we agree with that finding.

The fraudulent joinder exception to the voluntary-involuntary rule is designed to prevent

plaint iffs from blo cking removal by joining

nondiverse and/or in-state defendants who

should not be parties. That salutary purpose is

also served by recognizing an exception to the

voluntary-involuntary rule where defenda n ts

are improperly, though not fraudulently,

joined. We therefore conclude that removal

on the basis of an unappealed severance, by a 2 See, e.g.

, Insigna v. LaBella

, 845 F.2d 249,

254 (11th Cir. 1988) (“Fraudulent joinder is a

well-established exception to the voluntary-involuntary rule.”).

3 Accord Smallwood v. Ill. Cent. R.R.

, 385 F.3d

568, 573 (5th Cir. 2004) (en banc) (describing “the

test for fraudulent joinder” and quoting Travis

, 326

F.3d at 646-47), c ert. denied

, 125 S. Ct. 1825

(2005).

4 Se ction 1447(d) states that “[a]n order remanding a case to t he State court from which it

was removed is not reviewable on appeal or otherwise” (adding an exception not relevant here). 5 Cf

. Tapscott v. MS Dealer Serv. Corp. , 77

F.3d 1353, 1360 (11th Cir. 1996).

6 Crockett v. R.J. Re

ynolds Tobacco Co. , No.

03CV1391 (10th Dist. Ct., Galveston County,

Tex., Aug. 18, 2004) (transcript of hearing on defendants’ motion to sever).5

state court, of claims against improperly joined

defendants is not subject to the voluntary

involunt a ry rule. 7 Accordingly, removal

jurisd i ction existed in this case upon the severance of Crockett’s claims against the nondiverse in-state health care defendants.

III.

Crockett has not cha llenged the district

court’s disposition on the merits. Accordingly,

because we conclude that the district court had

subject matter jurisdiction, its judgment granting the motion for judgment on the pleadings,

denying (as moot) the motion to remand, and

di smissing all claims with prejudice, is AFFIRMED.

7 T his conclusion finds support the text of

§ 1441(b), which does not refer to “nonfraudulently joined” parties. Rather, it blocks removal only

where “properly joined” defendants are citizens of

the state in which the action is brought.