Source: http://nm.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20170331_0000542.DNM.htm/qx
Timestamp: 2017-06-23 00:10:53
Document Index: 321637788

Matched Legal Cases: ['§ 1447', '§ 1332', '§ 1332', '§ 1446', '§ 1332', '§ 388', '§ 37', '§ 55', '§\n1447', '§ 388', '§ 1332', '§ 1332', '§ 1332', '§ 3704', '§ 1367', '§ 1441', '§ 1441', '§\n1446', '§ 1332', '§ 1332', '§ 1441', '§ 1441', '§ 1441', '§ 1441', '§\n1446', '§ 1446', '§ 1446', '§ 3733', '§ 107']

| Bellman v. NXP Semiconductors USA, Inc.
Bellman v. NXP Semiconductors USA, Inc.
RANDY BELLMAN, JR.; JACQUELINE BELLMAN; RANDY BELLMAN; BRETT BOOTH; BRITTANY BOOTH; VICKI GOSS and ANTHONY BOOTH, Plaintiffs,v.NXP SEMICONDUCTORS USA, INC.; PHILIPS ELECTRONICS NORTH AMERICA CORPORATION; PHILIPS SEMICONDUCTORS, INC. and RINCHEM COMPANY, INC. Defendants.
J. Jaramillo Jaramillo Law Firm, P.C. Albuquerque, New Mexico
and David Bricker Waters Kraus & Paul El Segundo,
California and Maria E. Touchet Touchet Law Firm, P.C.
Albuquerque, New Mexico and Charles Siegel Waters Kraus &
Paul Dallas, Texas Attorneys for the Plaintiffs
L. Ring Mayer Brown, L.L.P. Chicago, Illinois and William P.
Slattery Dana S. Hardy Hinkle, Hensley, Shanor & Martin,
L.L.P. Santa Fe, New Mexico Attorneys for Defendants NXP
Semiconductors USA, Inc., Philips Electronics North America
Corporation, and Philips Semiconductors, Inc.
K. Harrison Susan Miller Bisong Modrall Sperling Roehl Harris
& Sisk, P.A. Albuquerque, New Mexico Attorneys for
Defendant Rinchem Company, Inc.
MATTER comes before the Court on the Plaintiffs' Motion
for Remand and Memorandum in Support Thereof, filed March 23,
2016 (Doc. 8)(“Motion”). The Court held a hearing
on July 11, 2016. The primary issue is whether the Court
should remand the case pursuant to 28 U.S.C. § 1447(c)
for lack of subject matter jurisdiction, because the parties
are not completely diverse under 28 U.S.C. § 1332(a)(1).
To decide this issue, the Court must determine whether the
Plaintiffs joined Defendant Rinchem Company, Inc., a
non-diverse party and citizen of New Mexico, fraudulently to
defeat federal diversity jurisdiction. The Court concludes
that the Plaintiffs have stated possibly viable claims
against Rinchem Co., and thus, that Rinchem Co. is not
fraudulently joined. Accordingly, because the Court lacks
diversity jurisdiction under 28 U.S.C. § 1332(a)(1), the
Court will grant the Motion and remand the case to the First
Judicial District Court, County of Santa Fe, State of New
action involves allegations concerning serious injuries to
Plaintiffs Randy Bellman, Jr., Brett Booth, and Brittany
Booth, stemming from their mothers' exposure to chemical
products and substances while working at a semiconductor
manufacturing plant in Albuquerque, New Mexico. Defendants
NXP Semiconductors USA, Inc., Philips Electronics North
America Corp., and Philips Semiconductors, Inc. (the
“Signetics Defendants”) owned and operated the
plant at all times relevant to this action. Rinchem Co.
allegedly supplied the chemicals that the Plaintiffs contend
caused their injuries. R. Bellman, Jr., Brett Booth, and
Brittany Booth bring negligence, products liability, and
warranty claims against the Signetics Defendants and Rinchem
Co. Their parents -- Plaintiffs Jacqueline Bellman, Randy
Bellman, Vicki Goss, and Anthony Booth -- bring derivative
Court takes its recitation of the facts from the Complaint
for Personal Injuries, filed February 2, 2016 (Doc.
1-1)(filed January 8, 2016, in Bellman, Jr. v. NXP
Semiconductors USA Inc.,
D-101-CV-2016-00045)(“Complaint”). The Court
relies on this factual account for background purposes only,
particularly because the Signetics Defendants advance several
objections to the Complaint's allegations concerning
Rinchem Co. The Court recognizes that the Complaint's
factual account is largely the Plaintiffs' version of
Court will provide a brief overview of the parties and then
review the Complaint's factual allegations.
Overview of the Parties.
Bellman, Jr. was born on January 21, 1991. See
Complaint ¶ 14, at 3. J. Bellman and R. Bellman are his
parents. See Complaint ¶ 14, at 3. Brett Booth
and Brittany Booth were born on December 29, 1988.
See Complaint ¶¶ 15-16, at 3. Brett Booth
and Brittany Booth are siblings, and V. Goss and A. Booth are
their parents. See Complaint ¶¶ 15-16, at
Signetics Defendants are foreign corporations organized under
the laws of Delaware. See Complaint ¶¶
8-10, at 2. At all times relevant to this action, the
Signetics Defendants owned and operated a semiconductor
manufacturing facility in Albuquerque. See Complaint
¶ 18, at 3. The Signetics Defendants operated the
facility as “Signetics” or “Signetics
Corporation.” Complaint ¶ 18, at 3. Rinchem Co. is
a domestic corporation that allegedly supplied, transported,
formulated, reformulated, mixed, sold, and/or distributed
chemical products and substances to the Signetics Corp.
facility and its employees. See Complaint ¶ 11,
at 2; id. ¶¶ 22-23, at 5-6.
The Complaint's Factual Allegations.
April 1987 to 2000, J. Bellman worked at Signetics
Corp.'s Albuquerque facility manufacturing semiconductor
products or components. See Complaint ¶ 19, at
3. V. Goss worked at the facility in a similar capacity from
July 1983 to 1989. See Complaint ¶ 19, at 3-4.
While there, J. Bellman and V. Goss “worked with, in
proximity to and/or were exposed to, ” a wide variety
of chemical products and substances[1] that were used in the
manufacture of semiconductor products or components.
See Complaint ¶ 20, at 4. Rinchem Co. supplied,
and Signetics Corp. prescribed, specified, and approved,
these chemicals. See Complaint ¶¶ 23, 26,
at 6. Signetics Corp. monitored some of its employees'
exposure to these chemicals; generally monitored its
employees' medical, including reproductive, health;
tracked the incidence of adverse reproductive outcomes among
its employees' offspring; and tracked the potential
disease burden to its employees and their families that
exposure to these chemicals posed. See Complaint
¶¶ 28-31, at 6-7.
chemicals that Signetics Corp. used included known or
suspected teratogenic, genotoxic, and/or reproductively toxic
chemical products and/or substances. See Complaint
¶ 33, at 7. Before and during J. Bellman's and V.
Goss' employment at Signetics Corp.'s Albuquerque
facility, Signetics Corp. had “developed, approved
and/or promulgated industrial hygiene policies and procedures
to be followed” at the facility. Complaint ¶ 37,
at 9. These policies “did not include any warnings to
workers about the potential for reproductive harm resulting
from exposure to the [] chemical[s]” that the facility
used, Complaint ¶ 38, at 9, nor did they include
methods, processes, or controls to mitigate excessive
exposure to, or standards, regulations, or guidelines to
minimize the danger from exposure to, those chemicals,
see Complaint ¶¶ 39-41, at 10. Likewise,
although Signetics Corp. had training programs for its
employees, those programs did not include warnings about
reproductive harm that might result from chemical exposure,
such as “miscarriage, stillbirth and/or birth defects[]
among their offspring.” Complaint ¶¶ 43-44,
at 10. Finally, although employees in “wafer processing
areas” wore protective equipment, that equipment was
designed to protect Signetics Corp.'s semiconductor
products/components from particulates and not to protect
workers from chemical exposure. Complaint ¶ 51, at 11.
their periods of gestation, R. Bellman, Jr., Brett Booth, and
Brittany Booth all sustained injuries in utero that are
linked to their mothers' exposure to chemicals at
Signetics Corp. See Complaint ¶¶ 69-70, at
16. R. Bellman, Jr.'s injuries include pheochromocytoma,
Von Hippel-Lindau disease, adrenal gland tumors, other
tumors, resection of the adrenal glands, and internal
injuries. See Complaint ¶ 76, at 17. Brett
Booth's injuries include congenital heart defects, single
ventricle, transportation of the great arteries, and
cirrhosis of the liver, resulting in numerous heart surgeries
and a heart transplant. See Complaint ¶ 78, at
17. Brittany Booth experiences seizures as a result of her
chemical exposure. See Complaint ¶ 80, at 18.
Plaintiffs commenced this action on January 8, 2016, in the
First Judicial District Court, County of Santa Fe, State of
New Mexico. See Complaint at 1; Bellman, Jr. v.
NXP Semiconductors USA Inc., D-101-CV-2016-00045,
Register of Actions Activity. The Complaint asserts three
counts against the Signetics Defendants for (i) negligence,
see Complaint ¶¶ 32-81, at 7-18; (ii)
punitive damages, see Complaint ¶¶ 82-93,
at 18-23; and (iii) strict liability, see Complaint
¶¶ 104-17, at 27-29. The Complaint also asserts two
counts against Rinchem Co. for (i) negligence, see
Complaint ¶¶ 94-98, at 24-26; and (ii) breach of
express and implied warranties, see Complaint
¶¶ 99-103, at 26. R. Bellman, Jr., Brett Booth, and
Brittany Booth seek damages for medical care and treatment,
pain and suffering, lost earnings, loss of future earning
capacity, loss of future household services, and other
damages. See Complaint ¶¶ 119.a-d, at
29-30. J. Bellman, R. Bellman, V. Goss, and A. Booth bring
derivative claims for damages for interference in their
parent-child relationships, mental and emotional anguish,
medical expenses, and other injuries and damages.
See Complaint ¶¶ 120-123, at 30-31.
February 16, 2016, the Signetics Defendants removed the case
under 28 U.S.C. § 1446. See Notice of Removal
at 1, filed February 16, 2016 (Doc. 1)(“Notice of
Removal”). The Signetics Defendants invoke federal
diversity jurisdiction pursuant to 28 U.S.C. § 1332,
arguing that “[c]omplete diversity exists between the
properly joined parties to this action.” Notice of
Removal ¶¶ 10-16, at 3-4. The Signetics Defendants
say that, although Rinchem Co. -- a New Mexico citizen -- is
also named as a Defendant, its consent to removal is not
required, because it was “fraudulently joined.”
Notice of Removal ¶ 3, at 2 (citing, among others,
Dutcher v. Matheson, 733 F.3d 980, 987-88 (10th Cir.
2013)). They explain that removal cannot be defeated by
fraudulent joinder of a non-diverse resident defendant
against whom a plaintiff is unable to establish a cause of
action. See Notice of Removal ¶ 17, at 4
(citing Dutcher v. Matheson, 733 F.3d at 988). Here,
the Signetics Defendants argue, “New Mexico law
precludes Plaintiffs from recovering against
Rinchem[.]” Notice of Removal ¶ 18, at 5.
they aver, the Uniform Commercial Code's four-year
statute of limitations on personal injury claims predicated
on breach of warranty bars the Plaintiffs'
breach-of-warranty claim. See Notice of Removal
¶¶ 19-22, at 5-6 (relying on Badilla v.
Wal-Mart Stores East Inc., 2015-NMSC-029, 357 P.3d 936).
Second, they contend that New Mexico law precludes the
Plaintiffs' negligence claim against Rinchem Co., because
it “had no duty to warn the Plaintiffs regarding risks
associated with use of any chemicals it may have delivered to
the Signetics plant at any point in time, ” and because
“Rinchem did not manufacture or blend any of the
chemicals and provided Signetics . . . safety
information” and warnings about the chemicals. Notice
of Removal ¶ 30, at 9-10 (relying on Parker v. E.I.
Du Pont de Nemours & Co., 1995-NMCA-086, 909 P.2d 1
(“Parker”); Restatement (Second) of
Torts, § 388 cmt. l (Am. Law Inst. 1965)). The
Signetics Defendants contend that, accordingly,
“diversity jurisdiction exists because New Mexico law
precludes Plaintiffs' putative claims against
Rinchem.” Notice of Removal ¶ 17, at 4.
respect to diversity jurisdiction's amount-in-controversy
requirement, the Signetics Defendants contend that a
“fair reading” of the Complaint demonstrates that
the Plaintiffs' claims against them independently exceed
the $75, 000.00 minimum. Notice of Removal ¶¶
31-34, at 10-11. They aver that the “Plaintiffs'
allegations of injury are at least as significant as others
that have been found to satisfy the amount in controversy
requirement.” Notice of Removal ¶ 33, at 11
(relying on, among others, Gebbia v. Wal-Mart
Stores, 233 F.3d 880, 881-83 (5th Cir. 2000)). The
Signetics Defendants conclude that, because there is complete
diversity and an amount in controversy of more than $75,
000.00, this case is removable. See Notice of
Removal ¶ 34, at 11.
The Motion to Remand.
March 23, 2016, the Plaintiffs moved to remand the case to
state court. See Motion at 1. The Plaintiffs assert
that the Court does not have diversity-of-citizenship
jurisdiction, because all the Plaintiffs, as well as Rinchem
Co., are citizens of New Mexico for diversity purposes.
See Motion at 2. With respect to whether Rinchem Co.
was fraudulently joined, the Plaintiffs contend that
“‘the defendant seeking removal bears a heavy
burden of proving fraudulent joinder, and all factual and
legal issues must be resolved in favor of the
plaintiff.'” Motion at 2 (alteration
omitted)(quoting Dutcher v. Matheson, 733 F.3d at
988 (quoting Pampillonia v. RJR Nabisco, Inc., 138
F.3d 459, 461 (2d Cir. 1998))). The Plaintiffs aver that
fraudulent joinder requires either (i) “actual fraud in
the pleading of jurisdictional facts”; or (ii) the
“inability of the plaintiff to establish a cause of
action against the non-diverse party in state court.”
Motion at 2-3 (quoting Dutcher v. Matheson, 733 F.3d
at 988 (quoting Cuevas v. BAC Home Loans Servicing,
LP, 648 F.3d 242, 249 (5th Cir. 2011))(internal
quotation marks omitted). The Plaintiffs argue that the
Signetics Defendants have not met these standards.
the Plaintiffs posit that the Complaint states a viable
negligence claim against Rinchem Co. See Motion at
3. The Plaintiffs interpret the Notice of Removal as
asserting that the “sophisticated user” doctrine
bars negligence liability on these facts. Motion at 3. The
Plaintiffs argue that Parker, upon which the
Signetics Defendants principally rely, “in fact
demonstrates why fraudulent joinder cannot be found
here.” Motion at 3. The Plaintiffs note that, in
Parker, the Court of Appeals of New Mexico affirmed
the trial court's grant of summary judgment as to strict
liability and negligence claims asserted against Du Pont Co.,
a supplier of substances used in the manufacture of
artificial temporomandibular joints. See Motion at
3-4. With respect to strict liability, the Plaintiffs assert
that the Court of Appeals of New Mexico relied on
“DuPont's [sic] extensive and unrebutted factual
showing” that the substances it supplied were inert,
safe for use and were “not inherently defective or
dangerous, ” and that Du Pont Co. had no agency
relationship with the manufacturer. Motion at 4 (citing
Parker, 1995-NMCA-086 ¶¶ 14-15, 909 P.2d
at 6-7). The Plaintiffs contend that, based on this factual
showing, the Court of Appeals of New Mexico held that Du Pont
Co. had no duty to perform further tests or to provide
warnings to other consumers, including the plaintiffs.
See Motion at 4 (citing Parker,
1995-NMCA-086 ¶ 17, 909 P.2d at 7). Turning to
negligence, the Plaintiffs contend that the Court of Appeals
of New Mexico affirmed summary judgment, because Du Pont Co.
advised the manufacturer in writing that its substances
“were not made for medical use” and that a
medical study had found that the substance, when used in a
hip replacement cup, tended to abrade. Motion at 6 (citing
Parker, 1995-NMCA-086 ¶ 36, 909 P.2d at 11-12).
Plaintiffs assert that these holdings do not stand for an
“absolute rule of immunity for suppliers in
Rinchem's position; rather, their liability depends on
the facts in any given case.” Motion at 5. The
Plaintiffs posit, further, that this case is distinguishable
from Parker, because here the Plaintiffs are suing
the supplier as well as the “ultimate user of the
product in question, ” i.e., the Signetics
Defendants. Motion at 7. The Plaintiffs contend that the
Signetics Defendants “will of course strenuously
dispute plaintiffs' allegations about their knowledge of
the hazards of the substances to which the employee
plaintiffs were exposed.” Motion at 7. In the
Plaintiffs' view, the Signetics Defendants “have
simply raised a possible defense that Rinchem may or may
prove at trial, and the Signetics Defendants will be doing
all they can at trial to establish Rinchem's liability
and diminish their own.” Motion at 7.
Plaintiffs contend, moreover, that the sophisticated-user
doctrine cases upon which the Signetics Defendants rely are
inapposite, because none were decided in the removal context.
See Motion at 8. The Plaintiffs argue that, rather,
those cases “all concern trial or summary judgment
records.” Motion at 8. According to the Plaintiffs,
“the standard for a finding of fraudulent joinder is
‘more exacting than that for dismissing a claim under
Rule 12(b)(6)[ of the Federal Rules of Civil Procedure],
' let alone for summary judgment.” Motion at 8
(quoting Montano v. Allstate Indem. Co., 211 F.3d
1278, 2000 WL 525592, at *2 (10th Cir. 2000)(unpublished
table decision)). The Plaintiffs also argue that some courts
“have recognized that the sophisticated-user and
related doctrines are not appropriate for application as
grounds for a finding of fraudulent joinder.” Motion at
8 (relying on Sherman v. A.J. Pegno Const. Corp.,
528 F.Supp.2d 320 (S.D.N.Y. 2007)(Sullivan, J). Those courts,
the Plaintiffs contend, hold that a determination whether a
supplier gives adequate warnings to the purchaser of its
product “is necessarily fact-specific, and is not
suited for resolution in the removal context.” Motion
on the negligence issue, the Plaintiffs argue that
“there is no question that plaintiffs' pleadings
set out cognizable claims for relief under New Mexico law,
” and that the Signetics Defendants “simply
assert a defensive theory that Rinchem may itself eventually
plead and prove, even as defendants themselves will be
arguing the opposite.” Motion at 11. The Plaintiffs
contend that “[t]hese issues will be resolved on a
fully-developed factual record in state court, but they do
not form a basis for federal jurisdiction here.” Motion
at 11. The Plaintiffs conclude that, “[a]s there is
‘even a possibility that a state court would
find that the complaint states a cause of action against any
one of the resident defendants, the federal court must find
that the joinder was proper and remand the case to the state
court.'” Motion at 11 (emphasis in
original)(quoting Couch v. Astec Ind., Inc., 71
F.Supp.2d 1145, 1147 (D.N.M. 1999)(Baldock, J.)(quoting
Triggs v. John Crump Toyota, Inc., 154 F.3d 1284,
1287 (11th Cir. 1998))).
second to the Complaint's breach of warranty claim
against Rinchem Co., the Plaintiffs contend that, if Rinchem
Co. asserts the Uniform Commercial Code's four-year
statute of limitations as a defense, the Plaintiffs
“will argue that the tolling provision of N.M. Stat.
§ 37-1-10 applies.” Motion at 12. The Plaintiffs
aver that this provision “tolls the running of
limitations against incapacitated persons” and that it
applies here, because “the UCC provision upon which
defendants rely, N.M. Stat. § 55-2-725, provides in
subsection (4) that it ‘does not alter the law on
tolling of the statute of limitations.'” Motion at
12. Ultimately, the Plaintiffs argue, “[t]his will . .
. be a fact issue that cannot be resolved at the present
state.” Motion at 12.
Signetics Defendants responded on April 11, 2016.
See Signetics Defendants' Response Brief in
Opposition to Plaintiffs' Motion for Remand, filed April
11, 2016 (Doc. 17)(“Response”). The Signetics
Defendants contend that “upon specific allegations of
fraudulent joinder the court may pierce the pleadings, . . .
consider the entire record, and determine the basis for
joinder by any means available.” Response at 2 (quoting
Dodd v. Fawcett Pubs., Inc., 329 F.2d 82, 85 (10th
Cir. 1964))(internal quotation marks and alteration omitted).
Accordingly, the Signetics Defendants argue, the Court may
“pierce” the pleadings, evaluate the sufficiency
of the Complaint's factual allegations, and assess how
New Mexico law “may affect Plaintiffs' claims
against Rinchem.” Response at 2. In conducting this
analysis, the Signetics Defendants assert that the Court
should consider the removal standard “in conjunction
with the United States Supreme Court's recent
jurisprudence regarding the viability of complaints under a
Rule 12(b)(6) analysis.” Response at 3. The Signetics
Defendants argue that “[t]his analysis requires a
litigant to do more than simply recite the bare elements of a
claim, and in many ways resembles that applied to remand
motions where removal has been premised on a claim of
fraudulent joinder.” Response at 3 (citing Ashcroft
v. Iqbal, 556 U.S. 662
(2009)(“Iqbal”); Bell Atl. Corp. v.
Twombly, 550 U.S. 544
(2007)(“Twombly”)). Under these cases,
the Signetics Defendants posit, the Complaint's
allegations against Rinchem Co. “are deficient because
the complaint sets forth a litany of labels, conclusions, and
formulaic recitations, and there are glaring (and fatal)
omissions in the factual predicates that might otherwise
support those claims and render them
‘plausible.'” Response at 3.
reaching their legal argument, the Signetics Defendants
proffer several facts that they deem salient to the
Court's resolution of the Motion. See Response
at 4-9. They note that R. Bellman, Jr. sustained the injuries
alleged in the Complaint twenty-five years ago, and that
Brett and Brittany Booth sustained their alleged injuries
twenty-eight years ago, all during their respective gestation
periods. See Response at 4. They assert that the
Complaint contains no allegations of the nature and scope of
J. Bellman's and V. Goss' respective employment at
Signetics during their children's gestation periods, nor
does the Complaint contain allegations regarding the
chemicals with which J. Bellman and V. Goss would have come
in contact during their children's gestation periods.
See Response at 5. The Complaint is further
deficient, they assert, in that it contains no allegations
regarding how J. Bellman and V. Goss “would have
acquired percipient knowledge of Rinchem's provision of
any matériel to the Signetics' facility during
[their children's] gestation period[s].” Response
at 5. They note that the Complaint provides no specific
allegations of (i) how or when J. Bellman and V. Goss were
exposed to chemicals at Signetics Corp.; (ii) which of the
chemicals to which J. Bellman and V. Goss were exposed
Rinchem Co. supplied; or (iii) whether Rinchem Co. was the
“sole ‘supplier' of the enumerated chemical
products and substances during the ‘relevant' time
periods.” Response at 6. Indeed, they assert, the
Complaint's allegations with respect to Rinchem Co. are
all “conclusory”; the Complaint simply asserts
that Rinchem Co. had a duty to exercise reasonable care in
its manufacture and supply of the “generically
identified products, ” and that Rinchem Co. made
express and implied warranties, but it does not identify
which chemicals Rinchem Co. supplied, nor does it allege the
terms of Rinchem Co.'s warranties. Response at 7.
Signetics Defendants posit a contrary version of events.
See Response at 8. They assert that Rinchem Co.
“was not a manufacturer, ‘blender, ' or
designer of any of the chemicals enumerated in [the
Complaint.]” Response at 8 (citing Affidavit of Willaim
[sic] Moore ¶ 4, at 1 (executed February 16, 2016),
filed February 16, 2016 (Doc. 1-2)(“Moore
Aff.”)). They allow that Rinchem Co. “may have
delivered certain chemicals to Signetics that were sold to
Signetics by various manufacturers, but Rinchem's role
was limited to the transport or delivery of the chemicals,
and Rinchem was paid as a public warehouse to store,
transport, and deliver the chemicals.” Response at 8
(citing Moore Aff. ¶¶ 7-8, at 2). They aver that,
although “Rinchem occasionally sold certain low
purity/industrial grade chemicals that would not have been
appropriate for use in semiconductor production, Rinchem has
no records that any of those chemicals were ever sold to
Signetics.” Response at 8 (citing Moore Aff.
¶¶ 11-12, at 2-3). Accordingly, the Signetics
Defendants assert that Rinchem Co. “could not have
‘manufactured, blended, designed, marketed,
distributed, sold, and supplied' any of the chemicals
listed by Plaintiffs in a semiconductor quality grade.”
Response at 8 (citing Moore Aff. ¶¶ 4-7, at 1-2;
id. ¶¶ 10-11, at 2-3)(alterations
to the Plaintiffs' negligence claim against Rinchem Co.,
the Signetics Defendants contend that, given the above
factual analysis, the claim “is, at best,
‘theoretical' and therefore insufficient to justify
remand.” Response at 9 (quoting Great Plains Trust
Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d
305, 312 (5th Cir. 2002)). The Signetics Defendants assert
that (i) the “Plaintiffs have set forth a generic
laundry list of chemicals and chemical categories”;
(ii) the “Plaintiffs have not asserted specific
allegations as to how or when Ms. Bellman and Ms. Goss came
into contact with those chemicals during the 1988 and 1990
gestation periods . . ., merely asserting in conclusory
fashion that they were exposed to ‘some or all' of
those substances”; and (iii) the Complaint proffers
“a set of perfunctory ‘labels and
conclusions' to the effect that” Rinchem Co.
formulated, distributed, and supplied “some of the . .
. chemical products and substances.” Response at 9-10
(emphases omitted). The Signetics Defendants contend that
this “lack of factual specificity is precisely what the
Supreme Court has warned against.” Response at 10
(citing Iqbal, 556 U.S. at 678).
Signetics Defendants argue, moreover, that, “to defeat
diversity, Plaintiffs have joined a defendant with no
meaningful connection to their negligence claim.”
Response at 10. They advance that Rinchem Co. “was a
warehousing and transport/delivery entity, ” and that
it “did not ‘manufacture, blend, design, market,
distribute, or sell'” the chemicals to which the
Complaint refers. Response at 10. They posit that,
accordingly, the “Plaintiffs' negligence claim
against Rinchem is an attempt to camouflage a kind of
‘chain of distribution' strict liability theory
against Rinchem without having to satisfy the requirements
for such a claim.” Response at 10 (citing Smith v.
Bryco Arms, 2001-NMCA-090, ¶ 10, 33 P.3d 638). They
contend that, under New Mexico law, “there is no
liability imposed on all actors in the ‘chain of
distribution, '” and that the Plaintiffs are
attempting to impose such liability “on a warehousing
and delivery operation that had no legally consequential role
in the industrial uses to which delivered products have been
put.” Response at 11 (citations omitted). The Signetics
Defendants press that the “products cases that raise
negligence claims uniformly involve defendants that actually
manufactured, designed, or sold a product, ” and avow
that they “have not identified any New Mexico case in
which a viable products negligence action was brought based
on a defendant's simple transport and delivery of
materials designed, manufactured, and/or sold by
others.” Response at 12 (citations omitted). The
Signetics Defendants conclude that, “whether the court
assesses the ‘plausibility' or
‘possibility' of plaintiffs' negligence claim
under a sophisticated user analysis, a bulk supplier
analysis, or the pleading and ‘chain of
distribution' analysis . . ., no negligence cause of
action exists against Rinchem[.]” Response at 13.
the Complaint's warranty claims against Rinchem Co., the
Signetics Defendants maintain that the “claims arise
under the Uniform Commercial Code and are time-barred.”
Response at 14 (citing Badilla v. Wal-Mart Stores East
Inc., 2015-NMSC-029, 357 P.3d 936). They aver that the
Plaintiffs' “tolling argument . . . lacks merit,
” because the Complaint “plead[s] no grounds for
tolling . . ., nor have [the Plaintiffs] submitted affidavits
to support such an argument.” Response at 14. They
argue, further, that the Complaint's express warranty
claim is deficient, because “there are no allegations
(nor could there be) that Rinchem ‘sold' anything
to Plaintiffs or that in the course of that non-existent sale
Rinchem made express affirmations or representations to the
Plaintiffs regarding the nature of any goods or
products.” Response at 15. The Signetics Defendants
contend that an express warranty under New Mexico law and
associated UJIs requires “a sale between a buyer and
seller and some form of affirmation or representation by the
seller to the buyer that forms part of the basis of the
bargain.” Response at 15. On the Complaint's
implied warranty claim, the Signetics Defendants contend
that, under the UCC and the UJIs, an implied warranty
“customarily arises in the context of a sale, by a
merchant, to a buyer.” Response at 15-16. The Signetics
Defendants advance that “there are no allegations in
the complaint . . . that Rinchem and the Plaintiffs were
involved in any sale or that Rinchem held itself out to
Plaintiffs as a ‘merchant' within the meaning of
the Uniform Commercial Code.” Response at 16. Finally,
the Signetics Defendants contend that the Complaint's
implied warranty claim fails as a matter of law, because the
Plaintiffs were neither in “vertical” nor
“horizontal” privity with the Signetics
Defendants or Rinchem Co., as the UCC requires for statutory
warranties. Response at 16-17.
Plaintiffs filed a Reply on May 9, 2016. See
Plaintiffs' Reply Brief in Support of Their Motion for
Remand at 1, filed May 9, 2016 (Doc.
19)(“Reply”). The Plaintiffs begin by asserting
that the Response concedes the Motion's arguments
concerning the sophisticated-user doctrine and that it
impermissibly raises “entirely new grounds for
removal.” Reply at 1. The Plaintiffs contend that
“[a] removing defendant cannot raise new arguments for
federal jurisdiction outside the normal 30-day period for
removal, ” nor “can a defendant present new
grounds for removal for the first time in opposition to a
motion for remand.” Reply at 2 (quoting N.M. ex
rel. Balderas v. Valley Meat Co., LLC, 2015 U.S. Dist.
LEXIS 72874, at *25 (D.N.M. 2015)(Browning, J.)). Here, the
Plaintiffs argue, the Signetics Defendants “have not
sought leave to amend their notice of removal” and have
instead “raised entirely new contentions” as well
as “abandon[ed] any argument to support the theories in
the notice of removal.” Reply at 2-3. The Plaintiffs
request that the Court “decline to consider the
arguments raised in defendants' response, and confine its
review of this motion to the original grounds for fraudulent
joinder asserted in the notice of removal -- grounds which
defendants have not defended.” Reply at 4 (footnote
case, the Plaintiffs contend that the Signetics
Defendants' “new arguments” do not establish
fraudulent joinder. Reply at 4. The Plaintiffs concede the
Signetics Defendants' assertion that “there is no
automatic liability on all actors in a chain of distribution,
” but argue that this “truism . . . proves
nothing.” Reply at 4-5. The Plaintiffs allow that they
“must establish, at trial, facts that would support a
finding of negligence against Rinchem, but at the present
stage defendants must establish facts that conclusively
negate such a possibility.” Reply at 5. The Plaintiffs
assert that the Signetics Defendants “have made no such
showing, ” because they
merely argue that Rinchem never sold any products to
Signetics to which plaintiffs would have been exposed, but
even defendants acknowledge that a defendant in a negligence
case need not have sold a product. As defendants state,
N.M.U.J.I. 13-1402 states that a supplier “must use
ordinary care to warn of risk of injury.” Response at
11. And while defendants state that they “do not
concede that Rinchem should even be deemed a ‘supplier,
'” and that “[a] transporter of a product is
not necessarily the ‘supplier' of that product[,
]” id. at 11 n. 2, these are simply factual
issues that remain to be controverted through discovery and
Reply at 5 (emphasis and alterations in original). Thus, the
Plaintiffs request that the Court remand the case for lack of
subject-matter jurisdiction pursuant to 28 U.S.C. §
1447(c). See Reply at 5.
Court held a hearing on the Motion on July 11, 2016.
See Draft Transcript of Motion Hearing (taken July
11, 2016)(“Tr.”).[2] The Plaintiffs began
argument by addressing the breach-of-warranty claim against
Rinchem Co. See Tr. at 4:13-5:13 (Siegel). The
Plaintiffs contended that, should Rinchem Co. raise a
statute-of-limitations affirmative defense, they will
“plead a tolling on the basis of incapacity.” Tr.
at 4:14-23 (Siegel). The Plaintiffs thus concluded that they
have a viable breach-of-warranty claim. See Tr. at
5:8-13 (Siegel). As to negligence, the Plaintiffs argued that
the Court's decision in N.M. ex rel. Balderas v.
Valley Meat Co., LLC provides clear guidance.
See Tr. at 5:14-25 (Siegel). The Plaintiffs averred
that the Court held that fraudulent joinder requires a
showing that “there is no possibility that the
plaintiff might recover on her stated state [claim.]”
Tr. at 6:6-14 (Siegel). The Plaintiffs asserted that the
Signetics Defendants have not made such a showing with
respect to the negligence claim. See Tr. at 6:14-15
(Siegel). Here, they averred, there is no evidence that would
obviously and categorically preclude negligence liability
against Rinchem Co., particularly on the sophisticated-user
doctrine, the primary basis upon which the Notice of Removal
relies for removing the case. See Tr. at 6:25-8:11
(Siegel). The Plaintiffs added that the Court's cases
establish that “this showing is even harder than the
showing required to get a case dismissed at the pleadings
stage under Federal Rule 12(b)(6).” Tr. at 8:11-15
(Siegel). The Plaintiffs allowed that the sophisticated-user
doctrine defense may be viable here, but asserted that there
has not yet been a conclusive evidentiary showing that
Rinchem Co. is entitled to the defense. See Tr. at
8:18-9:20 (Siegel). The Plaintiffs maintained that, absent
more extensive discovery, it would be premature to conclude
at the outset that Rinchem Co. is not liable for negligence.
See Tr. at 10:20-11:10 (Siegel). See also
id. at 11:8-10 (Siegel)(“[W]e don't think that
is appropriate for resolution as part of a fraudulent joinder
[] inquiry.”).
Court interposed, stating that it does not believe a
plaintiff has “an obligation to plead all the facts []
to avoid [] the statute of limitations defense.” Tr. at
11:23-25 (Court). The Court noted, however, that a
complaint's factual allegations can establish that a
claim is time-barred; for example, a complaint that pleads
only dates is “subject to a [motion] to dismiss.”
Tr. at 11:25-12:5 (Court). The Court noted that, here,
“just from a date standpoint, ” the
Complaint's allegations appear to be time-barred and that
it is unclear whether further discovery would be
“enough to avoid the statute of limitations.” Tr.
at 12:10-14 (Court). In response, the Plaintiffs stated that
New Mexico state courts permit plaintiffs to allege tolling
either in the complaint or in response to a motion to
dismiss, and that, accordingly, failure to
“affirmatively ple[a] a basis for tolling would not be
fatal to our claims.” Tr. at 13:1-12 (Siegel). The
Plaintiffs added that, “under the normal course of
events in federal court too, we would be allowed to raise a
tolling defense.” Tr. at 13:21-23 (Siegel). See
id. at 13:23-14:1 (Siegel)(“[A]n affirmative
defense . . . may never be[] raised by the defendant so an
exception to the affirmative defense need not initially be
pled by the plaintiff.”). The Plaintiffs concluded that
“this sort of limbo status between the federal and
state pleading practice here . . . on fraudulent
joinder” should not lead the Court to disregard
“how this would work out under either pleading
regime.” Tr. at 14:2-9 (Siegel).
Signetics Defendants took up argument, addressing first the
standard for removal. See Tr. at 18:24 (Hardy). The
Signetics Defendants contended that “the presumption
against removal, ” which the Court “has
recognized on numerous occasions . . . [, ] cannot be
interpreted as hostility toward removal.” Tr. at
18:24-19:5 (Hardy). The Signetics Defendants added that
“the evidentiary standard that applies in evaluating
removal jurisdiction . . . is preponderance of the
evidence” and that removal on the basis of diversity
jurisdiction is proper if there is no “reasonable basis
for the plaintiff's claim” against a non-diverse
defendant. Tr. at 19:6-18 (Hardy)(asserting that the
Court's cases have equated this standard with the
“no possibility of a claim” standard that the
Plaintiffs argue applies). The Signetics Defendants also
noted that “the standard for fraudulent joinder is
higher than the standard that needs to be considered on a
motion to dismiss.” Tr. at 19:18-22 (Hardy).
Court interjected and speculated that it will “have to
do a boatload of work to decide” the complex issue
whether New Mexico state courts recognize the
sophisticated-user doctrine. Tr. at 19:23-20:7 (Court). The
Court extrapolated that, if the issue requires such extensive
work, it likely does not meet fraudulent joinder's
heightened standard. See Tr. at 20:4-6 (Court). In
response, the Signetics Defendants asserted that the
negligence claim must be plausible under Twombly and
Iqbal. See Tr. at 20:8-16 (Hardy). The
Court observed that those cases seem inapposite in the
context of a motion to remand, where fraudulent joinder is
the primary issue, because in this context the Court can
“consider anything, ” including facts that do not
appear on the complaint's face. Tr. at 20:17-21:4
(Court). The Signetics Defendants replied that those cases
“inform the standard of fraudulent joinder, ”
because the cases that involve fraudulent joinder and removal
hold that the standard is “higher[] than the standard
on the motion to dismiss.” Tr. at 21:8-20 (Hardy,
Court). The Signetics Defendants added that “whether a
claim is implausible or plausible is similar to whether
it's possible or impossible.” Tr. at 23:1-4
(Hardy). The Signetics Defendants allowed, however, that
these standards involve different burdens, i.e.,
that the Signetics Defendants have the burden of showing that
the Complaint's allegations against Rinchem Co. are
“impossible” while the Plaintiffs' burden is
to state a “plausible” claim. Tr. at 23:1-12
Signetics Defendants next pivoted to the issue of Rinchem
Co.'s precise role in the case. See Tr. at
23:13-17 (Hardy). The Signetics Defendants asserted that
“Rinchem did not manufacture or blend any chemicals,
” and that “it is primarily a warehousing ground
transportation and chemical waste collection company.”
Tr. at 23:16-23 (Hardy, Court). The Signetics Defendants
explained that Rinchem Co.'s customers were chemical
manufacturers, and that it primarily warehoused and
transported chemicals for companies like Signetics Corp., but
that Rinchem Co. was “paid for doing that by the
chemical manufacturers, not by facilities[] such as
Signetics.” Tr. at 23:20-24:6 (Hardy). In essence, the
Signetics Defendants stated, Signetics Corp. purchased
chemicals directly from manufacturers, and Rinchem Co.
warehoused and delivered those chemicals, but it did not mix
or repackage them. See Tr. at 24:7-19 (Court,
Hardy). The Signetics Defendants acknowledged that Rinchem
Co. directly sold some chemicals to facilities, but argued
that “they would not have been at a semiconductor
grade.” Tr. at 24:25-25:5 (Hardy).
to the Complaint's negligence claims against Rinchem Co.,
the Signetics Defendants asserted that “the basic
issue” is that “Rinchem had no duty to warn the
plaintiffs of risks associated with any chemicals it
delivered. It did not manufacture or blend any of the
chemicals.” Tr. at 26:24-27:2 (Hardy). The Signetics
Defendants noted that the Restatement (Second) of Torts
provides that a supplier of a chattel is liable if the
supplier (i) “knows, or has reason to know that the
chattel is or is likely to be dangerous for the use for which
it is supplied”; (ii) “has no reason to believe
that those for whose use the chattel is supplied will realize
its dangerous condition”; and (iii) “fails [to]
exercise reasonable care to inform them of its dangerous
condition or of the facts which make it likely to be
dangerous.” Tr. at 28:1-15 (Hardy)(relying on
Restatement (Second) of Torts, § 388). The Signetics
Defendants argued that Rinchem Co. can assert a
“sophisticated user defense” under these
provisions, because “Signetics was a regular user of
the chemicals” and had “manufacturing safety
information. So Rinchem would have had no reason to believe
that Signetics wasn't [aware] of the risks.” Tr. at
28:16-29:12 (Hardy). Thus, the Signetics Defendants
concluded, the Plaintiffs cannot recover against Rinchem Co.,
because “they can't establish that Rinchem was
negligent.” Tr. at 30:1-3 (Hardy).
Signetics Defendants then briefly addressed Sherman v.
A.J. Pegno Const. Corp., which the Plaintiffs cite for
the proposition that negligence liability “can't be
decided prior to discovery.” Tr. at 31:1-15 (Hardy).
That case is inapposite, the Signetics Defendants argued,
because it involves a manufacturer and seller of a product,
“so the issue was the adequacy of the warning under the
bulk supplier doctrine which is similar to sophisticated user
but it's a little bit different.” Tr. at 31:2-10
(Hardy). The Signetics Defendants also noted that, in
Parker, the Court of Appeals of New Mexico held that
“the adequacy of a warning does not become a factual
issue until it is first determined that a duty to warn
exists.” Tr. at 31:11-15 (Hardy). The Signetics
Defendants contended that, here, because Rinchem Co. did not
have a duty to warn pursuant to the sophisticated-user
doctrine, there is no factual issue whether such a warning
was adequate. See Tr. at 31:16-21 (Hardy)(arguing
that “it's not a situation where discovery is
required”). The Signetics Defendants asserted that this
analysis resolves the Court's concern as to the
complexity of the sophisticated-user doctrine's
applicability in New Mexico state courts, because it
illustrates that the doctrine is “clear” and
“has been met.” Tr. at 31:22-32:4 (Hardy).
Finally regarding negligence, the Signetics Defendants
contended that the issues that the Notice of Removal raises
are the same as in the Response, because they all fall under
the “umbrella” of Rinchem Co.'s duty to warn.
Tr. at 32:5-16 (Hardy).
to the Complaint's breach-of-warranty claims, the
Signetics Defendants argued that the Plaintiffs
“don't identify what the express warranties were,
or to whom they were made.” Tr. at 32:17-21 (Hardy).
The Signetics Defendants contended that the Supreme Court of
New Mexico has held that the UCC's four-year statute of
limitations governs breach-of-warranty claims and that
“those claims accrue at the time tendered, regardless
of a lack of knowledge of the breach.” Tr. at 33:3-9
(Hardy)(referencing Badilla v. Wal-Mart Stores East
Inc.). The Plaintiffs' warranty claims are thus
time-barred, the Signetics Defendants said, because the
Plaintiffs' in utero injuries occurred between 1988 and
1991, and because “there is no evidence at all that the
statute was tolled” since then, i.e., the
Complaint does not allege incapacity and the Plaintiffs have
not provided affidavits of incapacity. Tr. at 33:10-21
(Hardy). See id. at 33:21-22 (Hardy)(“There is
just no evidence at all on that point.”). The Signetics
Defendants further contended that the Complaint's
warranty allegations fail to state a claim, because the
UCC's warranty provisions apply to “sellers,
” and “Rinchem was not a seller of any
semiconductor grade chemicals.” Tr. at 34:10-19
(Hardy). “There is also no privity between Rinchem and
plaintiffs, ” the Signetics Defendants argued, and
“there is no privity between the seller and the
employees of the buyer.” Tr. at 34:10-19 (Hardy).
Finally with respect to breach of warranty, the Signetics
Defendants contended that the tolling statute “applies
to children --it applies to minors and incapacitated
persons” but not to fetuses, as the Plaintiffs appear
to allege. Tr. at 34:23-35:5 (Hardy).
Signetics Defendants returned to the issue whether the
Response asserts new reasons for removal that the Notice of
Removal does not raise. See Tr. at 35:10 (Hardy). In
the Signetics Defendants' view, “the case law
precludes defendants from asserting a new basis for
jurisdiction in its response, ” e.g., a new
theory or a new statute. Tr. at 35:18-20 (Hardy). Here, the
Signetics Defendants explained, the Notice of Removal and the
Response both assert “diversity based on fraudulent
joinder because plaintiffs cannot [su]stain their warranty
and negligence claims under New Mexico law.” Tr. at
35:20-24 (Hardy). The Signetics Defendants stressed that the
“does not construe notices of removal so narrowly that
defendants cannot flush them out or basically say anything
else in their response to the motion to remand.” Tr. at
35:24-36:3 (Hardy). The Signetics Defendants suggested, for
example, that a defendant would be precluded from
“trying to change from diversity jurisdiction to
federal question jurisdiction, ” but that a defendant
is “permitted to flush out” grounds for removal
in its response to a motion for remand. Tr. at 36:14-37:1
Court then directed Rinchem Co. to take up argument.
See Tr. at 37:25-38:2 (Court). Rinchem Co. began by
explaining that it contracted with chemical companies, such
as Du Pont Co., to deliver chemicals to clients in
Albuquerque, such as Signetics Corp. See Tr. at
39:3-7 (Bisong). Rinchem Co. averred that it did not
repackage or otherwise alter the chemicals that the Complaint
lists before delivering them to Signetics Corp. See
Tr. at 38:8-19 (Court, Bisong)(stating that “[i]t was
simply a delivery”). The Court questioned how Rinchem
Co. was paid, to which Rinchem Co. responded that Signetics
Corp. directly paid the chemical supplier and that the
supplier, in turn, paid Rinchem Co. See Tr. at
39:20-40:12 (Court, Bisong)(clarifying that Rinchem Co.
directly sold some chemicals to clients, but that it did not
sell to Signetics Corp. during the relevant time period). The
Court asked whether Rinchem Co. “strictly
warehous[ed]” chemicals, to which Rinchem Co. said
“[c]orrect.” Tr. at 40:13-21 (Court, Bisong).
Finally, Rinchem Co. argued that the Complaint, while listing
a host of chemicals to which J. Bellman and V. Goss were
exposed at Rinchem Corp., does not specify which of those
chemicals Rinchem Co. allegedly delivered to Signetics Corp.,
nor does it isolate the specific chemicals that caused the
children's injuries. See Tr. at 41:2-15
(Bisong).
Court pivoted back to the Plaintiffs and inquired why Rinchem
Co. is not entitled to the sophisticated-user defense,
assuming the Supreme Court of New Mexico would adopt the
defense as the Restatement (Second) of Torts defines it.
See Tr. at 41:6-12 (Court). The Plaintiffs responded
that their position is not that the sophisticated-user
defense is unviable, but rather that the defense is “an
intensely fact laden matter” that requires further
discovery to resolve. Tr. at 41:13-17 (Siegel). The
Plaintiffs posited, however, that Rinchem Co. is unable to
establish any of the sophisticated-user defense's three
prongs. See Tr. at 41:18-21 (Court, Siegel). The
Plaintiffs suggested that Rinchem Co. would have particular
difficulty establishing the second prong, because there is no
evidence “as to what Signetics knew or didn't know
about the hazardousness” of the chemicals that Rinchem
Co. supplied. Tr. at 43:16-25 (Siegel). The Plaintiffs
allowed that the sophisticated-user defense may be viable,
but argued that “it has not been established as a
matter of law, and we say it can't be without
discover[y].” Tr. at 44:14-17 (Siegel). Likewise, the
Plaintiffs asserted that “there is a general duty on
the part of all actors to exercise ordinary care in the
circumstances” and that further discovery is necessary
to determine whether Rinchem Co. breached that duty. Tr. at
45:10-46:10 (Siegel). Thus, the Plaintiffs averred that these
issues are “not appropriate for removal and
remand.” Tr. at 46:8-10 (Siegel). Indeed, the
Plaintiffs pressed, because resolution of these issues would
require the Court to “plung[e] into [] complicated
question[s] of state law, both legally and factually, ”
the Court should remand the case. Tr. at 46:24-47:2 (Siegel).
briefly to the tolling issue, the Plaintiffs argued that the
statute of limitations tolls when “affected
children['s] . . . limitations period would start
accruing” and that there is no authority “for the
idea that it can't apply to people who were damaged in
the womb.” Tr. at 47:3-12 (Siegel). The Plaintiffs also
argued that, contrary to the Signetics Defendant's
assertion that tolling does not apply in breach-of-warranty
cases, “the breach of warranty statute itself [] says .
. . it does not alter the established law of [to]lling in
this state.” Tr. at 47:13-19 (Siegel).
Court interjected and inquired whether the Plaintiffs dispute
that Rinchem Co. “doesn't do anything to these
chemicals” and that “it simply is a
warehouse.” Tr. at 48:6-9 (Siegel). In reply, the
Plaintiffs agreed that Rinchem Co. is a warehouse, but
asserted that “it also is a supplier.” Tr. at
48:10-12 (Siegel). The Plaintiffs argued that, accordingly,
Rinchem Co. can be liable for negligence as a seller or as a
transporter of chemicals. See Tr. at 48:11-14
(Siegel). The Court questioned, as a follow-up, what the
Plaintiffs intend to tell “the jury that Rinchem could
do [or] should have done, ” e.g., “not
sell the product, make a disclosure, what is it that they
should have done.” Tr. at 48:25-49:4 (Court). The
Plaintiffs answered that they will tell the jury that Rinchem
Co. had a duty to “[w]arn about the hazards of products
that they are either warehousing and conveying or in some
instances selling, or if the knowledge [] rose to a certain
level” that Rinchem Co. had a duty to “stop
sell[ing] or conveying the product.” Tr. at 49:5-9
(Siegel).
Court speculated that, if New Mexico state courts adopt the
sophisticated-user defense, this case's facts likely
create the model circumstances in which the defense would
apply. See Tr. at 50:9-17 (Court). In rejoinder, the
Plaintiffs reiterated that they do not dispute that the
defense may apply, but maintained that “it cannot be
the basis for removal” on the grounds of fraudulent
joinder. Tr. at 50:18-22 (Siegel). The Court queried why, if
the Plaintiffs' joinder of Rinchem Co. was not a
fraudulent attempt to defeat diversity jurisdiction, they did
not also sue the chemical manufacturers. See Tr. at
50:23-24 (Court). See also id. at 50:1-5
(Court)(“[I]f you really want to . . . defeat diversity
jurisdiction why didn't you camouflage it by suing the
chemical manufacturers as well that they're buying
from.”). The Plaintiffs responded that their theory of
the case is that the Signetics Defendants caused the chemical
exposure that resulted in the Plaintiff children's birth
defects, but stated that “further discovery [may]
suggest that we ought to sue the particular maker of one of
those chemicals.” Tr. at 6-12 (Siegel). Despite this
answer, the Court maintained that “it raises a red
flag” that the Plaintiffs are “not suing the
manufacturers who are probably the ones that have much better
knowledge about the dangerousness of these chemicals than a
warehouse person.” Tr. at 51:20-24 (Court).
Court further suggested that the law does not require a
warehousing operation, such as Rinchem Co., to disclose the
dangerous condition of the chemicals that it supplies.
See Tr. at 54:16-18 (Court). The Plaintiffs
demurred, arguing that Rinchem Co. is liable if it knows or
has reason to know that the chemicals it supplies are
dangerous and has no reason to believe that the purchaser,
i.e. Signetics Corp., realizes the dangerous
condition. See Tr. at 54:19-24 (Siegel). The
Plaintiffs stated that they are entitled to a chance to prove
these facts through additional discovery and that, in their
view, such matters are not appropriate for a fraudulent
joinder finding. See Tr. at 55:2-11 (Siegel). The
Court, however, posited that fraudulent joinder does not
always require discovery and noted that it struggled to see
how the Plaintiffs will overcome the sophisticated-user
defense. See Tr. at 55:12-18 (Court). The Plaintiffs
again pressed that their pleadings are not presently
conclusive and that the Signetics Defendants' knowledge
of the chemicals' dangerousness has not yet been
established as a matter of law. See Tr. at 55:19-24
(Siegel). The Plaintiffs added that the Signetics Defendants
will “challenge and dispute the idea that they were
sophisticated users.” Tr. at 56:19-57:5 (Siegel). The
Plaintiffs posited that, in this context, where Rinchem Co.
argues that the Signetics Defendants were sophisticated
users, and the Signetics Defendants maintain that they were
not sophisticated users, Rinchem Co.'s joinder could not
be fraudulent. See Tr. at 58:4-11 (Siegel).
heard argument from all parties, the Court stated that it was
inclined to remand the case, “because of the very high
standard for fraudulent joinder.” Tr. at 59:4-9
(Court). The Court allowed that the parties' arguments at
the hearing “may have tightened up the issue a little
bit, ” but suggested that it was still inclined to
remand the case. Tr. at 59:9-12 (Court). The Court noted that
the existence of factual issues pertaining to the
sophisticated-user defense likely will warrant remand,
“because that discovery should take place in state
court rather than here.” Tr. at 59:16-20 (Court).
Still, the Court declined to issue an oral ruling, because
these issues' complexity requires careful consideration.
See Tr. at 60:1-4 (Court)(“[T]his is going to
take a little bit of work for me to be satisfied th[at] this
goes back to state court and I'm not inclined to conclude
that today.”).
REGARDING DIVERSITY JURISDICTION
“Subject-matter
jurisdiction under 28 U.S.C. § 1332(a)(1) requires: (i)
complete diversity among the parties; and (ii) that
‘the matter in controversy exceeds the sum or value of
$75, 000, exclusive of interest and costs.'”
Thompson v. Intel Corp., 2012 U.S. Dist. LEXIS
126311, at *12 (D.N.M. 2012)(Browning, J.)(citing 28 U.S.C.
§ 1332(a)). As the Court has previously explained,
“[t]he Supreme Court of the United States has described
this statutory diversity requirement as ‘complete
diversity, ' and it is present only when no party on one
side of a dispute shares citizenship with any party on the
other side of a dispute.” McEntire v. Kmart
Corp., 2010 U.S. Dist. LEXIS 13373, at *3 (D.N.M.
2010)(Browning, J.)(citing Strawbridge v. Curtiss, 7
U.S. (3 Cranch) 267, 267-68 (1806), overruled in part by
Louisville & N. R. Co. v. Mottley, 211 U.S. 149
(1908); McPhail v. Deere & Co., 529 F.3d 947,
951 (10th Cir. 2008)). The amount-in-controversy requirement
is an “estimate of the amount that will be put at issue
in the course of the litigation.” Valdez v. Metro.
Prop. & Cas. Ins. Co., 867 F.Supp.2d 1143, 1163
(D.N.M. 2012)(Browning, J.)(citing McPhail v. Deere &
Co., 529 F.3d at 956). The Court will discuss the two
diversity jurisdiction purposes, a person's domicile
determines citizenship. See Crowley v. Glaze, 710
F.2d 676, 678 (10th Cir. 1983). “A person's
domicile is defined as the place in which the party has a
residence in fact and an intent to remain indefinitely, as of
the time of the filing of the lawsuit.” McEntire v.
Kmart Corp., 2010 U.S. Dist. LEXIS 13373, at *3 (citing
Crowley v. Glaze, 710 F.2d at 678). See
Freeport-McMoRan, Inc. v. KN Energy, Inc., 498 U.S. 426,
428 (1991)(“We have consistently held that if
jurisdiction exists at the time an action is commenced, such
jurisdiction may not be divested by subsequent
events.”). If neither a person's residence nor the
location where the person has an intent to remain can be
established, the person's domicile is that of his or her
parents at the time of the person's birth. See Gates
v. Comm'r of Internal Revenue, 199 F.2d 291, 294
(10th Cir. 1952)(“[T]he law assigns to every child at
its birth a domicile of origin. The domicile of origin which
the law attributes to an individual is the domicile of his
parents. It continues until another domicile is lawfully
acquired.”). Additionally, “while residence and
citizenship are not the same, a person's place of
residence is prima facie evidence of his or her
citizenship.” McEntire v. Kmart Corp., 2010
U.S. Dist. LEXIS 13373, at *3 (citing State Farm Mut.
Auto. Ins. Co. v. Dyer, 19 F.3d 514, 520 (10th Cir.
1994)). A corporation, on the other hand, is
“‘deemed to be a citizen of any State by which it
has been incorporated and of the State where it has its
principal place of business.'” Gadlin v. Sybron
Int'l Corp., 222 F.3d 797, 799 (10th Cir.
2000)(quoting 28 U.S.C. § 1332(c)(1)).
statutory amount-in-controversy requirement, which presently
stands at $75, 000.00, must be satisfied as between a single
plaintiff and a single defendant for a federal district court
to have original jurisdiction over the dispute; “a
plaintiff cannot aggregate independent claims against
multiple defendants to satisfy the amount-in-controversy
requirement, ” nor can multiple plaintiffs aggregate
their claims against a single defendant to exceed the
threshold. Martinez v. Martinez, 2010 U.S. Dist.
LEXIS 38109, at *18 (D.N.M. 2010)(Browning, J.). If multiple
defendants are jointly liable, or jointly and severally
liable, on some of the claims, however, the amounts of those
claims may be aggregated to satisfy the amount-in-controversy
requirement as to all defendants jointly liable for the
claims. See Alberty v. W. Sur. Co., 249 F.2d 537,
538 (10th Cir. 1957); Martinez v. Martinez, 2010
U.S. Dist. LEXIS 38109, at *18. Similarly, multiple
plaintiffs may aggregate the amounts of their claims against
a single defendant if the claims are not “separate and
distinct.” Martin v. Franklin Capital Corp.,
251 F.3d 1284, 1292 (10th Cir. 2001)(Seymour, C.J.),
abrogated on other grounds by Dart Cherokee Basin
Operating Co. v. Owens, 135 S.Ct. 547 (2014). Multiple
claims by the same plaintiff against the same defendant may
be aggregated, even if the claims are entirely unrelated.
See 14AA Charles A. Wright, Arthur R. Miller, Edward
H. Cooper, Vikram D. Amar, Richard D. Freer, Helen Hershkoff,
Joan E. Steinman, & Catherine T. Struve, Federal
Practice and Procedure, Jurisdiction § 3704, at
566-95 (4th ed. 2011). While the rules on aggregation sound
complicated, they are not in practice: if a single plaintiff
-- regardless whether he or she is the only plaintiff who
will share in the recovery -- can recover over $75, 000.00
from a single defendant -- regardless whether the defendant
has jointly liable co-defendants -- then the court has
original jurisdiction over the dispute between that plaintiff
and that defendant. The court can then exercise supplemental
jurisdiction over other claims and parties that “form
part of the same case or controversy under Article III,
” 28 U.S.C. § 1367(a), meaning that they
“derive from a common nucleus or operative fact,
” United Mine Workers of Am. v. Gibbs, 383
U.S. 715, 725 (1966).
of the amount-in-controversy requirement must be established
by a preponderance of the evidence. See McPhail v. Deere
& Co., 529 F.3d at 953. In the context of
establishing an amount-in-controversy, the defendant seeking
removal could appear to be bound by the plaintiff's
chosen amount of damages in the complaint, which would seem
to allow a plaintiff to avoid federal jurisdiction
“merely by declining to allege the jurisdictional
amount [in controversy].” McPhail v. Deere &
Co., 529 F.3d at 955. The Tenth Circuit's decision
in McPhail v. Deere & Co. has foreclosed such an
option from a plaintiff who wishes to remain in state court.
McPhail v. Deere & Co. holds that a
defendant's burden in establishing jurisdictional facts
is met if the defendant proves “jurisdictional facts
that make it possible that $75, 000 is in play.” 529
F.3d at 955.
Supreme Court recently clarified that a defendant seeking
removal to federal court need only include in the notice of
removal a plausible allegation that the amount in controversy
exceeds the jurisdictional threshold. See Dart Cherokee
Basin Operating Co., LLC v. Owens, 135 S.Ct. at 554. The
district court should consider outside evidence and find by a
preponderance of the evidence whether the amount in
controversy is satisfied “only when the plaintiff
contests, or the court questions, the defendant's
allegation.” Dart Cherokee Basin Operating Co., LLP
v. Owens, 135 S.Ct. at 554.
REGARDING REMOVAL AND REMAND
civil action filed in state court satisfies the requirements
for original federal jurisdiction --meaning, most commonly,
federal-question or diversity jurisdiction -- the defendant
may invoke 28 U.S.C. § 1441(a) to remove the action to
the federal district court “embracing the place where
such action is pending.” 28 U.S.C. § 1441(a).
See Huffman v. Saul Holdings LP, 194 F.3d 1072, 1076
(10th Cir. 1999)(“‘When a plaintiff files in
state court a civil action over which the federal district
courts would have original jurisdiction based on diversity of
citizenship, the defendant or defendants may remove the
action to federal court.'”)(quoting Caterpillar
Inc. v. Lewis, 519 U.S. 61, 68 (1996)). In a case with
multiple defendants, there must be unanimous consent to
removal; any one defendant may spoil removal and keep the
case in state court. See 28 U.S.C. §
1446(b)(2)(A). Only true defendants have removal rights:
plaintiffs defending counterclaims and third-party defendants
may not remove an action, and their consent is not required
for removal if all the true defendants consent. See
Hamilton v. Aetna Life & Cas. Co., 5 F.3d 642 (2d
Cir. 1993); Wiatt v. State Farm Ins. Co., 560
F.Supp.2d 1068 (D.N.M. 2007)(Browning, J.). “A
plaintiff objecting to the removal may file a motion asking
the district court to remand the case to state court.”
Huffman v. Saul Holdings LP, 194 F.3d at 1076
(citing Caterpillar Inc. v. Lewis, 519 U.S. at 69).
remove a case based on diversity, the diverse defendant must
demonstrate that all of the usual prerequisites of diversity
jurisdiction are satisfied. Under 28 U.S.C. § 1332(a), a
federal district court possesses original subject-matter
jurisdiction over a case when the parties are diverse in
citizenship and the amount in controversy exceeds $75,
000.00. See 28 U.S.C. § 1332(a); Johnson v.
Rodrigues (Orozco), 226 F.3d 1103, 1107 (10th Cir.
2000). Diversity between the parties must be complete.
See Caterpillar Inc. v. Lewis, 519 U.S. at 68;
Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1225
(10th Cir. 2004). In addition to the requirements of original
jurisdiction, § 1441(b)(2) lays out the
“forum-defendant rule, ” which provides that a
case may not be removed on the basis of diversity
jurisdiction if any defendant is a citizen of the state in
which the state-court action was brought. The Tenth Circuit
that § 1441(b)(2) -- the so-called forum-defendant rule
-- provides as a separate requirement that “[a] civil
action otherwise removable solely on the basis of [diversity]
jurisdiction . . . may not be removed if any of the parties
in interest properly joined and served as defendants is a
citizen of the State in which such action is brought.”
Brazell v. Waite, 525 F.App'x 878, 884 (10th
Cir. 2013)(unpublished)(alterations in original)(quoting 28
U.S.C. § 1441(b)(2))). The forum-defendant rule applies
to cases removed under only diversity jurisdiction; a
defendant may remove a case brought against it in its home
state on the basis of federal-question jurisdiction.
See 28 U.S.C. § 1441(b). Last, a case cannot be
removed if it began with a nondiverse party or a
forum-citizen defendant, and only later came to satisfy the
requirements of removal jurisdiction, unless: (i) the
plaintiff voluntarily dismissed the removal-spoiling party,
see DeBry v. Transamerica Corp., 601 F.2d 480, 488
(10th Cir. 1979);[3]Flores-Duenas v. Briones, 2013
U.S. Dist. LEXIS 173620, at *12 n.6, *26 (D.N.M.
2013)(Browning, J.)(describing the operation of the
“voluntary-involuntary” rule); or (ii) the
removal-spoiling party was fraudulently joined or
procedurally misjoined.
The Presumption Against Removal.
courts are courts of limited jurisdiction; thus, there is a
presumption against removal jurisdiction, which the defendant
seeking removal must overcome. See Laughlin v. Kmart
Corp., 50 F.3d 871, 873 (10th Cir. 1995); Fajen v.
Found. Reserve Ins. Co., 683 F.2d 331, 333 (10th Cir.
1982); Martin v. Franklin Capital Corp., 251 F.3d at
1290; Bonadeo v. Lujan, 2009 U.S. Dist. LEXIS 45672,
at *4 (D.N.M. 2009)(Browning, J.)(“Removal statutes are
strictly construed, and ambiguities should be resolved in
favor of remand.”). The defendant seeking removal must
establish that federal court jurisdiction is proper “by
a preponderance of the evidence.” McPhail v. Deere
& Co., 529 F.3d at 953. See Bonadeo v.
Lujan, 2009 U.S. Dist. LEXIS 45672, at *4 (“As the
removing party, the defendant bears the burden of proving all
jurisdictional facts and of establishing a right to
removal.”). See also McPhail v. Deere &
Co., 529 F.3d at 955 (“It would have been more
precise to say that the defendant must affirmatively
establish jurisdiction by proving jurisdictional facts . . .
.”). Because federal courts are courts of limited
jurisdiction, the Tenth Circuit has ruled that “courts
must deny such jurisdiction if not affirmatively apparent on
the record.” Okla. Farm Bureau Mut. Ins. Co. v.
JSSJ Corp., 149 F.App'x 775, 778 (10th Cir.
2005)(unpublished), abrogated on other grounds by Dart
Cherokee Basin Operating Co. v. Owens, 135 S.Ct. 547
(2014). This strict construction and presumption against
removal should not, however, be interpreted as hostility
toward removal cases in the federal courts. See McEntire
v. Kmart Corp., 2010 U.S. Dist. LEXIS 13373, at *2
(“Strict construction does not mean judicial hostility
toward removal. Congress provided for removal, and courts
should not create rules that are at tension with the
statute's language in the name of strict
construction.”)(citing Bonadeo v. Lujan, 2009
U.S. Dist. LEXIS 45672, at *12).
The Procedural Requirements of Removal.
1446 of Title 28 of the United States Code governs the
procedure for removal. “Because removal is entirely a
statutory right, the relevant procedures to effect removal
must be followed.” Thompson v. Intel Corp.,
2012 U.S. Dist. LEXIS 126311, at *5. A removal that does not
comply with the express statutory requirements is defective
and must be remanded to state court. See Huffman v. Saul
Holdings LP, 194 F.3d at 1077. See also Chavez v.
Kincaid, 15 F.Supp.2d 1118, 1119 (D.N.M. 1998)(Campos,
J.)(“The [r]ight to remove a case that was originally
in state court to federal court is purely statutory, not
constitutional.”).
1446(a) of Title 28 of the United State Code provides that a
party seeking removal of a matter to federal court shall file
a notice of removal in the district and division where the
state action is pending, “containing a short and plain
statement of the grounds for removal, together with a copy of
all process, pleadings, and orders served upon such defendant
or defendants in such action.” 28 U.S.C. §
1446(a). Such notice of removal is proper if filed within
thirty days from the date when the case qualifies for federal
jurisdiction. See Caterpillar Inc. v. Lewis, 519
U.S. at 68-69; 28 U.S.C. § 1446(b). The Tenth Circuit
has further elaborated that, for the thirty-day period to
begin to run, “this court requires clear and
unequivocal notice from the [initial] pleading itself”
that federal jurisdiction is available. Akin v. Ashland
Chem. Co., 156 F.3d 1030, 1036 (10th Cir. 1998). The
Tenth Circuit specifically disagrees with “cases from
other jurisdictions which impose a duty to investigate and
determine removability where the initial pleading indicates
that the right to remove may exist.” Akin v.
Ashland Chem. Co., 156 F.3d at 1036.[4]
a civil action is removed solely under section 1441(a), [the
standard removal statute, which excludes multiparty,
multiforum jurisdiction, ] all defendants who have been
properly joined and served must join in or consent to the
removal of the action.” 28 U.S.C. § 1446(b)(2)(A).
The failure of all defendants to consent to removal will
result in remand. The rule of unanimity applies to all
defendants, whether they are required parties under rule 19
or merely proper parties under rule 20. The defendants who
have not been served, however, need not join in removal.
See Kiro v. Moore, 229 F.R.D. 228, 230-32 (D.N.M.
2005)(Browning, J.).
Amendment of the Notice of Removal.
Caterpillar, Inc. v. Lewis, the Supreme Court held
that a defect in subject-matter jurisdiction cured before
entry of judgment did not warrant reversal or remand to state
court. See 519 U.S. at 70-78. Citing
Caterpillar, Inc. v. Lewis, the Tenth Circuit has
held that “a defect in removal procedure, standing
alone, is not sufficient to warrant vacating judgment and
remand to state court if subject matter jurisdiction existed
in the federal court.” Browning v. Am. Family Mut.
Ins. Co., 396 F.App'x 496, 505-06 (10th Cir.
2010)(unpublished). In McMahon v. Bunn-O-Matic
Corp., 150 F.3d 651 (7th Cir. 1998)(Easterbrook, J.),
noticed, on appeal, defects in the notice of removal,
including that the notice of removal failed to properly
allege diversity of citizenship. See 150 F.3d at 653
(“As it happens, no one paid attention to
subject-matter jurisdiction . . . .”). The Seventh
Circuit nevertheless permitted the defective notice of
removal to be amended on appeal to properly establish
subject-matter jurisdiction. See 150 F.3d at 653-54.
Tenth Circuit has allowed defendants to remedy defects in
their petition or notice of removal. See Jenkins v. MTGLQ
Investors, 218 F.App'x. 719, 723 (10th Cir.
2007)(unpublished)(granting unopposed motion to amend notice
of removal to properly allege jurisdictional facts);
Watkins v. Terminix Int'l Co., 1997 WL 34676226,
at *2 (10th Cir. 1997)(per curiam)(unpublished)(reminding the
defendant that, on remand, it should move to amend the notice
Lopez v. Denver & Rio Grande W. R.R. Co., 277
F.2d 830, 832 (10th Cir. 1960)(“Appellee's motion
to amend its petition for removal to supply sufficient
allegations of citizenship and principal place of business
existing at the time of commencement of this action is hereby
granted, and diversity jurisdiction is therefore
present.”). The Tenth Circuit has further reasoned that
disallowing amendments to the notice of removal, even after
the thirty-day removal window had expired, when the defendant
made simple errors in its jurisdictional allegations,
“would be too grudging with reference to the
controlling statute, too prone to equate imperfect
allegations of jurisdiction with the total absence of
jurisdictional foundations, and would tend unduly to exalt
form over substance and legal flaw-picking over the orderly
disposition of cases properly committed to federal
courts.” Hendrix v. New Amsterdam Cas. Co.,
390 F.2d 299, 301 (10th Cir. 1968). The Tenth Circuit has
noted that a simple error in a jurisdictional allegation
includes failing to identify a corporation's principal
place of business or referring to an individual's state
of residence rather than citizenship. See Hendrix v.
New Amsterdam Cas. Co., 390 F.2d at 301. In
McEntire v. Kmart Corp., when faced with
insufficient allegations in the notice of removal --
allegations of “residence” not
“citizenship” -- the Court granted the defendants
leave to amend their notice of removal to cure the errors in
some of the “formalistic technical requirements.”
2010 WL 553443, at *8 (citing Hendrix v. New
Amsterdam Cas. Co., 390 F.2d at 300-02).
Further, in Thompson v. Intel Corp., the Court
permitted the defendant, Intel Corp., to amend its notice of
removal to include missing jurisdictional elements, including
evidence that its principal place of business and corporate
headquarters -- the center of Intel Corp.'s direction,
control, and coordination of activities -- is out of state,
so that the diversity requirements were met. See
2012 WL 3860748, at *1.
are limits to the defects that an amended notice of removal
may cure, however, as Professors Charles Alan Wright and
Arthur R. Miller explain:
[A]n amendment of the removal notice may seek to accomplish
any of several objectives: It may correct an imperfect
statement of citizenship, state the previously articulated
grounds more fully, or clarify the jurisdictional amount. In
most circumstances, however, defendants may not add
completely new grounds for removal or furnish missing
allegations, even if the court rejects the first-proffered
basis of removal, and the court will not, on its own motion,
retain jurisdiction on the basis of a ground that is present
but that defendants have not relied upon.
14 C. Wright & A. Miller, Federal Practice and
Procedure § 3733, at 651-659 (4th ed. 2009)
(footnotes omitted). Professor Moore has similarly
recognized: “[A]mendment may be permitted after the
30-day period if the amendment corrects defective allegations
of jurisdiction, but not to add a new basis for removal
jurisdiction.” 16 J. Moore, D. Coquillette, G. Joseph,
S. Schreiber, G. Vairo, & C. Varner, Moore's
Federal Practice § 107.30[2][a][iv], at 107-317 to
-18 (3d ed. 2013). Thus, where diversity jurisdiction is
asserted as a basis for removal of an action to federal
court, the district court may permit the removing defendant
to amend its removal notice, if necessary, to fully allege
facts that satisfy the requirements of diversity jurisdiction
by a preponderance of the evidence. See Carrillo v. MCS
Indus., Inc., 2012 WL 5378300, at *14 (D.N.M.
2012)(Browning, J.)(permitting party to amend its notice of
removal when the removing party did “not assert[] a new
basis for jurisdiction, or a new allegation not present in
its Notice of Removal; rather, the . . . Amended Notice of
Removal provides greater detail regarding the same basis for
jurisdiction asserted in the . . . Notice of Removal”).
Cf. New Mexico ex rel. Balderas v. Valley Meat Co.,
2015 WL 3544288, at *25 (D.N.M. 2015)(Browning, J.)(denying
amendment when it sought to assert a new jurisdictional basis
that was not raised in the notice of removal).
defendant may remove a case to federal court based upon
diversity jurisdiction in the absence of complete diversity
if a plaintiff joins a nondiverse party fraudulently to
defeat federal jurisdiction. See Am. Nat'l Bank &
Trust Co. v. Bic Corp., 931 F.2d 1411, 1412 (10th Cir.
1991); Hernandez v. Menlo Logistics, Inc., 2013 U.S.
Dist. LEXIS 156746, at *14-17 (D.N.M. 2013)(Browning, J.). A
defendant may remove on the basis of fraudulent joinder
either while the nondiverse party is still joined or after it
is dismissed from the case -- the doctrine can thus function
as an exception to either complete diversity or the
voluntary-involuntary rule. “‘[A] fraudulent
joinder analysis [is] a jurisdictional inquiry, '”
Bio-Tec Envtl., LLC v. Adams, 792 F.Supp.2d 1208,
1214 (D.N.M. 2011)(Browning, J.)(quoting Albert v.
Smith's Food & Drug Ctrs., Inc., 356 F.3d 1242,
1247 (10th Cir. 2004)), and, thus, the Tenth Circuit
instructs that the district court should “pierce the
pleadings, consider the entire record, and determine the
basis of joinder by any means available, ” Dodd v.
Fawcett Pubs., Inc., 329 F.2d at 85 (citations omitted).
“A district court may disregard a nondiverse party
named in the state court complaint and retain jurisdiction if
joinder of the nondiverse party is a sham or
fraudulent.” Baeza v. Tibbetts, 2006 U.S.
Dist. LEXIS 95317, at *3 (D.N.M. 2006)(Vazquez, J.). The
Supreme Court has stated: “Merely to traverse the
allegations upon which the liability of the resident
defendant is rested or to apply the epithet
‘fraudulent' to the joinder will not suffice: the
showing must be such as compels the conclusion that the
joinder is without right and made in bad faith.”
Chesapeake & Ohio Ry. Co. v. Cockrell, 232 U.S.
146, 152 (1914). The Tenth Circuit has explained that
allegations of fraudulent joinder complicate the analysis
whether removal is proper, because, “[w]hile a court
normally evaluates the propriety of a removal by determining
whether the allegations on the face of the complaint satisfy
the jurisdictional requirements, fraudulent joinder claims
are assertions that the pleadings are deceptive.”
Nerad v. AstraZeneca Pharms., Inc., 203 F.App'x
911, 913 (10th Cir. 2006)(unpublished).
party asserting fraudulent joinder bears the burden of proof.
See Montano v. Allstate Indemnity Co., 211 F.3d
1278, 2000 WL 525592, at *1 (“The case law places a
heavy burden on the party asserting fraudulent
joinder.”). “To justify removal based on
diversity jurisdiction, a defendant must plead a claim of
fraudulent joinder with particularity and prove the claim
with certainty.” Couch v. Astec Indus., Inc.,
71 F.Supp.2d at 1146-47. Before 2013, the most recent
published Tenth Circuit decision to state the burden of proof
for demonstrating fraudulent joinder was issued over forty
years earlier in Smoot v. Chicago, Rock Island &
Pacific Railroad Co., 378 F.2d 879 (10th Cir. 1967). The
Tenth Circuit said that fraudulent joinder must be
“established with complete certainty upon undisputed
evidence.” Smoot v. Chi., Rock Island & Pac.
R.R. Co., 378 F.2d at 882.
fraud -- e.g., a plaintiff colluding with a
nondiverse defendant to defeat removal[5] -- suffices to
establish fraudulent joinder, but it is not required. See
McLeod v. Cities Serv. Gas Co., 233 F.2d 242, 246 (10th
Cir. 1956)(“[C]ollusion in joining a resident defendant
for the sole purpose of preventing removal . . . may be shown
by any means available.”). In Smoot v. Chicago,
Rock Island & Pacific Railroad Co., the Tenth
Circuit stated two other bases for finding fraudulent
joinder: (i) “[t]he joinder of a resident defendant
against whom no cause of action is stated is a patent
sham”; or (ii) “though a cause of action be
stated, the joinder is similarly fraudulent if in fact no
cause of action exists.” 378 F.2d at 882 (quoting
Dodd v. Fawcett Pubs., Inc., 329 F.2d at 85. In
Smoot v. Chicago, Rock Island & Pacific Railroad
Co., the Tenth Circuit found fraudulent joinder, because
the joined party's non-liability was “established
with complete certainty upon undisputed evidence.” 378
F.2d at 882. “This does not mean that the federal court
will pre-try, as a matter of course, doubtful issues of fact
to determine removability; the issue must be capable of
summary determination and be proven with complete
certainty.” Smoot v. Chi., Rock Island & Pac.
R.R. Co., 378 F.2d at 882. In Smoot v. Chicago, Rock
Island & Pacific Railroad Co., the plaintiff died
when his car collided with a freight train. See 378
F.2d at 881. The plaintiff's estate sued the railroad
company and joined a non-diverse alleged employee as a
defendant. See 378 F.2d at 881. It was undisputed
that the diversity-destroying party's employment with the
railroad company had “terminated almost fifteen months
before the collision and that he was in no way connected with
the acts of negligence ascribed to him.” 378 F.2d at
recent unpublished decisions, the Tenth Circuit has adopted
different articulations of the burden of proof for fraudulent
joinder, two of which are from the United States Court of
Appeals for the Fifth Circuit. In Montano v. Allstate
Indemnity Co., the Tenth Circuit quoted favorably
Hart v. Bayer Corp., 199 F.3d 239 (5th Cir. 2000),
To prove their allegation of fraudulent joinder [the removing
parties] must demonstrate that there is no possibility that
[plaintiff] would be able to establish a cause of action
against [the joined party], in state court. In evaluating
fraudulent joinder claims, we must initially resolve all
disputed questions of fact and all ambiguities in the
controlling law in favor of the non-removing party. We are
then to determine whether that party has any possibility of
recovering against the party whose joinder is questioned.
Montano v. Allstate Indemnity Co., 211 F.3d 1278,
2000 WL 525592, at *4-5 (alterations in original)(quoting
Hart v. Bayer Corp., 199 F.3d at 246)(internal
quotation marks omitted). The Tenth Circuit stated that the
standard for proving fraudulent joinder “is more
exacting than that for dismissing a claim under Fed.R.Civ.P.
12(b)(6); indeed, the latter entails the kind of merits
determination that, absent fraudulent joinder, should be left
to the state court where the action commenced.”
2000 WL 525592, at *2. The Tenth Circuit in Montano v.
Allstate Indemnity Co. also quoted from Batoff v.
State Farm Insurance Co., 977 F.2d 848 (3d Cir.
1992), which states: “A claim which can be dismissed
only after an intricate analysis of state law is not so
wholly insubstantial and frivolous that it may be disregarded
for purposes of diversity jurisdiction.” 977 F.2d at
Nerad v. AstraZeneca Pharmaceuticals, Inc., the
Tenth Circuit adopted a different articulation of the burden
of proof. The Tenth Circuit stated that, where fraudulent
joinder is asserted, &ldquo;the court must decide whether
there is a reasonable basis to believe the plaintiff might
succeed in at least one claim against the non-diverse
defendant.&rdquo; Nerad v. AstraZenecaPharmaceuticals, Inc., 203 F.App&#39;x at 913
(citing Badon v. RJR Nabisco, Inc., 224 F.3d 382,
393 (5th Cir. 2000)). The Tenth Circuit explained that
“[a] ‘reasonable basis' means just that: the
claim need not be a ...