Court Opinion

ID: 38066
Source: CourtListenerOpinion
Date Created: 2010-04-25 20:02:29+00
Date Added: 2024-06-11T17:15:52.401313
License: Public Domain

United States Court of Appeals
                                                                                 Fifth Circuit
                                                                               F I L E D
                 IN THE UNITED STATES COURT OF APPEALS
                                                                                April 26, 2005
                           FOR THE FIFTH CIRCUIT
                                                                           Charles R. Fulbruge III
                                                                                   Clerk

                                    No. 02-60773

MABLE ANNETTE HUGHES MCDONAL, Parent and Next
Friend of Jamielee Hughes McDonal; DARRYL A. MCDONAL,
Parent and Next Friend of Jamielee Hughes McDonal,

                                                                     Plaintiffs - Appellants,

                                       versus

ABBOTT LABORATORIES, ET AL.,

                                                                                Defendants,

ABBOTT LABORATORIES, INC; AMERICAN HOME
PRODUCTS CORP, doing business as WYETH LABORATORIES;
WYETH-AYERST; WYETH-AYERST LABORATORIES; WYETH
LEDERLE; WYETH LEDERLE VACCINES; LEDERLE
LABORATORIES; AVENTIS PASTEUR INC., Individually and as
successor in interest to CONNAUGHT; BAXTER INTERNATIONAL
INC.; ELI LILLY & CO; EMERCK; GDL INTERNATIONAL, INC;
GLAXOSMITHKLINE, Individually, and as successor in interest to
SMITHKLINE BEECHAM CORP; MERCK & COMPANY INC;
SIGMA ALDRICH, INC; SPECTRUM CHEMICAL MANUFACTURING
CORP; URQUIMA; MITZI FERGUSON, MD; LESLIE LAMAR JONES,
MD; RIVER OAKS HOSPITAL;

                                                                    Defendants - Appellees.

                     Appeal from the United States District Court
                       for the Southern District of Mississippi
Before HIGGINBOTHAM, STEWART, and PRADO, Circuit Judges.

CARL E. STEWART, Circuit Judge:

        In this products liability action, plaintiffs and Mississippi residents Mabel and Daryl McDonal

(“the McDonals”) filed suit against various foreign and local defendants — the manufacturers and

distributors of Thimerosal, the manufacturers of the vaccines which contained Thimerosal, the doctors

who administered the vaccines, and River Oaks Hospital. On appeal, the McDonals challenge the

district court’s denial of their motions for a remand to state court and the concomitant dismissal of

their state law claims against both Mississippi resident and nonresident defendants. At the outset, we

consider the threshold inquiry of subject matter jurisdiction, on the basis of complete diversity of

citizenship, in order to ascertain whether the district court erred in its application of the improper

joinder doctrine.1 We hold that the district court’s denial of the plaintiffs motion to remand was

appropriate, consequently, for slightly different reasons than asserted by the district court, we affirm

in part and reverse in part.

                        FACTUAL AND PROCEDURAL BACKGROUND

        The McDonals, as the parents of four-year-old Jamielee Hughes McDonal (“Jamielee”),

brought this action, on behalf of Jamielee, who suffers from profound mercury poisoning. The

McDonals allege that Jamielee’s po isoning was the result of her exposure to sizeable doses of

mercury contained in a preservative, known as Thimerosal, used in childhood vaccines. Specifically,

the McDonals allege that through a normal regimen of early childhood vaccinations, Jamielee built

    1
     This circuit has adopted the term “improper joinder,” rather than “fraudulent joinder.”See
Smallwood v. Ill. Cent RR Co., 385 F.3d 568, 571 n.1 (5th Cir. 2004) (en banc). While there is no
substantive difference between the two terms, the phraseology “improper joinder” is preferred.

                                                   2
up a cumulative body burden of mercury nearly 30 times the permissible limit authorized by the

Environmental Protection Agency.

         On December 19, 2001, the McDonals commenced an action in Mississippi state trial court

against various diverse and non-diverse defendants2 seeking to recover damages arising from

Jamielee’s poisoning. The complaint averred state law claims of strict liability, negligence, and breach

of warranty against the manufacturers of vaccines (collectively, “the Vaccine defendants”) and the

manufacturers of thimerosal (collectively, “Thimerosal defendants”). The McDonals also alleged a

claim for medical malpractice, against the two Mississippi physicians and the Mississippi hospital

(collectively, “Healthcare defendants”), predicated on a theory of failure to warn of the inherent

dangers embedded in potential side effects stemming from Thimerosal-containing vaccines and a

failure to recommend Thimerosal-free vaccines.

         On January 25, 2002, Eli Lilly and Company (“ Eli Lilly”) removed the action to federal court

on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332 and federal question jurisdiction

pursuant to 28 U.S.C. § 1331. Eli Lilly’s removal petition contended that complete diversity existed

on the basis that the resident Healthcare defendants had been improperly joined. Eli Lilly also

contended that a federal question existed because, under the National Childhood Vaccine Act, 42

U.S.C. §§ 300aa-1 et seq., (“Vaccine Act”), the McDonals were barred from bringing a vaccine-

     2
       The McDonals initially sued American Home Products Corporation d/b/a Wyeth, Wyeth
Laboratories, Wyeth-Ayerst, Wyeth Ayerst Laboratories, Wyeth Lederle, Wyeth Ledele Vaccines and
Lederle Laboratories; Aventis Pasteur, Inc., Individually and as Successor in Interest to Connaught;
Eli Lilly and Company; GlaxoSmithKline, Individually and as Successor in Interest of Smith Kline
Beecham Corporation; Merck & Co., Inc.; Sigma Aldrich, Inc.; Mitzi Ferguson, M.D., Leslie Lamar
Jones, M.D., and River Oaks Hospital. On January 11, 2002, the McDonals filed an amended
complaint adding defendants Abbott Laboratories, Inc., Baxter International, Inc.; Emerck; GDL
International, Inc.; GlaxoSmith Kline Belguim; King Pharmaceuticals, Inc.; Medeva Pharmaceuticals,
Inc.; Spectrum Chemical Manufacturing Corp., and Urquima.

                                                   3
related action against the healthcare defendants until first filing a petition for relief in the United

States Court of Federal Claims (“Vaccine Court”).

        The McDonals subsequently moved for a remand to state court asserting that the removal to

federal court was procedurally defective based on the failure of all defendants to timely join in

removal. The McDonals also sought to remand on the grounds the Vaccine Act failed to present a

sufficient federal question. Eli Lilly, opposing the remand motion, filed a motion to amend the

removal petition to reflect consent to removal by two additional defendants, GDL International, Inc.

(“GDL”) and Spectrum Chemical Manufacturing Corp. (“Spectrum”).3

        On June 21, 2002, the district court granted Eli Lilly’s request to add GDL and Spectrum to

its petition for removal. Nevertheless, the district court granted the McDonals’ motion to remand

on the grounds that neither diversit y nor federal question jurisdiction existed. The district court

rejected Eli Lilly’s improper joinder claim because, in the eyes of the district court, the McDonals’

claims against the Healthcare defendants possessed a reasonable probability of recovery. The district

court also rejected Eli Lilly’s removal petition, under the well-pleaded complaint rule, on the grounds

that an affirmative defense that raises a federal question is inadequate to confer federal jurisdiction.

Subsequently, based on relatively new legal developments which had not been squarely considered

by the district court, the Defendants filed a mot ion for reconsideration on the grounds that the

Vaccine Court was the exclusive judicial venue charged with exercising jurisdiction over claims for

alleged Thimerosal related injuries.

    3
     In addition to GDL and Spectrum, the McDonals originally alleged that a third defendant,
Medeva Pharmaceuticals (“Medeva”), failed to timely consent to removal as well. Prior to Eli Lilly’s
opposition to the McDonals’ remand motion, Medeva was voluntarily dismissed. Hence, the
McDonal’s defective removal contention is limited to Spectrum and GDL.

                                                   4
        On August 1, 2002, the district court granted the Defendants’ reconsideration motion. The

district court issued an order finding that the McDonals’ claims are implicitly vaccine-related, and fall

within the purview of the Vaccine Act.4 Hence, from the district court’s vantage point the resident

Healthcare defendants were improperly joined, and diversity jurisdiction existed, because no

reasonable probability existed that the McDonals’ claims against the resident Healthcare defendants

were cognizable without first exhausting those claims in the Vaccine Court prior to filing suit in state

or federal court.

        After finding subject matter jurisdiction proper, the district court then dismissed, sua sponte,

the action as to all Defendants on the same basis that it affirmatively exercised jurisdiction — under

the Vaccine Act, the McDonals’ claims against both the diverse and non-diverse defendants must first

be exhausted in the Vaccine Court prior to the McDonals filing an action in state or federal court.

On appeal, the McDonals assert an error as to the propriety of the removal.

                                     STANDARD OF REVIEW

        We review de novo both the district court’s order denying the McDonals’ motion to remand

and its decision that the non-diverse parties were improperly joined. Great Plains Trust Co. v.

Morgan Stanley Dean Witter & Co., 313 F.3d 305, 311 (5th Cir. 2002).

                                            DISCUSSION

        On appeal, the McDonals posit that the district court erred in failing to remand this action to

state court because the failure of all defendants to timely consent to removal presented a clear

procedural defect. In the alternative, the McDonals contend that the district court erred in granting

  4
     Under the Vaccine Act, a specially constituted court of special masters of the Vaccine Court has
initial jurisdiction to hear claims for damages resulting from alleged vaccine-related injuries to the
exclusion of the state and other federal courts of the United States. See 42 U.S.C. § 300aa-11(a)(2).

                                                   5
dismissal, pursuant to the Vaccine Act, for defendants that merely made preservatives instead of

manufacturing or administering the vaccines themselves. At oral argument, the McDonals presented

for the first time a third and additional challenge, this time to the propriety of the removal. The

McDonals argued that under the common defense “theory,” a defense asserted by diverse and

nondiverse defendants alike, prohibits a finding that the nondiverse party was improperly joined. Our

en banc court, has recently addressed the very issue of applying the doctrine of improper joinder in

the context of when a common defense is mutually asserted by all of the defendants. See Smallwood

v. Ill. Cent. R.R. Co., 385 F.3d 568 (5th Cir. 2004) (en banc).

        We begin our analysis, as we must in a diversity case, by according priority to the requirement

of subject matter jurisdiction. It matters not that the propriety of the diversit y of citizenship was

raised for the first time on appeal, because subject matter jurisdiction is “non-waivable and delimits

the power of federal courts.” Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999); see also

Getty Oil Corp. v. Ins. Co. of North America, 841 F.2d 1254 (5th Cir. 1988) (stating that “where a

federal court proceeds in a matter without first establishing that the dispute is within the province of

controversies assigned to it by the Constitution and statute, the federal court poaches upon the

territory of a coordinate judicial system, and its decisions, opinions, and orders are of no effect”).5

Once a jurisdictional issue is raised, Congress instructs a federal court that if at any time prior to final

judgment, during a removal from state to federal court, “it appears that the [federal] district court

lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). As a threshold

matter, therefore, we must first determine whether the district court had jurisdiction to consider this

  5
    Nonetheless, even if the McDonals’ did not raise a question of jurisdiction, any federal court may
raise subject matter jurisdiction sua sponte. Ruhrgas, 526 U.S. at 583 (stating “[S]ubject-matter
delineations must be policed by the courts on their own initiative even at the highest level”).

                                                     6
action, because if we find such power lacking, then the case must be remanded back to the state court

from which it came.

        The district court found that diversity jurisdiction existed here because the local Healthcare

defendants were improperly joined, and therefore, the district court refused to remand the action to

state court. We recognize that the district court proceeded without the benefit of Smallwood’s

clarification of the improper joinder doctrine. Therefore we proceed to discuss these thorny issues

in the context of the circumstances presented to the district court, yet with the illumination of

Smallwood and subsequent case law construing it.

        The improper joinder doctrine constitutes a narrow exception to the rule of complete

diversity.   We have previously stated, but it bears emphasizing again, that the “burden of

demonstrating [improper] joinder is a heavy one.” Griggs v. State Farm Lloyds, 181 F.3d 694, 701

(5th Cir. 1999). To establish a claim for improper joinder, the party seeking removal must

demonstrate either “(1) actual fraud in the pleading o f jurisdictional facts, or (2) inability of the

plaintiff to establish a cause of action against the non-diverse party in state court.” Travis v. Irby, 326
F.3d 644, 647 (5th Cir. 2003) (citing Griggs, 181 F.3d at 699). Under this second prong, we examine

“whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff

against an in-state defendant, which stated differently means that there is no reasonable basis for the

district court to predict that the plaintiff might be able to recover against an in-state defendant.”

Smallwood, 385 F.3d at 573.6 If no reasonable basis of recovery exists, a conclusion can be drawn

   6
    A district court should ordinarily resolve a improper joinder by conducting a Rule 12(b)(6)-type analysis.
However, in cases where the plaintiff has stated a claim, but “misstated or omitted discrete facts,” the district
court has the discretion to pierce the pleadings and conduct a summary inquiry. Smallwood, 385 F.3d at 573.

                                                       7
that the plaintiff’s decision to join the local defendant was indeed fraudulent, unless that showing

compels dismissal of all defendants.

       The lesson of Smallwood is simply that there is no improper joinder when the nonresident

defendant’s “showing that compels a holding that there is no reasonable basis for predicting that state

law would allow the plaintiff to recover against the in-state defendant necessarily compels the same

result for the nonresident defendant[.]” Id. at 574. Such an allegation of improper joinder is more

properly an attack on the merits of the claim, rather than an inquiry into the propriety of the joinder

of the local party. Id. In other words, there is no improper joinder if a defense compels the same

result for the resident and nonresident defendants, because this would simply mean that “‘the

plaintiff’s case [is] ill founded as to all the defendants.’” Id. (quoting Chesapeake & Ohio Ry. v.

Cockrell, 232 U.S. 146, 153 (1914)). Hence, a remand to state court is necessitated whenever the

district court, in the guise of deciding whether the joinder was improper, departs from the threshold

inquiry of jurisdiction into a decision on the merits. See, e.g., Boyer v. Snap-On Tools Corp., 913
F.2d 108, 112 (3d Cir. 1990).

       We note that because the purpose underlying the improper joinder inquiry “is to determine

whether or not the in-state defendant was properly joined, the focus of the inquiry must be on the

joinder, not the merits of the plaintiff’s case.” Smallwood, 385 F.3d at 573. In other words, while

the focus of the improper joinder inquiry examines whether the joinder itself was improper, the

purpose of the inquiry must be whet her or not there is a possibility of recovery against the local

defendant. As long as the asserted defense applies uniformly to all defendants and dismisses the suit

as a whole, the resident defendants were no more improperly joined than the non-resident defendants.

                                                  8
       Therefore, the district court’s dismissal of this action would quite properly merit remand if

the Vaccine Act afforded the same defense to all of the defendants.7 Said differently, if the showing

of no possibility of recovery against the local defendant applies equally to all defendants, a remand

would be the appropriate disposition because the initial joinder would not have been improper. See

Cockrell, 232 U.S. at 153-54. We have made plain in applying Smallwood that its central principle

is implicated only when the common defense asserted would be equally dispositive as to all of the

defendants. See Rainwater v. Lamar Life Ins. Co., 391 F.3d 636, 638 (5th Cir. 2004). In turn, if a

district court concludes that the common defense proffered would not dispose “of every claim against

every defendant, [the district court] should continue to deny remand and proceed with the proper

disposition of the case.” Id. at 638-39.

       In its sua sponte order, the district court dismissed the McDonals’ claims on the grounds that

the express terms of the Vaccine Act had not been complied with because the McDonals had not

exhausted their administrative remedies as required under the Act. The district court’s reasoning was

predicated on the fact that the McDonals had failed to adhere to the Vaccine Act’s statutory

directives requiring claimants alleging injury or death caused by certain designated vaccines to first

bring such causes of action via the United States Court of Federal Claims’s “Vaccine Court.” See 42

U.S.C. § 300aa-12. The district court in this matter concluded that the McDonals’ claims against all

the Defendants were ultimately futile and required dismissal, as neither a state nor a federal court

   7
     Quite obviously it would be of no consequence that the state court in question would be called
upon to interpret federal law. See, e.g., Howlett v. Rose, 496 U.S. 356, 367 (1990) (“Federal law
is enforceable in state courts . . . because the Constitution and the laws passed pursuant to it are as
much laws in the States as laws passed by the state legislature.”); Tafflin v. Levitt, 493 U.S. 455, 458
-59 (1990) (“Under [our federal] system of dual sovereignty, we have consistently held that state
courts have inherent authority, and are thus presumptively competent, to adjudicate claims arising
under the laws of the United States.”)

                                                   9
would have jurisdiction to initially consider the merits of this case prior to its first being brought to

the Court of Federal Claims. We believe that some basic understanding of the Vaccine Act’s

administrative framework is necessary.

          The Vaccine Act was enacted by Congress, ostensibly as a federal mechanism beyond the

traditional tort law paradigm to provide a trust fund for claimants asserting that they had been harmed

through the use of childhood vaccines. Schafer v. American Cyanamid Co., 20 F.3d 1, 2 (1st Cir.

1994). Under the Vaccine Act, an individual may not bring a civil action in either state or federal

court in excess of $1,000 in damages arising from a “vaccine-related injury or death” involving the

administration of a vaccine unless a petition is first filed with United States Court of Federal Claims.

42 U.S.C. § 300aa-11(a)(2)(A). If such a barred civil action is indeed brought, the state or federal

court is required to dismiss the action in its entirety. 42 U.S.C. § 300aa-11(a)(2)(B). A potentially

noteworthy exception however is the fact that the term “vaccine related injury or death” does not

encompass “an illness, injury, condition, or death associated with an adulterant or contaminant

intentionally added to such a vaccine.” 42 U.S.C. § 300aa-33(5).

        It was, until recently, an open question in this circuit as to whether Thimerosal constituted

an adulterant or contaminant within the understanding of the Vaccine Act. However, we have recently

held that a manufacturer of Thimerosal used in a vaccine sho uld not be considered a “vaccine

manufacturer” as that term is understood within the context of the Vaccine Act. See Moss v. Merck

& Co., 381 F.3d 501, 503 (5th Cir. 2004). Accordingly, the Moss court found that a claim brought

against a Thimerosal manufacturer would not contravene the Vaccine Act. Id. at 504.

        Thus, proceeding with the benefit of the foregoing explication, we believe that the interplay

between Moss and our holding in Rainwater, supra, ultimately compels the appropriate disposition

                                                   10
of this matter. The import of Moss is that the nonresident Thimerosal defendants in the instant case,

would not be insulated from liability pursuant to the jurisdictional limitations embedded within the

Vaccine Act – and therefore a civil action could be brought against them in either a state or federal

forum. Conversely, we also find that the claims asserting vaccine-related injuries brought against the

resident Healthcare defendants and the nonresident Vaccine defendants were required to have first

been brought in the Vaccine Court. As such, the common defense corollary to the improper joinder

doctrine as articulated in Smallwood is inapplicable in the present case and therefore, remanding this

case to the Mississippi state trial court from which this case was removed would be unwarranted. See

Rainwater, 391 F.3d at 638-39.

                                          CONCLUSION

       We hold that the McDonals claims against the Thimerosal defendants, specifically Sigma-

Aldrich, Eli Lilly, GDL, and Spectrum are cognizable in federal court, and the district court erred by

dismissing them from this action because they are not deemed to be “vaccine administrators or

manufacturers” within the understanding of the Vaccine Act. However, we also hold that the claims

against the Vaccine Defendants, specifically Abbott Laboratories, Aventis Pasteur, Inc., Baxter

International, Inc., Merck & Company, Inc, SmithKline Beecham Corporation d/b/a/

GlaxoSmithKline, and Wyeth f/k/a American Home Products Corporation, are not cognizable because

they were not initially brought before the Vaccine Court, therefore the district court did not err by

dismissing the Vaccine Defendants from this action. Further, because the resident Healthcare

defendants, Mitzi Ferguson, M.D., Leslie Lamar Jones, and River Oaks Hospital should also have

properly been dismissed from this action, we affirm the district court’s determination as it pertained

to the dismissal of them.

                                                 11
AFFIRMED IN PART, REVERSED IN PART, REMANDED.

                            12