176 F. Supp. 3d 853
E.D. Mo.2016Background
- Twelve plaintiffs sued four interrelated corporations (Pharmacia, Pfizer, Solutia, New Monsanto) in Missouri state court alleging PCB exposure from Old Monsanto caused non‑Hodgkin’s lymphoma; plaintiffs are non‑Missouri residents; Solutia and New Monsanto are Missouri residents.
- Old Monsanto manufactured PCBs from ~1930s until 1977; in 1997 its chemical business was spun off to Solutia (Distribution Agreement: Solutia assumed/indemnified chemical liabilities).
- In 2000 Old Monsanto’s remaining divisions merged into Pharmacia, which spun off New Monsanto (Separation Agreement: New Monsanto to assume certain liabilities, including liabilities Solutia assumed if Solutia failed to pay).
- Solutia filed Chapter 11 in 2003; Solutia and New Monsanto executed a Settlement Agreement/Plan in 2007 allocating responsibility for legacy tort claims; the Plan stated tort claims would be “unaffected” and preserved holders’ rights to sue.
- Defendants removed to federal court on diversity and federal‑officer grounds before any defendant was served; plaintiffs filed motions to remand arguing (1) forum‑defendant rule and fraudulent joinder (Solutia and New Monsanto assumed, not merely indemnified, liabilities) and (2) federal officer removal does not apply because government‑directed sales were de minimis and no causal nexus existed.
- Court granted leave to supplement the record, found ambiguities in the agreements about assumption vs. indemnity and that the government‑directed/contract sales were too small to establish the requisite causal nexus; remanded for lack of both diversity and federal‑officer jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether removal violated the forum‑defendant rule / whether Missouri defendants were fraudulently joined | Removal improper; Solutia and New Monsanto may be directly liable (assumed liabilities) and thus are non‑diverse forum defendants | Removal proper because defendants were not served; forum defendants were only indemnitors (fraudulently joined) so diversity removal is valid | Remand granted: ambiguity in agreements means plaintiffs have colorable claims against Solutia and New Monsanto; fraudulent joinder not established |
| Whether Distribution/Separation/Settlement/Plan documents eliminated direct liability such that plaintiffs may not sue Solutia/New Monsanto | Plan and Settlement did not extinguish assumed liabilities; tort‑holders’ rights were preserved | Settlement/Plan superseded prior assumption language and limited obligations to indemnity; no third‑party beneficiary rights | Court found agreements ambiguous under Delaware contract principles; resolved ambiguities for remand and refused to decide substantive contract interpretation in federal forum |
| Whether federal officer removal under 28 U.S.C. §1442(a)(1) applies ("acting under" and causal nexus) | Old Monsanto did not act under federal direction for the PCB conduct at issue; government‑directed sales were a tiny fraction of total PCB production so no causal connection | Old Monsanto acted under federal direction: government task forces, OSHA rules, TSCA, wartime production certificates, and some direct/contract sales to government or defense contractors support removal | Remand granted: acting‑under satisfied only for PCBs made directly for government, but the government‑directed/contracted production was de minimis and insufficient to establish a causal nexus to plaintiffs’ environmental‑accumulation claims |
| Whether defendants have a colorable federal defense (TSCA preemption) | Plaintiffs: TSCA preemption is not colorable here (savings clause, pre‑1976 conduct, historically unsuccessful as a defense) | Defendants: TSCA preemption is a colorable federal defense supporting removal | Court did not reach definitive ruling; found removal fails on other grounds and therefore did not decide preemption merits |
Key Cases Cited
- Filla v. Norfolk S. Ry. Co., 336 F.3d 806 (8th Cir. 2003) (standard for fraudulent joinder inquiry)
- Junk v. Terminix Int'l Co., 628 F.3d 439 (8th Cir. 2010) (plaintiff must have colorable claim against non‑diverse defendant)
- Knudson v. Sys. Painters, Inc., 634 F.3d 968 (8th Cir. 2011) (defendant bears burden to prove plaintiffs' claim against non‑diverse defendant has no reasonable basis)
- Hubbard v. Federated Mut. Ins. Co., 799 F.3d 1224 (8th Cir. 2015) (anti‑removal presumption in diversity cases)
- Mesa v. California, 489 U.S. 121 (1989) (history and purpose of federal‑officer removal statute)
- Watson v. Philip Morris Cos., 551 U.S. 142 (2007) (limits on "acting under" and the need to show assistance in federal tasks)
- Isaacson v. Dow Chem. Co., 517 F.3d 129 (2d Cir. 2008) (Agent Orange cases: contractors with detailed government specs entitled to federal‑officer removal)
- Winters v. Diamond Shamrock Chem. Co., 149 F.3d 387 (5th Cir. 1998) (Agent Orange precedent supporting removal)
- Clair v. Monsanto Co., 412 S.W.3d 295 (Mo. Ct. App. 2013) (state‑law recognition that PCB tort claims can proceed)