Diane Graham v. Mentor Worldwide, 998 F.3d 800

Background:

Diane Graham received Mentor silicone breast implants in 2000; imaging in 2017–2018 showed leakage and, after a 2018 auto accident, she had the implants removed in November 2018.
In June 2019 Graham sued in Missouri state court: strict product liability against Mentor and SLCS, and negligence against the vehicle driver Haley; Mentor is non-Missouri; the others are Missouri citizens.
Mentor removed to federal court alleging fraudulent joinder of SLCS and fraudulent misjoinder of Haley; Haley answered and asserted a setoff defense.
The district court dismissed SLCS for fraudulent joinder, severed and remanded Haley’s negligence claim (applying fraudulent misjoinder), left only Graham v. Mentor in federal court, denied remand as to Mentor, and denied Mentor’s Rule 12(b)(6) preemption motion on fact-question grounds.
Graham moved to dismiss without prejudice; the district court denied that motion and dismissed Graham’s claim against Mentor with prejudice for improper motive (apparent attempt to avoid an adverse federal ruling) and for failing to explain the request. Graham appealed.

Issues:

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the district court erred in refusing to remand the strict-liability claim against Mentor	Graham: misjoinder of Haley was not "egregious"; claims arise from same transaction so remand required	Mentor: non-diverse defendants were dismissed/severed so diversity existed when final judgment entered	Court: did not reach merits; because the district court had dismissed non-diverse parties before final judgment and diversity existed at judgment, there was nothing to remand
Validity/applicability of "fraudulent misjoinder" to sever Haley and remand her claim	Graham: Haley and Mentor claims arise from same transaction so misjoinder not fraudulent	Mentor: misjoinder justified severance/remand	Court: declined to adopt or reject the doctrine here but accepted the district court’s procedural disposition; issue not properly before this court on appeal
Whether the district court abused its discretion by denying dismissal without prejudice	Graham: case was in early stages, no discovery or trial setting, dismissal without prejudice appropriate	Mentor: Graham sought dismissal to avoid imminent adverse summary judgment on preemption; dismissal would prejudice Mentor after it had prepared for discovery	Court: affirmed denial and dismissal with prejudice because Graham offered no explanation and motive suggested avoidance of an unfavorable outcome
Whether plaintiff received adequate notice before dismissal with prejudice	Graham: district court should have given notice and chance to withdraw	Mentor: its response warned dismissal with prejudice was possible and Graham had opportunities to respond	Court: plaintiff had sufficient notice and opportunities; Jaramillo notice requirement satisfied

Key Cases Cited

Hubbard v. Federated Mut. Ins. Co., 799 F.3d 1224 (8th Cir. 2015) (standard for fraudulent joinder)
In re Prempro Prods. Liab. Litig., 591 F.3d 613 (8th Cir. 2010) (declined to adopt or reject fraudulent misjoinder)
Caterpillar Inc. v. Lewis, 519 U.S. 61 (1996) (final judgment rule and effect of post-removal events on remand)
Junk v. Terminix Intern. Co., 628 F.3d 439 (8th Cir. 2010) (district court error in failing to remand not fatal when jurisdictional spoils removed before judgment)
Jaramillo v. Burkhart, 59 F.3d 78 (8th Cir. 1995) (district court may dismiss with prejudice but must give notice and chance to withdraw)
Newman-Green, Inc. v. Alfonzo-Larbain, 490 U.S. 826 (1989) (Rule 21 authority to drop nondiverse party)
Riegel v. Medtronic, Inc., 552 U.S. 312 (2008) (preemption under the Medical Device Amendments)
Thatcher v. Hanover Ins. Group, Inc., 659 F.3d 1212 (8th Cir. 2011) (courts must inquire whether dismissal sought to avoid adverse judgment)