In re Fresenius Granuflo/Naturalyte Dialysate Products Liability Litigation
76 F. Supp. 3d 321
D. Mass.2015Background
- Multiple California plaintiffs sued Fresenius-related defendants in state court; defendants removed to federal court asserting complete diversity under 28 U.S.C. § 1332.
- Removal rested on three contentions: Fresenius USA’s principal place of business is Massachusetts (not California); Ben Lipps domiciled in Massachusetts then Nevada (not California); and California citizen Walter Weisman was fraudulently joined.
- Court applied Hertz’s "nerve center" test to corporate citizenship and concluded Fresenius USA’s headquarters and central control were in Waltham, Massachusetts after a 1996 merger.
- Fact discovery and declarations showed Lipps lived, voted, and paid taxes in Massachusetts from 1996 until 2013, then changed domicile to Nevada in 2013.
- Weisman sat on German supervisory boards of holding companies, had no operational role in U.S. operating subsidiaries, lacked knowledge of the products, and presented undisputed evidence of no personal involvement.
- Court denied remand, held Fresenius USA and Lipps were not California citizens for diversity, and found Weisman fraudulently joined and dismissed him.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Corporate citizenship of Fresenius USA (principal place of business) | Fresenius USA’s principal place of business is Walnut Creek, CA due to manufacturing and historical presence | Headquarters, officers, direction, and central management are in Waltham, MA (nerve center) | Held: principal place of business is Massachusetts; Fresenius USA is diverse from CA plaintiffs |
| Citizenship/domicile of Ben Lipps | Lipps remains a California resident (wife’s residence, property, publicity) | Lipps domiciled in MA from 1996–2013 (licenses, voting, taxes), then changed domicile to NV in 2013 | Held: Lipps was MA domiciliary until 2013 and NV thereafter; not a CA citizen at filing |
| Applicability of judicial estoppel to prior corporate statements about CA HQ | Plaintiffs: prior admissions that HQ was in CA estop Fresenius from asserting MA HQ | Defendants: prior statements pre-Hertz and post-Hertz recantations mean estoppel is unwarranted | Held: Judicial estoppel not applied given intervening change in law and corrected/disavowed statements |
| Fraudulent joinder of Walter Weisman | Weisman is a CA resident and alleged to have participated in design/marketing; his joinder defeats diversity | Weisman had no operational role, lacked knowledge, and cannot be held individually liable under CA law theories | Held: Weisman fraudulently joined; no reasonable possibility of recovery against him; dismissed |
Key Cases Cited
- Samaan v. St. Joseph Hosp., 670 F.3d 21 (1st Cir. 2012) (removal procedures and burdens)
- Toste Farm, Corp. v. Hadbury, Inc., 70 F.3d 640 (1st Cir. 1995) (complete diversity requirement)
- Hertz Corp. v. Friend, 559 U.S. 77 (2010) ("principal place of business" = corporate "nerve center")
- In re Pharm. Indus. Average Wholesale Price Litig., 431 F.Supp.2d 109 (D. Mass. 2006) (removal burden discussion)
- Universal Truck & Equip. Co. v. Southworth-Milton, Inc., 765 F.3d 103 (1st Cir. 2014) (fraudulent joinder doctrine)
- Alternative Sys. Concepts, Inc. v. Synopsys, Inc., 374 F.3d 23 (1st Cir. 2004) (judicial estoppel factors)
- New Hampshire v. Maine, 532 U.S. 742 (2001) (judicial estoppel as an equitable doctrine)
- Frances T. v. Village Green Owners Ass’n, 42 Cal.3d 490 (Cal. 1986) (individual liability of corporate directors requires personal authorization or participation)
- Whitaker v. American Telecasting, Inc., 261 F.3d 196 (2d Cir. 2001) (test for fraudulent joinder analysis)
- Mills v. Allegiance Healthcare Corp., 178 F.Supp.2d 1 (D. Mass. 2001) (applying fraudulent joinder standard)
- Señor Frog’s de la Isla, Inc. v. Rodriguez, 642 F.3d 28 (1st Cir. 2011) (domicile and burden to prove domicile)