Walton v. Bayer Corporation, 2011 U.S. App. LEXIS 10341

Background

Plaintiff Walton, an Illinois citizen, sued Bayer affiliates (non-Illinois citizens) and Niemann Foods (Illinois citizen) in Illinois state court alleging Illinois tort-law claims for failure to warn about Yazmin.
Niemann is an Illinois pharmacy; Bayer defendants removed, arguing Niemann’s presence defeated complete diversity via fraudulent joinder, since no federal-law claim exists.
The district court dismissed Niemann with prejudice, restoring complete diversity, and the case was removed to federal court.
Walton appealed, challenging (a) the basis for removal and (b) the district court’s dismissal with prejudice and remand implications.
The court considered whether it had appellate jurisdiction and whether federal jurisdiction over the case exists, focusing on diversity and the learned-intermediary doctrine.
The learned-intermediary doctrine shields pharmacies from warning duties to consumers, but its application to nonmanufacturers (distributors) is evaluated to assess fraudulent joinder and jurisdiction.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the appeal is from a final judgment	Walton contests district court’s final judgment on remand/fees grounds	Defendants contend appeal stems from final discovery-sanction order	Court has jurisdiction; affirmed district court’s final judgment
Whether Niemann's dismissal created complete diversity	Niemann’s nondiverse status defeats complete diversity; joinder is fraudulent	Niemann dismissal restores diversity; improper joinder should bar remand	Niemann dismissal was proper; diversity restored, removing remand grounds
Whether the learned-intermediary doctrine applies to Niemann and forecloses claims	Learned-intermediary defense applies only to manufacturers; Niemann should not be shielded	Doctrine shields pharmacies from warning duties; Niemann is protected	Niemann is shielded; pharmacists’ warning duties limit liability, supporting dismissal
Whether the common-defense/ unremovable claims prevent remand	Common-defense may allow remand if claims against divers are not stronger than against nondivers	Common-defense doctrine not applicable because Bayer and Niemann distinctions exist; no removal to remand	Common-defense not applicable; reasoning does not require remand to state court
Whether judicial estoppel would bar relitigation on remand	If remanded, plaintiff could relitigate; estoppel should not bar later claims	Judicial estoppel bars inconsistent positions if remanded; would deter improper conduct	Judicial estoppel would bar the Bayer claims if remanded; estoppel applies

Key Cases Cited

Back Doctors Ltd. v. Metropolitan Property & Casualty Ins. Co., 637 F.3d 827 (7th Cir. 2011) (irrevocably accepting damages can defeat removal)
Sere v. Board of Trustees, 852 F.2d 285 (7th Cir. 1988) (punitive dismissal cannot be used to circumvent final-decision rule)
Ash v. Cvetkov, 739 F.2d 493 (9th Cir. 1984) (permissible to dismiss other claims without prejudice to avoid improper removal)
Hagans v. Lavine, 415 U.S. 528 (U.S. 1974) (federal jurisdiction not defeated by non-merits-based issues)
McCurdy v. Sheriff of Madison County, 128 F.3d 1144 (7th Cir. 1997) (fraudulent joinder concept and jurisdictional analysis)
Hunter v. Philip Morris USA, 582 F.3d 1039 (9th Cir. 2009) (fraudulent-joinder framework; identity of interests)
Smallwood v. Illinois Central R.R., 385 F.3d 568 (7th Cir. 2004) (fraudulent-joinder and removal doctrine discussion)
New Hampshire v. Maine, 532 U.S. 742 (U.S. 2001) (judicial estoppel factors and its flexible application)
Continental Illinois Corp. v. Commissioner, 998 F.2d 513 (7th Cir. 1993) (application of judicial estoppel; general15 principles)
Ladd v. ITT Corp., 148 F.3d 753 (7th Cir. 1998) (judicial estoppel scope and function)