The question of the preemption of state law by federal tobacco legislation has been addressed numerous times. Today, we address the preemption issue in the context of the doctrine of fraudulent joinder, which is invoked to achieve diversity jurisdiction. We hold that the district court erroneously allowed the defendants-appellees to achieve diversity jurisdiction by its incorrect finding that the plaintiffs-appellants’ state law claims were preempted and constituted fraudulent joinder. Because the district court should have remanded the action to state court, we vacate the judgment and remand with instructions to remand the .action to state court. We have jurisdiction over the final judgment of the district court pursuant to 28 U.S.C. § 1291.
BACKGROUND
Benjamin Francis, an Alaska resident and citizen, died at age fifty-two from lung cancer. As Francis’ survivor and on behalf of his estate, Dolores Hunter brought a wrongful death lawsuit in Alaska state court against Philip Morris USA, a Virginia corporation that produces, markets, and distributes cigarettes; Altria Group, the parent company of Philip Morris USA; and the Alaska Commercial Company (“ACC”), an Alaska corporation that sells merchandise, including cigarettes manufactured by Philip Morris, in stores throughout Alaska (all three Appellees are collectively referred to as “Appellees”).
Hunter alleged that Francis’ death resulted from defective products sold by Appellees. Hunter’s complaint included claims of: (I) fraud and misrepresentation, (II) products liability, (III) failure to warn, (IV) deceptive advertising, (V) breach of warranty, (VI) conspiracy, and (VII) addiction defectiveness.
Philip Morris and Altria (together, the “Altria defendants”) removed the case to the United States District Court for the District of Alaska. They argued that Hunter’s state law claims against ACC were preempted by congressional policy not to remove tobacco from the market and that ACC therefore was fraudulently joined, resulting in complete diversity of citizenship. The Altria defendants then filed a motion to dismiss Hunter’s complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. Hunter filed a motion to remand, *1042 asserting that her complaint adequately pleaded a strict products liability claim against ACC under Alaska state law. She argued that ACC was not fraudulently joined and, consequently, that total diversity between plaintiff and all defendants did not exist.
The district court denied Hunter’s motion to remand. The court agreed with the Altria defendants that Hunter’s state product liability claim against ACC was preempted because it would result in an effective ban on cigarettes, in contravention of congressional policy. Hunter therefore had stated no possible claim against ACC. The court accordingly found that ACC was fraudulently joined, resulting in diversity of citizenship. The court denied Hunter’s motion for reconsideration.
The district court then granted the 12(b)(6) motion to dismiss, reasoning that Hunter had failed to identify the specific products Francis used and the alleged defects in the products, and that any product liability claims were preempted by the congressional intent not to ban the sale of cigarettes. The district court entered final judgment in favor of Appellees. Hunter timely appealed.
DISCUSSION
Hunter contends that the district court erred in denying her motion to remand the case to state court and, accordingly, that the court lacked jurisdiction to grant the Altria defendants’ motion to dismiss. We review de novo the district court’s denial of a motion to remand to state court for lack of removal jurisdiction.
Moore-Thomas v. Alaska Airlines, Inc.,
A defendant may remove an action to federal court based on federal question jurisdiction or diversity jurisdiction. 28 U.S.C. § 1441. However, “ ‘[i]t is to be presumed that a cause lies outside [the] limited jurisdiction[of the federal courts] and the burden of establishing the contrary rests upon the party asserting jurisdiction.’ ”
Abrego Abrego v. Dow Chem. Co.,
“ ‘The threshold requirement for removal under 28 U.S.C. § 1441 is a finding that the complaint contains a cause of action that is within the original jurisdiction of the district court.’ ”
Ansley v. Ameriquest Mortgage Co.,
As for diversity jurisdiction, federal district courts have jurisdiction over suits for more than $75,000 where the citizenship of each plaintiff is different from that of each defendant. 28 U.S.C. § 1332(a). Although an action may be removed to federal court only where there is complete diversity of citizenship, 28 U.S.C. §§ 1332(a), 1441(b), “one exception to the requirement for complete diversity is where a non-diverse defendant has been ‘fraudulently joined.’ ”
Morris v. Princess Cruises, Inc.,
The Altria defendants removed the case to federal court based on diversity of citizenship, not federal question jurisdiction. In order to establish diversity, the Altria defendants contended that Hunter’s claims against ACC were both impermissibly vague and subject to conflict preemption and, accordingly, that ACC had been fraudulently joined. Removal accordingly was based on a meld of the implied preemption doctrine from the federal question context and the fraudulent joinder doctrine from the diversity context.
The Altria defendants relied in the district court, and rely here, on the Supreme Court’s decision in
Food & Drug Admin. v. Brown & Williamson Tobacco Corp.,
*1044 The district court agreed with the Altria defendants’ reliance on FDA in denying Hunter’s motion to remand. The court thus concluded that Hunter’s product liability claim against ACC was preempted because allowing such a claim would result in an effective ban on the sale of tobacco products in contravention of congressional objectives. We disagree with the district court’s reasoning on two grounds. First, we disagree with the Altria defendants’ use of the affirmative defense of implied preemption as a basis for asserting fraudulent joinder in order to invoke diversity jurisdiction. Second, even if the defendants were to be allowed to use the defense of federal preemption to establish fraudulent joinder, we conclude that Hunter’s state product liability claim is not impliedly preempted by federal law.
The use of the affirmative defense of federal preemption to assert fraudulent joinder in order to establish diversity jurisdiction was addressed by the Fifth Circuit in
Smallwood v. Illinois Central R.R. Co.,
The court explained that there are “two ways to establish improper joinder: ‘(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.’ ”
Id.
at 573 (quoting
Travis v. Irby,
Smallwood also addressed the unique situation when the same analysis applied to an assertion of fraudulent joinder applies to all defendants.
[W]hen, on a motion to remand, a 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, there is no improper joinder; there is only a lawsuit lacking in merit. In such cases, it makes little sense to single out the instate defendants as “sham” defendants and call their joinder improper. In such circumstances, the allegation of improp *1045 er joinder is actually an attack on the merits of plaintiffs case as such — an allegation that, as phrased by the Supreme Court in Chesapeake & O.R. Co. v. Cockrell, [232 U.S. 146 , 153[,34 S.Ct. 278 ,58 L.Ed. 544 ] (1914),] “the plaintiffs case [is] ill founded as to all the defendants.”
We agree with the Fifth Circuit. Here, as in Smallwood, the district court’s decision that Hunter’s claims against ACC were preempted “effectively decided the entire case.” Id. at 571. The Altria defendants’ preemption argument accordingly should have been brought in the context of attacking the merits of Hunter’s case, rather than as a basis for removing the case to federal court.
Our decision in
Ritchey
does not foreclose this holding. In
Ritchey,
we held that the statute of limitations defense is a permissible means by which to establish fraudulent joinder in order to remove an action on diversity grounds. We emphasized, however, that the statute of limitations defense is a “rather unique” defense that “does not truly go to the merits of the plaintiffs claim in any sense.”
The preemption defense, by contrast, goes to the merits of the plaintiffs case. When a defendant asserts that the plaintiffs claim is impliedly preempted by federal law, it cannot be said that the plaintiffs failure to state a claim against the resident defendant is “obvious according to the settled rules of the state.”
Hamilton Materials,
Here, for example, it is not obvious from the face of the complaint that Hunter has failed to state a claim against ACC. Hunter’s complaint alleged: (1) that Francis “purchased and used cigarettes from defendants”; (2) the cigarettes were unsafe and defective and posed a risk that outweighed their utility; (3) Francis used defendants’ cigarettes “without a change in condition,” since they had left defendants’ possession; (4) Francis developed lung cancer “as a direct and proximate result of the use of Defendants’ unsafe and defective cigarettes”; and (5) this caused his family losses. 2
In Alaska, “[a] manufacturer is strictly liable in tort when an article he places on the market knowing that it is to be used without inspection for defects, proves to have a defect that causes injury to a human.”
Pratt & Whitney Can., Inc. v. Sheehan,
As the Eleventh Circuit has stated, “if there is a possibility that a state court would find that the complaint states a cause of action against any of the resident defendants, the federal court must find that the joinder was proper and remand the case to the state court.”
Tillman v. R.J. Reynolds Tobacco,
Even if it were appropriate to raise implied preemption as a ground for a finding of fraudulent joinder, the Altria defendants would face both the strong presumption against removal jurisdiction and the “general presumption against fraudulent joinder.”
Hamilton Materials,
“When addressing questions of express or implied preemption, we begin our analysis ‘with the assumption that the historic police powers of the States [are] not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.’ ”
Altria Group, Inc. v. Good,
— U.S. -,
The Supreme Court and the appellate courts have addressed the question of the preemption of state law by federal tobacco legislation in a series of cases.
See, e.g., Altria,
For example, in
Boemer,
the Eighth Circuit rejected the tobacco company’s argument that the plaintiffs state design defect claim was preempted by the Labeling Act.
The Altria defendants’ argument that Hunter’s claim against ACC is impliedly preempted relies solely on the principle expressed in
FDA
that Congress has foreclosed the removal of tobacco products from the market. In reaching this conclusion, the Supreme Court reasoned that “Congress has directly addressed the problem of tobacco and health through legislation on six occasions since 1965,”
3
and that Congress enacted the statutes despite the fact that “the adverse health consequences of tobacco use were well known.”
FDA,
Appellees argue that
FDA’s
core holding should be expanded based on
Geier v. Am. Honda Motor Co.,
The tort action in
Geier
relied on a claim that manufacturers had a duty to install an airbag in a car.
Id.
at 881,
Unlike
Geier,
in which the state law claim would have imposed a duty that directly contradicted a federal regulation, Hunter’s claim cannot be said to “stand[ ] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”
Freightliner Corp.,
In sum, the Altria defendants have failed to overcome the presumption against removal because Hunter’s complaint does not indicate that she has obviously failed to state a claim against ACC. Accordingly, the district court erred in concluding that ACC was fraudulently joined. The Altria defendants further have failed to establish a clear conflict between Hunter’s claim and federal law. Implied preemption therefore does not apply. Because ACC was not fraudulently joined, there was no complete diversity of citizenship, and the case should have been remanded to the state court. Appellants shall recover their costs on appeal from Appellees.
For the foregoing reasons, the judgment of the district court is vacated and the case is remanded with instructions that the case be remanded to state court.
VACATED and REMANDED with instructions.
Notes
. On June 22, 2009, President Obama signed the Family Smoking Prevention and Tobacco Control Act, Pub.L. No. 111-31, 123 Stat. 1776 (2009), which granted the FDA authority to regulate tobacco products. This legislation, however, does not "affect any action pending in Federal [or] State ... court.”
Id.
§ 4(a)(2),
. Although Hunter raised numerous claims in her complaint, we address only her strict products liability claim, which is the claim she focuses on in her brief. We do not consider whether she has stated any other claim or claims on which relief can be granted.
. The Court listed six statutes aimed at regulating tobacco. In addition to the 1965 Labeling Act and the Public Health Cigarette Smoking Act of 1969, Congress enacted the Alcohol and Drug Abuse Amendments of 1983, Pub.L. No. 98-24, 97 Stat. 175 (expressing the policy to reduce alcohol and drug abuse); the Comprehensive Smoking Education Act, Pub.L. No. 98-474, 98 Stat. 2200 (addressing labeling requirements for cigarettes); the Comprehensive Smokeless Tobacco Health Education Act of 1986, Pub.L. No. 99-252, 100 Stat. 30 (providing for public education regarding smokeless tobacco products); and the Alcohol, Drug Abuse, and Menial Health Administration Reorganization Act, Pub.L. No. 102-321, 106 Stat. 323 (addressing,
inter alia,
the use of tobacco products by minors).
See FDA,
