John WALKER, Individually and as Administrator for estate of Ann-Ashia Maddox; Greg McKinney, Individually and as Administrator for estate of Deashia McKinney; estate of Nakiya McKinney; Janet Tongue, as Administratrix for estate of Sherry Lynn Maddox; estate of Crystal Maddox; estate of Demita Wise; Patrick Netherton, as Guardian and Next Friend of Y.M. and as Administrator for estate of Heaven Maddox; estate of Earth Maddox; Carla Sparrow, Individually and as Administrator for estate of Dariyel Maddox; Roger Hardin, Jr., as Guardian and Next Friend of N.H.; Elizabeth Maddox; Daryl Maddox; Michael Taylor, Individually; Patrick Netherton, as Guardian and Next Friend of Y.M. and as Administrator for estate of Heaven Maddox; estate of Earth Maddox, for Plaintiffs—Appellants v. PHILIP MORRIS USA, INC., Gail Brothers; Mickey Brothers; Altria Group, Inc.; Philip Morris International, Inc.; Nathan Johnson; Jackson Furniture Industries, Inc., Defendants—Appellees.
No. 09-5318
United States Court of Appeals, Sixth Circuit
Oct. 31, 2011.
443 Fed. Appx. 946
BEFORE: KETHLEDGE and WHITE, Circuit Judges, and BECKWITH, District Judge.*
v.
PHILIP MORRIS USA, INC., Gail Brothers; Mickey Brothers; Altria Group, Inc.; Philip Morris Interna-tional, Inc.; Nathan Johnson; Jack-son Furniture Industries, Inc., Defen-dants—Appellees.
No. 09-5318.
United States Court of Appeals, Sixth Circuit.
Oct. 31, 2011.
BEFORE: KETHLEDGE and WHITE, Circuit Judges, and BECKWITH, District Judge.*
OPINION
HELENE N. WHITE, Circuit Judge.
Plaintiffs, the surviving relatives and ad-ministrators of the estates of the victims of a house fire, appeal the district-court or-ders denying their motion to remand this diversity case to the Kentucky state court and granting Defendants’
I. BACKGROUND
A. Factual Background
On February 6, 2007, at approximately 3:51 a.m., a fire broke out at 235 Guthrie Drive, a residence in Bardstown, Ken-tucky. Daryl Maddox, who lived at the premises, was the first to notice the fire; although intoxicated, he tried to rouse the other inhabitants, then fled outside to seek help. Maddox alerted the neighbors, who tried unsuccessfully to enter the burning house and rescue those remaining inside. By the time the blaze was brought under control, ten persons—four adults and six children—were dead.
The official report lists the cause of the fire as unknown, but suggests that the most likely source of ignition was “smok-ing material.” Investigators traced the or-igin of the fire to an area in the living room where Johnny Litsey, a deceased tenant, usually sat in an upholstered chair. Friends and family described Litsey as a moderate to heavy smoker, who spent most of his days (and many nights) sitting in “his” chair. No one who responded to the fire recalled hearing a smoke detector sounding an alarm. An investigative re-port states that Maddox told investigators that there was a smoke detector in the hallway, but he “tested it and it did not work.”
Defendant Nathan Johnson owned the Guthrie Drive property and rented it to Sherry Maddox, a victim of the fire. Johnson hired his cousin Mickey Brothers and Brothers‘s wife, Gail, to maintain the property and perform all repairs. Accord-ing to service records, the Brothers tested the smoke and carbon monoxide detector in January 2006, while performing other maintenance work, but it had not been checked since.
Plaintiffs commenced this action in the Circuit Court for Nelson County, Ken-tucky, alleging negligence on the part of Johnson and the Brothers,1 and product-liability claims against the cigarette manu-facturer, Philip Morris USA, its parent entities, Philip Morris International, Inc., and Altria Group, Inc. (together, “Philip Morris“), and the manufacturer of the chair that initially caught fire, Jackson Furniture Industries, Inc. (“Jackson Fur-niture“).2 Plaintiffs claim the fire could have been prevented if the Kentucky De-fendants had maintained a working smoke detector in the rental home, and if Philip Morris and Jackson Furniture used safer designs for their products. In particular, Plaintiffs contend that the fire would not have occurred if Johnny Litsey had been smoking “reduced ignition propensity” cig-arettes (“RIPC“), which are less likely than regular cigarettes to cause smoking fires,3 and that the existence of a safer
B. Procedural History
Philip Morris was served the complaint on February 4, 2008. On March 14 and 24, 2008, Philip Morris received the Broth-ers’ and Johnson‘s Answers denying Plain-tiffs’ allegations. On April 9, 2008, Philip Morris received copies of three signed affi-davits in which Nathan Johnson, Gail Brothers and Mickey Brothers denied as-suming a duty to maintain or inspect the smoke detector. The Brothers’ affidavits state that Mickey Brothers checked the smoke detector on one occasion when asked to do so by Sherry Maddox, and that there were no other requests to check or service the smoke detector made by Mad-dox or any other resident. Mickey Broth-ers’ affidavit adds that on that one occa-sion, he “told Sherry Maddox to check [the smoke detector] in the future whenever she changed the time on her clocks in the spring and the fall.”
On April 11, 2008, with the support of all Defendants, Philip Morris removed the case to the Federal District Court for the Western District of Kentucky pursuant to
The district court denied Plaintiffs’ mo-tion to remand on August 28, 2008.
II. DISCUSSION
A. Removal/Remand Issue
Plaintiffs contend that the district court erred in denying their motion to remand because: (1) the notice of removal was untimely; and (2) the Kentucky Defen-dants were properly joined in the lawsuit.
1. Whether Philip Morris‘s Removal Notice was Timely Filed
Whether there is a defect in the removal procedure is a purely legal question that we review de novo. Loftis v. United Parcel Serv., Inc., 342 F.3d 509, 514 (6th Cir. 2003). Plaintiffs contend that Philip Mor-ris‘s removal to federal district court was untimely. Philip Morris filed its notice of removal 65 days after being served with Plaintiffs’ Complaint, and 28 days after receiving the Brothers’ Answer to the Complaint.
In relevant part, the federal removal statute provides that a notice of removal “shall be filed within thirty days after the receipt by the defendant ... of a copy of the initial pleading....”
Plaintiffs argue that their Complaint contained unambiguous information con-cerning the nature of their state-law claims against the Kentucky Defendants, and therefore Philip Morris had no excuse not to remove within 30 days of service. We disagree.
Philip Morris could not divine that the case was removable based only on a complaint that “unambiguously” asserted claims against non-diverse defendants.
2. Whether the District Court Erred in Denying Plaintiffs’ Motion to Remand
a. The District Court‘s Decision.
As to the Kentucky Defendants, the is-sue central to liability is whether they voluntarily assumed a duty of care to maintain and repair a smoke detector that failed to function on the night of the fire. The parties presented the following evi-dence on this issue:
- According to the property‘s service records, the Kentucky Defendants inspected the smoke detector in Jan-uary 2006, while performing other maintenance work. There is no evi-dence of any subsequent inspection.
- By affidavit, the Kentucky Defen-dants claim that they told Sherry Maddox, the main tenant, to check the smoke detector twice a year. Sherry Maddox died in the fire.
- According to a report, Daryl Mad-dox told fire investigators that he tested the smoke detector some time before the fire and that it did not work.
- By affidavit, Daryl Maddox claims that Plaintiffs relied on the Ken-tucky Defendants to test and service the smoke detector, and believed that the Kentucky Defendants did so when they checked the furnace fil-ters and serviced other items in the home.
Upon reviewing this evidence, the district court held:
[I]n light of the evidence submitted by Phillip [sic] Morris USA in support of removal, Plaintiffs have failed to present any countervailing evidence that goes to the issue of whether the non-diverse De-fendants assumed the duty to test the smoke detector. Although Plaintiffs re-plied to Phillip [sic] Morris USA‘s re-sponse to the motion to remand, they tendered no evidence to either refute the non-diverse Defendants’ answers and affidavits, or to support their own allegations.
Plaintiffs reiterate the Affidavit of Da-ryl Maddox, which states in relevant part, “We relied on the maintenance people overseeing the property to test and service the smoke detector. We believed the maintenance people tested the smoke detector when they checked the furnace filters and serviced other items in the home.” These statements do not establish that the non-diverse Defendants assumed the duty to test the
Insomuch as Plaintiffs’ lack of evi-dence reduces their claims to mere con-clusory allegations, there is no reason-able basis for predicting that Plaintiffs might establish liability in their claims against the non-diverse Defendants. Walker v. Phillip [sic] Morris USA Inc., No. 3:08-CV-191-S, 2008 WL 4066064, at *3-4 (W.D. Ky. Aug. 28, 2008) (footnote omitted). The district court concluded that the Kentucky Defendants were fraud-ulently joined and denied Plaintiffs’ motion to remand.
b. Standard for Ruling on a Motion to Remand where Fraudulent Joinder is Alleged.
A party who removes a case involving non-diverse parties to federal court on di-versity grounds will defeat a motion to remand if it can show that the non-diverse parties were fraudulently joined. Saginaw Hous. Comm‘n v. Bannum, Inc., 576 F.3d 620, 624 (6th Cir. 2009) (citing Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999)). “Fraudulent joinder occurs when the non-removing party joins a party against whom there is no colorable cause of action.” Id. (citing Jerome-Duncan, Inc. v. Auto-By-Tel, L.L.C., 176 F.3d 904, 907 (6th Cir. 1999)). The non-moving par-ty‘s motive for joining the non-diverse par-ty to the lawsuit is “immaterial to our determination regarding fraudulent join-der.” Jerome-Duncan, 176 F.3d at 907.
This court‘s fraudulent-joinder law is de-rived from the Fifth Circuit‘s discussion in Bobby Jones Garden Apartments, Inc. v. Suleski, 391 F.2d 172 (5th Cir. 1968), followed by this court in Alexander v. Electronic Data Systems Corp., 13 F.3d 940, 949 (6th Cir. 1994). In Bobby Jones, the Fifth Circuit held:
There can be no fraudulent joinder un-less it be clear that there can be no recovery under the law of the state on the cause alleged or on the facts in view of the law.... One or the other at least would be required before it could be said that there was no real intention to get a joint judgment, and that there was no colorable ground for so claiming.
391 F.2d 172, 176 (5th Cir. 1968) (citation and internal quotation marks omitted). In adopting the Fifth Circuit‘s analysis, this court explained that “the question is whether there is arguably a reasonable basis for predicting that the state law might impose liability on the facts in-volved.” Alexander, 13 F.3d at 949 (quot-ing Bobby Jones, 391 F.2d at 176). In other words, “the question [is] whether there was any ‘reasonable basis for pre-dicting that [the plaintiff] could prevail.‘” Id. (quoting Tedder v. F.M.C. Corp., 590 F.2d 115, 117 (5th Cir. 1979)). Further, “‘[A]ny disputed questions and fact and ambiguities in the controlling state law [should be resolved] ... in favor of the nonremoving party.‘” Id. (quoting Carriere v. Sears Roebuck & Co., 893 F.2d 98, 100 (5th Cir.), cert. denied, 498 U.S. 817, 111 S.Ct. 60, 112 L.Ed.2d 35 (1990)) (em-phasis removed).
In Coyne, this Court relied on Alexander in clarifying the standard for resolving claims of fraudulent joinder:
To prove fraudulent joinder, the remov-ing party must present sufficient evi-dence that a plaintiff could not have established a cause of action against non-diverse defendants under state law. See Alexander, 13 F.3d at 949. Howev-er, if there is a colorable basis for pre-dicting that a plaintiff may recover against non-diverse defendants, this
Court must remand the action to state court. The district court must resolve “all disputed questions of fact and ambi-guities in the controlling ... state law in favor of the non removing party.” Id. All doubts as to the propriety of removal are resolved in favor of remand. See id.
Coyne, 183 F.3d at 493 (emphasis added). Coyne thus states that the removing party may “present ... evidence” showing the absence of a state-law claim, but does not elaborate on the proper approach when considering such evidence. The Coyne court resolved the question before it by scrutinizing the pleadings to determine that, as alleged, the facts would not have supported a cause of action under state law.4
In Gentek Building Products, Inc. v. Sherwin-Williams Co., 491 F.3d 320 (6th Cir. 2007), in the context of a case removed from state court based on the defendant‘s assertion of jurisdiction under the Magnu-son-Moss Act, this court observed:
Questions of removal ... may involve facial and factual inquiries. When rul-ing on a motion to remand, a court generally looks to the plaintiff‘s com-plaint, as it is stated at the time of removal, and the defendant‘s notice of removal. See, e.g., Miller v. Grgurich, 763 F.2d 372 (9th Cir. 1985). But federal courts may look beyond the pleadings to assess challenged facts; this may occur, for example, when the defendant alleges that the plaintiff fraudulently joined non-diverse defendants to destroy diver-sity jurisdiction. 16 Moore‘s Federal Practice § 107.41[l][e][ii]. In that con-text, the court may employ a summary-judgment-like procedure to examine affi-davits and deposition testimony for evi-dence of fraud. Id. (citing Great Plains Trust Co. v. Morgan Stanley Dean Wit-ter & Co., 313 F.3d 305, 311-312 (5th Cir. 2002)).
491 F.3d at 330. Again, although observ-ing that some fact inquiry and summary-judgment-like procedure is appropriate where fraudulent joinder is alleged, the court did not elaborate further.
The Fifth Circuit, however, has on sev-eral occasions clarified the approach to be employed in situations where a fact inquiry is proper. In Smallwood v. Illinois Cen-tral Railroad Co., 385 F.3d 568 (5th Cir. 2004) (en banc), the Fifth Circuit explained that there are two ways to establish im-proper joinder: “(1) actual fraud in the pleading of jurisdictional facts, or (2) ina-bility of the plaintiff to establish a cause of action against the non-diverse party in state court.” Id. at 573 (quoting Travis v. Irby, 326 F.3d 644, 646-47 (5th Cir. 2003)). Noting that the second option had generat-ed “uncertainty” among district courts, the Fifth Circuit distinguished two approaches to determine whether a plaintiff has a reasonable basis of recovery under state law:
The court may conduct a Rule 12(b)(6)-type analysis, looking initially at the al-
Id. (footnotes omitted). However, the court cautioned, “a summary inquiry is appropriate only to identify the presence of discrete and undisputed facts that would preclude plaintiff‘s recovery against the in-state defendant.” Id. at 573-74 (emphasis added).
In Travis, the Fifth Circuit discussed in greater detail the appropriate analysis when a district court pierces the pleadings:
[A]lthough the fraudulent joinder and
Rule 12(b)(6) standards appear similar, the scope of the inquiry is different. ForRule 12(b)(6) motions, a district court may only consider the allegations in the complaint and any attachments. For fraudulent joinder, the district court may ... “pierce the pleadings” and con-sider summary judgment-type evidence in the record, but must also take into account all unchallenged factual allega-tions, including those alleged in the com-plaint, in the light most favorable to the plaintiff. Any contested issues of fact and any ambiguities of state law must be resolved in [the plaintiff‘s] favor. The burden of persuasion on those who claim fraudulent joinder is a heavy one.
Id. at 648-49 (citations omitted) (emphasis added). Thus, when deciding a motion to remand involving fraudulent-joinder alle-gations, the Fifth Circuit applies a test similar to, but more lenient than, the anal-ysis applicable to a
Several other circuits agree:
Many courts agree that the defendant bears a heavy burden to prove fraudu-lent joinder:
The standard requiring that the remov-ing party show that the plaintiff cannot establish a claim against the allegedly fraudulently joined party, even after re-solving all issues of law and fact in the plaintiff‘s favor, is even more favorable to the plaintiff than the standard for ruling on a motion to dismiss.
16 James W. Moore et al., Moore‘s Federal Practice—Civil § 107.14[2][c][iv][B] (3d ed.1997) (emphasis added).5 Other courts
[i]n ruling on a remand motion in a case involving allegations of fraudulent join-der, the district court must evaluate all of the factual allegations (in the defen-dants’ affidavits and deposition tran-scripts used to support their removal petition, plaintiff‘s affidavits and deposi-tion transcripts, and the verified com-plaint) in the light most favorable to the plaintiff, resolving all contested issues of substantive fact in favor of the plaintiff.
Id. at § 107.14[2][c][iv][C] (emphasis add-ed).7
In sum, courts generally agree on the following two rules when deciding motions to remand that involve allegations of fraudulent joinder. First, even if the dis-trict court “pierces the pleadings” to con-sider summary-judgment-type evidence (such as depositions, affidavits, etc.), the proper standard for evaluating that evi-dence remains akin to that of a
B. Whether Plaintiffs Stated a Col-orable Claim Against the Ken-tucky Defendants
Here, it is unclear which standard the district court applied in ruling on Plain-tiffs’ motion to remand. The court recited the rule set forth in Alexander:
There can be no fraudulent joinder un-less it [is] clear that there can be no recovery under the law of the state on the cause alleged or on the facts in view of the law ... Therefore the question is whether there is arguably a reasonable basis for predicting that the state law might impose liability on the facts in-volved. [Restated,] the question [is] whether there was any reasonable basis for predicting that [Plaintiffs] could pre-vail.
Walker, 2008 WL 4066064, at *2 (quoting Alexander, 13 F.3d at 949) (alterations in Walker).
However, the court denied the motion to remand on the basis that Plaintiffs prof-fered insufficient factual support to over-come the Kentucky Defendants’ affidavits denying that they assumed a duty to con-duct additional inspections of the smoke detector. Plaintiffs argue that in conclud-ing that “they tendered no evidence to either refute the non-diverse Defendants’ answers and affidavits, or to support their own allegations,” Walker, 2008 WL 4066064, at *2, the district court errone-ously resolved factual controversies in fa-vor of the non-moving parties. We agree.
Under Kentucky law, a party who breaches a voluntarily assumed duty can be liable in tort. Grand Aerie Fraternal Order of Eagles v. Carney-han, 169 S.W.3d 840, 847 (Ky. 2005) (citing Louisville Coo-perage Co. v. Lawrence, 313 Ky. 75, 230 S.W.2d 103, 105 (1950)). “A threshold in-quiry under this doctrine is whether the putative tortfeasor has actually and specifi-cally undertaken to render the services allegedly performed without reasonable care.” Id. (citing Good v. Ohio Edison Co., 149 F.3d 413, 420 (6th Cir. 1998)). The scope of the putative tortfeasor‘s undertak-ing “defines and limits” that person‘s duty. Id. (quoting In re Temporomandibular Joint Implants Prod. Liab. Litig., 113 F.3d 1484, 1493 (8th Cir. 1997)). In other words, providing assistance once does not, in and of itself, impose a duty to provide the same assistance again in the future.
Whether the Kentucky Defendants as-sumed a duty under Kentucky law is a factual question dependent on whether Mickey and Gail Brothers’ self-serving af-fidavits are truthful and accurate or whether Daryl Miller‘s self-serving and conclusory affidavit is truthful and accu-rate. No discovery was taken in this case; all that is known is that the smoke detec-tor was once inspected by the Kentucky Defendants and that there is reason to believe that Daryl Maddox knew it was not working. In denying Plaintiffs’ motion to remand and dismissing the claims against
There are at least two problems with this approach. First, the district court‘s evaluation of the nature and sufficiency of the evidence supporting Plaintiffs’ claims against the Kentucky Defendants went be-yond the inquiry contemplated by the lim-ited pleading-piercing exception recognized as appropriate where an undisputed factu-al inaccuracy or insufficiency in the plain-tiff‘s claim against the in-state defendant is the basis of removal. The fact-based, summary-judgment-type inquiry contem-plated in such a case is the inquiry that is necessary to bring the true undisputed facts to the court‘s attention. An inquiry into the facts is not permitted in ruling on a motion on the pleadings; therefore, some piercing of the pleadings and factual pres-entation must be permitted if the court is to be informed of undisputed facts that undermine the well-pleaded claim that is otherwise colorable on its face. This piercing permits consideration of such un-disputed facts that negate the claim. It is not intended to provide an opportunity to test the sufficiency of the factual support for a plaintiff‘s claim, as is done in a
This leads to the second problem. In rejecting Plaintiffs’ evidence as insufficient to overcome the Kentucky Defendants’ af-fidavits, the court went beyond the rele-vant inquiry—whether Plaintiffs have a colorable claim under Kentucky law—and instead inquired whether Plaintiffs had ad-equate evidentiary support for their claim, the traditional
Because there was no fraudulent join-der, there was no diversity. Thus, the district court lacked subject matter juris-diction to address the merits of Plaintiffs’ claim. We therefore VACATE the district court‘s orders of dismissal, and remand for entry of an order remanding the case to state court.
Notes
Upon examination of the record, we find that there was sufficient evidence for the district court to conclude that Plaintiffs could not have established a cause of action against the non-diverse Defendants under state law, thereby permitting removal of this action to federal court. While Plain-tiffs’ complaint alleged that the local Defen-dants were liable to Plaintiffs as suppliers pursuant to Ohio Rev.Code § 2307.78(A)(1), either for the failure to warn about the alleged nicotine defect or for the negligent sale of cigarettes, Plaintiffs do not allege that the wholesalers and retailers knew of the so-called nicotine defect any sooner than members of the general public; thus, the wholesalers and retailers are excluded from product liability under
Coyne, 183 F.3d at 493 (emphasis added).