United States District Court, S.D. Illinois
August 3, 2005.
GERALD KRUEGER AND REBEKAH KRUEGER, Plaintiffs,
R.J. REYNOLDS TOBACCO COMPANY, a corporation & MARTIN & BAYLEY, INC., d/b/a HUCK'S CONVENIENCE STORE, Defendants.
The opinion of the court was delivered by: DAVID HERNDON, District Judge
MEMORANDUM & ORDER
On December 27, 2004, Plaintiffs Gerald and Rebekah Krueger
filed the present complaint in the Third Judicial Circuit,
Madison County, Illinois against Martin & Bayley, Inc. d/b/a
Huck's Convenience Store ("Huck's") and R.J. Reynolds Tobacco
Company ("Reynolds") (Doc. 2). On February 10, 2005, Defendants
removed the case based on this Court's diversity jurisdiction
arguing that Huck's was fraudulently joined and its citizenship
should be disregarded for purposes of the Court's jurisdiction
Now before the Court are Plaintiffs' Motion to Remand (Doc.
12) and Defendants' Motion to Strike (Doc. 26). For the
reasons set forth below, the Court denies Plaintiffs' Motion to
Remand and Defendants' Motion to Strike. II. Background
Defendant Reynolds manufactures and distributes tobacco
products under the brand name Salem Lights (Doc. 2, Compl. at ¶
4). Defendant Huck's is engaged in the business of selling Salem
Lights brand cigarettes (Id. at ¶ 5). Plaintiff Gerald
Krueger alleges he purchased and consumed (on average)
approximately 20-30 Salem Lights cigarettes per day for more than
24 years (Id. at ¶ 3). Plaintiff Gerald Krueger alleges that
as a result of using Salem Lights tobacco products as intended he
was diagnosed with lung cancer on December 6, 2000 (Id. at ¶
1). Among other things, Plaintiff Gerald Krueger alleges he was
without knowledge that he received higher levels of tar and
nicotine than Defendants represented or that the smoke produced
by Salem Lights cigarettes is more mutagenic than regular
cigarettes (Id. at ¶ 3).
Count I alleges that Defendant Reynolds*fn1 violated the
Illinois Consumer Fraud and Deceptive Business Practices Act
("ICFA"), 815 ILCS 505/1, et seq., by misrepresenting and/or
concealing certain facts about the tar and nicotine content and
the increased mutagenicity of Salem Lights such that Plaintiff
was induced to purchase these cigarettes (Id. at ¶¶ 8-21).
Count VII makes the same allegations against Defendant Huck's
(Id. at ¶¶ 55-68).
Count II alleges that Defendant Reynolds expressly warranted
that the Salem Lights cigarettes were "Lights" cigarettes and
contained "lowered tar and nicotine" pursuant to the Uniform Commercial Code § 2-313,
810 ILCS 5/2-313, by placing the words "Salem Lights" and/or
"lowered tar and nicotine" on each and every package sold to
Plaintiff (Id. at ¶ 25). Plaintiffs allege that Defendant
Reynolds breached the aforesaid express warranties in that the
Salem Lights cigarettes were not "Lights" and/or did not deliver
"lowered tar and nicotine" to Plaintiff (Id. at ¶ 27). Count
VIII (incorrectly labeled as Count VII) makes the same
allegations against Defendant Huck's (Id. at ¶¶ 69-77).
Count III alleges that Defendant Reynolds by virtue of § 2-314
of the Uniform Commercial Code, 810 ILCS 5/2-314, impliedly
warranted that Salem Lights cigarettes were merchantable (Id.
at ¶ 34). Plaintiffs allege that Plaintiff relied upon the
implied warranty that Salem Lights cigarettes were merchantable
and Defendant Reynolds breached the implied warranty in that the
Salem Lights cigarettes were not merchantable (Id. at ¶¶ 34,
36). Count IX makes the same allegations against Defendant
Huck's (Id. at ¶¶ 78-86).
Count IV alleges products liability against Defendant Reynolds
in that Defendant Reynolds sold Salem Lights cigarettes that were
defective in that they were unreasonably dangerous in light of
their nature and intended use (Id. at ¶ 42). Count X makes
the same allegations against Defendant Huck's (Id. at ¶¶
87-95). Plaintiffs further contend that "[d]ue to the extent of
their [sic] obligations, including judgments pending against them
[sic] and their [sic] obligations to the various states under the
Master Settlement Agreement, R.J. Reynolds, Inc., the
manufacturers [sic] of Salem Lights at issue, would not be able
to satisfy any judgment in Plaintiff's favor based upon his claims represented in Count IV of this Complaint."
(Id. at ¶ 95).
Count V alleges negligence against Defendant Reynolds (Id.
at ¶¶ 49-54). Count XI makes the same allegations against
Defendant Huck's (Id. at ¶¶ 96-101).
Count VI, brought by Rebekah Krueger, alleges loss of
consortium against Defendant Reynolds (Id. at ¶¶ 54-57).
Count XII makes the same allegations against Defendant Huck's
(Id. at ¶¶ 54-57).
The removal statute, 28 U.S.C. § 1441, is construed narrowly,
and doubts concerning removal are resolved in favor of remand.
Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir.
1993). Defendants bear the burden to present evidence of federal
jurisdiction once the existence of that jurisdiction is fairly
cast into doubt. See In re Brand Name Prescription Drugs
Antitrust Litig., 123 F.3d 599, 607 (7th Cir. 1997). "A
defendant meets this burden by supporting [its] allegations of
jurisdiction with `competent proof,' which in [the Seventh
Circuit] requires the defendant to offer evidence which proves
`to a reasonable probability that jurisdiction exists.'" Chase
v. Shop `N Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th
Cir. 1997) (citations omitted).
Here, despite the apparent lack of diversity jurisdiction (both
Plaintiffs and Huck's are Illinois citizens), Defendants argue
that Huck's was fraudulently joined in the action and that
without the presence of Huck's diversity of citizenship exists
between the parties. Assuming Defendants can meet their burden to
show fraudulent joinder, diversity jurisdiction exists because
the parties are diverse, Plaintiffs are Illinois residents and Reynolds is an out-of-state
corporation,*fn2 and there is no dispute that the amount in
controversy exceeds $75,000. See 28 U.S.C. § 1332.
In the context of jurisdiction, "fraudulent" is a term of art.
See Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir.
1992). "Although false allegations of jurisdictional fact may
make joinder fraudulent, . . . in most cases fraudulent joinder
involves a claim against an in-state defendant that simply has no
chance of success whatever the plaintiff's motives." Id.
(collecting cases). To prove fraudulent joinder the
out-of-state defendant must "show there exists no `reasonable
possibility that a state court would rule against the [in-state]
defendant,'" Schwartz v. State Farm Mutual Auto. Ins. Co.,
174 F.3d 875, 878 (7th Cir. 1999) (citing Poulos,
959 F.2d at 73)), or "if a state court has come to judgment, there [is not]
any reasonable possibility that the judgment will be reversed on
appeal." Poulos, 959 F.2d at 73. The defendant bears a heavy
burden in this regard. Id.
In International Brotherhood of Teamsters Local 734 Health and
Welfare Trust Fund v. Philip Morris, Inc., 97 C 8813 and 97 C
8114, 1998 WL 242130, at *4 (N.D. Ill. May 8, 1998) (Manning,
J.), removal aff'd on other grounds, 196 F.3d 818 (7th Cir.
1999), the plaintiffs sought reimbursement for the health care
costs for smokers who allegedly suffered from smoking-related
illnesses. Id. at *1. The plaintiffs made allegations against the
non-diverse cigarette distributor defendants similar to those
made here: the defendants "distributed, sold and promoted the
sale of cigarettes and tobacco products"; "expressly and
impliedly warranted that the tobacco products which they . . .
distributed . . . were of merchantable quality, fit and safe";
and "possessed scientific data to demonstrate that the tobacco
products . . . were linked to serious illness and medical
complications." Id. at *2-3. Finding it unnecessary to
analyze the elements of each of the plaintiffs' ten counts, the
district court held that the non-diverse cigarette distributor
defendants were fraudulently joined because the allegations
against them were "wholly conclusory" and "did not tie the
distributor defendants into the allegedly wrongful acts described
in the complaints." Id. at *5.
In this case, the Court finds that Huck's has been fraudulently
joined. Accord Sandrowski v. Philip Morris, No. 03-CV-555-MJR
(S.D. Ill. Mem. & Order Oct. 6, 2003) (Reagan, J.). In their
complaint, Plaintiffs make the same generic allegations against
both Reynolds and Huck's, and in fact, even name Huck's as the
Defendant in counts directed at Reynolds. (Doc. 2, Compl.,
Counts I-VI). In support of their motion to remand, Plaintiffs
rely on three decisions made by the circuit court in Madison
County, Illinois where the court construed the "[d]efendant's
challenges to the sufficiency of [the] [p]laintiffs' [c]omplaint,
combined with [d]efendant's prayer for relief that [p]laintiffs'
[c]omplaint be dismissed with prejudice, as a Motion to Dismiss"
finding that the plaintiffs had stated a valid causes of action
against Huck's for violation of the ICFA, breach of express
warranty, breach of the implied warranty of merchantability, products liability, and
negligence. See Mills v. Martin & Bayley, Inc., d/b/a Huck's
Convenience Store, No. 04-L-1270 (Ill. Cir. Ct. April 12, 2005)
(Kardis, J.) (Doc. 25, Ex. G); Wilkerson v. Martin & Bayley,
Inc., d/b/a Huck's Convenience Store, No. 05-L-125 (Ill. Cir.
Ct. June 2, 2005) (Kardis, J.) (Doc. 30, Ex. 1); Lucas v.
Martin & Bayley, Inc., d/b/a Huck's Convenience Store, No.
05-L-127 (Ill. Cir. Ct. June 2, 2005) (Kardis, J.) (Doc. 30, Ex.
2). Denying a motion to dismiss is one matter. The state court
judge will, of course, be compelled to discharge Huck's at the
summary judgement stage. If not, this Court predicts his orders
will not withstand appellate review. In short, the Court cannot
say that there is any reasonable possibility that the state court
would rule against Huck's or an Illinois appellate court would
reverse its ultimate decision to dismiss Huck's from the case.
The Court DENIES Plaintiffs' motion to remand because
Defendants have met their burden of establishing that removal was
proper (Doc. 12). The Court DISMISSES Huck's from the case
because it was fraudulently joined as a defendant.
The Court further DENIES Defendants' motion to strike (Doc.
IT IS SO ORDERED.