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Smith v. Shipping Utilities

November 23, 2005


The opinion of the court was delivered by: Murphy, Chief District Judge


This matter was before the Court on November 7, 2005, for a hearing on Plaintiffs' motion to remand. For the following reasons, this action is remanded to the Third Judicial Circuit Court, Madison County, Illinois.


This action was filed in Madison County, Illinois, on June 9, 2005. The state court complaint alleges injuries suffered by Plaintiff Edward P. Smith while operating a forklift working at Defendant Prairie Farms Dairy, Inc.'s (Prairie Farms') plant in Granite City, Illinois (Doc. 2, ¶¶ 6, 9-10, 13). Smith and his wife assert claims for negligence and products liability against Shipping Utilities, Inc. (Shipping Utilities), which distributed the forklift; CitiCapitial Commercial Corporation, which owned the forklift; and Nacco Materials Handling Group, Inc., d/b/a Hyster Company (Nacco), which manufactured the forklift. Additionally, Plaintiffs assert claims for spoliation against Prairie Farms and Shipping Utilities because they modified, altered, and destroyed the integrity of the forklift in modifying and altering it and its component parts and permitting its continued use, among other things. Additionally, Shipping Utilities, which is in the business of renting, leasing, and distributing industrial machinery, sold and transported the forklift to a third-party 1500 miles away without notice to Plaintiffs or their attorneys, and Prairie Farms allowed Shipping Utilities to do so without giving notice.

Nacco removed this action to this Court on July 15, 2005, arguing that diversity jurisdiction exists despite the fact that Prairie Farms is an Illinois citizen because Prairie Farms is "fraudulently joined;" therefore, the Court should disregard its citizenship. Nacco contends that Prairie Farms is fraudulently joined because (1) Plaintiffs cannot state a claim against Prairie Farms or, alternatively, (2) the spoliation claims against Prairie Farms are "misjoined."


It is fundamental that "[f]ederal courts are not courts of general jurisdiction; they have only the power that is authorized by Article III of the Constitution and the statutes enacted by Congress pursuant thereto." Bender v. Williamsport Area School Dist., 475 U.S. 534, 541 (1986). For this reason, district courts must "interpret the removal statute narrowly," and any doubt regarding jurisdiction should be resolved in favor of remand to state court. Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993). As the party seeking to invoke the Court's jurisdiction, Nacco bears the burden of proving the existence of federal subject matter jurisdiction by "competent proof," NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 237 (7th Cir. 1995), which means "proof to a reasonable probability that jurisdiction exists." Target Market Publishing, Inc. v. ADVO, Inc., 136 F.3d 1139, 1142 (7th Cir. 1998).

In order for this Court to have diversity jurisdiction under 28 U.S.C. § 1332, the parties must be of diverse citizenship and the amount in controversy must exceed the sum or value of $75,000, exclusive of interest and costs. The burden of proof falls on the party seeking to invoke federal diversity jurisdiction to present "competent proof" that the requirements of § 1332 have been met. Chase v. Shop 'N Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir. 1997); see also McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 179 (1936). In deciding whether a defendant has been fraudulently joined, a federal court "must engage in an act of prediction: is there any reasonable possibility that a state court would rule against the non-diverse defendant?" Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992). As recognized by the Seventh Circuit Court of Appeals in Poulos, "[a]n out-of-state defendant who wants to remove must bear a heavy burden to establish fraudulent joinder." Id.

The Illinois Supreme Court has held that a spoliation claim can be stated under existing negligence law, including the principle that the defendant owed a duty to the plaintiff. Boyd v. Travelers Ins. Co., 652 N.E.2d 267, 270 (Ill. 1995). The issue in this case is whether Prairie Farms had a duty to preserve evidence. The Illinois Supreme Court has articulated a two-prong test for determining when there is a duty to preserve evidence. In determining whether a duty to preserve evidence exists, first, as a threshold matter, the court must determine whether such a duty arises by agreement, contract, statute, special circumstance, or voluntary undertaking. Dardeen v. Kuehling, 821 N.E.2d 227, 236 (Ill. 2004). If so, then the court must determine "whether that duty extends to the evidence at issue -- i.e., whether a reasonable person should have foreseen that the evidence was material to a potential civil action. If the plaintiff does not satisfy both prongs, there is no duty to preserve the evidence at issue." Id. (internal citations omitted). The first prong is referred to as the "relationship" prong and the second prong as the "foreseeability" prong. Id.*fn1

While the Court in Dardeen found no duty under the facts of that case, 821 N.E.2d at 233 (the defendant insurer had neither possession nor control over its insured's sidewalk and, therefore, had no duty to preserve it), the analysis and the following language leads this Court to the opposite result in this case.

We hinted at what special circumstances might give rise to a duty to preserve evidence in Miller v. Gupta, 174 Ill.2d 120, 200 Ill. Dec. 217, 672 N.E.2d 1229 (1996). In Miller, a medical malpractice plaintiff's attorney requested X rays from the plaintiff's doctor. The doctor complied and obtained the X rays. Before taking the X rays to the hospital to copy them, he placed them on the floor of his office near the wastebasket. The X rays disappeared. A housekeeping employee who cleaned the doctor's office guessed that she disposed of the X rays, which were later incinerated. We remanded to allow the plaintiff to amend the negligent spoliation claim to satisfy Boyd. Miller, 174 Ill.2d at 129, 220 Ill. Dec. 217, 672 N.E.2d 1229.

Unlike the plaintiff in Miller, Dardeen never contacted the defendant to ask it to preserve evidence. Dardeen never requested evidence from State Farm, and he never requested that State Farm preserve the sidewalk or even document its condition. And though he visited the accident site hours after he was injured, he did not photograph the sidewalk. Additionally, unlike the doctor in Miller, State Farm never possessed the evidence at issue and, thus, never segregated it for the plaintiff's benefit.

Dardeen, 821 N.E.2d at 232. In this case, there is no question that Prairie Farms possessed the forklift after the accident. Additionally, six days after the accident, Plaintiffs' counsel sent a letter to Prairie Farms' Office Manager stating: "Due to the fact that this accident resulted in both a compensable work accident and personal injury, you are being placed on notice not to alter, repair, destroy, or modify this piece of equipment from its post-accident state until notifying this office and giving us 14 days notice to inspect the forklift" (Doc. 24, Ex. D). Considering Prairie Farms' possession of the forklift and the fact that it was put on notice, there is a reasonable possibility that the state court would rule against Prairie Farms when considering whether a duty to preserve evidence arose by special circumstance. See, e.g., O'Brien Tire, 752 N.E.2d at 12; cf. Dardeen, 821 N.E.2d at 233 ("[N]o Illinois court has held that a mere opportunity to exercise control over the evidence at issue is sufficient to meet the relationship prong. [citing cases] We do not intimate that, nor do we decide whether, possession is required in every negligent spoliation case.").

Moreover, Smith filed an affidavit in which he states that immediately following the accident, an employee of Prairie Farms placed a "do not use sign" on the forklift that was later removed (Doc. 35, ΒΆ 3). On these facts, there is a reasonable possibility that the state court would rule against Prairie Farms when considering whether a duty to preserve evidence arose by voluntary undertaking. See, e.g., Boyd, 652 N.E.2d at 271 (defendant insurance company assumed a duty to preserve evidence when its employees took possession of it, knowing that it was relevant to future litigation). Based upon the foregoing, there is a reasonable possibility that the state court would rule against Prairie Farms ...

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