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Phillips v. Howmedica Osteonics Corp.

December 17, 2007

SHARON PHILLIPS, PLAINTIFF,
v.
HOWMEDICA OSTEONICS CORPORATION AND ANDERSON HOSPITAL, DEFENDANTS.



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

MEMORANDUM AND ORDER

I. INTRODUCTION

This matter is before the Court on preliminary review of the allegations of federal subject matter jurisdiction asserted in the notice of removal filed by Defendant Howmedica Osteonics Corporation ("Howmedica"). See Wisconsin Knife Works v. National Metal Crafters, 781 F.2d 1280, 1282 (7th Cir. 1986) ("The first thing a federal judge should do when a complaint is filed is check to see that federal jurisdiction is properly alleged."); Board of Educ. of Decatur Sch. Dist. No. 61 v. Rainbow/Push Coal., 75 F. Supp. 2d 916, 918 (C.D. Ill. 1999) (citing Wisconsin Knife Works, 781 F.2d at 1282) (reviewing a notice of removal sua sponte and holding that the court lacked federal subject matter jurisdiction); Waymar Med., Inc. v. American Med. Elecs., Inc., 786 F. Supp. 754, 755 (E.D. Wis. 1992) (same). See also Hay v. Indiana State Bd. of Tax Comm'rs, 312 F.3d 876, 879 (7th Cir. 2002) (quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 577 (1999)) ("Jurisdiction is the 'power to declare law,' and without it the federal courts cannot proceed. Accordingly, not only may the federal courts police subject matter jurisdiction sua sponte, they must."); Hammes v. AAMCO Transmissions, Inc., 33 F.3d 774, 778 (7th Cir. 1994) (noting that a federal court "has an independent duty to satisfy itself that it has subject-matter jurisdiction"); Kurz v. Fidelity Mgmt. & Research Co., No. 07-cv-592-JPG, 2007 WL 2746612, at *1 (S.D. Ill. Sept. 18, 2007) ("The limited nature of federal subject matter jurisdiction imposes on federal courts a duty to examine their jurisdiction at every stage of a proceeding, sua sponte if need be."); Kuntz v. Illinois Cent. R.R. Co., 469 F. Supp. 2d 586, 588 (S.D. Ill. 2007) ("Because a federal court's jurisdiction is limited, it has a . . . nondelegable duty to police the limits of federal jurisdiction with meticulous care.").

This action was filed originally in the Circuit Court of the Third Judicial Circuit, Madison County, Illinois, on October 17, 2007. The complaint in this case alleges that Plaintiff Sharon Phillips suffered personal injuries as a result of a defective hip replacement device that was surgically implanted in her body in September 2003. Phillips asserts claims for breach of implied warranty, strict products liability, and negligence against Howmedica, the manufacturer of the hip replacement device. Additionally, Phillips asserts a claim in strict products liability against Defendant Anderson Hospital ("Anderson"), where Phillips underwent the operation in which the defective hip replacement device was implanted in her body. On November 29, 2007, Howmedica removed the case from state court to this Court, asserting federal subject matter jurisdiction on the basis of diversity of citizenship. Having reviewed carefully the jurisdictional allegations contained in Howmedica's notice of removal, the Court concludes that federal subject matter jurisdiction does not exist in this case. Accordingly, the case will be remanded to state court.

II. DISCUSSION

A. Legal Standard

Under 28 U.S.C. § 1441, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). The party seeking removal has the burden of establishing federal jurisdiction. See Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 540 (7th Cir. 2006); Vogel v. Merck & Co., 476 F. Supp. 2d 996, 998 (S.D. Ill. 2007); Fuller v. BNSF Ry. Co., 472 F. Supp. 2d 1088, 1091 (S.D. Ill. 2007). "'Courts should interpret the removal statute narrowly and presume that the plaintiff may choose his or her forum.' Put another way, there is a strong presumption in favor of remand." Potter v. Janus Inv. Fund, 483 F. Supp. 2d 692, 695 (S.D. Ill. 2007) (quoting Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir. 1993)) (internal citation omitted). "All doubts about the propriety of removal are to be resolved in favor of remand." Disher v. Citigroup Global Mkts., Inc., 487 F. Supp. 2d 1009, 1014 (S.D. Ill. 2007). See also Alsup v. 3-Day Blinds, Inc., 435 F. Supp. 2d 838, 841 (S.D. Ill. 2006) ("Doubts concerning removal must be resolved in favor of remand to the state court."); Littleton v. Shelter Ins. Co., No. 99-912-GPM, 2000 WL 356408, at *1 (S.D. Ill. Mar. 9, 2000) ("The removal statute, 28 U.S.C. § 1441, is construed narrowly, and doubts concerning removal are resolved in favor of remand.").

Removal based on federal diversity jurisdiction requires, of course, that the parties to a case be of completely diverse state citizenship, that is, no plaintiff may be a citizen of the same state as any defendant, and that the amount in controversy exceed $75,000, exclusive of interest and costs. See 28 U.S.C. § 1332(a)(1); Carden v. Arkoma Assocs., 494 U.S. 185, 187 (1990); Rubel v. Pfizer Inc., 361 F.3d 1016, 1017 (7th Cir. 2004); Lyerla v. Amco Ins. Co., 461 F. Supp. 2d 834, 835 (S.D. Ill. 2006). However, even where diversity of citizenship is not complete, a federal court may disregard the citizenship of a diversity-defeating defendant on removal when that defendant has been fraudulently joined, that is, "there is no possibility that a plaintiff can state a cause of action against [the] nondiverse defendant[ ] in state court, or where there has been outright fraud in [the] plaintiff's pleading of jurisdictional facts." Gottlieb v. Westin Hotel Co., 990 F.2d 323, 327 (7th Cir. 1993). See also Hoosier Energy Rural Elec. Coop., Inc. v. Amoco Tax Leasing IV Corp., 34 F.3d 1310, 1315 (7th Cir. 1994); Hauck v. ConocoPhillips Co., Civil No. 06-135-GPM, 2006 WL 1596826, at *2 (S.D. Ill. June 6, 2006). A defendant seeking removal based on alleged fraudulent joinder to defeat diversity has the "heavy" burden of proving that, after the court resolves all issues of law and fact in the plaintiff's favor, there is no possibility the plaintiff can establish a cause of action against a diversity-defeating defendant in a state court. Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992); Brooks v. Merck & Co., 443 F. Supp. 2d 994, 998 (S.D. Ill. 2006); Bavone v. Eli Lilly & Co., Civil No. 06-153-GPM, 2006 WL 1096280, at *2 (S.D. Ill. Apr. 25, 2006).

B. Fraudulent Joinder

In this case, it appears from the record that an amount in excess of $75,000, exclusive of interest and costs, is in controversy. However, diversity of citizenship is not complete. For diversity purposes, Howmedica is a citizen of New Jersey, as it is a corporation incorporated under the law of New Jersey with its principal place of business in New Jersey. See 28 U.S.C. § 1332(c)(1). However, the Court's review of the online corporate records of the Illinois Secretary of State, which records the Court can judicially notice, see Bova v. U.S. Bank, N.A., 446 F. Supp. 2d 926, 930 n.2 (S.D. Ill. 2006), discloses that Anderson is a corporation incorporated under the law of Illinois with its principal place of business in Illinois. Thus, Anderson is an Illinois citizen, as is Phillips, so that complete diversity of citizenship does not exist in this case. Howmedica contends that Anderson's Illinois citizenship can be disregarded by the Court because Anderson has been fraudulently joined to defeat diversity. Specifically, Howmedica asserts that Illinois law broadly exempts hospitals from liability under the doctrine of strict products liability in tort. Additionally, Howmedica contends that because Anderson furnished medical services to Phillips, rather than distributing a product, Anderson cannot be liable to Phillips in strict products liability. The Court considers each of these contentions in turn.

Turning first to the matter of whether Illinois law exempts hospitals from claims in strict products liability, the Court is unaware of any such broad-based exemption for hospitals from products liability claims under Illinois law. See Kirk v. Michael Reese Hosp. & Med. Ctr., 513 N.E.2d 387, 394-96 (Ill. 1987) (in a strict liability action arising from an automobile accident, holding that a hospital could not be held liable in strict products liability for prescribing certain medications to the driver responsible for the accident where the driver had consumed alcoholic beverages before the accident and had received adequate warnings about the dangerous propensities of the drugs from his physician); Cunningham v. MacNeal Mem'l Hosp., 266 N.E.2d 897, 899-904 (Ill. 1970) (holding that a hospital could be held liable in strict products liability for distributing hepatitis-infected blood to patients). In Suvada v. White Motor Co., 210 N.E.2d 182 (Ill. 1965), the Supreme Court of Illinois adopted the doctrine of strict products liability. The Suvada case was a suit by passengers on a bus who were injured when a truck collided with the bus, apparently as a result of the failure of the truck's brakes, against the manufacturer of the allegedly defective brakes. Id. at 183. In imposing liability on the manufacturer of the brakes notwithstanding the lack of privity of contract between the plaintiffs and the manufacturer, the court held that

(1) One who sells any product in a defective condition unreasonably dangerous to the user or consumer or to his property is subject to liability for physical harm thereby caused to the ultimate user or consumer, or to his property, if

(a) the seller is engaged in the business of selling such a product, and

(b) it is expected to reach the user or consumer in the condition ...


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