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Smith v. Philip Morris USA Inc.

United States District Court, N.D. Illinois, Eastern Division

September 30, 2019

MARTIN A. SMITH, Plaintiff,
PHILLIP MORRIS USA INC., et al, Defendants.


          Honorable Edmond E. Chang United States District Judge.

         Martin Smith alleges that he developed laryngeal cancer as a result of smoking cigarettes. R. 1-1, Notice of Removal, Exh. 1, Compl. ¶ 2.[1] Smith filed a lawsuit in the Circuit Court of Cook County against the following manufacturers of cigarettes: Phillip Morris USA Inc., R.J. Reynolds Tobacco Company, and Liggett Group LLC (together the “Manufacturer Defendants”). Also named in the lawsuit are a few retailers of cigarettes. One is drug-store giant Walgreen Company. The other three retailers are gas stations where Smith bought cigarettes: JAMS BO Properties, Inc.; 1401 State Line, Inc.; and Ibrahim Mubarak d/b/a Citgo (together with Walgreen, the “Retailer Defendants”). Id. ¶¶ 4-11.

         The Manufacturer Defendants removed the action to this Court, asserting complete diversity between Smith, who is an Illinois citizen, and the Manufacturer Defendants, who are all citizens of states other than Illinois. R. 1, Not. of Removal; Compl. ¶¶ 4-6, 14. The Manufacturer Defendants acknowledged that the Retailer Defendants are not diverse to Smith. But the Manufacturing Defendants argue that the Retailer Defendants' citizenship should be disregarded for diversity-jurisdiction purposes because Smith fraudulently joined them. Notice of Removal ¶¶ 17-38. Smith filed a motion to remand the case back to state court, arguing, unsurprisingly, that he did not fraudulently join the Retailer Defendants. R. 47, Mot. to Remand. For the reasons explained below, Smith's motion is granted and the case is remanded to Cook County Circuit Court.

         I. Legal Standard

         A defendant may remove an action filed in state court to federal court in any case in which the plaintiff could have filed the case in federal court. 28 U.S.C. § 1441(a). The party seeking removal bears the burden of demonstrating federal jurisdiction, “and federal courts should interpret the removal statute narrowly, resolving any doubt in favor of the plaintiff's choice of forum in state court.” Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 758 (7th Cir. 2009). Where, as here, defendants invoke diversity jurisdiction, the defendants must demonstrate complete diversity of citizenship and an amount in controversy exceeding $75, 000. Id. at 758; see also 28 U.S.C. § 1332(a). Neither party contests the amount in controversy, so the only issue is whether there is complete diversity under the fraudulent-joinder doctrine.

         Under the doctrine of fraudulent joinder, a federal court considering removal may “disregard, for jurisdictional purposes, the citizenship of certain non-diverse defendants, assume jurisdiction over a case, dismiss the non-diverse defendants, and thereby retain jurisdiction.” Schur, 577 F.3d at 763 (quoting Mayes v. Rapoport, 198 F.3d 457, 461 (4th Cir. 1999)). Despite the doctrine's name, actual “fraud” is not needed to successfully invoke fraudulent joinder. See Walton v. Bayer Corp., 643 F.3d 994, 999 (7th Cir. 2011). A removing defendant can also “show that, after resolving all issues of fact and law in favor of the plaintiff, the plaintiff cannot establish a cause against the in-state defendant.” Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992). Put another way, “the district court must ask whether there is ‘any reasonable possibility' that the plaintiff could prevail against the non-diverse defendant.” Schur, 577 F.3d at 764 (quoting Poulos, 959 F.2d at 73).

         A removing defendant bears a “heavy burden” to establish fraudulent joinder. Schur, 577 F.3d at 764; Poulos, 959 F.2d at 73. The Seventh Circuit has suggested that this “burden is even more favorable to the plaintiff than the standard that applies to a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).” Schur, 577 F.3d at 764 (collecting cases). Courts typically conclude that there is fraudulent joinder where the plaintiff asserts a claim against a non-diverse defendant “that simply has no chance of success whatever the plaintiff's motives.” Poulos, 959 F.2d at 73; see also Walton, 643 F.3d at 999.

         II. Analysis

         Smith brings only two claims against the Retailer Defendants-strict liability and negligence. See Compl. ¶¶ 121-131. In light of the fraudulent-joinder standard, the question is whether there is any reasonable possibility that Smith can prevail against the Retailer Defendants on either the strict liability claim or the negligence claim. If Smith has a reasonable possibility of success on even one of his claims against the Retailer Defendants, then the Court must count the Retailer Defendants' Illinois citizenship for jurisdictional purposes and send the case back to state court.

         A. Negligence

         To establish a valid claim for negligence under Illinois law, “a party must demonstrate that the defendant owed him a duty, that the defendant breached this duty, and that he suffered an injury that was proximately caused by the defendant's breach.” Lewis v. CITGO Petroleum Corp., 561 F.3d 698, 702 (7th Cir. 2009) (citing Cunis v. Brennan, N.E.2d 617, 618 (1974)); see also Brobbey v. Enter. Leasing Co. of Chicago, 935 N.E.2d 1084, 1093 (Ill.App.Ct. 2010). The Manufacturer Defendants argue that Smith has no reasonable possibility of success on his negligence claim because (1) he failed to allege sufficient facts that the Retailer Defendants owed him a duty, or that any breach of duty proximately caused his injury; and (2) any allegation that the Retailer Defendants are liable for failing to stop selling cigarettes is preempted under federal law. R. 53, Defs.' Resp. Br. at 19-20. It might be that the Manufacturer Defendants have solid Rule 12(b)(6) arguments on the merits. Ultimately, however, the Defendants have failed to show that there is no reasonable possibility that Smith can prevail.

         It is true that the complaint generally speaking lacks factual specificity as to the Retailer Defendants. As far as the duty element goes, Illinois law recognizes a duty to warn “when there is unequal knowledge and the defendant, possessed with such knowledge, knows or should know that harm might occur if no warning is given.” Gray v. Nat'l Restoration Sys., Inc., 820 N.E.2d 943, 957 (2004). Here, Smith argues that the Retailer Defendants owed a duty to Smith, arising out of their unequal knowledge about the dangers of cigarettes. R. 60, Pl.'s Reply Br. at 4.[2] Smith's complaint, however, is devoid of any factual allegations supporting this theory. Smith only very generally alleged, for example, that the Retailer Defendants “had a duty to use reasonable care in placing into the stream of commerce, distributing, marketing, promoting, and selling” the defective cigarettes. Compl. ¶ 126. Smith also alleged that the Retailer Defendants “knew or should have known” of the dangers of the cigarettes, which, according to Smith, were unknown to the public (including Smith). Id. ¶ 128. Otherwise, though, the complaint contains no specific facts supporting the assertion that the Retailer Defendants owed a duty so Smith.

         These shortcomings, however, are not necessarily fatal to Smith's negligence claim, at least not to the point that there is no reasonable possibility of him prevailing on the claim. In assessing fraudulent joinder, the Court is not limited by the allegations in the parties' pleadings. The Court may “pierce the pleadings and consider summary judgment-type evidence such as affidavits and deposition testimony” in determining whether fraudulent joinder has occurred. Peters v. AMR Corp., 1995 WL 358843, at *3 (N.D. Ill. June 13, 1995) (quoting Carriere v. Sears Roebuck & Co., 893 F.2d 98, 100 (5th Cir. 1990)) (cleaned up)[3]; see also Faucett v. Ingersoll-Rand Mining & Machinery Co., 960 F.2d 653, 655 (7th Cir. 1992) (considering the defendant's affidavit when evaluating whether there was fraudulent joinder). At the same time, however, the Court must be careful not to use the evidence to “pre-try” the case. Peters, 1995 WL 358843, at *3. Additionally, in reviewing the evidence, the Court must give the benefit of factual and legal inferences to the plaintiff. Id.; Poulos, 959 F.2d at 73. After all, the standard is whether there is any reasonable possibility of Smith winning-not whether he has adequately stated a claim.

         In support of keeping the case in federal court, the Manufacturer Defendants submitted several affidavits, including one from Dale Johnson, Walgreen's Divisional Merchandise Manager of Consumables. Among other things, Johnson avers that “Walgreens did not possess any knowledge of any alleged dangers of cigarettes that was not available to the general public.” R. 53-3, Defs.' Resp. Br., Exh. 3, D. Johnson Affidavit ...

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