Friday, June 08, 2007

Eighth Circuit Holds Case Involving Immunity of Non-Diverse Defendant Will Not Be Remanded Simply Because State Law is Ambiguous Or Difficult To Apply

Per Simpson v. Thomure, 484 F.3d 1081 (8th Cir. May 7, 2007):

Crissy Simpson's right hand was severely injured in an accident at work while she was operating a power press machine. Simpson filed suit in Missouri state court against the out-of-state power press manufacturer and Tim Thomure, her supervisor, a fellow Missouri resident. The manufacturer defendants removed. The district court denied Simpson's motion to remand to state court and dismissed her claim against Thomure, concluding that he was fraudulently joined and therefore the court had diversity jurisdiction over the action. After resolving her claims against the out-of-state manufacturer defendants, Simpson appealed the order denying her motion to remand and dismissing her claim against non-diverse defendant Thomure. Reviewing that order de novo, we affirm.

. . .

There is no federal diversity jurisdiction if the plaintiff and any defendant are citizens of the same State. 28 U.S.C. § 1332(a). However, the right of an out-of-state defendant to remove a diversity suit to federal court "cannot be defeated by a fraudulent joinder of a resident defendant." Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 66 L.Ed. 144 (1921). Invoking this principle, the out-of-state defendants filed a timely notice of removal under 28 U.S.C. § 1446(b), asserting that defendant Thomure was fraudulently joined because, as Simpson's co-worker, he was immune from suit under the Missouri Workers' Compensation Law. See Mo.Rev.Stat. § 287.120.2. Simpson responded with a timely motion to remand under 28 U.S.C. § 1447, arguing that Thomure was not fraudulently joined because there was a "reasonable basis in fact and law" supporting the claim against him and therefore the district court lacked diversity jurisdiction. Menz v. New Holland N. Am., Inc., 440 F.3d 1002, 1004 (8th Cir.2006), quoting Wiles v. Capitol Indem. Corp., 280 F.3d 868, 871 (8th Cir.2002).

The district court denied the motion to remand and dismissed Simpson's claim against Thomure for failure to state a claim upon which relief may be granted. See Fed.R.Civ.P. 12(b)(6). After dismissing Thomure, the court had diversity jurisdiction to proceed with Simpson's claims against the manufacturer defendants. See Caterpillar Inc. v. Lewis, 519 U.S. 61, 73, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996). Four months later, the remaining parties filed stipulations of dismissal, and the court entered final judgment. Simpson then appealed the order denying her remand motion and dismissing her claim against Thomure.

On appeal, Simpson argues that the district court erred in denying her motion to remand because a Missouri court might impose co-worker liability on Thomure based on the facts alleged in her complaint. She argues that Missouri law of coworker liability is fact intensive and ambiguous; therefore, the district court was obligated to "resolve all facts and ambiguities in the current controlling substantive law in the plaintiff's favor" and remand. Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 811 (8th Cir.2003).

We doubt this is a sound principle for deciding fraudulent joinder issues that turn on the non-diverse defendant's alleged immunity from suit. We also note that the Filla opinion discussed the merits of the fraudulent joinder issue before dismissing, for lack of appellate jurisdiction, an appeal from the grant of a remand motion. See 28 U.S.C. § 1447(d). This discussion was of no precedential force because we lacked jurisdiction to review the merits of the remand order "whether erroneous or not and whether review [was] sought by appeal or by extraordinary writ." Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 343, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976).

In our view, Simpson attacks the wrong half of the district court's order. Caterpillar v. Lewis teaches that, because Thomure, the non-diverse party, was dismissed from the case, we must decide this appeal based upon the present procedural posture of the case. Compare Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 572-73, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004). At this time, final judgment has been entered, so there is nothing to remand to state court unless the district court's Rule 12(b)(6) dismissal of Simpson's claim against Thomure is reversed. If that claim is revived, remand will follow automatically because Simpson and Thomure, the only remaining defendant, are citizens of the same State. Thus, the significant issue on appeal is whether the district court erred in dismissing the claim against Thomure on the merits. Our review is still de novo, but we may not grant Simpson relief simply because Missouri law may be unclear or hard to apply. Rather, we must review under state law the correctness of the district court's decision to dismiss, just as we would if Simpson and Thomure were citizens of different States and the district court granted Thomure's Rule 12(b)(6) motion to dismiss.


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