# Amicus Curiae Brief — Martin v. Franklin Capital Corp.

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0073%3A09

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2005
- **Citation:** 546 U.S. 132

## Text

fo) FILED
CF, JUL 25 2005

No. 04-1140

IN THE

Supreme Court of the United States

GERALD T. and JUANA M. MARTIN, on behalf of themselves
and all others similarly situated,

Petitioners,
v.

FRANKLIN CAPITAL CORPORATION, a Utah corporation, and
CENTURY-NATIONAL INSURANCE COMPANY,
a California corporation,

Respondents.

On Writ oF CERTIORARI TO THE UNITED STATES
CouRT OF APPEALS FOR THE TENTH CIRCUIT

BRIEF OF PRODUCT LIABILITY ADVISORY
COUNCIL, INC. AS AMICUS CURIAE IN

SUPPORT OF RESPONDENTS
Of Counsel: ROBERT N. WEINER
HuGH YOUNG, JR. Counsel of Record
Propuct LIABILITY ADVISORY RosBertT D. ROSENBAUM
Counc, INc. BRIAN E. BowcuT
1850 Centennial Park Drive SARAH M. BRACKNEY
Suite 510 ARNOLD & Porter LLP
Reston, VA 22091 555 12th Street, N.W.
(703) 264-5300 Washington, DC 20004

(202) 942-5000
Counsel for Amicus Curiae

195621 g

COUNSEL PRESS

OFFICE OF THE CLERK

1ABLE OF CONTENTS

TABLE OF CITED AUTHORITIES

INTEREST OF AMICUS CURIAE

SUMMARY OF ARGUMENT

ARGUMENT

I.

THE OVERRIDING OBJECTIVE OF THE
REMOVAL STATUTE IS TO EXTEND TO
DEFENDANTS THE PROTECTION OF A
NEUTRAL FORUM BASED ON
DIVERSITY JURISDICTION AS AN
ALTERNATIVE TO THE POTENTIALLY
BIASED STATE COURT FORUMS
SELECTED BY PLAINTIFFS

A REMOVAL BASED ON REASONABLE,
BUT ULTIMATELY UNSUCCESSFUL,
GROUNDS DOES NOT, WITHOUT MORE,
JUSTIFY SANCTIONS

A. Plaintiffs Are Devising Novel Strategies
to Block Removal and Defendants Are
Responding Appropriately by Urging the
Courts to Evolve Existing Principles to
Address Those New Strategies

ii
Contents

B. Uncertainties Arising from the Time
Limits in the Removal Statute Are
Another Reason Defendants Must Have
the Latitude to Advance Reasonable
AGQOUIOUES .occccesseseteeneeee

C. Defendants Also Must Have the Latitude
to Make Reasonable Arguments Given
the Uncertainties in Seeking to Establish
Fraudulent Joinder .....scccccccsces

Ili. CONGRESS DID NOT INTEND TO
GRANT HOLLOW REMOVAL RIGHTS,
SUBJECTING DEFENDANTS TO
SANCTIONS IF THEY ARE UNSUCCESS-
FUL IN OVERCOMING PLAINTIFFS’
ye Pere

CONT UGIUIN occ cccccucessesunneeee
APPENDIX A: CORPORATE MEMBERS OF THE

PRODUCT LIABILITY ADVISORY
est « Pri

Page

il

TABLE OF CITED AUTHORITIES

Page
Cases
B., Inc. v. Miller Brewing Co., 663 F.2d 545
EE 17, 18
Boyer v. Snap-on Tools Corp., 913 F.2d 108 (3d Cir.
pee CE Pere hevee es cceseseeecces 16. 17, 19
Chicago, Rock Island, & Pac. Ry. Co. v. Schwyhart,
Cer 9
Clay v. Wyeth, No. 5:04-cv-192-Oc-l1OGRJ
SS I EG IED cc cccccccccccccces 18
Coleman v. Conseco, Inc., 238 F. Supp. 2d 804
EE ee 10
Crowe v. Coleman, 113 F.3d 1536 (11th Cir. 1997)
PPE Mee wiebesesecscecbaceseces 17, 19
Doe v. Kerwood, 969 F.2d 165 (Sth Cir. 1992) .... 13
Erie R. Co. v. Tompkins, 304 U.S. 64 (1938) ...... 4
Exxon Mobil Corp. v. Allapattah Servs., Inc.,
i «<.cosetudeccecveceses 4,9

Franz v. Weth, No. H-04-0169 (S.D. Tex. Apr. 26,
i ae he eee ehbdebeoeenestes 16

iv
Cited Authorities

Page

Hales v. Merck & Co., Inc., No. 03-AR-1028-M
te Fe Fe eee 18

Heimback vy. A.H. Robins Co., Inc., No. 02-0347-S-
eee Gk Ee FEUD. OG, BOE cc ccccccscvcccecs 16

Hroncich v. Wyeth, No. 2:03-cv-659-FTM-29SPC
GRA TUR. SU. BA, SEO cc ccsccccccscescscs 18

In re Benjamin Moore & Co., 309 F.3d 296 (Sth Cir.
SD Sentesseds eheneSWaephdseceueseeees 10

In re Diet Drugs Prods. Liab. Litig., 220 F. Supp. 2d
S46 GBD. PO. BOGE) ccc cccccccccccecs 6, 11, 15, 17

In re Diet Drugs Prods. Liab. Litig., 294 F. Supp. 2d
Se EEE cesdatevadcasccnedecter 10

In re Fen-Phen Litig., No. 1:03-MD-1-RLV
eee Gs DU GE Knee ccdessanescecdet 9,10

In re Rezulin Prods. Liab. Litig., 168 F. Supp. 2d
eee 10, 17

In re Silica Prods. Liab. Litig., 2005 WL 1593936
Ss Ce, SD Se SE wuccccecsdccvcéecss 9,10

Johnson v. Helmerich & Payne, Inc., 892 F.2d 422
SD HEED. k onecneteuetaadassadascenes 11

Vv

Cited Authorities

Johnson v. Wyeth, No. 1:02-CV-1368-TNT (N.D. Ga.
SA GREED Shanecassduneceocéecucesences

Koch v. PLM Int'l, Inc., 1997 WL 907917 (S.D. Ala.
it I a coaveenkelesenal

Legg v. Wyeth, No. CV-04-S-0435-NE (N.D. Ala.
PD, Bee Ee 8 cv thorescperencsescecescens

SEED Sccecevbdcovensccecesesoncessevenes

McKinney v. Bd. of Trs. of Md. Cmty. Coll.,

955 F.2d 924 (4th Cir. 1992) .............4..

Pacheco de Perez v. AT&T Co., 139 F.2d 1368

CRE GER GRGED ccccceccesesesccesccseaces

Parnas v. Gen. Motors Corp., 879 F. Supp. 91

GEL GED. TRGED ccocevccncccvcvccecesecens

Powers v. Chesapeake & O. Ry. Co., 169 U.S. 92

CREED ccccccccessececesocosenssecesesees

Reeb v. Wal-Mart Stores, Inc., 902 F. Supp. 185

Dn Ce seadeesnénccesecetetuesuue

Staples v. Joseph Morton Co., 444 F. Supp. 1312

GREASE Be CUED cccccccccccccvcsscccessese

vi
Cited Authorities

Page

Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353
oo ee errr 10

Tedford v. Warner-Lambert Co., 327 F.3d 423
ee oe 6, 13,14

Triggs v. John Crump Toyota, Inc., 154 F.3d 1284
DL ctctvcceneskauneuecnwuaeen 16

United Steelworkers of Am., AFL-CIO v. R.H.
Bouligny, Inc., 382 U.S. 145 (1965) ........... 4

Walker v. Armco Steel Corp., 446 U.S. 740 (1980)
RAE bewenNeneses enaneesaeunebaiaue 4

Wecker v. Nat'l Enameling & Stamping Co., 204 U.S.
DE. divnéspsundbacneneeneutuuinans 6

Wilson v. Republic Iron & Steel Co., 257 U.S. 92
DD Giese seaveeeceséeaneudeudscevsecens 6, 16

Statutes

DE vioekddcietedendiunenoseée 2
Ph ec ccvescageeedssseuenbend 11, 12
PG ED ouddvnesdeedesevedcceneens 20

Class Action Fairness Ac* of 2005, Pub. L. No. 109-
NS 8 er ee 6-7

vil

Cited Authorities
Page
Judiciary Act of 1789, ch. 20, § 12, 1 Stat. 73,
Ds cosudsbdcéecacdbedeanseseeteden su 5
Other Authorities
American Law Institute, Feperat JupiciaL Cope
Revision Proyect 466 (2004) ................ 7
Erwin Chemerinsky, Feperat Jurispiction (4th ed.
Di coveseketecéntanesddusabestenuebees 5
Henry J. Friendly, The Historic Basis of Diversity
Jurisdiction, 41 Harv. L. Rev. 483 (1928) ...... 5
S. Rep. No. 109-14(2005) .............ceeeeee 4,7

l

This brief is filed on behalf of the Product Liability
Advisory Council, Inc. as amicus curiae in support of
Respondents, with the written consent of the parties.'

INTEREST OF AMICUS CURIAE

The Product Liability Advisory Council, Inc. (“PLAC”)
is a nonprofit corporation with more than 120 corporate
members representing a broad cross-section of American
industry. Its corporate members include manufacturers and
sellers of products such as automobiles, aircraft, electronics,
chemicals, pesticides, pharmaceuticals and medical devices.’
PLAC’s primary purpose is to file amicus curiae briefs in
cases raising issues that affect the development of products
liability law and that have the potential to affect PLAC’s
members. PLAC has submitted hundreds of amicus briefs in
state and federal appellate courts, including this Court.

The members of PLAC have a significant interest in the
principles relating to the removal of state court actions to
federal courts. In recent years, PLAC members have been
named as defendants in numerous state court actions,
particularly in mass tort product liability cases. They have
gained first-hand experience with devices used by the
plaintiffs’ bar in an effort to block defendants’ removal of
those actions to federal court based on diversity jurisdiction

' Copies of those consents have been filed with the Clerk of the
Court. No counsel for a party in this case authored this brief in whole
or in part, and no person or entity other than amicus curiae, its
members or its counsel made a monetary contribution to the
preparation or submission of this brief.

? A list of PLAC’s current corporate membership is included
as Appendix A to this brief.

2

under the provisions of 28 U.S.C. § 1441(a). PLAC’s
members have a particular interest in retaining the right to
challenge plaintiffs’ improper devices and strategies to block
the appropriate exercise of defendants’ Statutory removal
rights, without the threat of being sanctioned if they are not
able to establish the impropriety of those devices and
Strategies.

SUMMARY OF ARGUMENT

Petitioners argue that this Court should adopt a novel
standard, tilted toward plaintiffs, for implementing the costs
and fees provision of the removal statute. This extraordinary
approach — reading the word “may” in the statute to mean
“shall” — is necessary, Petitioners claim, to Carry Out the intent
of Congress, to fulfill the “large objectives” of the removal
Statute and to satisfy “equitable considerations.” Respondents
have already refuted Petitioners’ arguments concerning
Congress’ intent in amending that provision of the removal
statute. Respondents have also demonstrated that, to the
extent the “large objectives” of the removal statute and
“equitable considerations” bear upon the standard for
awarding fees under that provision, those factors favor the
party-neutral, multi-factor analysis applied by the lower
courts in this case.

As to “large objectives,” a central purpose of the removal
Statute since the dawn of the Republic has been to extend
the protection of diversity jurisdiction to defendants sued
outside their home state. Petitioners emphasize the purposes
of the limitations on removal, but those limitations are
subsidiary to this overriding objective of the statute: to
provide a neutral forum to such defendants. To that end, this
Court and the other federal courts have vigilantly protected

3

defer dants against abusive practices by plaintiffs designed
to frustrate the right of removal.

As to the appropriate equitable considerations in
establishing a standard for fee awards, one of the most crucial
is the development and proliferation of Stratagems to
manipulate federal jurisdiction and defeat defendants’
removal rights. These devices are often difficult for
defendants to overcome at the opening stages of a litigation.
The law is often uncertain. The approaches of the lower courts
vary. And the record is often undeveloped. But it is not
improper for defendants to try, so long as they have a
reasonable basis for such challenges. To over-deter them
would be to reward manipulative conduct by some plaintiffs
and to undercut the central goal of the removal statute. Equity
is best served under these circumstances, not by adopting a
rule tilted toward plaintiffs, but by leaving to the discretion
of the district judge the determination, based on neutral
factors, whether to award fees under the specific facts before
the court. The most iraportant factors in determining whether
fees should be awarded should be the nature of the Strategic
obstacle to removal being challenged, the plaintiff's apparent
intent in erecting the obstacle and the reasonableness of the
defendants’ challenge, even if unsuccessful.

As to the intent of Congress, there is no indication from
any source that Congress intended to grant defendants
removal rights while subjecting them to sanctions for
reasonable, but unsuccessful efforts to exercise those rights.

4

ARGUMENT

I. THE OVERRIDING OBJECTIVE OF THE
REMOVAL STATUTE IS TO EXTEND TO
DEFENDANTS THE PROTECTION OF A
NEUTRAL FORUM BASED ON DIVERSITY
JURISDICTION AS AN ALTERNATIVE TO THE
POTENTIALLY BIASED STATE COURT FORUMS
SELECTED BY PLAINTIFFS

The Constitution provided for diversity jurisdiction of the
federal courts, and the very first Congress implemented it in
the Judiciary Act of 1789. As this Court explained just last Term,
“the purpose of the diversity requirement . . . is to provide a
federal forum for important disputes where state courts might
favor, or be perceived as favoring, home-state litigants.” Exxon
Mobil Corp. v. Allapattah Servs., Inc., 125 8. Ct. 261 1, 2618
(2005); see also Walker v. Armco Steel Corp., 446 U.S. 740,
745 (1980) (“‘[D]iversity of citizenship jurisdiction was
conferred in order to prevent apprehended discrimination in state
courts against those not citizens of the State.’”’) (quoting Erie
R. Co. v. Tompkins, 304 U.S. 64, 74 (1938)); United Steelworkers
of Am., AFL-CIO v. R.H. Bouligny, Inc., 382 U.S. 145, 150
(1965) (Diversity jurisdiction provides “protection of the
nonresident litigant from local prejudice.”). The diversity
jurisdiction clause also reflects a concern, of particular relevance
to present-day suits against out-of-state corporations, “that state
courts might discriminate against interstate businesses and
commercial activities.” It was therefore viewed “as a means of
ensuring the protection of interstate commerce.” ?

*S. Rep. No. 109-14, at 8 (2005) (report accompanying The
Class Action Fairness Act of 2005). That report cited, among other
scholars, Henry J. Friendly, subsequently an eminent judge of the

(Cont'd)

5

Since first implementing the diversity jurisdiction
authorized by Article III, Congress has also allowed
defendants the right to remove to federal court certain cases
brought against them in state courts. See Judiciary Act of
1789, ch. 20, § 12, 1 Stat. 73, 79-80 (providing for removal
when the amount in controversy exceeded $500 and the
defendant was a citizen of a different State). Petitioners’
rendition of the objectives of statutory removal rights is
unbalanced and myopic. The overriding purpose of the
creation of removal rights was to extend the protection of
diversity jurisdiction to defendants. See Erwin Chemerinsky,
FEDERAL JuRISDICTION § 5.5 (4th ed. 2003). Because plaintiffs
select the forum in the first instance, they do not need a right
of removal to invoke diversity jurisdiction. Unless defendants
could remove, diversity would protect only plaintiffs.
Even wholly diverse out-of-state defendants would always
be forced to litigate in the state courts of plaintiffs’ choice.
To be sure, defendants’ removal rights are subject to
limitations, but those limitations do not displace the
overriding objective of the removal statute to provide such
protection to defendants.

Accordingly, this Court has long been Vigilant in
protecting defendants’ removal rights against abusive
practices designed to frustrate those rights. See, e. g., Powers
v. Chesapeake & O. Ry. Co., 169 U.S. 92, 102 (1898) (in suit
against diverse railway and non-diverse local employees,
court permitted belated removal when employees were

(Cont'd)

Second Circuit Court of Appeals. In an examination of the reasons
for the grant of diversity jurisdiction, he found a “principal reason”
to have been a “desire to protect creditors against [state] legislation
favorable to debtors.” Henry J. Friendly, The Historic Basis of
Diversity Jurisdiction, 41 Harv. L. Rev. 483, 496-97 (1928).

6

dismissed from the action at trial); Wecker v. Nat’! Enameling
& Stamping Co., 204 U.S. 176, 185 (1907) (ignoring non-
diverse defendant’s citizenship when joined for the purpose
of preventing exercise of right of removal and without a
factual basis); Wilson v. Republic Iron & Steel Co., 257 U.S.
92, 98 (1921) (same). As this Court admonished nearly
100 years ago in Wecker, “the Federal courts should not
sanction devices intended to prevent a removal to a Federal
court where one has that right, and should be equally vigilant
to protect the right to proceed in the Federal court as to permit
the state courts, in proper cases, to retain their own
jurisdiction.” 204 U.S. at 186.

There is, if anything, greater need for such vigilance now
than in 1907. Indeed, the recent echoes in federal courts of
Wecker’s call for scrutiny reflect the increased salience of
the concern. The Court of Appeals for the Fourth Circuit, for
example, observed that “Congress created the removal
process to protect defendants. It did not extend such
protection with one hand, and with the other give plaintiffs a
bag of tricks to overcome it.” McKinney v. Bd. of Trs. of Md.
Cmty. Coll., 955 F.2d 924, 928 (4th Cir. 1992).4 Congress
recognized the need for protecting defendants’ right to a
neutral federal forum in interstate class action litigation
earlier this year by its enactment of “The Class Action

* See also Tedford v. Warner-Lambert Co., 327 F.3d 423, 427
(Sth Cir. 2003) (“Congress may have intended to limit diversity
jurisdiction [by time limits reducing the opportunity for removal after
substantial progress had been made in state court], but it did not
intend to allow plaintiffs to circumvent it altogether.”); In re Diet
Drugs Prods. Liab. Litig., 220 F. Supp. 2d 414, 425 (E.D. Pa. 2002)
(“As long as Congress authorizes the federal district courts to exercise
subject matter jurisdiction over diversity actions we must protect
the right of parties to invoke it.”).

J

Fairness Act of 2005.” Pub. L. No. 109-2, 119 Stat. 4. That
Act extended protection for defendants in such actions,
following extensive hearings into plaintiffs’ lawyers’
“gam[ing]” procedural rules to keep interstate class actions
in state courts. See S. Rep. No. 109-14, at 4, 10. The same
“gaming” occurs in non-class action litigation against
interstate businesses, as discussed below. The explosion of
mass tort litigation has increased defendants’ need for a
neutral federal forum.

Il. A REMOVAL BASED ON REASONABLE, BUT
ULTIMATELY UNSUCCESSFUL, GROUNDS
DOES NOT, WITHOUT MORE, JUSTIFY
SANCTIONS

~ Petitioners assume that a remand of a removed case
means the defendant somehow acted improperly or
contravened Congress’s intent in removing the case, even if
the removal rested on reasonable grounds. See Pet. Br. at
§ IV.A. Not only is that assertion unfounded, but it also would
subvert the central function of the removal statutes. As the
American Law Institute recently stated, “[c]urrent law invites
contrivance to frustrate defendants’ legitimate rights of
removal by a variety of stratagems ....” American Law
Institute, FEDERAL JupiciAL Cope REVISION PROJECT 466
(2004). We discuss below a sample of some of those
contrivances and the challenges they pose to the appropriate
exercise of removal rights. Even these few samples, however,
demonstrate that Petitioners’ interpretation of the fee award
provision of the removal statute would vitiate the removal
rights that Congress granted.‘

* These examples are drawn primarily from diversity jurisdiction

removals, because removals on that basis arise most often in product
(Cont'd)

8

A. Plaintiffs Are Devising Novel Strategies to Block
Removal and Defendants Are Responding
Appropriately by Urging the Courts to Evolve
Existing Principles to Address Those New
Strategies

Petitioners argue that defendants should not remove
cases based on “novel contentions.” If that were the rule,
however, defendants could not respond to new strategies to
block their right of removal. The law is not static. As Justice
Holmes observed, the life of the law is experience.
Legal standards must adapt to the innovations of thousands
of practitioners plying their ingenuity on behalf of their
clients. Not only is there nothing improper in defendants’
urging courts to extend established principles to plaintiffs’
latest devices to block removal, such advocacy is essential.
As this Court explained more than 100 years ago, it is
sometimes necessary for the court to develop new
interpretations of removal law to “prevent the right of
removal, to which the statute declares the party to be entitled,
from being defeated by circumstances wholly beyond his
control.” Powers, 169 U.S. at 100.

One example of such a new device used in mass tort
cases to block federal court jurisdiction is the filing of mass
complaints, joining — or more aptly misjoining — numerous
plaintiffs diverse from defendants, whose claims could
therefore be removed to federal court if filed individually,
with at least one plaintiff who is not diverse from at least

(Cont'd)

liability litigation. We do not mean to Suggest that there are not similar
issues arising in connection with removals based on federal question
jurisdiction.

9

one defendant. This device multiplies the effect on
removability of one non-diverse plaintiff, using that lack of
diversity to insulate potentially thousands of other plaintiffs
against removal. See Allapattah, 125 S. Ct. at 2617 (diversity
jurisdiction requires that all plaintiffs be diverse from all
defendants). In product liability litigation involving silica,
for example, up to 4,280 plaintiffs joined in a Single
complaint filed in a Mississippi state court, with at least one
plaintiff having the same citizenship as at least one defendant.
See In re Silica Prods. Liab. Litig., 2005 WL 1593936, at
*74-*75 (S.D. Tex. June 30, 2005). In product liability
litigation involving the diet drugs sometimes known as “fen-
phen,” 168 cases were filed in a Georgia municipal court on
behalf of more than 14,000 plaintiffs residing throughout the
nation. In each case, only one or two plaintiffs were Georgia
residents and no more than a handful of plaintiffs lacked
citizenship diverse from that of any defendant. See In re Fen-
Phen Litig., No. 1:03-MD-1-RLY, slip op. at 2 (N.D. Ga.

Oct. 15, 2003).° In response to this new strategy, defendants
have properly argued that plaintiffs have invented a new form
of fraudulent joinder, just as inappropriate as plaintiffs’

fraudulently joining non-diverse defendants against whom
plaintiffs have no intention of seeking a recovery or no valid

claim. See Chicago, Rock Island, & Pac. Ry. Co. y.

Schwyhart, 227 U.S. 184, 194 (1913) (“fraudulent joinder”
of a defendant is found either when there is no real intention
to get a joint judgment or when there is no colorable ground

for such a judgment).

A number of courts have accepted that argument, and
this removal-blocking device has come to be known as

* Unpublished decisions cited in this brief will be provided upon
the request of the Court.

10

“fraudulent misjoinder.”’ Not every court, however, has
recognized this device as a form of fraudulent joinder.
See, e.g., In re Benjamin Moore & Co., 309 F.3d 296, 298
(Sth Cir. 2002) (district court had remanded case despite
fraudulent misjoinder claim; Court of Appeals agreed with
defendants that “it might be concluded that misjoinder of
plaintiffs should not be allowed to defeat diversity
jurisdiction,” but the Court was without jurisdiction to
overturn district court). Even courts which accept the general
proposition that joinder of plaintiffs may constitute a form
of fraudulent joinder differ as to the standard to apply in
evaluating such a claim. Compare, e.g., Tapscott v. MS Dealer
Serv. Corp., 77 F.3d 1353, 1360 (11th Cir. 1996) (requiring
“egregious” misjoinder for finding of fraudulent misjoinder),
with In re Rezulin Prods. Liab. Litig., 168 F. Supp. 2d at
147-48 (rejecting requirement of “egregiousness”); compare
Koch v. PLM Int'l, Inc., 1997 WL 907917, at *34 (S.D. Ala.
Sept. 24, 1997) (applying federal joinder rules), with In re
Diet Drugs Prods. Liab. Litig., 294 F. Supp. 2d at 678-79

” See, e.g., In re Silica Prods. Liab. Litig., 2005 WL 1593936,
at *75 (finding that each plaintiff's claim should be considered in
evaluating federal jurisdiction as if that claim had been severed from
all the other plaintiffs’ claims); Coleman v. Conseco, Inc., 238
F. Supp. 2d 804, 818 (S.D. Miss. 2002) (finding that 48 plaintiffs,
only 3 of whom were non-diverse from defendants, were fraudulently
misjoined and remanding only those 3 plaintiffs’ claims to state
court); In re Diet Drugs Prods. Liab. Litig., 294 F. Supp. 2d 667,
677-79 (E.D. Pa. 2003) (finding fraudulent misjoinder in six Georgia
cases, each having one Georgia non-diverse plaintiff and numerous
out-of-state and diverse plaintiffs); In re Rezulin Prods. Liab. Litig.,
168 F. Supp. 2d 136, 146-47 (S.D.N.Y. 2001) (finding fraudulent
misjoinder of plaintiffs because only some of multiple plaintiffs had
valid claims against non-diverse defendants): In re Fen-Phen Litig..,
slip op. at 3 (finding fraudulent misjoinder of more than 14,000
plaintiffs).

1]

(applying state joinder rules). In the Eleventh Circuit,
moreover, where an element of “egregiousness” is required
for a finding of fraudulent misjoinder, the courts have not
yet defined what conduct would be considered sufficiently
“egregious” for that purpose.

Particularly in connection with such a newly evolving
principle of law, where the boundaries and even the direction
are unclear, where the standards vary from jurisdiction to
jurisdiction, defendants must have room for reasonable
advocacy, even if they are unsuccessful in convincing a
particular court of their position. As with any effort to extend
established principles to new circumstances, defendants will
not always be successful in challenging this improper device.
But that does not make those efforts improper, and the Court
should not chill them.

Another example of plaintiffs’ new anti-removal tactics
also came to light in the “fen-phen” litigation. The court
assigned the multidistrict litigation found substantial
evidence that some defendants had colluded with the
plaintiffs’ bar to deny the principal defendant its Statutory
removal rights. See In re Diet Drugs Prods. Liab. Litig.,
220 F. Supp. 2d at 420-22. The colluding defendants had
refused to grant required consents to the principal defendant's
removals in hundreds or thousands of cases. See id. Without
those consents, the principal defendants’ removals were
blocked.* In return, plaintiffs ultimately dismissed those
co-defendants. However, the evidence of such collusion took
years to uncover. Surely, a defendant in such circumstances
should not be sanctioned for challenging such collusion, even
if the defendant fails to convince a court of the collusion.

* Courts have interpreted 28 U.S.C. § 1446(b) to require that
all defendants join in or consent to removal. See, e.g., Johnson v.
Helmerich & Payne, Inc., 892 F.2d 422, 423 (Sth Cir. 1990).

12

B. Uncertainties Arising from the Time Limits in the
Removal Statute Are Another Reason Defendants
Must Have the Latitude to Advance Reasonable
Arguments

In order that the case not proceed wastefully in state court

for too long prior to removal, Congress imposed time limits ~

on defendants’ removal rights. A defendant must remove a
State court case within 30 days after service. 28 U.S.C.
§ 1446(b). However,

[iJf the case stated by the initial pleading is not
removable, a notice of removal may be filed
within 30 days after receipt by the defendant .. .
of a copy of an amended pleading, motion, order
or other paper from which it may first be
ascertained that the case is one which is or has
become removable, except that a case may not be
removed on the basis of [diversity] jurisdiction
--. More than | year after commencement of the
action.

Id. Working within these time limits creates Significant
uncertainties for defendants.

A defendant having reason to believe there is fraudulent
joinder but possessing incomplete evidence to that effect at
the outset of the case faces a practical dilemma. If the
defendant removes the case at the outset based on the limited
facts then available, it risks remand for failure to meet the
significant burden of demonstrating fraudulent joinder at that
time. On the other hand, if the defendant does not remove

13

the case within the first 30 days, but does so later based on
additional facts obtained in discovery, it risks an objection
that the removal is untimely, that there were sufficient facts
available at the outset to have supported the grounds on which
the defendant subsequently removed the case. The same type
of dilemma arises as the facts emerge in discovery. As
developing evidence increasingly Suggests fraudulent joinder,
the defendant will have to make a judgmenf when it is first
ascertainable that the case has become removable. As part
of that assessment, the defendant will also need to weigh
whether the evidence is yet sufficient to meet the defendant’ s
burden of establishing fraudulent joinder. When these
judgment calls are reasonable, but a federal court ultimately
disagrees and finds the defendant removed either too early
or too late, it would be inequitable to subject the defendant
to sanctions.

Moreover, plaintiffs are well aware of the Statutory time
limits and often act in a manner designed inequitably to
prevent defendants from removing on a timely basis.
Defendants may properly challenge those tactics as
inequitable. For example, in Tedford v. Warner-Lambert Co.,
plaintiff sued a non-diverse prescribing physician along with
an out-of-state drug manufacturer but signed a dismissal of
the claim against the physician. However, the plaintiff did
not disclose that dismissal to the manufacturer until the one-
year time limit for removal had passed. When removing the
case, the manufacturer successfully argued as a matter of
equity that the one-year deadline should be tolled because of
plaintiffs’ manipulation. The court agreed. See 327 F.3d at
426-27; see also, e.g., Doe v. Kerwood, 969 F.2d 165, 169
(Sth Cir. 1992) (recognizing equitable power of the court to
consider exceptions to the statutory 30-day limit on removal);

14

Staples v. Joseph Morton Co., 444 F. Supp. 1312; 1313-14
(E.D.N.Y. 1978) (plaintiff estopped from moving to remand
when he induced defendant to refrain from removing on a
timely basis). However, the courts are split on whether such
equitable tolling applies and it is in any event not clear what
conduct triggers an equitable exception to the statutory time
periods. See, e.g., cases cited in Tedford, 327 F.3d at 426
n.4. It would be unfair and contrary to the central purposes
of the removal statute to put a defendant at high risk of
sanctions in order to find out the answer to this legal question
in a particular jurisdiction.

C. Defendants Also Must Have the Latitude to Make
Reasonable Arguments Given the Uncertainties
in Seeking to Establish Fraudulent Joinder

Plaintiffs suing out-of-state defendants have not only
developed new stratagems to block removal but have
continued to use the older tactic of joining non-diverse
defendants with no intention of pursuing a judgment or no
colorable claim against the them. It is a common practice,
for example, for mass tort plaintiffs Suing out-of-state
corporate defendants in state court to name as a co-defendant
a low-level corporate employee living in that state or a local
distributor of the product in question, merely to keep the
case in state court and without any interest in seeking a
judgment against the co-defendant. If the corporate defendant
has reason to believe, as a legal or factual matter, that the
local defendant is fraudulently joined, it is entirely
appropriate to challenge that device. Proving fraudulent
joinder, however, is often a difficult challenge for defendants.
They face uncertainties even as to the procedures the district
court will employ in resolving such a claim.

15

This phenomenon is demonstrated by the predicament
of the Bankston Drugstore in rural Fayette, Mississippi,
which was sued in hundreds of cases filed there and was
later usually dropped from the suit. It was no secret to the
courts or the parties that the only reason Bankston Drugstore
was being sued was to keep the case in state court.
Establishing that proposition was no simple matter, however.
One court, relying on the testimony of the owner of that
pharmacy before the House Judiciary Committee, explained
the situation as follows:

As the only pharmacy in Jefferson County,
Mississippi, the store is named in hundreds of
lawsuits involving the sale of allegedly defective
drugs, including fen-phen. Hilda Bankston, the
former owner of the pharmacy, testified [before
the House Judiciary Committee] that because of
this “lawsuit frenzy” she has had to spend
innumerable hours retrieving information for
potential plaintiffs, testifying in court, enduring
the whispers and questions of customers and
neighbors who wonder what the pharmacy did to
end up in court so often, and worrying about
whether her business would survive. . . . Although
the pharmacy is usually dropped from the
lawsuits, the costs of hiring lawyers and
obtaining insurance can become prohibitive.
As Ms. Bankston sees it, her “life’s work was
merely a means to an end for trial lawyers seeking
to cash in on lucrative class actions — a back door
into the Jefferson County court system.”

In re Diet Drugs Prods. Liab. Litig., 220 F. Supp. 2d at 424
(internal citations omitted).

16

Defendants could challenge such a removal-blocking
strategy by showing that the plaintiff had no good faith
intention of pursuing the non-diverse defendant to judgment.
See, e.g., Wilson, 257 U.S. at 98; Triggs v. John Crump
Toyota, Inc., 154 F.3d 1284, 1291 (11th Cir. 1998); Boyer v.
Snap-on Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990).
But proving the plaintiff's intent in bringing a lawsuit is rarely
a certainty for a defendant considering removal. In rare cases,
there might be direct evidence of intent. See, e.g., Mask v.
Chrysler Corp., 825 F. Supp. 285, 286-87 (N.D. Ala. 1993)
(plaintiff's counsel sent letter to non-diverse automobile
dealership defendant joined in suit against manufacturer,
Stating that plaintiff did not intend to pursue the dealership
to judgment); Heimback v. A.H. Robins Co., Inc., No. 02-
0347-S-BLW, slip op. at 2-3 (D. Id. Nov. 14, 2002) (non-
diverse physician-defendant testified that patient-plaintiff had
assured him that physician was joined in suit against drug
manufacturer only to keep the case in state court). In other
cases, a defendant might only have circumstantial evidence.
By the very nature of such evidence, however, a defendant is
always uncertain at the time of removal whether or not it
will be able to prevail in establishing a lack of intent on that
basis. See, e.g., Parnas v. Gen. Motors Corp., 879 F. Supp.
91,94 (E.D. Mo. 1995) (evidence insufficient to demonstrate
lack of intent); Franz v. Wyeth, No. H-04-0169, Slip op. at
6-13 (S.D. Tex. Apr. 26, 2004) (proposed plaintiff agreement
to dismiss non-diverse defendant if diverse defendant would
agree not to remove case was insufficient evidence of lack
of intent to pursue non-diverse defendant to judgment).

An alternative to proving a lack of intent to pursue the
defendant would be to demonstrate that there is no reasonable
possibility of plaintiff's establishing a claim against the non-
diverse defendant. If the law governing liability is uncertain,

17

however, the courts will give the plaintiff the benefit of the
doubt in ruling on a fraudulent joinder challenge to the claim
against that defendant. See, e.g., Crowe v. Coleman, 113 F.3d
1536, 1540 (11th Cir. 1997); Boyer, 913 F.2d at 111: B., Inc.
v. Miller Brewing Co., 663 F.2d 545, 549 (Sth Cir. 1981).

In some cases, plaintiffs’ strategy for defeating removal
is to make factual allegations in their complaint sufficient
on their face to state a claim against a non-diverse defendant,
even when no valid claim exists as a factual matter. See, e.2.,
In re Diet Drugs Prods. Liab. Litig., 220 F. Supp. 2d at 422
(50 plaintiffs sued Dr. Seymour Hersh alleging that he had
prescribed a drug to them, even though the evidence showed
that none of the plaintiffs had been treated by or had had any
contact whatever with Dr. Hersh); Jn re Rezulin Prods. Liab.
Litig., 168 F. Supp. 2d at 138-141 (non-diverse field sales
representative joined in suit against drug manufacturer under
State law requiring sale of the drug for liability, despite
evidence that the representative had never sold the drug).

Defendants face uncertainty, however, as to how far the
district court will permit them to go in introducing evidence
to establish that there is no colorable claim against the non-
diverse defendant. First, courts differ, even within the same
circuit, as to whether their review of a fraudulent joinder
claim is limited to the allegations of the complaint or whether
they may consider evidence proffered by the parties.
See, e.g., Pacheco de Perez v. AT&T Co., 139 F.2d 1368,
1380 (11th Cir. 1998) (fraudulent joinder determination to
be made based on complaint supplemented by any affidavits
and deposition transcripts); Johnson v. Wyeth, No. 1:02-CV-
1368-TNT (N.D. Ga. Jan. 3, 2003) (determining fraudulent

18

joinder based in part on deposition transcripts); Hales v.
Merck & Co., Inc., No. 03-AR-1028-M, slip op. at 6-7
(N.D. Ala. Jung 26, 2003) (court would not consider non-
diverse defendants’ affidavits in deciding fraudulent joinder);
Legg v. Wyeth, No. CV-04-S-0435-NE, slip op. at 10 (N.D.
Ala. Apr. 27, 2004) (refusing to consider non-diverse field
sales representative defendant’s affidavit that she had never
promoted or had anything else to do with the drug in
question); see also Reeb v. Wal-Mart Stores, Inc., 902 F. Supp.
185, 187-88 (E.D. Mo. 1995) (discussing the split of authority
in the Eighth Circuit on whether or not to permit “piercing
of the pleadings” in evaluating fraudulent joinder).

Even within a single judicial district, judges’ divergent
views of the limitations on piercing the pleadings can lead
to different decisions based on substantially identical facts.
Compare, e.g., Clay v. Wyeth, No. 5:04-cv-192-Oc-10GRJ,
slip op. at 28 (M.D. Fla. Sept. 23, 2004) (Hodges, J.) (finding
that pharmacy and drug company sales representatives were
fraudulently joined because the affidavits and other evidence
submitted by the parties established that there was no
reasonable basis for the claims against these defendants),
with Hroncich v. Wyeth, No. 2:03-cv-659-FTM-29SPC, slip
op. at 3-4 (M.D. Fla. Jan. 12, 2004) (Steele, J.) (refusing to
go beyond allegations of complaint and remanding case that
involved similar facts and evidence and the same types of
non-diverse defendants as in Clay).

Courts that permit some piercing of the pleadings,
moreover, often limit the factual issues they will consider.
See, e.g., B., Inc., 663 F.2d at 551 (“The question of whether
the plaintiff has set forth a valid claim against the in-state
defendant(s) should be capable of summary determination.”);

eae ee e___ __ eG

19

Crowe, 113 F.3d at 1541-42 (district court is to stop short of
adjudicating the merits of the case); Boyer, 913 F.2d at 112
(recognizing uncertainty as to extent of permissible inquiry
into the validity of the claim).

Particularly under these circumstances, it would be
inequitable and contrary to the central purpose of the removal
Statute for plaintiffs’ legal fees to be imposed on a defendant
merely because it is unsuccessful in establishing fraudulent
joinder in a particular case.

III. CONGRESS DID NOT INTEND TO GRANT
HOLLOW REMOVAL RIGHTS, SUBJECTING
DEFENDANTS TO SANCTIONS IF THEY
ARE UNSUCCESSFUL IN OVERCOMING
PLAINTIFFS’ STRATAGEMS

The foregoing discussion includes only some examples
of the uncertainties facing many defendants considering
removing a case against them filed in state court. Plaintiffs
suing out-of-state corporations have many devices available
to frustrate defendants’ exercise of their right to seek the
neutral forum provided by the federal court. Defendants
cannot always be successful in challenging those devices in
the face of the uncertainties discussed above. But there is no
indication in the removal statute, its legislative history or its
“large objectives” that Congress intended to require
defendants who acted reasonably nonetheless to pay the
plaintiffs’ legal fees whenever defendants are unsuccessful
in upholding a removal. To the contrary, these factors weigh
heavily in favor of the type of multi-factor, party-neutral
standard employed by the Court of Appeals in this case. When
“equitable considerations” are added to the mix, there can
be no question that the equities overwhelmingly favor this
Court’s affirming the application of that type of standard.

20

CONCLUSION

For the foregoing reasons, the Court should affirm the
Tenth Circuit’s ruling as to the standards for determining an
award of costs and fees under 28 U.S.C. § 1447(c) and as to
the decision in this case.

Respectfully submitted,

Of Counsel: RosBert N. WEINER
HuGH YOUNG, Jr. Counsel of Record
Propuct LIABILITY ADVISORY RoBERT D. ROSENBAUM
CounclL, INc. Brian E. Bowcut
1850 Centennial Park Drive SARAH M. BRACKNEY
Suite 510 ARNOLD & Porter LLP
Reston, VA 22091 555 12th Street, N.W.
(703) 264-5300 Washington, DC 20004

(202) 942-5000

Counsel for Amicus Curiae

la

APPENDIX A:
CORPORATE MEMBERS OF THE
PRODUCT LIABILITY ADVISORY COUNCIL

3M

Altec Industries

Altria Corporate Services, Inc.
American Household, Inc.
American Suzuki Motor Corporation
Amgen Inc.

Andersen Corporation
Anheuser-Busch Companies
Appleton Papers, Inc.

Arai Helmet, Ltd.

Astec Industries

Aventis Pharmaceuticals, Inc.
BASF Corporation

Bayer Corporation

Beretta U.S.A Corp.

BIC Corporation

Biro Manufacturing Company, Inc.
Black & Decker (U.S.) Inc.

BMW of North America, LLC
Boeing Company

Bombardier Recreational Products
BP America Inc.

Bridgestone Americas Holding, Inc
Briggs & Stratton Corporation
Bristol-Myers Squibb Company
Brown-Forman Corporation
CARQUEST Corporation
Caterpillar Inc.

Chevron Corporation

Continental Tire North America, Inc.

2a

Appendix A

Cooper Tire and Rubber Company
Coors Brewing Company

Crown Equipment Corporation
DaimlerChrysler Corporation

Deere & Company

The Dow Chemical Company

E & J Gallo Winery

E.I1. DuPont De Nemours and Company
Eaton Corporation

Eli Lilly and Company

Emerson Electric Co.

Engineered Controls International, Inc.
Estee Lauder Companies

Exxon Mobil Corporation

Ford Motor Company

Freightliner LLC

General Electric Company

General Motors Corporation
GlaxoSmithKline

The Goodyear Tire & Rubber Company
Great Dane Limited Partnership
Guidant Corporation

Harley-Davidson Motor Company

The Heil Company

Honda North America, Inc.

Hyundai Motor America

ICON Health & Fitness, Inc.

Illinois Tool Works, Inc.

International Truck and Engine Corporation

Isuzu Motors America, Inc.
Johnson & Johnson
Johnson Controls, Inc.

3a
Appendix A

Joy Global Inc., Joy Mining Machinery
Kawasaki Motors Corp., U.S.A.

Kia Motors America, Inc.

Koch Industries

Kolcraft Enterprises, Inc.

Kraft Foods North America, Inc.
Lincoln Electric Company

Masco Corporation

Mazda (North America), Inc.
McNeilus Truck and Manufacturing, Inc.
Medtronic, Inc.

Mercedes-Benz of North America, Inc.
Michelin North America, Inc.

Miller Brewing Company

Mine Safety Appliances Company
Mitsubishi Motors North America, Inc.
Nintendo of America, Inc.

Niro Inc.

Nissan North America, Inc.

Novartis Consumer Health, Inc.
Novartis Pharmaceuticals Corporation
Occidental Petroleum Corporation
PACCAR Inc

Panasonic

Pentair, Inc.

Pfizer Inc.

Pharmacia Corporation

Porsche Cars North America, Inc.

PPG Industries, Inc.

Purdue Pharma L.P.

Putsch GmbH & Co.KG

The Raymond Corporation

4a

Appendix A

Raytheon Aircraft Company
Remington Arms Company, Inc.
Rheem Manufacturing

RJ Reynolds Tobacco Company
Schindler Elevator Corporation
SCM Group USA Inc.

Shell Oil Company

The Sherwin-Williams Company
Smith & Nephew, Inc.

St. Jude Medical, Inc.

Sturm, Ruger & Company, Inc.
Subaru of America, Inc.

Synthes (U.S.A.)

Terex Corporation

Textron, Inc.

Thomas Built Buses, Inc.

TK Holdings

The Toro Company

Toshiba America Incorporated
Toyota Motor Sales, USA, Inc.
TRW Automotive US LLC
Tyson Foods, Inc.

UST (U.S. Tobacco)

Volkswagen of America, Inc.
Volvo Cars of North America, Inc.
Vulcan Materials Company
Water Bonnet Manufacturing, Inc.
Watts Water Technologies, Inc.
Whirlpool Corporation

Wyeth

Yamaha Motor Corporation, U.S.A.
Yokohama Tire Corporation
Zimmer, Inc.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385016_0073%3A09. Public record. Not legal advice.