## Facts

- The City of St. Louis and various Missouri hospitals and healthcare providers sought to recover unreimbursed costs of treating indigent smokers with tobacco-related illnesses.
- Plaintiffs alleged tobacco manufacturers and affiliated entities marketed addictive products through misleading statements, leading to illnesses requiring expensive medical care.
- Plaintiffs also sued Missouri-based tobacco distributors and retailers, alleging those entities profited from sales connected to the asserted harms.
- Defendants removed the case from Missouri state court to federal court, claiming diversity jurisdiction and arguing the Missouri distributor defendants were fraudulently joined to defeat diversity.
- Plaintiffs moved to remand, asserting at least one viable restitution-based claim against the distributor defendants under Missouri law.

## Issues

1. Whether the Missouri distributor defendants were fraudulently joined such that their citizenship could be disregarded for diversity jurisdiction.
2. Whether plaintiffs had a reasonable basis in fact and law to assert a Missouri restitution (unjust enrichment) claim against the distributor defendants, requiring remand for lack of complete diversity.

## Decision

- The court granted plaintiffs’ motion to remand.
- The court held defendants failed to meet the heavy burden to prove fraudulent joinder of the Missouri distributor defendants.
- The court found plaintiffs’ restitution theory against the distributors had an arguable, reasonable basis under Missouri law.
- Because at least one properly joined defendant was non-diverse, complete diversity was absent and the federal court lacked subject-matter jurisdiction.
- The court did not decide the merits of plaintiffs’ tobacco-liability theories, addressing only jurisdiction and remand.

## Legal Principles

- A removing party asserting fraudulent joinder must show no reasonable basis in fact and law for a claim against the resident defendant, or no real intent to pursue that defendant.
- In evaluating fraudulent joinder, the claim need only be colorable; doubts about removal and uncertainties in state law are resolved in favor of remand.
- Missouri restitution generally requires allegations that (1) a benefit was conferred on the defendant, (2) at the plaintiff’s expense, and (3) retention would be unjust.
- Where state-law liability is not clearly foreclosed—especially on unsettled questions—federal courts should not use fraudulent-joinder doctrine to retain jurisdiction.

## Conclusion

The district court remanded the case to Missouri state court because plaintiffs alleged a reasonably supportable restitution claim against in-state tobacco distributors, defeating complete diversity and eliminating federal jurisdiction.


City of St. Louis v. American Tobacco Co., 70 F. Supp. 2d 1008 (E.D. Mo. 1999)