Shorraw v. Bell, 2016 WL 3586675 (2016)

Facts

  • Georgette Shorraw, a South Carolina resident, was a passenger in a vehicle driven by Frederick J. Bell, also a South Carolina resident.
  • Bell allegedly lost consciousness due to a defect involving his implanted Riata Automatic Implantable Cardioverter Defibrillator (AICD) lead, causing a crash that injured Shorraw.
  • Shorraw sued in South Carolina state court against St. Jude Medical S.C., Inc. (St. Jude), asserting product-related claims including negligence, strict liability, and breach of express and implied warranties based on alleged defects in the AICD system.
  • Shorraw also named Bell as a defendant; however, Bell’s citizenship initially did not defeat diversity because the federal court, in earlier proceedings, treated Bell as a nominal defendant for jurisdictional purposes due to his lack of real financial exposure.
  • After the case was removed to federal court and remand was denied on the nominal-party issue, Shorraw amended her complaint to add Scott Kramer, a South Carolina citizen employed by St. Jude as a technical-services specialist.
  • The amended pleading alleged Kramer was negligent in connection with Bell’s implanted defibrillator system, including allegations that he failed to properly perform or arrange testing and/or failed to warn about the need to replace the device, contributing to a device failure.
  • Shorraw supported adding Kramer with affidavits from Robert G. Dismukes, a technical-services representative in the medical-device field, describing the role and duties of technical-services personnel and how failures in testing, troubleshooting, and communication could contribute to patient harm.
  • After Kramer was added, the federal court remanded the action to South Carolina state court because Kramer’s presence destroyed complete diversity.
  • Approximately one year later, St. Jude removed the case again, contending that Shorraw added Kramer only to defeat diversity jurisdiction and that deposition testimony and related discovery showed Kramer was fraudulently joined or that Shorraw acted in bad faith to prevent removal.
  • Shorraw (and Bell, aligned with Shorraw on remand) moved to remand, arguing the second removal was untimely under 28 U.S.C. § 1446 and that St. Jude had not shown fraudulent joinder or bad faith.

Issues

  1. Whether St. Jude’s second removal in this diversity case was barred by 28 U.S.C. § 1446’s timing limits, including the one-year limitation on diversity removals absent a showing of plaintiff bad faith.
  2. Whether St. Jude carried its burden to show Shorraw acted in bad faith or fraudulently joined Scott Kramer so that Kramer’s South Carolina citizenship could be disregarded for diversity jurisdiction.
  3. Whether costs and attorneys’ fees should be awarded under 28 U.S.C. § 1447(c).

Decision

  • The court granted the motion to remand and returned the case to the South Carolina Court of Common Pleas.
  • The court held St. Jude did not meet its burden to invoke the statutory bad-faith exception that would allow a diversity removal more than one year after commencement of the action.
  • The court rejected St. Jude’s attempt to treat Kramer as fraudulently joined or maintained in bad faith, finding St. Jude’s arguments went to contested factual matters and did not establish that Shorraw had no possible claim against Kramer under South Carolina law.
  • Because Kramer was a properly joined South Carolina defendant, complete diversity was lacking and the federal court lacked subject-matter jurisdiction under 28 U.S.C. § 1332.
  • The court denied the request for costs and attorneys’ fees under 28 U.S.C. § 1447(c).

Legal Principles

  • Removal statutes are strictly construed; the removing party bears the burden of establishing federal subject-matter jurisdiction, and doubts are resolved in favor of remand.
  • For fraudulent joinder, the removing defendant must show either (a) fraud in pleading jurisdictional facts or (b) no possibility that the plaintiff can state a viable claim against the nondiverse defendant in state court; disputes of fact and uncertainties in state law are resolved in the plaintiff’s favor at the jurisdictional stage.
  • In diversity cases, 28 U.S.C. § 1446 generally bars removal more than one year after commencement of the action unless the district court finds the plaintiff acted in bad faith to prevent removal; the removing defendant bears the burden on the bad-faith exception.
  • A plaintiff’s desire to litigate in state court, by itself, does not equal bad faith under § 1446; the exception requires proof that the plaintiff’s conduct was aimed at preventing removal in an improper way.
  • When the record shows, at most, competing factual accounts about an in-state employee’s conduct, that dispute does not satisfy the “no possibility of recovery” standard required to disregard the employee’s citizenship.
  • Attorneys’ fees on remand under § 1447(c) are discretionary and generally turn on whether the removing party’s position was objectively unreasonable.

Conclusion

In Shorraw v. Bell, 2016 WL 3586675 (D.S.C. July 5, 2016), the District of South Carolina remanded a products-liability and negligence action arising from a crash allegedly caused by a defective St. Jude AICD lead, holding that St. Jude’s second diversity removal was untimely under § 1446 and that St. Jude failed to prove bad-faith or fraudulent joinder of in-state technical-services specialist Scott Kramer; the court also denied fees and costs under § 1447(c).