Holman v. Johnson & Johnson

• Decision Date: 22 May 2019
• Docket Number: Case No. 19ap00645
• Citation: 600 B.R. 6
• Parties: Cheryl HOLMAN, Individually, and as Independent Administrator on behalf of the Estate of Elaine Cook, Deceased, Plaintiff, v. JOHNSON & JOHNSON, Johnson & Johnson Consumer Companies, Inc., Johnson & Johnson Customer Logistics Services, LLC, and Walgreen Co., Defendants.
• Court: U.S. Bankruptcy Court — Northern District of Illinois

600 B.R. 6

Cheryl HOLMAN, Individually, and as Independent Administrator on behalf of the Estate of Elaine Cook, Deceased, Plaintiff,

v.JOHNSON & JOHNSON, Johnson & Johnson Consumer Companies, Inc., Johnson & Johnson Customer Logistics Services, LLC, and Walgreen Co., Defendants.

Case No. 19ap00645

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

Signed May 22, 2019

Kristine Kolky, Taft, Stettinius & Hollister LLP, Chicago, IL, Shannon M. McNulty, Clifford Law Offices, PC, Chicago, IL, Michael P. O'Neil, Taft Stettinius & Hollister LLP, Indianapolis, IN, for Plaintiff.

Mary Elizabeth D. Kellett, HeplerBroom LLC, Edwardsville, IL, for Johnson & Johnson, Johnson & Johnson Consumer Companies, Inc.

Johnson & Johnson Customer Logistics Services, LLC, pro se.

Walgreen Co., pro se.

(Removal from Circuit Court of Cook County, Law Division, 2018-L-1811)

Memorandum Opinion

Honorable Deborah L. Thorne, United States Bankruptcy Judge

Introduction & Background

This matter comes before the court upon Cheryl Holman's ("Holman") motion to remand certain removed state law claims back to state court. Holman is the administrator of the estate of Elaine Cook ("Cook"), deceased. Holman is suing Johnson & Johnson ("J & J") (and others) on various legal theories, all arising under state law, to recover damages against J & J for its role in allegedly causing cancer-related injuries to Cook. The injuries allegedly arise out of exposure to talc used in J & J's products.

J & J allegedly acquired most or all of its talc from Imerys, a company now in bankruptcy in the District of Delaware.¹ J & J argues that removal of the state law claims to this court is proper under 28 U.S.C. § 1452(a) due to the pending Imerys bankruptcy case and the existence of "related to" bankruptcy jurisdiction over the state law claims under 28 U.S.C. § 1334(b). For the following reasons, this court disagrees and orders that the claims be remanded to the Circuit Court of Cook County.

Discussion

I. Removal, Jurisdiction, and the Power to Enter an Order Remanding the State Law Claims

J & J has removed the claims to this court under 28 U.S.C. § 1452(a). This statute provides in pertinent part that "[a] party may remove any claims or cause of action in a civil action ... to the district court for the district where such civil action is pending , if such district court has jurisdiction of such claim or cause of action under section 1334 of this title." 28 U.S.C. § 1452(a) (emphasis added). Accordingly, removal under section 1452(a) is appropriate only if subject matter jurisdiction under section 1334 exists over the removed claims.

Subject matter jurisdiction exists under section 1334(b) over claims "related to" a pending bankruptcy case. 28 U.S.C. § 1334(b).² The district court has referred subject matter jurisdiction over "related to" claims to this court. 28 U.S.C. § 157(a) ; N.D. Ill. L.R. 40.3.1(a).³ Accordingly, the claims were properly removed to this court in the first instance, and this court may therefore pass on the propriety of the removal. See 28 U.S.C. § 157(a) ; N.D. Ill. L.R. 40.3.1(a) ; Fed. R. Bankr. P. 9001(3), 9027(a)(1) ; Gianakas v. Exchange Nat'l Bank of Chicago (In re Gianakas) , 56 B.R. 747, 751–52 (N.D. Ill. 1985) ; City of Joliet v. Bank One, Chicago, N.A. (In re Green) , 210 B.R. 556, 558 (Bankr. N.D. Ill. 1997). The fact that Imerys's bankruptcy case is pending in Delaware and not in this district is irrelevant. 28 U.S.C. § 1452(a) ("where such civil action is pending") (emphasis added); Engra, Inc. v. Gabel (In re Engra, Inc.) , 86 B.R. 890, 893 (S.D. Tex. 1988).

If subject matter jurisdiction under section 1334(b) is lacking, the claims must be remanded back to state court. 28 U.S.C. § 1447(c) ("If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded .") (emphasis added); Hernandez v. Brakegate, Ltd. , 942 F.2d 1223, 1225–26 (7th Cir. 1991) ; see also 28 U.S.C. § 1452(a) (noting that removal is only proper if the court has jurisdiction under section 1334 ). This court has subject matter jurisdiction to consider its own jurisdiction. Bayo v. Napolitano , 593 F.3d 495, 500 (7th Cir. 2010) ("[A] federal court always has jurisdiction to determine its own jurisdiction.") (quotations and citations omitted). And this court has the power to issue an order remanding the claims back to state court, even if the underlying claims being remanded are non-core state law claims being brought by a non-debtor against a non-debtor (as is the case here). See, e.g. , Podkolzin v. Amboy Bus Co. , 402 B.R. 539, 543 n.5 (E.D.N.Y. 2009) ; Scherer v. Carroll , 150 B.R. 549, 552 (D. Vt. 1993) ; Rachmale v. Conese , 515 B.R. 567, 569 n.2 (Bankr. E.D. Mich. 2014) ; Citcorp Savings of Ill. v. Chapman (In re Chapman) , 132 B.R. 153, 160–61 (Bankr. N.D. Ill. 1991).

II. Several Preliminary Matters

Several preliminary matters need to be addressed at the outset. First, in reaching its decision, this court will apply the law of the Seventh Circuit, even though Imerys's bankruptcy case is pending in the Third Circuit. Under section 1452(a), this court must look to its own jurisdiction, and section 1452(b) similarly speaks of the court to which the claims have been removed as being the proper court to equitably remand the claims. See 28 U.S.C. § 1452(a) – (b) ; see also Cabibi v. Avon Prod., Inc. , No. CV1903037CJCJCX, 2019 WL 1976438, at *2 (C.D. Cal. May 3, 2019) (looking to the law of the Ninth Circuit notwithstanding the fact that Imerys's bankruptcy case is pending in the Third Circuit).

Second, J & J urges this court to defer ruling until after the Delaware District Court rules on the pending section 157(b)(5) motion. But J & J has removed the claims to this court under section 1452(a). Section 1452(a) prompts an inquiry into this court's jurisdiction , and section 1452(b) prompts an inquiry into whether it is prudent for this court to exercise jurisdiction even if it exists. See 28 U.S.C. § 1452(a) – (b). Section 157(b)(5), by contrast, is not jurisdictional at all; that section relates only to the proper federal trial venue for personal injury and wrongful death tort claims. Stern v. Marshall , 564 U.S. 462, 479–80, 131 S.Ct. 2594, 180 L.Ed.2d 475 (2011) (holding that section 157(b)(5) is not jurisdictional). Accordingly, this court believes that the interplay between sections 157(b)(5) and 1452 does not give this court a sound legal reason to delay a jurisdictional inquiry under section 1452, especially where such a delay would likely operate to the prejudice of the state court plaintiff. This court therefore declines to stay the resolution of this matter pending the outcome of the section 157(b)(5) motion in Delaware. Cabibi , 2019 WL 1976438, at *3 n.2 ; Holman v. Honeywell Int'l, Inc. , No. 4:01CV2030CEJ, 2002 WL 32727081, at *1–2 (E.D. Mo. Jan. 25, 2002).

Finally, the parties raise legal questions about whether mandatory abstention is appropriate in this case and whether J & J has complied with the proper time limits in removing the state law claims to this court. See 28 U.S.C. §§ 1334(c)(2), 157(b)(2)(B), 157(b)(4); see also 28 U.S.C. § 1446(b)(1), (3) ; Fed. R. Bankr. P. 9027(a)(2). Because this court rules below that it lacks subject matter jurisdiction, and because the court further rules that it would equitably remand the claims to state court under section 1452(b) even if subject matter jurisdiction did exist, the court does not reach the merits of these other points of contention.

III. J & J's Burden to Establish that "Related To" Jurisdiction Exists over the State Law Claims

J & J has the burden of demonstrating that "related to" jurisdiction under section 1334 is proper. Morris v. Nuzzo , 718 F.3d 660, 668 (7th Cir. 2013) ; see also Lothian Cassidy, LLC v. Lothian Expl. & Dev. II, L.P. , 487 B.R. 158, 161 (S.D.N.Y. 2013). Importantly, any doubts are to be resolved in favor of Holman, who chose a state court forum for her lawsuit. Morris , 718 F.3d at 668 ; see also Lothian , 487 B.R. at 161.

"Related to" jurisdiction under section 1334 is narrowly construed in the Seventh Circuit out of respect for state courts and for Article III of the federal constitution. Matter of FedPak Sys., Inc. , 80 F.3d 207, 214 (7th Cir. 1996). "[C]ommon sense cautions against an open-ended interpretation of the ‘related to’ statutory language in a universe where everything is related to everything else." Id.

[T]he [‘related to’] language should not be read ... broadly. [It] is primarily intended to encompass tort, contract, and other legal claims by and against the debtor, claims that, were it not for bankruptcy, would be ordinary stand-alone lawsuits between the debtor and others but that section 1334(b) allows to be forced into bankruptcy court so that all claims by and against the debtor can be determined in the same forum.

Id. (quoting Zerand-Bernal Grp., Inc. v. Cox , 23 F.3d 159, 161 (7th Cir. 1994) ).

Additionally, where (as here) the claims are being brought neither by nor against the debtor, "[a] case is ‘related’ to a bankruptcy when the dispute ‘affects the amount of property for distribution [i.e., the debtor's estate] or the allocation of property among creditors.’ " Id. at 213–14 (quoting Matter of Mem'l Estates, Inc. , 950 F.2d 1364, 1368 (7th Cir. 1991) ). Any such impact on the asset pool or on the allocation of property to creditors must be direct and substantial. See Diamond Mortg. Corp. of Illinois v. Sugar , 913 F.2d 1233, 1239 (7th Cir. 1990).

IV. J & J's Arguments Considered

J & J makes three arguments to support "related to" jurisdiction over the state law claims. First, J & J argues that certain contractual indemnification agreements exist between J & J and Imerys that might be triggered by the state court litigation. Second, J & J argues that J & J and Imerys share insurance policies, polices that are property of Imerys's bankruptcy estate and that may be affected by...