Asperger v. Shop Vac Corp.

• Citation: 524 F.Supp.2d 1088
• Decision Date: 26 November 2007
• Docket Number: Civil No. 07-772-GPM.
• Court: U.S. District Court — Southern District of Illinois
• Parties: Charles ASPERGER and Debra Asperger, Plaintiffs, v. SHOP VAC CORPORATION and Sears Holdings Corporation, d/b/a Mart, Defendants.

524 F.Supp.2d 1088

Charles ASPERGER and Debra Asperger, Plaintiffs, v. SHOP VAC CORPORATION and Sears Holdings Corporation, d/b/a Mart, Defendants.

Civil No. 07-772-GPM.

United States District Court, S.D. Illinois.

November 26, 2007.

COPYRIGHT MATERIAL OMITTED

Bob L. Perica, Percia Law Firm, Wood River, IL, for Plaintiffs.

Theodore J. MacDonald, Jr., St. Louis, IL, for Defendants.

MEMORANDUM AND ORDER

MURPHY, District Judge:

I. INTRODUCTION

This matter is before the Court on preliminary review of the allegations of federal subject matter jurisdiction asserted in the notice of removal filed by Defendant Shop Vac Corporation. See Wisconsin Knife Works v. National Metal Crafters, 781 F.2d 1280, 1282 (7th Cir.1986) ("The first thing a federal judge should do when a complaint is filed is check to see that federal jurisdiction is properly alleged."); Board of Educ. of Decatur Sch. Dist. No. 61 v. Rainbow/Push Coal., 75 F.Supp.2d 916, 918 (C.D.Ill.1999) (citing Wisconsin Knife Works, 781 F.2d at 1282) (reviewing a notice of removal sua sponte and holding that the court lacked federal subject matter jurisdiction); Waymar Med., Inc. v. American Med. Elecs., Inc., 786 F.Supp. 754, 755 (E.D.Wis.1992) (same). See also Hay v. Indiana State Bd. of Tax Comm'rs, 312 F.3d 876, 879 (7th Cir.2002) (quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 577, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999)) ("Jurisdiction is the `power to declare law,' and without it the federal courts cannot proceed. Accordingly, not only may the federal courts police subject matter jurisdiction sua sponte, they must."); Hammes v. AAMCO Transmissions, Inc., 33 F.3d 774, 778 (7th Cir.1994) (noting that a federal court "has an independent duty to satisfy itself that it has subject-matter jurisdiction"); Kurz v. Fidelity Mgmt. & Research Co., No. 07-CV-592-JPG, 2007 WL 2746612, at *1 (S.D.Ill. Sept. 18, 2007) ("The limited nature of federal subject matter jurisdiction imposes on federal courts a duty to examine their jurisdiction at every stage of a proceeding, sua sponte if need be."); Kuntz v. Illinois Cent. R.R Co., 469 F.Supp.2d 586, 588 (S.D.Ill.2007) ("Because a federal court's jurisdiction is limited, it has a ... nondelegable duty to police the limits of federal jurisdiction with meticulous care.").

This action was filed originally in the Circuit Court of the Third Judicial Circuit, Madison County, Illinois, on September 28, 2007. The, complaint in the case alleges that on October 1, 2005, Plaintiff Charles Asperger was using a Shop Vac vacuuming device in the garage of his home in Edwardsville, Illinois. Mr. Asperger alleges that the device ignited fumes in the garage, causing him to suffer burns to over fifty percent of his body, and resulting in $676,819.79 in damage to his home and belongings. Mr. Asperger asserts claims for negligence against Defendant Shop Vac Corporation ("Shop Vac"), the manufacturer of the Shop Vac device that allegedly caused his injuries, and Defendant Sears Holdings Corporation d/b/a K-Mart, ("Sears") from which Mr. Asperger alleges he purchased the Shop Vac device. His wife, Plaintiff Debra Asperger, asserts a claim for loss of consortium against Shop Vac. Shop Vac has removed the case from state court to this Court, asserting federal subject matter jurisdiction on the basis of diversity of citizenship. Having reviewed carefully the jurisdictional allegations contained in Shop Vac's notice of removal, the Court concludes that federal subject matter jurisdiction does not exist in this case. Accordingly, the case will be remanded to state court.

II. DISCUSSION

A. Legal Standard

Under 28 U.S.C. § 1441, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). The party seeking removal has the burden of establishing federal jurisdiction. See Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 540 (7th Cir.2006); Vogel v. Merck & Co., 476 F.Supp.2d 996, 998. (S.D.Ill.2007); Fuller v. BNSF Ry. Co., 472 F.Supp.2d 1088, 1091 (S.D.Ill.2007). "`Courts should interpret the removal statute narrowly and presume that the plaintiff may choose his or her forum.' Put another way, there is a strong presumption in favor of remand." Yount v. Shashek, 472 F.Supp.2d 1055, 1057-58 (S.D.Ill.2006) (quoting Doe v. Allied-Signal Inc., 985 F.2d 908, 911 (7th Cir.1993)). "All doubts about the propriety of removal are to be resolved in favor of remand." Disher v. Citigroup Global Mkts., Inc., 487 F.Supp.2d 1009, 1014 (S.D.Ill.2007). See also Alsup v. 3-Day Blinds, Inc., 435 F.Supp.2d 838, 841 (S.D.Ill.2006) ("Doubts concerning removal must be resolved in favor of remand to the state court."); Littleton v. Shelter Ins. Co., No. 99-912-GPM, .2000 WL 356408, at *1 (S.D.Ill. Mar. 9, 2000) ("The removal statute, 28 U.S.C. § 1441, is construed narrowly, and doubts concerning removal are resolved in favor of remand.").

Removal based on federal diversity jurisdiction requires, of course, that the parties to a case be of completely diverse state citizenship, that is, no plaintiff may be a citizen of the same state as any defendant, and that the amount in controversy exceed $75,000, exclusive of interest and costs. See 28 U.S.C. § 1332(a)(1); Carden v. Arkoma Assocs., 494 U.S. 185, 187, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990); Rubel v. Pfizer Inc., 361 F.3d 1016, 1017 (7th Cir.2004); Lyerla v. Amco Ins. Co., 461 F.Supp.2d 834, 835 (S.D.Ill.2006); Cassens v. Cassens, 430 F.Supp.2d 830, 832-33 (S.D.Ill.2006). However, even where diversity of citizenship is not complete, a federal court may disregard the citizenship of a diversity-defeating defendant on removal when that defendant has been fraudulently joined, that is, "there is no possibility that a plaintiff can state a cause of action against [the] nondiverse defendant[ ] in state court, or where there has been outright fraud in [the] plaintiff's pleading of jurisdictional facts." Gottlieb v. Westin Hotel Co., 990 F.2d 323, 327 (7th Cir.1993). See also Hoosier Energy Rural Elec. Coop., Inc. v. Amoco Tax Leasing IV Corp., 34 F.3d 1310, 1315 (7th Cir.1994); Smith v. Merck & Co., 472 F.Supp.2d 1096, 1098 (S.D.Ill. 2007); Bova v. U.S. Bank, N.A., 446 F.Supp.2d 926, 930 (S.D.Ill.2006). A defendant seeking removal based on alleged fraudulent joinder to defeat diversity has the "heavy" burden of proving that, after the court resolves all issues of law and fact in a plaintiff's favor, there is no possibility that the plaintiff can establish a cause of action against a diversity-defeating defendant in a state court. Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir.1992); Brooks v. Merck & Co., 443 F.Supp.2d 994, 998 (S.D.Ill.2006); Bavone v. Eli Lilly & Co., Civil No. 06-153-GPM, 2006 WL 1096280, at *2 (S.D.Ill. Apr. 25, 2006); Riddle v. Merck & Co., Civil No. 06-172-GPM, 2006 WL 1064070, at *2 (S.D.Ill. Apr. 21, 2006).

B. Fraudulent Joinder

In this case, it appears from the record that an amount in excess of $75,000, exclusive of interest and costs, is in controversy. However, diversity of citizenship is not complete. Shop Vac is a corporation incorporated under the law of New Jersey with its principal place of business in Pennsylvania. Mr. and Mrs. Asperger are citizens of Illinois, as is Sears, which is a corporation incorporated under Delaware law with its principal place of business in Illinois. Shop Vac contends that the citizenship of Sears may be disregarded because Sears has been fraudulently joined to defeat diversity. The basis of Shop Vac's claim of fraudulent joinder is the familiar doctrine of the corporate veil. Specifically, Shop Vac asserts that, contrary to the allegations of the Aspergers' complaint, Sears does not do business as K-Mart. Rather, Sears is the parent corporation of K-Mart Holding Corporation, which in turn is the corporate parent of Mart Corporation, the company that actually does business as K-Mart. Under settled principles regarding the separateness of corporate identity, Shop Vac argues, Sears cannot be held liable for the acts of K-Mart Corporation.

In a case in which the Court's diversity jurisdiction is invoked, the Court must apply Illinois law with respect to matters of substantive law, while applying federal law as to matters of procedure. See Hanna v. Plumer, 380 U.S. 460, 464-65, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965); Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938); Tropp v. Western-Southern Life Ins. Co., 381 F.3d 591, 595 (7th Cir.2004); First Nat'l Bank & Trust Corp. v. American Eurocopter Corp., 378 F.3d 682, 689 (7th Cir.2004); LaRoe v. Cassens & Sons, Inc., 472 F.Supp.2d 1041, 1046 (S.D.Ill.2006). Shop Vac appears to assume that Illinois law governs the issue of veil-piercing in this matter, and absent evidence of a conflict between Illinois law and the law of Delaware, where, as noted, Sears is incorporated, the Court is entitled to assume that Illinois furnishes the relevant substantive law as to this issue. See Clevenger v. Eastman Chem. Co., No. 07-CV-148-DRH, 2007 WL 2458474, at *4 n. 2 (S.D.Ill. Aug. 24, 2007) (citing Potter v. Janus Inv. Fund, 483 F.Supp.2d 692, 701 n. 4 (S.D.Ill. 2007)) (a federal court presumptively applies the substantive law of the forum, unless the parties to an action dispute the application of such law). Moreover, even were the Court to conduct a conflict of laws analysis, the result would be the same.

In diversity cases, of course, Illinois law regarding conflict of laws is deemed to be substantive. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Allstate Ins. Co. v. Menards, Inc., 285 F.3d 630, 634 (7th Cir.2002); Land v. Yamaha Motor Corp., 272. F.3d 514, 516 (7th Cir.2001); In re...