Badon v. R.J.R. Nabisco

• Decision Date: 16 August 2000
• Docket Number: BADON-ROBERSON,No. 98-30942,98-30942
• Parties: (5th Cir. 2000) CARRIE BADON; RAY BADON; RUSSELL BADON; JOE MAE; SCOTTY JOSEPH BADON, Plaintiffs-Appellants, v. R J R NABISCO INC; LIGGETT & MEYERS TOBACCO CO; AMERICAN BRANDS INC; PHILIP MORRIS COMPANIES INC; B A T INDUSTRIES, LTD; PELICAN CIGAR CO; MALONE & HYDE INC; SCHLESINGER WHOLESALERS & AUTOMOTIVE CIGARETTE SERVICE INC; PHILIP MORRIS INC; R J REYNOLDS TOBACCO CO; BROWN & WILLIAMSON TOBACCO CO; BATUS HOLDINGS INC; AMERICAN TOBACCO CO; LIGGETT GROUP INC; BROOKE GROUP LIMITED; HILL & KNOWLTON INC; TOBACCO INDUSTRY RESEARCH COMMITTEE; COUNCIL FOR TOBACCO RESEARCH USA INC; TOBACCO INSTITUTE INC; FORTUNE BRANDS INC; LIGGETT & MYERS INC, Defendants-Appellees
• Court: U.S. Court of Appeals — Fifth Circuit

Page 382

224 F.3d 382 (5th Cir. 2000)

CARRIE BADON; RAY BADON; RUSSELL BADON; JOE MAE BADON-ROBERSON; SCOTTY JOSEPH BADON, Plaintiffs-Appellants, v. R J R NABISCO INC; LIGGETT & MEYERS TOBACCO CO; AMERICAN BRANDS INC; PHILIP MORRIS COMPANIES INC; B A T INDUSTRIES, LTD; PELICAN CIGAR CO; MALONE & HYDE INC; SCHLESINGER WHOLESALERS & AUTOMOTIVE CIGARETTE SERVICE INC; PHILIP MORRIS INC; R J REYNOLDS TOBACCO CO; BROWN & WILLIAMSON TOBACCO CO; BATUS HOLDINGS INC; AMERICAN TOBACCO CO; LIGGETT GROUP INC; BROOKE GROUP LIMITED; HILL & KNOWLTON INC; TOBACCO INDUSTRY RESEARCH COMMITTEE; COUNCIL FOR TOBACCO RESEARCH USA INC; TOBACCO INSTITUTE INC; FORTUNE BRANDS INC; LIGGETT & MYERS INC, Defendants-Appellees.

No. 98-30942

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

August 16, 2000

Appeal from the United States District Court for the Western District of Louisiana

Before KING, Chief Judge, GARWOOD and STEWART, Circuit Judges.

GARWOOD, Circuit Judge:

The instant interlocutory appeal concerns the propriety of the district court's denial of the plaintiffs' motion to remand this tobacco case to the Louisiana court from which defendants had removed it on the basis of diversity of citizenship, alleging that all the nondiverse defendants were fraudulently joined. The district court certified its denial of the motion to remand under 28 U.S.C. § 1292(b) and we then granted plaintiffs' petition to appeal.

Facts and Proceedings Below

This action by plaintiff Carrie Badon, and other parties Badon, all Louisiana residents, seeks relief from numerous cigarette manufacturers, three wholesalers or distributors, and others, all on account of Carrie Badon having incurred throat cancer, which was diagnosed in May 1993, as a result of having smoked cigarettes manufactured and sold by defendants. It is alleged that Badon, whom the record reflects was born in October 1937, smoked cigarettes "for approximately 40 years," and as a result "became addicted to them."

The original complaint was filed in Louisiana state court on May 23, 1994. It named as defendants five cigarette manufacturers, each a foreign (i.e., non-Louisiana) corporation, and three "cigarette distributors," two of the latter, Pelican Cigar Company (Pelican) and Schlesinger Wholesalers and Automatic Cigarette Service Inc. (Schlesinger), being Louisiana corporations.¹ Pursuant to the directions of plaintiffs' counsel, process was not served on any of the defendants nor were any of them notified of the suit until after the amended complaint was filed on December 30, 1997.² The first time any defendant had any notice of the suit was on January 5, 1998, when service, of the original and amended complaints, was made on the first defendant to be served. The amended complaint-fifty-seven legal pages long and divided into numbered paragraphs 18 (the last numbered paragraph of the original complaint was number 17) through 236-names the same defendants as the original complaint and adds as defendantsseveral corporations which are parents or affiliates of the cigarette manufacturer defendants originally named, and also adds as defendants a public relations corporation (which, just following removal, plaintiffs dismissed without prejudice) and two incorporated trade organizations.³ All defendants are foreign corporations, except the two Louisiana distributors who are referred to in the amended complaint as "the Tobacco Wholesalers". The amended complaint alleges that "the Tobacco Wholesalers were authorized retail and/or wholesale distributors, sellers, and/or dealers of and on behalf of the Tobacco companies" (defined to mean the defendants manufacturers and their parent and affiliate corporations). Neither the original nor the amended complaint alleges that Carrie Badon (or any other plaintiff) ever acquired any cigarettes directly from any of the Louisiana distributor defendants, but it is alleged that she smoked cigarettes which those defendants had distributed.

For example, the amended complaint alleges that "Defendants were engaged in the business of manufacturing and/or selling their tobacco products for ultimate retail sale to consumers such as Plaintiff. Defendants manufactured their tobacco products, manipulated the level of nicotine in their tobacco products and sold these tobacco products to retailers, who sold the Defendants' tobacco products to Plaintiff."

On February 4, 1998, defendants filed their joint notice of removal relying on diversity of citizenship and asserting that all defendants except the two Louisiana distributors were diverse to all the plaintiffs and that the citizenship of the Louisiana distributors should be disregarded as they were fraudulently joined in that there was no possibility of recovery against them. In the latter connection, it was alleged, inter alia, that they were not manufacturers, were mere distributors, sold only in the original sealed containers, and had no greater knowledge of the composition or properties of cigarettes than the consuming public, and reliance was placed on, among others, the decisions in Lonkowski v. RJ Reynolds Tobacco Co., 1996 WL 888182 (No. 96-1192, W.D. La. December 10, 1996) (Trimble, J.); Vickrey v. RJ Reynolds Tobacco Co., No. 96-2612 (W.D. La. April 3, 1997) (Little, C.J.); and Morgan v. United States Tobacco Co., No. 97-0280 (W.D. La. April 12, 1997) (Little, C.J.).

On March 6, 1998, plaintiffs filed their motion to remand. They did not question that there was the requisite amount in controversy and, except for the distributor defendants, complete diversity. They asserted first that the removal was untimely under the concluding clause of the second paragraph of 28 U.S.C. § 1446(b), stating that "a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action," in that the action had been commenced in May 1994 and removal was not attempted until February 1998. Plaintiffs also alleged that their joinder of the Louisiana distributors was not fraudulent in that they could recover against them on the basis of redhibition, under La. Civ. Code arts. 2520, 2524 (in their discussion of article 2524 plaintiffs also relied on La. Civ. Code art. 2475) and 2531, and also on the basis of conspiracy under La. Civ. Code art. 2324. In respect to conspiracy, the motion to remand states that a conspiracy has been alleged against all defendants in paragraphs 19, 48 and 49 of the amended complaint which it quotes and then characterizes as having "alleged an agreement between all of the Defendants to manipulate nicotine in cigarettes with the intent to addict Carrie Badon to tobacco products and thereby causing her to suffer great harm." The motion to remand was unverified and was supported by (and only by) the affidavit of plaintiffs' counsel stating why service of process on the original complaint had been withheld (see note 2 supra).

On March 24, 1998, defendants filed their opposition to the motion to remand. They contended that removal was timely as it was effected within thirty days of receipt of the initial pleading in the case as provided in the first paragraph of section 1446(b), and that the second paragraph of section 1446(b) was inapplicable because the case was removable as initially filed. They also alleged that plaintiffs' inequitable conduct in withholding citation for more than three years and seven months precluded their reliance on the one year limitation contained in the second paragraph of section 1446(b). As to diversity jurisdiction, defendants reiterated that there was complete diversity except for the two Louisiana distributor defendants and urged that the citizenship of those defendants should be disregarded as they had been fraudulently joined in that plaintiffs had no claim against them under Louisiana law. The opposition to the motion to remand was supported by affidavits of the two Louisiana distributors denying the allegations of conspiracy, and averring that they "at no time . . . entered into any agreement with anyone, including any manufacturer of tobacco products or any Defendants . . . for the concealment or suppression of information regarding the nicotine levels in cigarettes, the alleged regulation of nicotine levels in tobacco products, or nicotine 'addiction'", and that they "have never met with, discussed, written to or received written or oral communications or otherwise planned with any of the tobacco manufacturers or any other defendants to take any of the unlawful acts alleged." These affidavits also averred that the distributors never designed, manufactured, packaged or labeled cigarettes or purchased or blended tobacco for cigarettes, never held themselves out as manufacturers of cigarettes, never exercised or attempted to exercise any control or influence over any characteristics of the design, composition, or quality of cigarettes, never made any representations concerning health risks associated with smoking or the alleged addictiveness of nicotine, never had (and never represented to the public or to any plaintiff that they had) any specialized or superior knowledge not available to the general public respecting nicotine levels in cigarettes or nicotine addiction or health risks associated with smoking, and that all the cigarettes they sold were sold unaltered in the labeled and sealed packages in which they were received from the manufacturers.⁴

On March 31, 1998, plaintiffs filed their unverified reply to defendants' opposition to the motion to remand. This reply asserts only that the removal was untimely under the one year clause of the second paragraph of section 1446(b) and that there was no fraudulent joinder of the Louisiana distributor defendants because recovery against them under the Louisiana law of redhibition and/or warranty was possible even though there was no privity between them and plaintiffs.⁵ This reply contains no mention of the conspiracy claim, and...