Bailey v. Monsanto Co.
| Decision Date | 31 March 2016 |
| Docket Number | Case No. 4:15CV00844 AGF |
| Parties | Roger Bailey, et al., Plaintiffs, v. Monsanto Company; Solutia, Inc.; Pharmacia Corp.; and Pfizer, Inc., Defendants. |
| Court | U.S. District Court — Eastern District of Missouri |
Amy Collignon Gunn, Erica F. Blume, John G. Simon, The Simon Law Firm, P.C., St. Louis, MO, Charles S. Siegel, Waters and Kraus, LLP, Steve B. Jensen, Allen Stewart, P.C., Dallas, TX, for Plaintiffs Roger Bailey, Nicoletta Calhoun, Thomas Cleary, Catherine Guidroz, Cindy Hannon, Stanley Johnson, Pamela G. Kles, Rebecca P. Mackel, Tommy D. Moore, Louis D. Olandese, Anne H. Pilackas and Ann M. Stafford.
Adam E. Miller, Mark G. Arnold, Husch Blackwell, LLP, Ann E. Sternhell Blackwell, John R. Musgrave, Thompson Coburn, LLP, St. Louis, MO, Edward L. Dowd, Jr., James F. Bennett, Michael J. Kuhn, Dowd Bennett, LLP, Clayton, MO, for Defendants.
AUDREY G. FLEISSIG
This products liability action is before the Court on Plaintiffs' two motions (Doc. Nos. 24 & 39) to remand the case to state court. Twelve individual Plaintiffs seek to hold four inter-related corporations liable, under Missouri tort law, for the manufacture and sale of polychlorinated biphenyls (“PCBs”), environmental and dietary exposure to which Plaintiffs allege caused them to contract non-Hodgkin's lymphoma
. The case was filed in Missouri state court and removed to this Court based on diversity jurisdiction, 28 U.S.C. § 1332(a), and federal officer removal, 28 U.S.C. § 1442(a)(1).
One motion to remand presents the question of whether the two forum Defendants—Monsanto Co. (“New Monsanto”) and Solutia, Inc. (“Solutia”)—simply indemnified, rather than assumed the liabilities of, a third Defendant—Pharmacia, LLC1 (“Pharmacia”)—for claims arising out of the manufacture of PCBs, such that both of the forum Defendants were fraudulently joined to defeat diversity jurisdiction. The other motion to remand presents the question of whether federal officer removal is proper here. On November 24, 2015, oral argument was held on the motions to remand, and the parties thereafter filed motions for leave to supplement the record. The motions for leave will be granted, and for the reasons set forth below, both motions to remand will be granted.
Plaintiffs all reside in states other than Missouri. They initiated this action in Missouri state court on May 22, 2015, against New Monsanto, Solutia, Pharmacia, and Pfizer, Inc. It is undisputed that there is complete diversity of citizenship. It is also undisputed that New Monsanto and Solutia have their principal places of business in Missouri, and are thus Missouri residents for purposes of diversity jurisdiction, whereas Pharmacia and Pfizer are not residents of Missouri. The complaint alleges that Plaintiffs contracted non-Hodgkin's lymphoma
as a result of their dietary and environmental exposure to PCBs manufactured by the chemical division of “Old Monsanto,” a company that, as of 2000, ceased to exist. It is also undisputed that Pharmacia, which was formerly “Old Monsanto,” is a proper Defendant in this action.
For purposes of the motions now before the Court, the record establishes the following. From the early 1930s2 until 1977, Old Monsanto (and its predecessor in interest) was virtually the sole manufacturer of the PCBs used in the United States.
PCBs are a group of man-made chemicals that have been used in many different products, including electrical equipment to prevent fires and explosions. By the late 1930s it was known that PCBs were systemically toxic to humans, and by the late 1960s that PCBs were accumulating in the environment and food chain. In the early 1970s, Old Monsanto ceased manufacturing PCBs in “open systems,” and limited their manufacture to “closed systems.” In August 1977, Old Monsanto stopped all manufacture of PCBs. The Toxic Substance Control Act of 1976 (“TCSA”) allowed the manufacture of PCBs until 1979 and banned it thereafter.
In 1997, Old Monsanto's chemical business was spun off into a new independent company, Solutia, pursuant to a “Distribution Agreement” (Doc. No. 34-10 at 5-53). Under the Distribution Agreement, Solutia expressly assumed and agreed to indemnify Old Monsanto for liabilities related to Old Monsanto's chemical business, including its manufacture of PCBs.3 The Distribution Agreement included a provision, § 10.07, that there were no third-party beneficiaries thereto, as follows:
Except for the provisions of sections 3.03 and 3.04 relating to Indemnities, which are also for the benefit of the Indemnitees, this Agreement is solely for the benefit of the parties hereto and...and is not intended to confer upon any other Persons any rights or remedies hereunder.
On March 31, 2000, the remaining divisions of Old Monsanto (agricultural and pharmaceutical) merged with Pharmacia & Upjohn, Inc., with Old Monsanto being the surviving corporation and taking the Pharmacia name. Pharmacia then transferred its agricultural business to a newly created subsidiary, New Monsanto, which it spun off by means of a “Separation Agreement” dated September 1, 2000 (Doc. No. 34-10 at 55-148), and amended on July 1, 2002 (Doc. No. 73-2). Under the Separation Agreement, Pharmacia contributed and transferred to New Monsanto, and New Monsanto “received and assumed, directly or indirectly, certain assets and liabilities.” (Doc. No. 34-10 at 59.)
More specifically, under § 2.01 of the Separation Agreement, Pharmacia was to transfer to New Monsanto all of Pharmacia's interests in the New Monsanto assets, and New Monsanto was “to assume all the [New] Monsanto Liabilities,” with “[New] Monsanto Liabilities” defined in the definitional section (Article I) as including all liabilities of either New Monsanto or Pharmacia “that were assumed by Solutia...in connection with the spinoff of Solutia...to the extent that Solutia fails to pay, perform or discharge such Liabilities....” Id . at 74, 71. The Separation Agreement contained the same no-third-party-beneficiaries language as the Distribution Agreement. Id . at 97.
In a July 1, 2002 amendment to the Distribution Agreement, Pharmacia and New Monsanto described the 2000 Separation Agreement as having the following effect:
Pharmacia assigned and transferred certain assets related to its chemicals and agricultural businesses and certain other assets to New Monsanto and New Monsanto assumed certain liabilities relating thereto and all liabilities that were assumed by Solutia or any of its subsidiaries in connection with the Solutia Distribution to the extent that Solutia fails to pay, perform or discharge such liabilities.
(Doc. No. 73-1 at 3) (emphasis added).
In 2003, Pharmacia merged with Pfizer. Thereafter, on December 17, 2003, Solutia filed a petition for Chapter 11 bankruptcy in the Bankruptcy Court for the Southern District of New York. In Solutia's June 29, 2007 memorandum to the bankruptcy court in support of approval of a Settlement Agreement reached between Solutia and New Monsanto that was to be part of Solutia's Reorganization Plan, Solutia explained that at the time of Solutia's spin-off, it was believed that PCB tort lawsuits against Old Monsanto were “manageable.” But since that time, PCB litigation had become unmanageable, and the Settlement Agreement “would allow Solutia to accomplish its primary goal since it filed for chapter 11: to reallocate the majority of the legacy liabilities.” (Doc. No. 25-1 at 5-6.) Solutia continued that under the Settlement Agreement, New Monsanto had Id . at 6. And in a supplemental memorandum, Solutia represented several times that pursuant to the Settlement Agreement, New Monsanto would be “financially responsible for all Legacy Tort Claims.” (Doc. No. 25-2 at 3, 4.)
The “Recitals” section of Settlement Agreement (Doc. No. 34-10 at 150-200)4 includes the following statements:
The Settlement Agreement set out indemnification obligations of Solutia (§ 5.01) and of New Monsanto (§ 5.02). Section 5.01 provided that Id . at 179-80. Section 5.02 provided that “[New] Monsanto shall indemnify Solutia... for any Losses which [Solutia]...becomes subject to, as a result or arising out of...any Legacy Tort Claims.” Id . at 180.
Although the Settlement Agreement was between Solutia and New Monsanto, it attached and adopted therein the “Pharmacia Indemnity Agreement” between Solutia and Pharmacia. Thus the Settlement Agreement establishes rights and obligations among all three parties. In the Pharmacia Indemnity Agreement, Solutia agreed to “indemnify Pharmacia” for “any Loss” arising from, among other things, “Solutia Tort Claims” and “Chemical Liabilities [with certain exceptions].” (Doc. No. 73-3 at 2-3).
On November 29, 2007, the bankruptcy court confirmed Solutia's Reorganization Plan and approved and attached thereto the Settlement Agreement between Solutia and New Monsanto. (Doc. No. 34-11 at 1-67.) The Confirmation Order included an injunction against persons enforcing claims against Solutia and an injunction against...
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