Block ex rel. J.A. v. Toyota Motor Corp.

• Decision Date: 19 December 2011
• Docket Number: No. 11–1724.,11–1724.
• Parties: Angela BLOCK, as Trustee for the Next of Kin of J.A., a minor, deceased, J.A. a minor, by her mother and natural guardian, Angela Block; Angela Block, individually, Plaintiffs–Appellants, v. TOYOTA MOTOR CORPORATION, a Japanese corporation; Toyota Motor North America, Inc., a California corporation; Calty Design Research, Inc., a California corporation; Toyota Motor Engineering and Manufacturing North America, Inc., a Kentucky corporation; Toyota Motor Manufacturing, Kentucky, Inc., a Kentucky corporation; Toyota Motor Sales, USA, Inc., a California corporation, Defendants,Brooklyn Park Motors, Inc., a Minnesota corporation doing business as Toyota City, Defendant–Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

665 F.3d 944

Angela BLOCK, as Trustee for the Next of Kin of J.A., a minor, deceased, J.A. a minor, by her mother and natural guardian, Angela Block; Angela Block, individually, Plaintiffs–Appellants,

v.TOYOTA MOTOR CORPORATION, a Japanese corporation; Toyota Motor North America, Inc., a California corporation; Calty Design Research, Inc., a California corporation; Toyota Motor Engineering and Manufacturing North America, Inc., a Kentucky corporation; Toyota Motor Manufacturing, Kentucky, Inc., a Kentucky corporation; Toyota Motor Sales, USA, Inc., a California corporation, Defendants,Brooklyn Park Motors, Inc., a Minnesota corporation doing business as Toyota City, Defendant–Appellee.

No. 11–1724.

United States Court of Appeals, Eighth Circuit.

Submitted: Nov. 16, 2011.Filed: Dec. 19, 2011.

Amy Collignon Gunn, argued, Anne Brockland, on the brief, St. Louis, MO, for appellant.

John D. Sear, argued, Minneapolis, MN, Lawrence C. Mann, Troy, MI, Bard D. Borkon, Nathan J. Marcusen, Minneapolis, MN, for appellee.

Before WOLLMAN, MURPHY, and BENTON, Circuit Judges.

MURPHY, Circuit Judge.

Angela Block sued Brooklyn Park Motors and several Toyota affiliates in Minnesota state court after her son was killed and her daughter seriously injured in a crash with a 1996 Toyota Camry. In her capacity as trustee and guardian and also individually, Block asserted claims of wrongful death and personal injury based on strict products liability, negligence, and fraud. After defendants removed the case to federal court, Block filed a motion to remand arguing that removal was improper since Brooklyn Park Motors is a citizen of Minnesota, the forum state. The district court ¹ concluded that Brooklyn Park Motors had been fraudulently joined because Block had not asserted any reasonable basis for recovery against it, denied her motion to remand, and dismissed with prejudice all claims against Brooklyn Park Motors. Block appeals the denial of her motion to remand and the dismissal of Brooklyn Park Motors. We affirm.

I.

This case arises out of a tragic automobile accident in St. Paul, Minnesota in June 2006, which involved two of Block's children. Javis Trice–Adams was driving a car with four passengers: his son Javis Adams, his daughter Jassmine Adams, Quincy Adams, and Devyn Bolton. Block is the mother of both Javis and Jassmine Adams. While Trice–Adams was stopped at an intersection, a 1996 Toyota Camry driven by Koua Fong Lee hit his car from behind, pushing it into oncoming traffic. Block's complaint alleges that the accident happened after the Toyota suddenly accelerated to at least 70 miles per hour and did not decelerate even though Fong Lee applied the brakes. Trice–Adams and Javis Adams died on the scene. Devyn Bolton was rendered a quadriplegic and later died. Quincy and Jassmine Adams were severely injured but survived.

After the 2006 accident Fong Lee was arrested and convicted of criminal homicide. He had purchased the Toyota Camry that year from its first owner, who had bought it new from Brooklyn Park Motors in 1996. The car had approximately 170,000 miles on the odometer when Fong Lee purchased it. Fong Lee's conviction was eventually vacated after evidence of sudden acceleration in other Toyota vehicles was produced in post conviction proceedings.

In 2010 Block brought an action in Minnesota state court against Brooklyn Park Motors and a number of Toyota affiliated companies (Toyota defendants) asserting claims of strict products liability, negligence, res ipsa loquitur, and fraud. Block alleges that the Toyota Camry was defective because it suddenly accelerated and that the National Highway Transportation Safety Administration (NHTSA) had received “numerous complaints” about incidents of sudden acceleration in Toyota Camrys. The Toyota defendants removed to federal court. Block then moved to remand to state court arguing that removal was improper under 28 U.S.C. § 1441(b) because Brooklyn Park Motors is a citizen of Minnesota.² The Toyota defendants argued that Brooklyn Park Motors was fraudulently joined and therefore the motion to remand should be denied.

The district court denied the motion to remand and dismissed all claims against Brooklyn Park Motors with prejudice. It concluded that Minnesota's “seller's exception statute,” which allows for dismissal of strict products liability claims against sellers, applied to Block's strict liability claims. See Minn.Stat. § 544.41. The court decided that the provisional nature of the dismissal under that statute did not preclude a finding of fraudulent joinder in this case. It concluded that no reasonable basis for strict liability existed against Brooklyn Park Motors since it did not have actual knowledge of the alleged defect and that there was no reasonable basis for the negligence claim which also required knowledge of the alleged defect.

Block then moved to reconsider or for entry of final judgment on the dismissal of Brooklyn Park Motors. In her motion to reconsider Block alleged that there were numerous complaints to NHTSA about sudden acceleration which showed that Brooklyn Park Motors had actual knowledge of the alleged defect, but Block did not produce any examples of such complaints. The district court denied the motion to reconsider and entered final judgment in favor of Brooklyn Park Motors. Block now appeals the denial of her motion to remand, arguing that Brooklyn Park Motors was not fraudulently joined and should not have been dismissed. At argument Block further contended that Brooklyn Park Motors should not have been dismissed with prejudice.

II.

We review de novo the district court's denial of the motion to remand. Knudson v. Systems Painters, Inc., 634 F.3d 968, 975 (8th Cir.2011). A defendant may remove a case to federal court in diversity cases “only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C. § 1441(b). Block argues that since Brooklyn Park Motors is a citizen of Minnesota, the state in which the action was brought, removal was inappropriate and remand is required.

If there was “no reasonable basis in fact and law” for Block's claims against Brooklyn Park Motors, Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 810 (8th Cir.2003) (citation omitted), joinder of Brooklyn Park Motors was “fraudulent,” meaning that it was named as a party “solely to prevent removal” of the case from state court. Id. at 809. If Brooklyn Park Motors was fraudulently joined, both the district court's denial of the motion to remand and the dismissal of Brooklyn Park Motors were proper.

Fraudulent joinder does not exist where “there is arguably a reasonable basis for predicting that the state law might impose liability based upon the facts involved.” Junk v. Terminix Int'l Co., 628 F.3d 439, 446 (8th Cir.2010) (citation omitted). In order to establish fraudulent joinder, the defendant must “do more than merely prove that the plaintiff's claim should be dismissed pursuant to a Rule 12(b)(6) motion” since “we do not focus on the artfulness of the plaintiff's pleadings.” Knudson, 634 F.3d at 980. In fraudulent joinder cases, some courts examine material beyond the complaint's allegations to “determine if there is any factual support” for the claims against the allegedly fraudulently joined defendant. See Masepohl v. Am. Tobacco Co., Inc., 974 F.Supp. 1245, 1250 (D.Minn.1997). “All doubts about federal jurisdiction should be resolved in favor of remand to state court.” In re Prempro Prod. Liab. Litig., 591 F.3d 613, 620 (8th Cir.2010).

Block argues that the district court erred in finding fraudulent joinder, dismissing Brooklyn Park Motors, and denying the motion to remand because there is a reasonable basis in fact and law for her strict liability and negligence claims. We address these claims separately.

A.

Block first argues that the district court erred in finding no “reasonable basis in fact and law” for her strict liability claims against Brooklyn Park Motors. Minnesota has a “seller's exception” statute which mandates dismissal of strict liability claims against nonmanufacturers where the nonmanufacturer provides the identity of the manufacturer, unless the plaintiff shows that the nonmanufacturer falls into one of three exceptions:

(a) that the defendant has exercised some significant control over the design or manufacture of the product, or has provided instructions or warnings to the manufacturer relative to the alleged defect in the product which caused the injury, death or damage;

(b) that the defendant had actual knowledge of the defect in the product which caused the injury, death or damage; or

(c) that the defendant created the defect in the product which caused the injury, death or damage.

Minn.Stat. § 544.41 subdiv. 3. If the plaintiff can show one of the three exceptions, dismissal is prohibited. If no exception applies, dismissal is mandatory but “[t]he plaintiff may at any time subsequent to dismissal move to vacate the order of dismissal and reinstate the ... defendant” where it can show an inability to recover against the manufacturer. Id. subdiv. 2. The statute thus “tempers the harsh effect of strict liability as it applies to passive sellers, while ensuring that a person injured by a defective product can recover from a viable source.” In re Shigellosis Litig., 647 N.W.2d 1, 6 (Minn.Ct.App.2002).

Block contends that dismissal under § 544.41 is always provisional and thus the Minnesota seller's exception statute is never a proper basis for finding fraudulent joinder. She states that the statute allows reinstatement of the seller “at any time subsequent to dismissal” under certain conditions, see id. subdiv. 2, and thus Brooklyn Park Motors would remain “functionally a party,” precluding removal. She cites Illinois and Missouri district court cases suggesting that under similar statutes in those states the seller “remains functionally a...