Central Laborers Welfare Fund v. Philip Morris, Civ. 97-568-GPM.

• Decision Date: 30 November 1998
• Docket Number: No. Civ. 97-568-GPM.,Civ. 97-568-GPM.
• Parties: CENTRAL LABORERS WELFARE FUND, et al., Plaintiffs, v. PHILIP MORRIS INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Illinois

85 F.Supp.2d 875

CENTRAL LABORERS WELFARE FUND, et al., Plaintiffs, v. PHILIP MORRIS INC., et al., Defendants.

No. Civ. 97-568-GPM.

United States District Court, S.D. Illinois.

November 30, 1998.

COPYRIGHT MATERIAL OMITTED

L. Thomas Lakin, Lakin Law Firm, Wood River, IL, for plaintiffs.

David B. Love, Thomas J. Frederick, Dan K. Webb, Winston & Strawn, Chicago, IL, Lisa A. Pake, Alan C. Kohn, Kohn, Sands et al., St. Louis, MO, Lawrence R. Desideri, Chicago, IL, for Philip Morris, Inc.

Thomas F. Gardner, Jones, Day, et al., Chicago, IL, for R.J. Reynolds Tobacco Co.

Andrew R. McGaan, James C. Munson, Kirkland & Ellis, Chicago, IL, for Brown & Williamson Tobacco Corp.

Adam I. Stein, Mark G. Cunha, Simpson, Thacher et al., New York City, Stephen M. Schoenbeck, Lathrop, Gage et al., St. Louis, MO, for B.A.T. Industries PLC.

Kurt E. Reitz, J. William Newbold, III, Thompson Coburn, Belleville, IL, for Lorillard Tobacco Co., Inc.

James A. Morsch, Harold C. Wheeler, Butler, Rubin et al., Chicago, IL, Michael M. Fay, Kasowitz, Benson et al., New York City, for Liggett Group, Inc.

Kenneth J. Mallin, Rodney W. Ott, Bryan Cave, St. Louis, MO, Michael E. Wiles, Christopher M. Green, R. Townsend Davis, Debevoise & Plimpton, New York City, for Council for Tobacco Research USA Inc.

Larry E. Hepler, Burroughs, Hepler et al., Edwardsville, IL, Deborah L. Kuhn, Altheimer & Gray, Chicago, IL, for Tobacco Institute, Inc.

Richard E. Boyle, Thomas R. Peters, Gundlach, Lee, et al., Belleville, IL, David B. Love, Winston & Strawn, Chicago, IL, for Smokeless Tobacco Council, Inc.

Thomas E. Jones, Walker & Williams, Belleville, IL, for Weeke Wholesale Co., Dearborn Wholesale Grocers, Inc., World Wide Tobacco, Inc., Zenith Tobacco Corp., Republic Tobacco Management Corp.

Michael T. Hannafan, Cory A. Johnson, Chicago, IL, Aime L. Hendricks, Thomas J. McCormack, Chadbourne & Parke, New York City, for British American Tobacco Co., Ltd.

Shevon L. Harris, Lewis, Rice et al., St. Louis, MO, Michael C. Lasky, Davis & Gilbert, New York City, for Hill & Knowlton, Inc.

MEMORANDUM AND ORDER

MURPHY, District Judge.

This matter is before the Court on its own motion to reconsider its order of March 16, 1998, (Doc. 60) denying the Plaintiffs' motion to remand (Doc. 19). For the following reasons, the Court vacates its order of March 16, 1998, (Doc. 60) and grants the Plaintiff's motion to remand (Doc. 19).

BACKGROUND

On May 30, 1997, the Plaintiffs, fourteen named multi-employer health and welfare funds and their respective trustees, filed suit, on behalf of themselves and all others similarly situated, in the Circuit Court for the Third Judicial Circuit, Madison County, Illinois (the state court) (Doc. 2). In their seven count class action complaint, the Plaintiffs named as Defendants six major tobacco manufacturers (the Manufacturer Defendants), four tobacco trade associations (the Trade Association Defendants), and five Illinois tobacco distributors (the Distributor Defendants).

The Plaintiffs are citizens of Illinois. The Manufacturer and Trade Association Defendants are citizens of states other than Illinois and, therefore, are diverse Defendants. However, the Distributor Defendants are citizens of Illinois, and therefore, are nondiverse Defendants.

In the complaint, the Plaintiffs seek recovery from the Defendants for moneys they expended for smoking related illnesses incurred by their participants. The complaint alleges a violation of the Illinois Antitrust Act, 740 ILCS 10/1 et seq.; common law fraud and misrepresentation; a violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505/1 et seq.; intentional and negligent breach of a special duty; breach of express and implied warranties; and unjust enrichment.

On June 6, 1997, prior to effecting service on any of the Defendants, the Plaintiffs, with leave of court, filed a first amended complaint (Ex. A. to Doc. 19). The first amended complaint does not substantively alter the original complaint. Rather, the first amended complaint adds two additional funds as Plaintiffs and four diverse tobacco entities as Defendants. None of the Defendants was served with notice of the Plaintiffs' motion for leave to amend, the state court's order granting the Plaintiffs' motion for leave to amend, or the first amended complaint. In fact, according to the Defendants, none of the Defendants learned of the existence of the first amended complaint until the Plaintiffs filed their motion to remand in this Court.

It is unclear from the record, but the diverse Defendants named in the original complaint somehow received notice of the action pending against them in state court and obtained a copy of the original complaint. Accordingly, on June 30, 1997, all of the diverse Defendants named in the original complaint filed their notice of removal (Doc. 1). Neither the nondiverse Distributor Defendants named in the original complaint nor the additional diverse Defendants named in the first amended complaint joined in the removal petition.

In the removal petition, the Defendants invoke this Court's subject matter jurisdiction in two ways. First, the Defendants allege that this Court has diversity jurisdiction under 28 U.S.C. § 1332 because the nondiverse Distributor Defendants were fraudulently joined. Second, the Defendants allege that this Court has federal question jurisdiction under 28 U.S.C. § 1331 because the Plaintiffs' claims relate to an employee benefit plan and therefore arise under the Employee Retirement Income Security Act of 1974 (ERISA), as amended, 29 U.S.C. § 1001 et seq., and because the Plaintiffs' claims are completely preempted under § 502(a) of ERISA, 29 U.S.C. § 1132(a).

On July 30, 1997, the Plaintiffs timely filed their motion to remand this action to state court pursuant to 28 U.S.C. § 1447 (Doc. 19) and their memorandum in support thereof (Doc. 20). The Plaintiffs offer three arguments in support of their motion to remand. First, the Plaintiffs argue that this Court lacks diversity jurisdiction because the Distributor Defendants were not fraudulently joined. Second, the Plaintiffs argue that their claims against the Defendants are not preempted by ERISA. Third, the Plaintiffs argue that the notice of removal is procedurally defective because not all of the named Defendants, exclusive of the named Distributor Defendants which the Defendants claim were fraudulently joined, joined in the notice of removal.

On August 18, 1997, the Defendants filed a memorandum in opposition to the Plaintiffs' motion to remand (Doc. 25), and on August 22, 1997, the Plaintiffs filed a reply (Doc. 27). On December 16, 1997, the Defendants filed supplemental authority in opposition to the Plaintiffs' motion to remand (Doc. 37), and on March 16, 1998, the Plaintiffs filed supplemental authority in support of their motion to remand (Doc. 59).

On March 16, 1998, the Honorable William D. Stiehl, District Judge, entered an order (Doc. 60) denying the Plaintiffs' motion to remand (Doc. 19). On April 24, 1998, this case was reassigned to the undersigned Judge for all further proceedings. A hearing on all pending motions was scheduled for July 13, 1998. In preparing for that hearing, the undersigned Judge thoroughly reviewed the record in this case. Given the Court's duty to independently review the issue of its subject matter jurisdiction, the undersigned Judge became concerned about the issue of whether the Court actually had subject matter jurisdiction and advised the parties to be prepared to argue the issue at the scheduled hearing. Following the hearing, the Court took the issue of its subject matter jurisdiction under advisement. Since that time, both the Plaintiffs and the Defendants have filed supplemental authority and arguments in support of their respective positions (Docs. 129, 134, 140, 141, 152, 154, 160, 170, 172).

Following a careful review of all of the pleadings and authority submitted by the parties in this case, the Court finds that it lacks subject matter jurisdiction. The Court does not take lightly the fact that in so concluding, it must vacate the prior order of Judge Stiehl. However, if the district court "at any time before final judgment" determines that it lacks jurisdiction, it must remand the case. 28 U.S.C. § 1447(c). The Court respectfully disagrees with Judge Stiehl's conclusion that the Distributor Defendants were fraudulently joined and that the claims are completely preempted under ERISA. Accordingly, the Court must remand the case. See 28 U.S.C. § 1447(c).

ANALYSIS

In order for a defendant to properly remove a case to federal court, the court must have jurisdiction over the case. 28 U.S.C. § 1441(a). Jurisdiction exists in a removal action if the case might have been originally brought in a federal court. Id. This can be accomplished in either of two ways. First, "[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Jurisdiction based on § 1331 is known as federal question jurisdiction. Id. Second, "[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between ... citizens of different states." 28 U.S.C. § 1332(a). Jurisdiction based on § 1332 is known as diversity jurisdiction. Id.

A. PROCEDURAL DEFECTS IN THE REMOVAL PETITION

As a threshold matter, the Court must first address the Plaintiffs' argument that the Defendants' removal petition is procedurally defective. The Plaintiffs offer two procedural defects as grounds for this Court to remand the case to state court. First, the Plaintiffs claim that the nondiverse Defendants needed to join in the removal petition. Second, the Plaintiffs claim that the additional Defendants named in the first amended complaint also needed to join...