City of Holly Springs v. Johnson & Johnson

• Decision Date: 16 September 2022
• Docket Number: 3:21-CV-246-DMB-RP
• Parties: CITY OF HOLLY SPRINGS PLAINTIFF v. JOHNSON & JOHNSON, et al. DEFENDANTS
• Court: U.S. District Court — Northern District of Mississippi

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CITY OF HOLLY SPRINGS PLAINTIFF v. JOHNSON & JOHNSON, et al. DEFENDANTS

No. 3:21-CV-246-DMB-RP

United States District Court, N.D. Mississippi, Oxford Division

September 16, 2022

ORDER

DEBRA M. BROWN, UNITED STATES DISTRICT JUDGE

This is the second time the City of Holly Springs' claims against various opioid manufacturers, opioid distributors pharmacies, and medical providers have been removed to federal court. The first time, in a separate case, the presiding district judge rejected the removing defendants' claims of fraudulent misjoinder and granted the City's motion to remand based on a lack of diversity of citizenship. This time, certain of those defendants removed the case asserting that one defendant's citizenship should be disregarded because it is a non-juridical entity or, alternatively, that such defendant was fraudulently joined. The City again has moved to remand. Because the removing defendants in this case still have not shown diversity jurisdiction exists and because the removal was procedurally improper, this case will be remanded to state court.

I Relevant Procedural History

On May 12, 2020, the City of Holly Springs filed a complaint in the Circuit Court of Marshall County, Mississippi, against several opioid manufacturers, opioid distributors pharmacies, and medical providers.^[1] Doc. #2. Asserting that five non-diverse pharmacy and medical provider defendants^[2] should be severed under Federal Rule of Civil Procedure 21 and that those same defendants were fraudulently misjoined, Endo Pharmaceuticals Inc. removed the case to the United States District Court for the Northern District of Mississippi on July 10, 2020. See City of Holly Springs v. Johnson & Johnson, No 3:20-cv-205-MPM-RP, at Doc. #2 (N.D. Miss. July 20, 2020). A week later, the City moved to remand. Id. at Doc. #28.

United States District Judge Michael P. Mills addressed the City's motion to remand in an August 6, 2020, order. City of Holly Springs v. Johnson & Johnson, 477 F.Supp.3d 547, 555 (N.D. Miss. 2020). Judge Mills found the “defendants' reliance upon Rule 21 as a basis for removing a case to be improper” because “in order to remove a case involving non-diverse parties on the basis of diversity jurisdiction, a defendant needs an actual removal doctrine, such as fraudulent joinder or fraudulent misjoinder.” Id. at 552. Regarding the defendants' fraudulent misjoinder argument, Judge Mills explained that “district courts which recognize the fraudulent misjoinder doctrine have tended to emphasize ... that it should only apply in cases of truly egregious misjoinder.”^[3] Id. at 553.

In finding [the] defendants' misjoinder arguments to not be well taken, [Judge Mills] emphasize[d] that the main focus of the very lengthy complaint . [was] not on the manufacture or design aspects of the supply of opioids to consumers. .

Rather, the main thrust of the complaint . [was] that there was a symbiotic relationship between drug manufacturers and local doctors and pharmacies, pursuant to which they sought to work together for their mutual financial benefit by promoting the excessive use of opioids. By focusing on the promotion of the use of opioids, . there is greater similarity among the alleged actions of the various defendants than in the typical case in which a retailer is joined in a products liability action. True enough, the diverse manufacturers played a different role in the supply chain than the non-diverse doctors and pharmacies, but the complaint allege[d] that they were motivated by a similar state of mind, namely a willingness to overlook the harm caused by the oversupplying of opioids to consumers, in the interest of profits. That being the case, .. the fact that the various defendants played different roles in supplying opioids to consumers [did not] preclud[e] their lawful joinder under Rule 20, and that joinder [was not] sufficiently “egregious” to give rise to federal jurisdiction under Tapscott [v. Miss. Dealer Serv. Corp., 77 F.3d 1353 (11th Cir. 1996)].

Id. at 554. Because he found federal jurisdiction lacking, Judge Mills remanded the case to the Circuit Court of Marshall County. Id. at 555.

Following remand, the claims against two of the five non-diverse defendants-Tyson Pharmacy and Cassandra Hawkins, M.D. -were dismissed without prejudice in November 2020. Doc. #17-9; Doc. #17-26. Almost a year later, on October 25, 2021, the claims against two more non-diverse defendants-Liddy's Health Mart and Byhalia Health Center-were also dismissed without prejudice. Doc. #21-13.

On December 1, 2021, Mississippi CVS Pharmacy, L.L.C., Walgreen Co., and Walmart Inc. (“Pharmacy Defendants”) removed the case to federal court, asserting that “there remains one Non-Diverse Defendant in this case, Robinson”^[4] but “Robinson is not an entity capable of suing or being sued[, n]or is it a citizen of Mississippi” and its “purported citizenship has no bearing as to whether the named parties are diverse.” Doc. #1 at 9-11. The Pharmacy Defendants also assert that “the Court should disregard Robinson's purported citizenship because it was fraudulently joined as a party.” Id. at 12.

On December 15, 2021, the City filed a motion to remand.^[5] Doc. #26. The motion is fully briefed.^[6] Docs. #27, #40, #42.

II Removal and Remand

“Under the federal removal statute, a civil action may be removed from a state court to a federal court on the basis of diversity. This is so because the federal court has original subject matter jurisdiction over such cases.” Int'l Energy Ventures Mgmt., L.L.C. v. United Energy Grp., Ltd., 818 F.3d 193, 199 (5th Cir. 2016).

Removal may be improper, however, for jurisdictional or procedural reasons. Jurisdictional defects require remand to state court. And ... they may be asserted at any point before a final, non-appealable judgment is rendered. It goes without saying courts are also obliged to raise jurisdictional defects sua sponte, if necessary.

By contrast, procedural defects require the action's being remanded to state court only if plaintiff files a motion to remand within 30 days after the filing of the notice of removal under section 1446(a).

Hinkley v. Envoy Air, Inc., 968 F.3d 544, 549 (5th Cir. 2020).

“The party seeking to remove bears the burden of showing that federal jurisdiction exists and that removal was proper. Any ambiguities are construed against removal and in favor of remand to state court.” Scarlott v. Nissan N. Am., Inc., 771 F.3d 883, 887 (5th Cir. 2014) (internal citations omitted). If the plaintiff timely files a motion raising procedural defects and the court concludes the removal procedure was improper, remand is warranted. See Hinkley, 968 F.3d at 550 (district court “presumably would have remanded to state court based on [defendant's] having removed to the incorrect judicial district” if the plaintiffs “timely filed a motion to remand”).

III Analysis

The City submits that remand is warranted based on both jurisdictional and procedural defects.

A. Jurisdiction

The City argues there is not complete diversity of citizenship such that this Court lacks subject matter jurisdiction. Doc. #27 at 1. Diversity jurisdiction requires that there be (1) complete diversity between the parties and (2) an amount in controversy more than $75,000. 28 U.S.C. § 1332; Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89 (2005). Complete diversity requires that “all of the plaintiffs . be citizens of different states than all of the defendants.” Williams v. Homeland Ins. Co. of N.Y., 18 F.4th 806, 812 (5th Cir. 2021).

The parties do not dispute that the amount in controversy is satisfied^[7] or that all remaining parties besides Robinson are diverse.^[8] However, in the removal notice, the Pharmacy Defendants assert that Robinson “has [not] appeared in [this] action” and the City has not “move[d] for default judgment” or “produce[d] any evidence showing efforts to effect service on Robinson;” “Robinson is a non-juridical entity [and] its purported citizenship has no bearing as to whether the named parties are diverse;” “[t]o the extent ‘Robinson Pharmacy' and ‘Robinson Drug Store' are fictitious names used to represent some other person or entity, the Court should still disregard Robinson's purported citizenship;” and Robinson was “fraudulently joined as a party” because there is no possibility of recovery against it as a non-juridical entity. Doc. #1 at 10-12.

In support of remand, the City argues that contrary to the representation that it “did not make any efforts to serve Defendant Robinson,” it “served Robinson Pharmacy, and its Registered Agent Scott Robinson accepted service.”^[9] Doc. #27 at 3-4. Further, because two other diverse defendants have also failed to appear and the City has yet to seek default judgment against them, the City argues its failure to seek default judgment against Robinson cannot be relied on to show fraudulent joinder because “defenses which are common to all defendants may not serve as a basis for a finding of fraudulent joinder.” Id. at 5.

The Pharmacy Defendants respond that “Robinson ... has never been registered as a corporation-or any other sort of legal entity-in the State of Mississippi” so it has “no legal existence . and should be disregarded for diversity purposes;” the City's service on Scott is insufficient because “there is no registered agent for Robinson because Robinson has never been registered in Mississippi;” there is no possibility of recovery against Robinson because “[u]nder Mississippi law, a plaintiff cannot recover from a sole proprietorship-an entity that has no legal status apart from its owner-and therefore no cause of action can be stated against that proprietorship;” and the City “ha[s] no intention of pursuing its...