City of Neodesha, Kansas v. Bp Corp. North America

• Decision Date: 27 January 2005
• Docket Number: No. 04-4150-SAC.,04-4150-SAC.
• Citation: 355 F.Supp.2d 1182
• Parties: CITY OF NEODESHA, KANSAS, individually and as representative of those persons and entities similarly situated, Plaintiff v. BP CORPORATION NORTH AMERICA INC., BP America Inc., BP Products North America Inc., BP America Production Company, Atlantic Richfield Company D/B/A Group Environmental Management Company, and Norm Bennett. Defendants
• Court: U.S. District Court — District of Kansas

355 F.Supp.2d 1182

CITY OF NEODESHA, KANSAS, individually and as representative of those persons and entities similarly situated, Plaintiff v. BP CORPORATION NORTH AMERICA INC., BP America Inc., BP Products North America Inc., BP America Production Company, Atlantic Richfield Company D/B/A Group Environmental Management Company, and Norm Bennett. Defendants

No. 04-4150-SAC.

United States District Court, D. Kansas.

January 27, 2005.

COPYRIGHT MATERIAL OMITTED

David W. Edgar, John F. Edgar, Daniel R. Young, Edgar Law Firm, LLC, Kansas City, MO, Douglas D. Depew, Depew Law Firm, Neodesha, KS, for Plaintiff.

Christopher L. Heigele, E. Wayne Taff, Steven F. Coronado, Sherman, Taff & Bangert, P.C., Kansas City, MO, Evan Westerfield, Sidley Austin Brown & Wood, LLP, Chicago, IL, for Defendants.

MEMORANDUM AND ORDER

CROW, Senior District Judge.

This case comes before the court on defendants' motion to remand. Plaintiff City of Neodesha, Kansas¹ filed this action in state court against corporate defendants BP Corporation North America Inc., BP America Inc., BP Products North America Inc., BP America Production Company, Atlantic Richfield Company d/b/a Group Environmental Management Company, and one individual, Norm Bennett. Plaintiff's petition, which seeks one billion dollars in damages, alleges various state claims arising from a dispute over the responsibility for contamination in the soils and groundwater beneath the city. No federal claims are asserted, and the EPA is not involved in the matter.

Defendants removed the action to this court on the basis of diversity jurisdiction pursuant to 28 U.S.C. §§ 1332, 1441, and 1446. Defendants acknowledge that the individual defendant, Norm Bennett, is a Kansas resident and citizen and that therefore the parties are not completely diverse, as the statutes require. Defendants contend, however, that Mr. Bennett was fraudulently joined for the purpose of defeating diversity jurisdiction so the court must disregard his presence for purposes of subject matter jurisdiction. See generally Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 66 L.Ed. 144 (1921) (the right of removal cannot be defeated by "a fraudulent joinder of a resident defendant having no real connection with the controversy.")

General removal standard

A civil action is removable only if a plaintiff could have originally brought the action in federal court. 28 U.S.C. § 1441(a). Remand is required "if at any time before final judgment it appears that the district court lacks subject matter jurisdiction." Id. § 1447(c). Because federal courts are courts of limited jurisdiction, the law imposes a presumption against federal jurisdiction. Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir.1974).

Removal statutes are strictly construed, and any doubts about the propriety of removal are resolved in favor of remand. Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111 (3rd Cir.1990), cert. denied, 498 U.S. 1085, 111 S.Ct. 959, 112 L.Ed.2d 1046 (1991). When removal is challenged, the burden rests with the removing party to prove jurisdiction exists. Kansas Baptist Convention v. Mesa Operating Ltd., 703 F.Supp. 73 (D.Kan.1989). Diversity jurisdiction depends upon all parties to one side of the case having a different citizenship from all parties to the opposing side. Id.

Muller v. TSC Industries, Inc., 1992 WL 331286, *1 (D.Kan. Oct.2, 1992).

The removing defendant's burden of proving fraudulent joinder is not unlike the burden of proving any claim of fraud. McLeod v. Cities Service Gas Company, 233 F.2d 242, 246 (10th Cir.1956). "[U]pon specific allegations of fraudulent joinder, the court may pierce the pleadings, consider the entire record, and determine the basis of joinder by any means available." Dodd v. Fawcett Publications, Inc., 329 F.2d 82, 85 (10th Cir.1964) (citations omitted).

Fraudulent Joinder Standard

The Tenth Circuit has not clearly set forth in its published opinions the evidentiary standard applicable to fraudulent joinder claims.² The parties take full advantage of this lack of definitive law in urging the court to adopt differing standards. Defendant contends, in reliance upon several cases from this district,³ that fraudulent joinder exists when the plaintiff has "no real intention in good faith to prosecute the action against the defendant or seek a joint judgment," regardless of the legal and factual viability of the claim. See Abels v. State Farm Fire & Cas. Co., 770 F.2d 26, 32 (3d Cir.1985). Plaintiff contends, in reliance upon an unpublished Tenth Circuit opinion and recent cases from this district,⁴ that fraudulent joinder is found only when there is no reasonable basis in fact or colorable ground supporting the claim against the joined defendant. See Montano v. Allstate Indemnity, 211 F.3d 1278, 2000 WL 525592, *2 (10th Cir.2000). The battle is thus framed between a subjective standard and an objective one.

This court has reviewed the varying standards for fraudulent joinder in stating:

Fraudulent joinder occurs when no cause of action is pleaded against the non-diverse or resident defendant, Roe v. General American Life Ins. Co., 712 F.2d 450, 452 n. * (10th Cir.1983); when the cause of action pleaded against the resident defendant is defective as a matter of law, Boyer, 913 F.2d at 111-12; when the pleaded cause of action does not exist in fact against the resident defendant, Roe, 712 F.2d at 452 n. *; when there is "no real intention in good faith to prosecute the action against the defendant or seek a joint judgment," Abels v. State Farm Fire & Cas. Co., 770 F.2d 26, 29 (3rd Cir.1985); or when "there has been outright fraud in the plaintiff's pleadings of jurisdictional facts." B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir.1981) (footnote omitted). On the other hand, if there is a possibility that a state court would recognize the cause of action actually pleaded against the resident defendant, then joinder is proper and remand is required. Coker v. Amoco Oil Co., 709 F.2d 1433, 1440-41 (11th Cir.1983); Frontier Airlines, Inc. v. United Air Lines, Inc., 758 F.Supp. 1399, 1404 (D.Colo.1989).

Muller, 1992 WL 331286, *3.

Thereafter, the Tenth Circuit addressed fraudulent joinder claims in its unpublished Montano opinion, stating:

The case law places a heavy burden on the party asserting fraudulent joinder. A representative example states:

To prove their allegation of fraudulent joinder [the removing parties] must demonstrate that there is no possibility that [plaintiff] would be able to establish a cause of action against [the joined party] in state court. In evaluating fraudulent joinder claims, we must initially resolve all disputed questions of fact and all ambiguities in the controlling law in favor of the non-removing party. We are then to determine whether that party has any possibility of recovery against the party whose joinder is questioned. Hart, 199 F.3d at 246 (quotation omitted); see Pampillonia v. RJR Nabisco, Inc., 138 F.3d 459, 461 n. 3 (2d Cir.1998) (citing cases); cf. Smoot v. Chicago, Rock Island & Pac. R.R. Co., 378 F.2d 879, 882 (10th Cir.1967) (finding fraudulent joinder where non-liability of joined party was "established with complete certainty upon undisputed evidence."). This standard is more exacting than that for dismissing a claim under Fed.R.Civ.P. 12(b)(6); indeed, the latter entails the kind of merits determination that, absent fraudulent joinder, should be left to the state court where the action was commenced. See Batoff v. State Farm Ins. Co., 977 F.2d 848, 851-53 (3d Cir.1992) ("A claim which can be dismissed only after an intricate analysis of state law is not so wholly insubstantial and frivolous that it may be disregarded for purposes of diversity jurisdiction."). Finally, as the reference to "a cause of action" in the quoted passage reflects, remand is required if any one of the claims against the non-diverse defendant ... is possibly viable. See Green v. Amerada Hess Corp., 707 F.2d 201, 207 (5th Cir.1983) ("Even if [plaintiff] were [precluded] from pursuing all his claims save one in state court, a remand would be necessary.").

Montano, 211 F.3d 1278 (reversing and remanding to the district court with directions to remand, in turn, to state court).

Although Montano is unpublished, the case has persuasive value with respect to this issue which is not resolved in the Tenth Circuit's published opinions, and its rationale assists this court in deciding the instant pending motion. Accordingly, the court shall rely upon Montano. See 10th Cir. R. 36.3(B)(1)-(2) (explaining that unpublished decisions may be cited if they have persuasive value with respect to a material issue not addressed in a published opinion and it would assist the court in its disposition).

Objective test

The court's task is thus to determine whether plaintiff has any possibility of recovery against Mr. Bennett, viewing any disputed questions of fact and all ambiguities in the controlling law in favor of the plaintiff, as the non-removing party. "Fraudulent joinder is a term of art, which does not reflect on the integrity of plaintiff or counsel, but rather exists regardless of the plaintiff's motives when the circumstances do not offer any other justifiable reason for joining the defendant." Barger, 1994 WL 69508, at *3. "To defeat plaintiffs' motion to remand it is incumbent upon defendants to show that there is no possibility that plaintiffs would be able to establish a cause of action against [the defendant] in state court." Cooper, 320 F.Supp.2d at 1157. To make this determination, the court looks to the facts pled in the petition and the law of the state of Kansas.

The petition alleges that Mr. Bennett is a Kansas resident, who at all times was acting within the course and scope of his agency and/or employment with defendants. Plaintiff's petition states that the sole claim applicable to Mr. Bennett is Count VI,...