City of St. Louis v. American Tobacco Co. Inc., 4:98CV02087 ERW.

• Decision Date: 02 July 1999
• Docket Number: No. 4:98CV02087 ERW.,4:98CV02087 ERW.
• Citation: 70 F.Supp.2d 1008
• Parties: CITY OF ST. LOUIS, et al., Plaintiffs, v. AMERICAN TOBACCO COMPANY, INC., et al., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

70 F.Supp.2d 1008

CITY OF ST. LOUIS, et al., Plaintiffs, v. AMERICAN TOBACCO COMPANY, INC., et al., Defendants.

No. 4:98CV02087 ERW.

United States District Court, E.D. Missouri, Eastern Division.

July 2, 1999.

COPYRIGHT MATERIAL OMITTED

Kenneth C. Brostron, Terrance J. Good, Vice-President, Carolyn M. Kopsky, Margaret M. Mooney, Katherine M. Barrett, Lashly and Baer, P.C., St. Louis, MO for plaintiffs.

Frank N. Gundlach, Armstrong Teasdale, LLP, St. Louis, MO, Andrew R. McGaan, Ram Padmanabhan, Kirkland and Ellis, Chicago, IL, for American Tobacco Company, Inc., Batus Holdings, Inc., Brown and Williamson Tobacco Corp.

Michael B. Minton, J. William Newbold, III, Bruce D. Ryder, Thompson Coburn, St. Louis, MO, Mark G. Cunha, John D. Roesser, Jerry Coleman, Simpson and Thacher, New York City, for B.A.T. Industries P.L.C., British American Tobacco Holdings, Ltd.

Arthur L. Smith, Jeffrey W. Coverdell, Husch and Eppenberger, St. Louis, MO, for British American Tobacco Company, Ltd.

James A. Durbin, James H. McLarney, Karen Zambri Schutter, Swanson and Midgley, Kansas City, MO, Michael M. Fay, Aaron H. Marks, Nancy E. Straub, Kasowitz and Benson, New York City, for Liggett & Myers, Inc., Liggett Group, Inc., Brooke Group, Ltd.

Michael B. Minton, J. William Newbold, III, Bruce D. Ryder, Thompson Coburn, St. Louis, MO, Gene Voights, Richard L. Gray, Shook and Hardy, Kansas City, MO, for Lorillard Tobacco Co., Lorillard Corp., Loews Corp.

Alan C. Kohn, Lisa A. Pake, Kohn and Shands, St. Louis, MO, Dan K. Webb, David B. Love, Thomas J. Frederick, Winston and Strawn, Chicago, IL, for Philip Morris Incorporated, Philip Morris Companies, Inc.

Michael B. Minton, J. William Newbold, III, Bruce D. Ryder, Thompson Coburn, St. Louis, MO, Robert F. McDermott, Jr., Jones and Day, Washington, DC, Thomas P. McNulty, Thomas F. Gardner, Jones and Day, Chicago, IL, for R.J. Reynolds Tobacco Company.

Charles L. Joley, Donovan and Rose, Belleville, IL, for United States Tobacco Co.

Kenneth J. Mallin, Mark W. Eggert, Bryan Cave LLP, St. Louis, MO, Harry Zirlin, Steven Klugman, Debevoise and Plimpton, New York City, for The Council For Tobacco Research U.S.A., Inc.

Larry E. Hepler, Senior Partner, Daniel W. Farroll, Amy Collignon Gunn, Burroughs and Hepler, Edwardsville, IL, for The Tobacco Institute, Inc.

Richard E. Boyle, Gundlach and Lee, St. Louis, MO, Thomas R. Peters, Gundlach and Lee, Belleville, IL, for Smokeless Tobacco Council, Inc.

Michael A. Vitale, Herzog and Crebs, St. Louis, MO, Bruce M. Ginsberg, Davis and Gilbert, New York City, for Hill and Knowlton, Inc.

Michael B. Minton, J. William Newbold, III, Bruce D. Ryder, Thompson Coburn, St. Louis, MO, for Mound City Industries, Inc., Liberty Candy & Tobacco, Co., Westerheide Tobacco & Cigar Co., U-Gas, Inc. D.C., Inc., Jimco, Inc., Marilyn R. Hays.

MEMORANDUM AND ORDER

WEBBER, District Judge.

This matter is before the Court upon plaintiffs' Motion to Remand [Document # 23].

I. STATEMENT OF RELEVANT FACTS.

On November 16, 1998, the plaintiffs filed a petition against defendants in the Twenty-Second Judicial Circuit Court of the City of St. Louis, State of Missouri, Cause No. 982-9656, styled City of St. Louis, et al. v. American Tobacco Company, Inc., et al. (hereinafter referred to as the "state action"). The plaintiffs in the action include one municipality and a number of hospitals and medical care entities. The defendants are cigarette manufacturers, distributors, and other similar entities. In this action, plaintiffs allege that defendants, through conduct including, but not limited to, the manufacture, advertising, sale and promotion of tobacco products in the state of Missouri, have caused damage the plaintiffs. Plaintiffs also allege that other defendants, through conduct including, but not limited to, the sale, distribution, promotion and advertising of tobacco products in Missouri, have damaged the plaintiffs. This latter group of defendants (hereinafter referred to as the "Distributor Defendants"), are all citizens of the State of Missouri. Plaintiffs allege that they have suffered damage, because the defendants fraudulently and falsely promoted, advertised, and sold highly addictive tobacco products that cause lung cancer, throat cancer, emphysema, heart disease, and other diseases. Plaintiffs claim that in discharging their governmental public benefit functions, they were required to provide unreimbursed healthcare to Medicaid and medically indigent patients for these tobacco related illnesses caused by defendants' addictive tobacco products. For this reason, plaintiffs bring a variety of claims to recover these damages from the defendants, including a claim in Count VII for public nuisance, in Counts VIII and IX for products liability based upon strict liability, in Count X for products liability based upon negligence, and in Count XI a cause of action based upon the Restatement of Restitution § 115.

On December 17, 1998, defendants removed the plaintiffs' action to this Court, alleging that this Court has diversity jurisdiction pursuant to 28 U.S.C. § 1332. Defendants allege that diversity of jurisdiction exists in this case, because plaintiffs have fraudulently joined the Distributor Defendants in this cause of action for the purpose of insuring state court jurisdiction. On January 29, 1999, plaintiffs filed the instant motion to remand this action to the Missouri court system, contending that this Court lacks subject matter jurisdiction, because they have established their causes of action against the Distributor Defendants.

II DISCUSSION.

Defendants contend that this Court has jurisdiction over this action pursuant to 28 U.S.C. § 1332, because the matter in controversy exceeds $75,000 and that the true parties in this case are citizens of different states. Understanding that at least some of the named defendants, the Distributor Defendants, are citizens of Missouri, defendants argue that plaintiffs have fraudulently joined the Distributor Defendants for the purpose of defeating federal jurisdiction. Therefore, the Court must decide whether plaintiffs' causes of action against the Distributor Defendants are valid claims or merely a subterfuge to defeat federal jurisdiction.

A. APPLICABLE LEGAL STANDARDS.

Pursuant to 28 U.S.C. § 1332, federal district courts have "original jurisdiction of all civil actions where the matter in controversy exceeds the sum of value of $75,000" and the matter is between "citizens of different States." 28 U.S.C. § 1332(a)(1). In cases in which the removing party argues that a court has federal jurisdiction due to the plaintiff's fraudulent joinder of non-diverse defendants, the removing party bears the burden of demonstrating fraudulent joinder. Monroe v. Consolidated Freightways, Inc., 654 F.Supp. 661, 663 (E.D.Mo.1987) (citation omitted). In order to meet this burden, the removing party must show one of the following: (1) there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court; or (2) there has been outright fraud in the plaintiff's pleading of jurisdictional facts. Parnas v. General Motors Corp., 879 F.Supp. 91, 92 (E.D.Mo.1995)(citing Monroe, 654 F.Supp. at 662-63). In this case, defendants have only attempted to meet their burden of proving the first of these two options. In determining whether the defendants in this matter have sustained this burden, this Court must also be mindful of the fact that removal statutes are strictly construed. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S.Ct. 868, 85 L.Ed. 1214 (1941). Placing this heavy burden on the defendants is a necessary corollary of the "considerable deference" that federal courts generally give "to a plaintiff's choice of forum." Terra International, Inc. v. Mississippi Chemical Corp., 119 F.3d 688, 695 (8th Cir.1997).

B. THE REMOTENESS DOCTRINE DOES NOT CLEARLY PRECLUDE PLAINTIFFS' CLAIMS.

Defendants first argue that plaintiffs' claims against the Distributor Defendants are barred by the remoteness doctrine. In making their arguments pursuant to this doctrine, defendants note that plaintiffs are attempting to recover damages equivalent to the resources and funds expended by plaintiffs in treating individuals suffering from smoking-related illnesses. Defendants argue that this claim made by plaintiffs for indirect and derivative injuries runs counter to the "bedrock principle" that a plaintiff generally stands at too remote a distance to recover for harms against a third person.

Understanding this argument advanced by defendants, the Court does not find that plaintiffs' claims are clearly barred by the remoteness doctrine under Missouri law. The Court agrees with defendants that several courts have dismissed similar or identical claims like those advanced by the plaintiffs in this case based upon the "bedrock principle" that a plaintiff who complains of harm caused by misfortunes suffered by a third party at the hands of a defendant "generally" stands at too remote a distance to recover. However, the Court does not find the opinions of the state Supreme Courts cited by defendants particularly persuasive when the Missouri state courts have not thoroughly considered a claim like the instant matter under Missouri law. Similarly, the Court does not find defendants' citation of federal court opinions from other jurisdictions particularly helpful when those courts did not consider Missouri law. In addition, the Court does not find defendants' citation of other federal court decisions particularly helpful, because those courts are in some disharmony on the issue of whether the remoteness principle bars a plaintiff's common law claims. See generally Steamfitters Local Union 420 Welfare Fund v. Philip Morris, Inc., 171 F.3d 912(3d Cir.1999)(rejecting union health and welfare fund suits against tobacco companies on remoteness grounds); Arkansas Blue Cross...