Coyne v. American Tobacco Co., PLAINTIFFS-APPELLANTS

Citation183 F.3d 488
Decision Date17 March 1999
Docket NumberDEFENDANTS-APPELLEES,BRITISH-AMERICAN,PLAINTIFFS-APPELLANTS,EBY-BROWN,No. 98-3269,98-3269
Parties(6th Cir. 1999) THOMAS J. COYNE, JR. AND TIMOTHY F. HAGAN, ON BEHALF OF THE STATE OF OHIO AND ALL OHIO TAXPAYERS,, v. THE AMERICAN TOBACCO COMPANY, ALSO KNOWN AS THE AMERICAN TOBACCO COMPANY, INC.; AMERICAN BRANDS, INC.; B.A.T. INDUSTRIES P.L.C.; R.J. REYNOLDS TOBACCO COMPANY; RJR NABISCO, INC.; BROWN & WILLIAMSON TOBACCO CORPORATION, FORMERLY KNOWN AS THE AMERICAN TOBACCO COMPANY, INDIVIDUALLY AND AS SUCCESSOR BY MERGER TO;TOBACCO CO., LTD; BATUS INC.; BATUS HOLDING, INC.; PHILIP MORRIS, INC.; PHILIP MORRIS COMPANIES, INC.; LIGGETT & MYERS, INC.; LIGGETT GROUP, INC.; BROOKE GROUP, LTD; LORILLARD TOBACCO COMPANY, ALSOKNOWN AS LORILLARD TOBACCO COMPANY, INC.; LORILLARD, INC.; UNITED STATES TOBACCO COMPANY; UST, INC.; COUNCIL FOR TOBACCO RESEARCH - U.S.A., INC.; TOBACCO INSTITUTE, INC.; NOVELART MANUFACTURING COMPANY;COMPANY; THE KROGER COMPANY; RISER FOODS, INC., Argued:
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 96-02247-Patricia A. Gaughan, District Judge. [Copyrighted Material Omitted] Jack D. Maistros (argued and briefed), Thomas M. Wilson (briefed), John R. Climaco (briefed), Climaco, Climaco, Lefkowitz & Garofoli, Cleveland, Ohio, Stanley M. Chesley, Waite, Schneider,bayless & Chesley, Cincinnati, Ohio, for Plaintiffs-Appellants Thomas J. Coyne, Jr., Timothy F. Hagan.

John Winship Read, Vorys, Sater, Seymour & Pease, Cleveland, Ohio, for Defendant-Appellee American Brands, Inc.

Percy Squire, Bricker & Eckler, Columbus, Ohio, for Defendant-Appellee B.A.T. Industries P.L.C.

Theodore M. Grossman (argued and briefed), Dennis L. Murphy (briefed), Jones, Day, Reavis & Pogue, Cleveland, Ohio, for Defendants-Appellees R.J. Reynolds Tobacco Company, RJR Nabisco, Inc.

Phillip J. Campanella (briefed), Calfee, Halter & Griswold, Cleveland, Ohio, for Defendants-Appellees Brown & Williamson Tobacco Corporation, Batus, Inc., Batus Holding, Inc.

Diane P. Chapman, Baker & Hostetler, Cleveland, Ohio, for Defendant-Appellee Philip Morris, Inc.

Mary M. Bittence, Diane P. Chapman (briefed), Baker & Hostetler, Cleveland, Ohio, Daniel K. Webb (briefed), Thomas J. Frederick (briefed), Kevin J. Narko (briefed), Winston & Strawn, Chicago, Illinois, for Defendant-Appellee Philip Morris Companies, Inc.

Tyler L. Mathews (briefed), Kenneth J. Walsh (briefed), McDonald, Hopkins, Burke & Haber, Cleveland, Ohio, for Defendants-Appellees Liggett & Myers, Inc., Liggett Group, Inc., Brooke Group, Ltd.

Susan Dumay Wolfe (briefed), Shook, Hardy & Bacon, Kansas City, Missouri, Patrick M. McLaughlin (briefed), McLaughlin & McCaffrey, Cleveland, Ohio, for Defendants-Appellees Lorillard Tobacco Company, Lorillard, Inc.

Steven D. Bell (briefed), Ulmer & Berne, Cleveland, Ohio, for Defendant-Appellee U.S. Tobacco Company.

Thomas J. Collin (briefed), Thompson, Hine & Flory, Cleveland, Ohio, for Defendants-Appellees UST, Inc., Council for Tobacco Research -U.S.A., Inc.

Charna E. Sherman (briefed), David J. Michalski (briefed), Hahn, Loeser & Parks, Cleveland, Ohio, for Defendant-Appellee Tobacco Institute, Inc.

Eric S. Brown (briefed), Catherine E. Huston (briefed), Michael J. Renner (argued), Simon B. Karas, Assistant Attorney General (briefed), Office of the Attorney General of Ohio, Columbus, Ohio, for Amicus Curiae Betty D. Montgomery.

Before: Boggs, Clay, and Godbold,* Circuit Judges.

OPINION

Clay, Circuit Judge.

Plaintiffs-Appellants, Thomas J. Coyne, Jr. and Timothy F. Hagan, on behalf of the State of Ohio and all Ohio taxpayers, appeal from the order entered by the district court dismissing this taxpayer action for lack of standing. Plaintiffs seek recovery of money expended by the State of Ohio to treat Ohio citizens who suffer from nicotine addiction and other tobacco-related illnesses and diseases. Plaintiffs assign error to the district court's decision to exercise subject matter jurisdiction over this action exclusively alleging state law causes of action, and contend that the district court erroneously concluded that Plaintiffs lacked standing to sue on the basis of their alleged "tax burden" injury. For the reasons set forth below, we AFFIRM the district court's decision.

I.

On September 16, 1996, Plaintiffs, two locally elected Ohio public officials,1 filed a class action lawsuit against Defendants, various out-of-state tobacco manufacturers and in-state tobacco wholesalers and retailers, in the Court of Common Pleas, Cuyahoga County, Ohio, alleging that Defendants were knowledgeable about the addictiveness of nicotine, yet conspired to manipulate the level of nicotine in cigarettes in order to create and sustain smokers' addiction to tobacco products. Plaintiffs did not file suit in their representative capacity or claim that they themselves are addicted to or have suffered any physical injury as a result of Defendants' conduct. Instead, Plaintiffs alleged injury on behalf of the State of Ohio on the theory that the state had expended sums of money to pay for the health care of Ohio citizens due to tobacco-attributable illnesses. Specifically, Plaintiffs seek reimbursement of the public treasury pursuant to twelve state law causes of action: (i) breach of a "special duty" to render services for the protection of the public health; (ii) consumer fraud; (iii) restitution to the state and taxpayers of Ohio; (iv) unjust enrichment; (v) conspiracy to restrain and suppress research and the dissemination of information as to the harmful effects of smoking; (vi) violation of Ohio consumer protection statutes; (vii) breach of express warranty; (viii) breach of implied warranty; (ix) strict product liability; (x) fraud and deceit; (xi) negligent misrepresentation; and (xii) negligence. In addition, Plaintiffs asserted a cause of action for equitable, injunctive and/or declaratory relief. In essence, Plaintiffs' suit is premised upon the belief that Defendants have been unjustly enriched at the expense of the State of Ohio, and that Defendants have unlawfully shifted the financial responsibility for their conduct to the state and ultimately the taxpayers.

On October 16, 1996, Defendants removed this case to federal district court on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332. Defendants alleged that Plaintiffs had fraudulently joined the Ohio wholesale and retail tobacco suppliers in order to destroy diversity jurisdiction2. In response, Plaintiffs filed a motion to remand the case to state court on November 15, 1996, asserting that no Defendant had been fraudulently joined, and therefore, the district court should remand the action for lack of subject matter jurisdiction. The district court denied Plaintiffs' motion to remand on November 3, 1997, finding in relevant part that the "local" Defendants had been fraudulently joined in the action.

While the remand motion was pending before the district court, Plaintiffs filed an amended complaint on January 9, 1997. Defendants in turn filed a joint motion to dismiss the amended complaint on January 21, 1997, asserting that Plaintiffs lacked standing to bring a taxpayer suit against the tobacco defendants as Plaintiffs were not directly harmed by any act of Defendants and that Plaintiffs could not sue on behalf of the State of Ohio. After briefing by the parties, and submission of an amicus curiae brief on behalf of the Ohio Attorney General, the district court issued a Memorandum Opinion and Order on February 12, 1998, granting Defendants' motion to dismiss Plaintiffs' amended complaint in its entirety. The district court determined that Plaintiffs lacked standing to bring suit on behalf of the State of Ohio or as an aggrieved taxpayer because their only claimed injury, the "tax burden" injury, was not direct, but merely a generalized grievance shared by all taxpayers and not likely to be redressed by the relief requested. Plaintiffs filed a timely notice of appeal to this Court on March 12, 1998.

II.

A complaint will be dismissed for failure to state a claim only when "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Wright v. MetroHealth Med. Ctr., 58 F.3d 1130, 1138 (6th Cir. 1995). "For purposes of ruling on a motion to dismiss for want of standing, both the trial and reviewing courts must accept as true all material allegations of thecomplaint, and must construe the complaint in favor of the complaining party." Warth v. Seldin, 422 U.S. 490, 501 (1975). This Court reviews de novo the district court's decision to dismiss a claim for lack of standing. See Ohio Ass'n of Indep. Schools v. Goff, 92 F.3d at 419, 421 (6th Cir. 1996).

Additionally, this Court reviews de novo a district court's decision on subject matter jurisdiction. See Certain Interested Underwriters at Lloyd's London, England v. Layne, 26 F.3d 39, 41 (6th Cir. 1994). However, we must respect the district court's factual findings that are the basis of a jurisdictional determination unless clearly erroneous. See Ohio Nat'l Life Ins. Co. v. United States, 922 F.2d 320, 326 (6th Cir. 1990).

III.

Plaintiffs assert that this action, originally filed in state court and involving only issues of state law, should be adjudicated in state court. Plaintiffs argue that the district court erred in denying their motion to remand the case to state court because Plaintiffs pleaded a viable cause of action against non-diverse Defendants. Plaintiffs therefore contend that the district court lacked subject matter jurisdiction to hear their claims because complete diversity between the parties did not exist at the time of removal. We disagree.

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