Flagg v. Stryker Corp.
| Decision Date | 24 March 2016 |
| Docket Number | No. 14–31169.,14–31169. |
| Citation | 819 F.3d 132 |
| Parties | Kale FLAGG, Plaintiff–Appellant v. STRYKER CORPORATION; Memometal Incorporated, USA, Defendants–Appellees. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Kristina Lee Furra Ohlmeyer, Ohlmeyer & Ohlmeyer, L.L.C., New Orleans, LA, for Plaintiff–Appellant.
Douglas John Moore, Meera Unnithan Sossamon, Irwin Fritchie Urquhart & Moore, L.L.C., New Orleans, LA, Robert M. Roach, Jr., Manuel Lopez, Roach & Newton, L.L.P., Houston, TX, for Defendants–Appellees.
Richard Abbott Samp, Chief Counsel, Washington Legal Foundation, Washington, DC, Joseph Lee McReynolds, Esq., Senior Trial Attorney, Andrew Joseph Baer, Esq., Nancy Jane Marshall, Deutsch Kerrigan, L.L.P., New Orleans, LA, for Amicus Curiae.
Before STEWART, Chief Judge, and JOLLY, DAVIS, JONES, SMITH, DENNIS, CLEMENT, PRADO, OWEN, ELROD, SOUTHWICK, HAYNES, GRAVES, HIGGINSON, and COSTA, Circuit Judges.
We took this case en banc to decide whether the district court erred by dismissing the non-diverse defendants as improperly joined and exercising diversity jurisdiction over the remaining diverse defendants. We conclude that the district court did not err by concluding that the plaintiff had improperly joined the non-diverse defendants because the plaintiff had not exhausted his claims against those parties as required by statute. Therefore, the district court properly exercised jurisdiction over the diverse defendants which remained in the case.
Defendants Dr. Denise Elliot, West Jefferson Medical Center, and the Foot and Ankle Center (collectively the "Medical Defendants") performed surgery and cared for Plaintiff–Appellant Kale Flagg in connection with implanting a toe joint in Flagg's foot. The toe implant that the Medical Defendants implanted was manufactured by Defendants–Appellees Stryker Corporation and Memometal Incorporated, USA (collectively the "Manufacturing Defendants").
Flagg claims that the surgery was unsuccessful. He alleges that the toe implant has caused him undue pain, and that he required further surgeries to correct the problem. He therefore alleges that the Medical Defendants committed malpractice by negligently performing the surgery. He further alleges that the toe implant manufactured by the Manufacturing Defendants was defective and unreasonably dangerous.
Flagg filed a lawsuit in Louisiana state court asserting state law medical malpractice claims against the Medical Defendants and state law products liability claims against the Manufacturing Defendants. All parties agreed that Flagg failed to exhaust his claims against the Medical Defendants in the manner required by the Louisiana Medical Malpractice Act before filing this suit.
The Manufacturing Defendants removed the case to federal court on the basis of diversity jurisdiction. Flagg is a citizen of Louisiana, and the Manufacturing Defendants are citizens of states other than Louisiana. Therefore, Flagg and the Manufacturing Defendants are completely diverse. However, the Medical Defendants, like Flagg, are all Louisiana citizens.
In their Notice of Removal, the Manufacturing Defendants argued that Flagg was prohibited from filing suit against the Medical Defendants because he failed to administratively exhaust his medical malpractice claims before filing this lawsuit as required by Louisiana law. The Manufacturing Defendants therefore argued that Flagg improperly joined the Medical Defendants, such that the district court could exercise diversity jurisdiction over the case.
Shortly after the Manufacturing Defendants removed the case, Flagg moved to stay the case to allow him to exhaust his claims against the Medical Defendants as required by Louisiana law. The district court denied the motion.
The Manufacturing Defendants then argued that, because Flagg failed to exhaust his claims against the Medical Defendants before filing suit, the district court should dismiss the Medical Defendants as improperly joined and disregard their citizenship for the purposes of diversity jurisdiction.
The district court, relying on our decisions in Melder v. Allstate Corp., 404 F.3d 328 (5th Cir.2005) and Holder v. Abbott Laboratories, Inc., 444 F.3d 383 (5th Cir.2006), agreed that Flagg had improperly joined the Medical Defendants. The court therefore dismissed the Medical Defendants from the case without prejudice. The district court then exercised diversity jurisdiction over the remaining defendants and dismissed Flagg's action against the Manufacturing Defendants with prejudice pursuant to Federal Rule of Civil Procedure 12(b)(6).
Flagg appealed the district court's judgment. Although Flagg did not challenge the district court's subject matter jurisdiction on appeal, the panel considered sua sponte whether the district court properly exercised diversity jurisdiction over the case. The panel majority concluded that the Medical Defendants were not improperly joined and directed the district court to remand the case to state court.1 For that reason, the panel did not reach the propriety of the district court's Rule 12(b)(6) dismissal of the Manufacturing Defendants.
We took this case en banc to decide whether the district court correctly dismissed the action against the Medical Defendants as improperly joined and exercised jurisdiction over the Manufacturing Defendants.
The federal courts may exercise diversity jurisdiction over a civil action between citizens of different States if the amount in controversy exceeds $75,000.2 An out-of-state defendant may generally remove a case filed in state court to a federal district court if the parties are diverse, the amount in controversy requirement is met, and none "of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought."3
Ordinarily, diversity jurisdiction requires complete diversity—if any plaintiff is a citizen of the same State as any defendant, then diversity jurisdiction does not exist.4 However, if the plaintiff improperly joins a non-diverse defendant, then the court may disregard the citizenship of that defendant, dismiss the non-diverse defendant from the case, and exercise subject matter jurisdiction over the remaining diverse defendant.5
Federal courts have jurisdiction to determine their own subject matter jurisdiction.6 In this context, the court has the obligation to determine whether a plaintiff has improperly joined a party that defeats federal diversity jurisdiction.7
This Court articulated its standard for improper joinder in its recent en banc decision in Smallwood v. Illinois Central Railroad Co. In Smallwood, we explained that a non-diverse party is improperly joined if the plaintiff is unable "to establish a cause of action against the non-diverse party in state court."8 Thus, the test for improper joinder "is whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant."9 "In this inquiry the motive or purpose of the joinder of in-state defendants is not relevant."10
In most cases, to determine whether the plaintiff has any possibility of recovery against the non-diverse defendant, the court should 11
However, where the plaintiff's complaint has "misstated or omitted discrete facts that would determine the propriety of joinder," the court may instead "pierce the pleadings and conduct a summary inquiry."12 Such a summary inquiry "is appropriate only to identify the presence of discrete and undisputed facts that would preclude [the] plaintiff's recovery against the in-state defendant."13 The decision to pierce the pleadings "lie[s] within the discretion of the trial court."14
Crucially, "[j]urisdictional facts are determined at the time of removal, not by subsequent events."15 Thus, to determine whether a plaintiff has improperly joined a non-diverse defendant, the district court must examine the plaintiff's possibility of recovery against that defendant at the time of removal. This inquiry must be made regardless of whether the court examines the plaintiff's chance of surviving a Rule 12(b)(6) challenge or, instead, conducts a summary inquiry by piercing the pleadings.
Flagg filed a motion in the district court asking to stay the case so he could exhaust his claims against the Medical Defendants. By doing so, Flagg conceded that he failed to exhaust his medical malpractice claims before filing suit. This concession was the only fact outside the complaint that the district court considered to determine whether Flagg improperly joined the Medical Defendants. Considering this fact was entirely consistent with Smallwood's authorization to conduct a "Rule 12(b)(6) -type analysis"16 to "identify the presence of discrete and undisputed facts that would preclude [the] plaintiff's recovery against the in-state defendant."17
For the reasons set forth below, the district court correctly concluded that Flagg could not "establish a cause of action against [the Medical Defendants] in state court" at the time the Manufacturing Defendants removed the case because he had not exhausted his claims before filing suit.18 It follows that Flagg improperly joined the Medical Defendants, and the district court properly exercised diversity jurisdiction over the Manufacturing Defendants.
The Louisiana Medical Malpractice Act ("LMMA") provides in relevant part that "[n]o action against a health care provider ... may be commenced in any court before the claimant's proposed complaint has been presented to a medical review panel."19 The Supreme Court of Louisiana has interpreted this provision to not only require the plaintiff to present the claim to a medical review panel,...
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