Jackson v. Philip Morris Inc., 2:98-CV-178B.

• Decision Date: 08 December 1998
• Docket Number: No. 2:98-CV-178B.,2:98-CV-178B.
• Citation: 46 F.Supp.2d 1217
• Parties: Carroll JACKSON, Susan Hoggan, Parley R. Young, and Marylyn Taylor, individually and on behalf of all others similarly situated, Plaintiff, v. PHILIP MORRIS INC. (Philip Morris U.S.A.); Philip Morris Companies, Inc.; R.J. Reynolds Tobacco Company; RJR Nabisco Inc.; The American Tobacco Company; American Brands Inc.; Liggett & Meyers, Inc.; The Brooke Group Limited; Liggett Group Inc.; Brown & Williamson Tobacco Corporation.; B.A.T. Industries, PLC; Batus Holdings Inc.; British American Tobacco Company, Ltd.; British-American Tobacco (Holdings) Ltd.; Lorillard Tobacco Co.; Loews Corporation; United States Tobacco Company; UST, Inc.; The Council for Tobacco Research-U.S.A. Inc. (Successor-in-interest to Tobacco Industry Research Committee); Tobacco Institute Inc.; Cuban Cigar Inc.; A.W. Marshall Co.; Core-Mark International, Inc.; and John Does 1-50, Defendants.
• Court: Utah Supreme Court

46 F.Supp.2d 1217

Carroll JACKSON, Susan Hoggan, Parley R. Young, and Marylyn Taylor, individually and on behalf of all others similarly situated, Plaintiff, v. PHILIP MORRIS INC. (Philip Morris U.S.A.); Philip Morris Companies, Inc.; R.J. Reynolds Tobacco Company; RJR Nabisco Inc.; The American Tobacco Company; American Brands Inc.; Liggett & Meyers, Inc.; The

Brooke Group Limited; Liggett Group Inc.; Brown & Williamson Tobacco Corporation.; B.A.T. Industries, PLC; Batus Holdings Inc.; British American Tobacco Company, Ltd.; British-American Tobacco (Holdings) Ltd.; Lorillard Tobacco Co.; Loews Corporation; United States Tobacco Company; UST, Inc.; The Council for Tobacco Research-U.S.A. Inc. (Successor-in-interest to Tobacco Industry Research Committee); Tobacco Institute Inc.; Cuban Cigar Inc.; A.W. Marshall Co.; Core-Mark International, Inc.; and John Does 1-50, Defendants.

No. 2:98-CV-178B.

United States District Court, D. Utah, Central Division.

December 8, 1998.

Richard Burbidge, Burbidge & Mitchell, Salt Lake City, UT, Stephen Mitchell, Salt Lake City, UT, Jason Boren, Salt Lake City, UT, Donald Winder, Salt Lake City, UT, Margaret Olson, Salt Lake City, UT, Gerry Holman, Salt Lake City, UT, for plaintiffs.

Brent Manning, Manning Curtis Bradshaw & Bednar LLC, Salt Lake City, UT, Alan C. Bradshaw, Salt Lake City, UT, Vincent Chang, New York City, Daniel Kolb, Davis Polk & Wardwell, New York City, D. Scott Wise, New York City, Jerome Doak, Jones, Day, Reavis & Pogue, Dallas, TX, Kevin Dorse, Jones, Day, Reavis & Pogue, Los Angeles, CA, Ricky Shackelford, Los Angeles, CA, Gordon L. Roberts, Parsons Behle & Latimer, Salt Lake City, UT, Daniel Hindert, Salt Lake City, UT, Richard Schneider, Atlanta, GA, Barry Goheen, Atlanta, GA, W. Bruce Wold, Sedgwick Detert Moran & Arnold, San Francisco, CA, Micki Singer, San Francisco, CA, Michael Zundel, Jardine Linebaugh & Dunn, Salt Lake City, UT, J. Scott Brown, Salt Lake City, UT, John Nyhan, Los Angeles, CA, Jay R. Henneberry, Chadbourne & Parke, Los Angeles, CA, R. Brent Stephens, Snow Christensen & Martineau, Salt Lake City, UT, Ryan Tibbitts, Salt Lake City, UT, Mark Cunha, New York City, Linda Mahoney, New York City, Ronald Newmann, New York City, Alan Sullivan, Snell & Wilmer LLP, Salt Lake City, UT, Gary Long, Shook Hardy & Bacon LLP, Kansas City, MO, John Sherk, Kansas City, MO, Anna McLean, San Francisco, CA, James Muehlberger, Shook Hardy & Bacon LLP, Kansas City, MO, Casey McGarvey, Salt Lake City, UT, Samuel Gaufin, Salt Lake City, UT, E. Scott Savage, Berman Gaufin Tomsic & Savage, Salt Lake City, UT, Gary Long, Kansas City, MO, John Sherk, III, Kansas City, MO, Peter Billings, Fabian & Clendenin, Salt Lake City, UT, Harry Zirlin, New York City, James Lowrie, Jones

Waldo Holbrook & McDonough, Salt Lake City, UT, James Stewart, Salt Lake City, UT, John Ashton, Prince Yeates & Geldzahler, Salt Lake City, UT, M. David Eckersley, Salt Lake City, UT, Michael Fay, New York City, Aaron Marks, New York City, Neil Kaplan, Clyde Snow Sessions & Swenson, Salt Lake City, UT, Paul Felt, Ray Quinney & Nebeker, Salt Lake City, UT, for defendants.

MEMORANDUM OPINION AND ORDER

BENSON, District Judge.

INTRODUCTION

This matter comes before the Court by way of plaintiffs' "Motion for Further Consideration to Vacate or Amend the Court's Memorandum Opinion and Order of June 17, 1998 or in the Alternative Motion for Leave to Amend Complaint as to Utah State Distributors" which was filed in response to the Court's denial of plaintiffs' motion to remand. The Court has been fully briefed by both sides and heard oral argument on October 20, 1998, and now renders the following decision.

BACKGROUND

I. Procedural Background

On February 13, 1998 the four named plaintiffs filed a complaint in the Third District Court of Salt Lake County, Utah, on behalf of themselves and a proposed class of plaintiffs including generally "all nicotine dependent persons who are residents of the State of Utah and who have purchased and smoked cigarettes designed, tested, manufactured, marketed, distributed or sold by the Defendants." (Pls' Compl. ¶ 19). The Complaint collectively names as "Defendants" seventeen manufacturers ("tobacco companies") and three distributors of tobacco products ("distributors"). All defendants are diverse except two of the three distributors which are Utah corporations.

Plaintiffs specifically allege claims of "deceptive sales practices, strict product liability, unjust enrichment, fraud, fraudulent concealment, negligent misrepresentation, negligence, breach of express and implied warranties, [and,] civil conspiracy." (Id. ¶ 8). Of these ten claims, only two are alleged against the distributors: (1) deceptive sales practices under the Utah Consumers Sales Practices Act ("UCSPA") and (2) strict product liability. Plaintiffs' petition for relief includes, "damages for ... personal injuries, economic losses, punitive and exemplary damages, equitable relief, disgorgement of profits, and the return of monies spent to purchase Defendants' manipulated and dangerously defective products...." (Id.).

On March 13, 1998, defendants removed the instant action to this Court pursuant to 28 U.S.C. §§ 1441(a) and 1446, claiming that plaintiffs fraudulently joined the Utah distributors in order to defeat diversity. Plaintiffs moved to remand, arguing that complete diversity was lacking because they set forth colorable claims against instate distributors. The distributors also moved to dismiss plaintiffs' claims against them for failure to state any viable claim for relief. On May 21, 1998, this Court heard oral argument on all pending motions.

On June 17, 1998, the Court issued its Amended Memorandum Opinion and Order denying plaintiffs' motion to remand and dismissing the distributors. Plaintiffs responded with the present motion for reconsideration and have requested that this Court vacate or amend its prior ruling. On October 20, 1998, the Court heard oral argument on plaintiffs' motion.

II. Court's Prior Opinion Denying Plaintiffs' Motion to Remand

In its Amended Memorandum Opinion and Order dated June 17, 1998, this Court denied plaintiffs' motion to remand and granted distributors' motion to dismiss. Addressing plaintiffs' first claim against the distributors, brought under the UCSPA, this Court found that plaintiffs' consumer protection claim was really one of personal injury and thus excluded from available actions under the Act. In addition, the Court held that plaintiffs' UCSPA claim failed because plaintiffs made only general allegations of fraud and deception on the part of the distributor defendants which is insufficient under the particularity requirement of Rule 9(b).

With respect to plaintiffs' strict product liability claim, the Court relied upon the reasoning of Walls v. American Tobacco Co., 1997 U.S.Dist. LEXIS 11215 (N.D.Okla.1997) in which it was held that plaintiffs had failed to sufficiently allege that the wholesale distributors sold any product to the named plaintiffs. Consequently, this Court dismissed plaintiffs' strict product liability claim finding that plaintiffs failed to make any allegation that either of the named Utah distributors ever sold product to any of the four named plaintiffs.

III. Standard of Review

When facing a claim that a defendant has been fraudulently joined, this Court must construe all ambiguities against the party seeking removal and resolve all doubts regarding the existence of federal jurisdiction in favor of remanding the action. It has long been the rule that the propriety of removal must be determined by looking at the record at the time the petition for removal is filed. See Pullman Co. v. Jenkins, 305 U.S. 534, 537, 59 S.Ct. 347, 83 L.Ed. 334 (1939). Specifically, the Court must make its determination by looking at the allegations contained in the complaint as it exists at the time of removal. Subsequent amendment cannot defeat removal. Id.

However, as the Tenth Circuit has noted, "it is well settled that upon allegations of fraudulent joinder designed to prevent removal, federal courts may look beyond the pleadings to determine if the joinder, although fair on its face, is a sham or fraudulent device to prevent removal." Smoot v. Chicago, Rock Island and Pacific Railroad Co., 378 F.2d 879, 881-82 (10th Cir.1967). Indeed, the Tenth Circuit's opinion in Dodd v. Fawcett Publications, Inc., 329 F.2d 82 (10th Cir.1964), which provides additional guidance in this area, has become a frequently quoted and relied upon interpretation of fraudulent joinder analysis. In Dodd the court stated:

In many cases, removability can be determined by the original pleadings and normally the statement of a cause of action against the resident defendant will suffice to prevent removal. But upon 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. The joinder of a resident defendant against whom no cause of action is stated is patent sham, and though a cause of action be stated, the joinder is similarly fraudulent if in fact no cause of action exists.

Id. at 85 (citations omitted) (emphasis added).

Many courts have placed substantial emphasis on the notion that "[i]f there is even a possibility that a state court would find that the complaint states a cause of action against any one of the resident defendants" then the matter must be remanded. Coker v. Amoco Oil Co., 709 F.2d 1433, 1440-41 (11th Cir.1983); see also 14A CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE § 3723, at 342-53 (2d ed.1985) (asserting that "there need be only a possibility that a right to relief exists to avoid" fraudulent joinder). However, this "benefit of the doubt" standard must be tempered by reason. Upon piercing the pleadings and considering the entire record, courts must make a determination as to...