Lane v. Champion Intern. Corp., Civ. A. No. 92-01043-RV-S.

• Citation: 827 F. Supp. 701
• Decision Date: 14 June 1993
• Docket Number: Civ. A. No. 92-01043-RV-S.
• Parties: James H. LANE, et al., Plaintiff, v. CHAMPION INTERNATIONAL CORP., et al., Defendants.
• Court: U.S. District Court — Southern District of Alabama

827 F. Supp. 701

James H. LANE, et al., Plaintiff, v. CHAMPION INTERNATIONAL CORP., et al., Defendants.

Civ. A. No. 92-01043-RV-S.

United States District Court, S.D. Alabama, S.D.

June 14, 1993.

Richard A. Freese, Birmingham, AL, Mary E. Murchison, Foley, AL, J. Alan Cox, Tallahassee, FL, Bayless E. Biles, Bay Minette, AL, for plaintiff.

G. Sage Lyons, Mobile, AL, W. Kyle Carpenter, Knoxville, TN, Shelia L. Birngaum, New York City, for defendants.

ORDER

VOLLMER, District Judge.

This matter is before the court on defendant Owenby's "motion to dismiss for lack of personal jurisdiction" (tab 5; see also tabs 6, 8, and 9), defendant Champion's brief in support of this court's jurisdiction (tab 7), plaintiffs' "motion to remand" and incorporated response to defendant Owenby's motion to dismiss (tab 23; see also tab 24), defendants' reply brief in support of defendant Owenby's motion to dismiss and responsive brief in opposition to plaintiffs' motion to remand (tab 25), and defendants' "response to plaintiffs' submittal of Charest v. Olin Corp." (tab 30). After due and proper consideration of the foregoing, and of the arguments of counsel for the parties that were presented during the May 3, 1993, hearing in this action, the court concludes, for the following reasons, that this action is due to be REMANDED to the Circuit Court of Baldwin County, Alabama.

Background

Plaintiffs, James and Jacqueline Lane (the "Lanes") and Eugenia Elebash ("Elebash"), owners of land located on Perdido Bay in Baldwin County, Alabama, initiated this action in Baldwin County Circuit Court¹ against defendants Champion International Corporation ("Champion") and Douglas Owenby ("Owenby"), alleging state law violations² arising out of defendant Champion's release of dioxins into a waterway (i.e., Eleven Mile Creek in Florida) leading into Perdido Bay.³ At all times material to this action, Champion operated a pulp and paper mill in Cantonment, Florida, approximately five miles east of the Alabama state line. The mill is located on Eleven Mile Creek, approximately ten miles north of Perdido Bay. At times material to this action, Owenby worked as Vice-President, Operations Manager of the Cantonment mill. Plaintiffs seek injunctive relief and monetary damages exceeding $50,000, exclusive of interest and costs.

Defendants timely and jointly removed this action to federal court pursuant to 28 U.S.C. § 1441. In so doing, they sought to invoke this court's subject matter jurisdiction, contending that complete diversity of citizenship exists between the plaintiffs and the only appropriately-joined defendant — Champion. The Lanes are Florida residents, and plaintiff Elebash is a resident of Alabama. Defendant Champion is a corporation organized and existing under New York law and maintains its principal place of business in Connecticut. Defendant Owenby is a Florida resident.

Addressing the apparent lack of diversity of citizenship between defendant Owenby and the Lanes, defendants contend that Owenby is due to be dismissed for two reasons: first, plaintiffs have failed to and, indeed, cannot state a claim for relief against him (that is, there is and can be no basis in fact or law supporting a recovery against him "on any alleged basis pleaded or otherwise"), and, second, this court and the Alabama state courts lack personal jurisdiction over him. Plaintiffs challenge the defendants' contentions, asserting both that they have stated valid claims for relief against Owenby and that this court has personal jurisdiction over him.

Immediately following removal, Owenby filed a motion to dismiss for lack of personal jurisdiction (tab 5; see also tabs 6, 8, and 9). Additionally, Champion filed a brief in support of this court's jurisdiction (tab 7), addressing therein the contention that plaintiffs have failed to state a claim for relief against Owenby. After allowing the parties a period of discovery limited solely to the jurisdictional issues raised by Owenby and Champion, the plaintiffs filed a "motion to remand" (tab 23; see also tab 24), and an incorporated response to Owenby's motion to dismiss. The court conducted oral argument on May 3, 1993, on the motions to dismiss and to remand. Both motions are now ripe for this court's consideration.

Discussion

A. Scope and Substance of this Court's Consideration

At the outset, the court notes that there is some disagreement between the parties concerning this court's obligation to consider both the "failure to state a claim" and "lack of personal jurisdiction" contentions presented by the defendants. The defendants cast their two arguments supporting this court's diversity jurisdiction under the "fraudulent joinder" rubric; that is, they assume that this court should and must consider both issues in determining whether this action is properly before the court. Their assumption is premised on an expansive view of fraudulent joinder jurisprudence and notions of judicial economy, and appears to presume that the "no possibility of recovery" prong of the fraudulent joinder analysis, see infra at pages 705-07, incorporates consideration of whether the state court could render a valid judgment against the defendant under the due process clause of the fourteenth amendment. See Martino v. Viacao Aerea Riograndense, S.A., 1991 W.L. 13886 (E.D.La. Jan. 25, 1991) (court "asked to review personal jurisdiction to determine whether plaintiffs could succeed in the court of the particular state," as opposed to the traditional fraudulent inquiry, questioning whether the plaintiffs could obtain "success purely on the subject matter"); see also Villar v. Crowley Maritime Corp., 780 F.Supp. 1467 (S.D.Tx. 1992), aff'd, 990 F.2d 1489 (5th Cir.1993); Nolan v. The Boeing Co., 736 F.Supp. 120 (E.D.La.1990); Acker v. Armstrong World Industries, Inc., 1989 W.L. 268344 (S.D.Miss. Dec. 1, 1989).

Plaintiffs maintain that only the failure to state a claim issue is an appropriate subject of the fraudulent joinder analysis in this case. They assert that the personal jurisdiction issue is one that this court, in the exercise of its discretion, may, but ought not, consider.

As will be discussed, the doctrine of fraudulent joinder most often addresses those situations in which there has been outright fraud in the content of plaintiff's pleading of jurisdictional facts, or in which one can say no possibility exists that the plaintiff would be able to establish a viable cause of action against the non-diverse defendant in state court. In this case, it is urged that there is no possibility that Owenby could be held liable to the plaintiffs not only because the plaintiffs assertedly cannot establish a viable cause of action against him, but also because the Alabama state court could not exercise personal jurisdiction, and thus could not render a valid judgment against, him.

In the typical fraudulent joinder case, a resident plaintiff attempts to destroy diversity, and thereby defeat removal, by bringing a state court action against both a resident and a nonresident defendant. Since the nondiverse defendant is a citizen of the forum state in such instances, there is no question that such defendant is subject to personal jurisdiction. Thus, to establish fraudulent joinder the removing party must demonstrate that the court lacks subject matter jurisdiction over the claim against the nondiverse defendant because the plaintiff could not possibly prevail, on the merits, in state court. In such a case, the court must determine whether the law might impose liability on the resident defendant, and the court frequently considers the plaintiffs motion to remand in conjunction with the resident defendant's motion to dismiss. The conceptual inquiry prompted by both such motions ordinarily deals with a kind of substantive guess about the merits of the claim urged against the resident, and the general question for the court to resolve is whether there is any possibility that the plaintiff might be able to establish liability against the so-called fraudulently joined defendant. If the answer to the court's inquiry is yes, the joinder is not condemned as fraudulent.

Because the fraudulently joined defendant is usually a resident of the state in which suit is brought, the question of the court's personal jurisdiction over the resident defendant does not arise. The pivotal inquiry goes directly to subject matter jurisdiction. That is not so in this case. Here, because the Lanes are Florida residents and have named as a defendant Owenby, who also is a Florida resident, it is the naming of a nonresident defendant, and not a resident defendant, that destroys diversity. The court's personal jurisdiction over the nonresident defendant thus becomes one focus of inquiry.

This case differs from the better-known fraudulent joinder cases because Owenby maintains that there is no possibility that plaintiffs case establish liability against him — not only because plaintiffs are impeded from invoking a serious cause of action against him — but also because plaintiffs cannot establish that Owenby is subject to personal jurisdiction in Alabama. Thus, although the usual case focuses directly and only on subject matter jurisdiction in the remand context, here both personal jurisdiction and plaintiffs' claims against Owenby directly implicate the court's remand authority.

Plaintiffs urge the court to reach the motion to remand first. According to plaintiffs, what the Court must determine is whether there is any reasonable basis for predicting that they could succeed in establishing liability against Owenby under Florida law. They seek to track strictly the traditional fraudulent joinder analysis and to have this court eschew consideration of personal jurisdiction as a component of this court's jurisdiction.

It is within this court's discretion to determine whether it will consider the motion to dismiss (for lack of personal jurisdiction) prior to addressing p...