Polanco v. H.B. Fuller Co.

• Decision Date: 23 September 1996
• Docket Number: Civil File No. 3-96-8.
• Citation: 941 F.Supp. 1512
• Parties: Ruth Linares POLANCO, individually and as trustee and representative of the estate of Joel de Jesus Linares Polanco, Plaintiff, v. H.B. FULLER COMPANY, Defendant.
• Court: U.S. District Court — District of Minnesota

941 F.Supp. 1512

Ruth Linares POLANCO, individually and as trustee and representative of the estate of Joel de Jesus Linares Polanco, Plaintiff, v. H.B. FULLER COMPANY, Defendant.

Civil File No. 3-96-8.

United States District Court, D. Minnesota, Third Division.

September 23, 1996.

COPYRIGHT MATERIAL OMITTED

Scott M. Hendler, Hendler Law Firm, Austin, TX, Sam Heins, Kent Williams, and Melinda Morales, Heins, Mills & Olson, Minneapolis, MN, Michael J. Brickman and Christian Hartley, Ness, Motley, Loadholt, Richardson & Poole, Charleston, SC, of counsel, for plaintiff.

Janice M. Symchych, Timothy E. Branson and Peter C. Beckerman, Dorsey & Whitney, L.L.P., Minneapolis, MN, for defendant.

MEMORANDUM AND ORDER

DAVIS, District Judge.

INTRODUCTION

Presently before the Court is defendant's motion to dismiss. For the following reasons, the motion is GRANTED.

BACKGROUND

This case presents several difficult jurisdictional and procedural questions. Common to them is the issue of imputing the conduct of a subsidiary to its corporate grandparent. The following background is taken from the pleadings as well as extra-pleading material submitted by both parties. Ruth Linares Polanco, a Guatemalan citizen, has brought this wrongful death action pursuant to Minn. Stat. § 573.02. Ruth is the sister of Joel Polanco, a sixteen-year-old Guatemalan boy who died in January 1993.

Guatemala and other Latin American countries have experienced a phenomenon in which thousands of children live on the streets. The Guatemalan social system is apparently unable or unwilling to meaningfully address this problem. (Bovino Aff. attached as Ex. 2 to Hendler Aff. para. 9.) As a result, these children are on their own. Many have turned to industrial-grade adhesives for comfort marketed under names such as "Resistol", "Aralite" and "Plasticola." The adhesives at issue here are not legitimately available for retail sale to children, but are often purloined from legitimate use and divided into baby-food jars or "baggiesized" doses. Inhalation produces a high, and a warm, pleasing sensation in the typically empty bellies of the street children. It is a false respite, however; the glue is highly addictive and repeated abuse leads to neurological damage and death. Plaintiff alleges that her decedent became addicted to defendant's glue and died as a result.

Defendant H.B. Fuller (hereafter "Fuller-U.S.") is not a monolithic entity. Fuller-U.S. owns 95% of Kativo, a Panamanian corporation. Kativo, directly, and through its own subsidiary, in turn owns all the stock of Fuller-Guatemala ("Fuller-Guatemala"), a Guatemalan corporation. (1/19/95 Baker Aff. para. 5; Hendler Aff.Exh. 28.) There is no dispute that the physical manufacture of the glue was by Fuller-Guatemala (which markets Resistol and Aralite in Guatemala), a fact of central importance to the present dispute. (Coffin Aff. attached as Ex. D to 3/18/96 Baker Aff. paras. 1-2; Ray, Jr. Aff. attached as Ex. D to 3/18/96 Baker Aff. paras. 1, 4.)

Plaintiff originally brought suit against Fuller-U.S., in the Northern District of Texas. Plaintiff then voluntarily dismissed her suit under Fed.R.Civ.P. 41(a)(1). Plaintiff subsequently filed suit in this district against Fuller-U.S., Fuller-Guatemala and Kativo. Plaintiff again invoked 41(a)(1) to dismiss Kativo and Fuller-Guatemala from the complaint.

Fuller-U.S., the only remaining defendant, moves for dismissal on four principal grounds. First, defendant claims that diversity jurisdiction does not exist because: (1) it is being sued for the acts of its subsidiary, a Guatemalan corporation, and (2) as the manufacturer of the allegedly used and defective glue, Fuller-Guatemala is an indispensable party which must be joined. In either case, Guatemalan citizens would (or should be) on both sides of the suit, and diversity will not be complete.

Second, defendant urges that the matter be dismissed on forum non conveniens grounds, arguing that every relevant piece of evidence is likely to be in Guatemala. Moreover, defendant notes that there are approximately a half-dozen Guatemalan manufacturers whose adhesives find their way into the hands of children. (Acevedo Aff. attached as Ex. C to 3/18/96 Baker Aff. para. 11.) These products are generically referred to as "Resistol," although that trademark is held by Kativo. Unable to implead these defendants into an American court (which would likely be unable to exercise personal jurisdiction over them) defendant may be hampered in its ability to show that someone else's products were inhaled by Joel Polanco.

Third, Guatemala's Civil Code provides for a one-year period of "prescription" in wrongful death actions. (Garro Aff. attached as Ex. 1 to Hendler Aff. paras. 15-16.) Prescription is a term of civil law jurisdictions such as Guatemala, rather than common law jurisdictions such as the United States. In effect, prescription is very similar to the lapsing of a limitations period. However, defendant argues that Guatemala's Code speaks directly to the right of recovery, rather than the procedure by which recovery may be had. It is accordingly substantive, and defendant argues that Minnesota choice of law principles (which this Court is bound to observe under Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-1022, 85 L.Ed. 1477 (1941)) compel the application of the one-year period to bar plaintiff's claims. Plaintiff filed this suit one day before the expiration of Minnesota's three-year limitations period.

Finally, defendant argues that plaintiff's second dismissal (of defendants Kativo and Fuller-Guatemala) operates as an adjudication on the merits precluding her from maintaining claims against Fuller-U.S. under Fed.R.Civ.P. 41(a)(1). Because the Court's analysis of the jurisdictional and forum non conveniens issues is dispositive, it is unnecessary to consider the choice of law or res judicata questions raised by this case.

DISCUSSION

I. Jurisdiction

Plaintiff's complaint plays a central role in the analysis of this issue. 28 U.S.C. § 1332(a)(2) confers diversity jurisdiction where the a controversy involves "citizens of a State and citizens or subjects of a foreign state." As is true in "domestic" cases, diversity must be complete. Faysound Ltd. v. United Coconut Chemicals, Inc., 878 F.2d 290 (9th Cir.1989). Fuller-U.S. contends that Fuller-Guatemala is the real target of plaintiff's suit, and its citizenship should be considered in determining whether diversity exists.

A. Standard of Decision.

Analysis begins with the principle that the Court is not bound solely to consideration of the parties' characterization of the claims. Instead, the Court must affirmatively satisfy itself that subject-matter jurisdiction exists:

[The] court may proceed as it never could under 12(b)(6) or Fed.R.Civ.P. 56. Because the issue in a factual 12(b)(6) motion is the trial court's jurisdiction — its very power to hear the case — there is substantial authority that the trial court is free to weigh the evidence and satisfy itself as to the existence of its power to hear the case. In short, no presumptive truthfulness attaches to the plaintiff's allegations, and the existence of disputed material facts will not preclude the trial court from evaluating for itself the merits of jurisdictional claims. Moreover, the plaintiff will have the burden of proof that jurisdiction does in fact exist.

Osborn v. United States, 918 F.2d 724, 730 (8th Cir.1990).

B. Plaintiff's Complaint

Plaintiff's original complaint in this district charged all three defendants (Fuller-U.S., Fuller-Guatemala and Kativo) with being "engaged in the business of designing, manufacturing, marketing, and distributing adhesive products ..." (Pl's Complaint para. 6.) Counts I-III of that complaint involve different, but garden-variety product liability theories (defective design, failure to warn and negligence). When plaintiff dismissed Fuller-Guatemala, she dismissed the actual manufacturer of the product. While she amended her complaint to delete references to the dismissed defendants, the substance of her complaint was unchanged. By the terms of her complaint, she continues to charge Fuller-U.S. with the manufacture of the product.

Aside from the language of the pleadings, plaintiff concedes that the glue at issue was manufactured and distributed by Fuller-Guatemala, not Fuller-U.S. There can be no question that plaintiff is seeking to hold Fuller-U.S. responsible for Fuller-Guatemala's products. This is at odds with plaintiff's contention in her brief that she seeks only to hold Fuller-U.S. responsible for its own conduct in "conceiving the design" of the adhesives. This theory of liability, for which plaintiff offers no evidence of recognition under Minnesota tort law, is nowhere encompassed by the clear terms of plaintiff's complaint. Therefore, plaintiff cannot rely on the "conceiving the design" theory to avoid the consequences of her pleading.

C. The "Attribution Rule"

It appears that few courts have directly addressed the question of whether a suit seeking to hold a corporate parent liable for the acts of its subsidiary implicates jurisdictional concerns. In a line of cases, the Fifth Circuit has developed what defendant describes as the "attribution rule": where a corporate parent is sued for the acts of its subsidiary, "attribution" of the subsidiary's citizenship to the parent is — appropriate to limit the exercise of diversity jurisdiction. Freeman v. Northwest Acceptance Corp., 754 F.2d 553 (5th Cir.1985) was a diversity suit brought by Texas residents against an Oregon corporation for the acts of its wholly-owned subsidiary, a Colorado corporation. On appeal after plaintiffs prevailed at trial, the Fifth Circuit undertook a sua sponte review of the district court's subject-matter jurisdiction. After concluding that plaintiffs were likely Colorado citizens, the court stated that assuming they were, diversity...