West Virginia ex rel. Mcgraw v. Minnesota Mining

Decision Date25 January 2005
Docket NumberNo. CIV.A.2:03-2161.,CIV.A.2:03-2161.
Citation354 F.Supp.2d 660
CourtU.S. District Court — Southern District of West Virginia
PartiesSTATE of WEST VIRGINIA ex rel. Darrell V. MCGRAW, Jr., Attorney General, Plaintiff v. MINNESOTA MINING AND MANUFACTURING COMPANY, a foreign corporation, Mine Safety Appliances Company, a foreign corporation, and American Optical Corporation, a foreign corporation, Defendants

Alva A. Hollon, Jr., John O. Hollon, Sams & Hollon, Jacksonville, FL, Frances A. Hughes, Office of the Attorney General, Joshua I. Barrett, Rudolph L. DiTrapano, Sean P. McGinley, Ditrapano Barrett & Dipiero, Charleston, WV, Michael T. Gallagher, Russell Serafin, The Gallagher Law Firm, Houston, TX, for Plaintiffs.

Andre M. Pauka, Carrie A. Jablonski, Jeffrey A. Hall, Philip S. Beck, Bartlit Beck Herman Palenchar & Scott, Chicago, IL, Bryant J. Spann, David B. Thomas, Wm. Scott Wickline, Allen Guthrie McHugh & Thomas, Beth Ann Rauer, Bruce M. Jacobs, Heather Heiskell Jones, James S. Crockett, Jr., Spilman Thomas & Battle, John T. Dinsmore, Flaherty Sensabaugh & Bonasso, Raymond S. Franks, II, Stephen P. Goodwin, Goodwin & Goodwin, Charleston, WV, Karen K. Maston, Vanessa L. Vance, Connelly Baker Wotring & Jackson, Houston, TX, for Defendants.


COPENHAVER, District Judge.

Pending are plaintiff's motion to remand, filed October 10, 2003, and defendants' joint motion to amend their notice of removal, filed November 17, 2003.1

I. Factual and Procedural Posture

On August 6, 2003, plaintiff instituted this action in the Circuit Court of Lincoln County. The case arises out of the ostensible failure of countless respirators/dust masks used primarily by those working in the mining industry in West Virginia. As a result of the devices' alleged shortcomings, plaintiff asserts it has incurred an enormous financial liability. Specifically, plaintiff contends it will spend hundreds of millions of dollars to care for thousands of miners who used the respirators/dust masks and who subsequently contracted occupational pneumoconiosis (Compl. at ¶ 1.)

Plaintiff alleges purely state law claims for (1) violations of the West Virginia Consumer Credit and Protection Act (CCPA), W. Va.Code § 46A-6-101, et seq. (Count I), (2) strict liability (Count II), (3) negligence (Count III), (4) breach of implied warranty (Count IV), (5) negligent misrepresentation (Count V), and (6) punitive damages (Count VI).

On September 12, 2003, defendants removed. The joint notice of removal alleged diversity jurisdiction pursuant to 28 U.S.C. § 1332. No defendant is a citizen of West Virginia. Regarding plaintiff's citizenship, defendants assert:

The State of West Virginia is the named plaintiff. This designation of the State of West Virginia does not preclude removal of this action because, on information and belief, the named plaintiff is not the real party in interest. There is diversity jurisdiction when the citizenship of the real party or parties in interest is considered.

(Not. of Removal at ¶ 6.) In a footnote, defendants further contend that "[u]nder the particular circumstances of this case even if the State of West Virginia is considered the real party in interest here, the designation of the State of West Virginia does not preclude removal of this action because the plaintiff should be deemed a citizen of the State." (Id.) Defendants identify neither the actual real party in interest nor its citizenship in the notice of removal.

Plaintiff moved to remand, asserting (1) the notice of removal is defective, (2) removal is improper because plaintiff is not a citizen of any state, and (3) removal is barred by the Eleventh Amendment. Defendants respond (1) Attorney General Darrell V. McGraw should be considered a citizen of West Virginia because he is acting without authority under West Virginia law and should not be cloaked with the state's status, (2) the notice of removal satisfies 28 U.S.C. § 1446(a), but an amendment to the notice of removal is permissible, if necessary, (3) the West Virginia Bureau of Employment Programs ("BEP") is the real party in interest, and (4) the Eleventh Amendment does not bar removal. On November 17, 2003, defendants moved to amend the notice of removal to allege that the BEP is a West Virginia citizen and a real party in interest.

II. The Notice of Removal

Examination of the notice proceeds in four orderly steps. First, since it appears to be so alleged in the notice, the court addresses whether the attorney general is the real party in interest. If he is, the analysis ends. Second, defendants assert, in essence, the state is fraudulently joined because the attorney general lacks statutory authority to bring this action. As a result of this putative lack of authority, defendants contend he should be treated as a citizen of West Virginia for diversity purposes. Third, if fraudulent joinder is absent, the court proceeds to determine whether the notice adequately alleges the BEP as a real party in interest, along with its West Virginia citizenship, even though the BEP is not mentioned by name in the notice. If the notice is deficient in this regard, the court reaches the fourth inquiry of whether amendment is proper to cure the omissions.

A. The Attorney General as a Real Party in Interest

It is well-settled that "`[s]ince neither a state nor its alter ego is a citizen for purposes of diversity jurisdiction', a suit between a state, or its alter ego, and a citizen of another state is not a suit between citizens of different states and diversity jurisdiction does not exist." Ristow v. South Carolina Ports Auth., 27 F.3d 84, 89 n. 6 (4th Cir.1994), vacated on other grounds, 513 U.S. 1011, 115 S.Ct. 567, 130 L.Ed.2d 485 (1994); see Roche v. Lincoln Prop. Co., 373 F.3d 610, 613 (4th Cir.2004). For this reason, a removing defendant will often allege the state plaintiff is not a real party in interest in the case. An additional argument is that a named agency or officer is not the state's alter ego, and hence not a citizen for diversity purposes.

Because nominal parties are disregarded for diversity purposes, the real party in interest analysis is critical to the subject matter jurisdiction calculus. In Roche, our court of appeals observed as follows:

Early in its history, the Supreme Court "established that the `citizens' upon whose diversity a plaintiff grounds jurisdiction must be real and substantial parties to the controversy." Id. at 460-61, 100 S.Ct. 1779 (quotations and citations omitted) (emphasis added). "Thus, a federal court must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy." Id. (citations omitted) (emphasis added).

. . . . .

Thus, in diversity cases, the general rule is that the citizenship of the real parties in interest is determinative for purposes of diversity jurisdiction. The citizenship rule testing diversity in terms of the real party in interest is grounded in notions of federalism. It is based upon the principle that a primarily local controversy should be tried in the appropriate state forum and that nominal or formal parties, who do not have a significant interest in the outcome of the litigation, should not be able to use the federal courts.

Id. at 613, 615 (emphasis added).

Footnote one of the notice, as earlier observed, contains the principal allegation concerning the attorney general:

Under the particular circumstances of this case, even if the State of West Virginia is considered the real party in interest here, the designation of the State of West Virginia does not preclude removal of this action because the plaintiff should be deemed a citizen of the state.

(Not. of Remov. ¶ 6 n.1 (emphasis added).) Although some degree of divination is required, it appears by process of elimination that the underscored language refers to the attorney general. This conclusion is indicated for at least three reasons. First, the state cannot be deemed a citizen of itself. Second, the attorney general is the only other named party in the style of the case, albeit as a relator. Third, the allegation dovetails with defendants' subsequently filed memorandum in opposition to remand. Therein, defendants assert that since the attorney general lacks the authority to bring this action, he is rightly treated as the "plaintiff" and should further "be considered a citizen of West Virginia." (Def.'s Mem. in Opp. at 20.)

So construed, this allegation in the footnote remains puzzling. If the state is considered a real party in interest, complete diversity is absent even if the attorney general is ultimately found to be an additional real party in interest. See State of W. Va. v. Morgan Stanley & Co. Inc., 747 F.Supp. 332, 338 n. 6 (S.D.W.Va.1990)("It is suggested in [District of Columbia ex rel. American Combustion, Inc. v. Transamerica Ins. Co., 797 F.2d 1041, 1047 (D.C.Cir.1986)] that once it is determined that a state is a real party to the controversy, the complete diversity requirement enunciated in Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806), cannot be met even if a diverse party is aligned with the state."), see also Long v. District of Columbia, 820 F.2d 409, 416 (D.C.Cir.1987)(absent dismissal of District of Columbia as a "noncitizen" and therefore nondiverse defendant, federal diversity jurisdiction also lacking in plaintiff's suit brought against a diverse codefendant); Jakoubek v. Fortis Benefits Ins. Co., 301 F.Supp.2d 1045, 1049 (D.Neb.2003); Batton v. Georgia Gulf, 261 F.Supp.2d 575, 582 (M.D.La.2003)(presence of state agency as a codefendant destroyed complete diversity); Town of Ogden Dunes v. Bethlehem Steel Corp., 996 F.Supp. 850, 853 (N.D.Ind.1998)(no federal jurisdiction existed over codefendant steel companies where joinder of state agency as defendant destroyed complete diversity).

Perhaps realizing the import of this initial concession, defendants have altered their...

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