Shi et al v. American Honda Motor Co., Inc.
ENTER MEMORANDUM OPINION AND ORDER. Signed on 11/8/2011.Mailed notice(drw, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
XIAOFA SHI and CHUNYUN LIU,
No. 11 C 2682
Judge James B. Zagel
AMERICAN HONDA MOTOR CO., INC.,
MEMORANDUM OPINION AND ORDER
Defendant American Honda Motor Co, Inc. removed this personal injury case from state
court pursuant to 28 U.S.C. § 1446(b). Plaintiffs wish to return to state court and move to
remand, arguing that Schaumburg Honda could be reinstated as a defendant in state court
proceedings thereby destroying diversity jurisdiction. After reviewing the record, I agree with
Defendant that there is no “reasonable possibility” that Schaumburg Honda will return to the
state case. Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th Cir. 1992). Accordingly, Plaintiffs’
motion to remand is denied.
On May 25, 2008, Xiaofa Shi was involved in a rollover accident in his 2000 Honda
CR-V sport utility vehicle that left him paralyzed. The complaint alleges that the 2000 Honda
CR-V was defective and unreasonably dangerous because it lacked Electronic Stability Control
(“ESC”) systems which are designed to prevent sport utility vehicles from rolling over. Plaintiffs
sued American Honda Motor Co. and Schaumburg Honda, the local dealership where Plaintiffs
purchased the Honda CR-V, in Illinois state court on claims of strict product liability and
After substantial discovery was conducted, the state court granted summary judgment to
Schaumburg Honda. The dismissal of Schaumburg Honda created complete diversity between
the parties and Defendant immediately filed its notice of removal. 28 U.S.C. § 1446(b). Plaintiff
objects to the removal on the grounds that Schaumburg Honda could likely be reinstated as a
defendant in state court proceedings, as evidenced by two provisions in the trial court’s summary
judgment order allowing Plaintiffs to move for reconsideration and to take an additional
deposition. I disagree.
The involuntary dismissal of non-diverse defendants in state trial court generally does not
make a case removable under 28 U.S.C. 1446(b). Poulos, 959 F.2d at 72. This is mainly
because the dismissal may not be final; the plaintiff could successfully appeal and have the nondiverse parties reinstated, thereby destroying diversity jurisdiction. Prohibiting removal in these
situations promotes judicial economy by avoiding unnecessary back and forth between state and
federal court. Id.
There is one exception to this rule. Where defendants can show that the non-diverse
parties were fraudulently joined in state court, federal courts should allow for removal. Id. at 73.
In this jurisdictional context, “fraudulent” does not carry its ordinary meaning as a negative
characterization of motive. Rather, it is meant to describe “a claim against an in-state defendant
that simply has no chance of success, whatever the plaintiff’s motive.”1 Id. (“When speaking of
Plaintiffs argue that defendants should be required to plead with particularity their claims
of fraudulent joinder. Fed. R. Civ. P. 9(b). While there is some precedent to support this
position from other circuits, see e.g. Updike v. West, 172 F.2d 663, 665 (10th Cir. 1949), the
Seventh Circuit has made clear its position that, in the jurisdictional context, “fraudulent” is not a
characterization of motive (or any other state of mind). Poulos, 959 F.2d at 73. It therefore
jurisdiction, ‘fraudulent’ is a term of art.”). See also Steel v. Ford Motor Company, No. 11C00460, 2011 WL 1485380, at *3 n.2 (N.D. Ill. Apr. 19, 2011).
An out-of-state defendant asserting fraudulent joinder as an avenue for removal bears a
difficult burden. “The defendant must show that, after resolving all issues of fact and law in
favor of the plaintiff, the plaintiff cannot establish a cause of action against the in-state
defendant.” Poulos, 959 F.2d at 73 (emphasis in original). Put differently, “the federal court
must engage in an act of prediction” over whether there is a “reasonable possibility” that the nondiverse defendants could be reinstated. Id.
Based on the record before me I see no reasonable possibility of Schaumburg Honda
being reinstated as a defendant in state court. To begin with, substantial discovery yielded no
evidence that Schaumburg Honda exercised any control over the design or manufacture of the
2000 Honda CR-V sport utility vehicle, had actual knowledge of the defect, or created the defect.
735 ILCS 5/2-621(c). Nor is there any reason to believe that Plaintiffs would be unable to collect
damages from Defendant should Plaintiffs ultimately prevail in this case. See generally 735
ILCS 5/2-621(b). Because of this, the state court was required to dismiss Plaintiffs’ product
liability claim against Schaumburg Honda under Illinois’ “sellers exception” rule. 735 ILCS 5/2621. Plaintiffs similarly failed to turn up evidence to create a genuine issue of fact on their
negligence claim, entitling Schaumburg Honda to summary judgment.
Given that it is undisputed that Honda brand vehicles sold in the United States did not
have ESC technology until 2003 – three years after Plaintiffs purchased their CR-V – and that
makes little sense to apply Rule 9(b)’s heightened pleading requirements, and I decline to do so
ESC technology and other stability features were not features Plaintiffs considered when
purchasing their vehicle, I am unpersuaded that any amount of additional discovery could
overcome the “sellers exception” rule or create a genuine issue of fact as to whether Schaumburg
Honda acted negligently toward the Plaintiffs. As such, there is no reasonable possibility that
Schaumburg Honda will be reinstated as a defendant, either by the state trial court or on appeal.
I pause to recognize that federal courts, including this one, are not in complete accord
over whether removal should be allowed following the involuntary dismissal of non-diverse
defendants under Illinois’ “seller’s exception” rule. 735 ILCS 5/2-621. See Scheinman v. BMW,
No. 10-C4848, 2010 WL 3937489 (N.D. Ill. Sept. 30, 2010) (Conlon, J.);. but see Steel, 2011
WL 1485380 (Chang, J.). As Defendant rightly points out, that issue is not squarely raised in this
case. Although entitled to dismissal of the strict products liability claim under 735 ILCS 5/2621, Schaumburg Honda was actually granted summary judgment after considerable discovery.
This fact greatly reduces the likelihood of later reinstatement. Even if a § 2-621 dismissal was
central to this case, however, I agree with the Steel court that it is impossible to square Poulos’
“reasonable possibility” test with a categorical bar on treating defendants dismissed pursuant to
§ 2-261 as fraudulently joined. Steel, 2011 WL 1485380, at *5. There is no reason why a district
court cannot engage in the same “act of prediction” in cases involving § 2-621 dismissals as it
does with every other type of involuntary dismissal. The Seventh Circuit has not carved out any
exceptions to Poulos, and I see no reason to invent one from whole cloth.
For the foregoing reasons, Plaintiffs’ motion to remand is DENIED.
James B. Zagel
United States District Judge
DATE: November 8, 2011