The Water Works and Sewer Board of Gadsden v. 3M Company et al

Filing 202

MEMORANDUM OPINION Signed by Chief Judge Karon O Bowdre on 9/25/17. (SAC )

FILED
2017 Sep-25 PM 03:16
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
MIDDLE DIVISION
THE WATERS WORKS AND SEWER
BOARD OF GADSDEN,
Plaintiff,
v.
3M COMPANY, et al.
Defendants.

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CASE NO.: 4:16-CV-1755-KOB

MEMORANDUM OPINION
Plaintiff Waters Works and Sewer Board of Gadsden brought suit against more than
thirty manufacturers, distributors, and users of chemicals in Etowah County Circuit Court; the
Board alleged that the Defendants had contaminated the Board’s water source with
perfluorinated chemicals. The Defendants represent the majority of the carpet industry in North
America and are concentrated around Dalton, Georgia. However, Defendant Industrial
Chemicals is an Alabama corporation based in Birmingham. Defendant Shaw Enterprises
removed the case to federal court, alleging that the Board had fraudulently joined Industrial
Chemicals to defeat diversity jurisdiction. The Board moved to remand the case, arguing that
Industrial Chemicals was properly joined and, therefore, complete diversity did not exist and
thus the court lacked subject matter jurisdiction. 1
Because the court agrees that Industrial Chemicals was not fraudulently joined, it will

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In its motion to remand, the Board also argued that removal was improper because Defendant Aikman & Collins
Floor Coverings International Inc. did not consent to the removal. The Defendants responded by noting that Aikman
& Collins was a dissolved entity. In its reply brief, the Board withdrew its argument that removal was improper
because Aikman & Collins did not consent. See (Doc. 193 at 16–17).

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grant the Board’s motion and remand this case to state court.

I.

BACKGROUND
A.

Allegations in the Complaint

Despite the scope of this action, the allegations in the complaint are simple. Plaintiff
Water Works and Sewer Board of the City of Gadsden is the public water supplier to the City of
Gadsden, Alabama, and the surrounding area. The Board draws its source water from the Coosa
River at a point downstream from Dalton, Georgia, and has recently learned that its water supply
is contaminated with perfluorinated chemicals (PFCs), including perfluorooctanoic acid (PFOA)
and perfluorooctane sulfonate (PFOS).
The Board has named manufacturers, suppliers, and users of PFCs as Defendants it
believes are jointly liable to it for negligence, nuisance, trespass, and wantonness for causing the
presence of the chemicals in the Board’s water source. Because of the contamination, the Board
says it has lost profits as customers have switched to other sources of water. Further, the Board
says its current water filtration system cannot remove or reduce PFC levels in the water to the
level recommended by the EPA.
B.

Evidence Provided to the Court
1.

Evidence Submitted by the Plaintiff

The Board submitted evidence about industrial use of PFCs, including a white paper from
the Association of State and Territorial Solid Waste Management Officials (ASTSWNO) Federal
Facilities Research Center’s Remediation and Reuse Focus group on PFCs. See (Doc. 164-2).
The paper notes that PFOA and PFOS are the two most prevalent types of PFCs, and that PFCs
have been used by companies to make fluropolymer coatings and products that are oil and water
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repellent, including clothing, upholstery, paper, carpets, and non-stick cookware. Additionally,
the National Institute of Environmental Health says that PFCs can be used to ensure that
products, such as carpet and sofas, are resistant to stains. See (Doc. 164-3 at 2).
PFCs are also used in other compounds. An OECD/UNEP 2 Global PFC Group Synthesis
Paper submitted by the Board also mentions that PFCs are sometimes components of foaming
agents and hydraulic fluids. See (Doc. 164-6). According to research cited by the ASTSWNO
paper, the highest concentrations of PFCs are found in areas with direct discharge from
industries that utilize PFCs.
The Board also submitted an Environmental Protection Agency question and answer
document on PFC contamination in Dalton, Georgia. The EPA believes that PFC contamination
in Dalton results from industrial discharge by carpet manufacturers. See (Doc. 164-4 at 5).
Finally, the Board has also submitted evidence regarding Industrial Chemicals’ business and its
potential relationship to PFCs. Industrial Chemicals, an Alabama corporation, maintains a
distribution site in Dalton, and its advertising materials say it sells “textile chemicals,”
“surfactants,” and “polymers,” as well as foaming agents, hydraulic fluids, and metal plating and
finishing chemicals. (Doc. 164-5 at 2–3). Industrial Chemicals is also a distributor for OmniChem136, which supplies over 5,000 different chemical products.
The Board also notes that distribution is not the sole focus of Industrial Chemicals’
business. According to the company’s website, it also transports and disposes of waste materials.
See (Doc. 193-5).
2.

Evidence Submitted by the Defendants

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The Organisation for Economic Co-operation and Development (OECD)/United Nations Environment Programme
(UNEP).

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In the notice of removal and also in opposition to the Board’s motion to remand, the
Defendants provided numerous affidavits to establish that the Board fraudulently joined
Industrial Chemicals. The affidavits fall into three general categories: Industrial Chemicals
officers; expert testimony; and the other Defendants stating they did not buy chemicals
containing PFCs from Industrial Chemicals.
The Defendants have provided two affidavits from Chip Welch, the CEO/President of
Industrial Chemicals. In his first affidavit, Mr. Welch says that Industrial Chemicals has never
used PFCs during a manufacturing process or marketed or sold chemicals designed to create
water or stain resistance. Industrial Chemicals had records of sales dating from 2005. Mr. Welch
reviewed sales made to Defendants and says, to his knowledge, none of the chemicals the
company sold to these Defendants contained PFCs. See (Doc. 2-2).
In his second affidavit, Mr. Welch states that the polymers sold by the company are used
for water treatment and do not contain PFCs; the items purchased from Omni-Chem136 do not
contain PFCs; and the hydraulic fluids sold by the company do not contain PFCs. Further, Mr.
Welch says the company has never sold to any company located in or around Dalton, Georgia
surfactants used in firefighting foams or mist suppressants for metal plating, products that
commonly contain PFCs. See (Doc. 189-24).
William Welch, Industrial Chemicals’ original founder, also submitted an affidavit. Mr.
Welch states that Industrial Chemicals opened a warehouse in Dalton, Georgia in 1996 and that,
to his knowledge, the company never sold products containing PFCs to customers in that area.
Mr. Welch says the products sold to customers in Dalton were “not chemicals designed to impart
water, strain, or grease resistance to carpet or other textile products.” See (Doc. 189-21 at 4).
The Defendants also submitted an affidavit from Dr. Dennis Paustenbach, an industrial
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hygienist and toxicologist. Dr. Paustenbach says he reviewed a list of the all chemical products
Industrial Chemicals sold to these Defendants, and none contained PFCs or are known to
degrade into PFCs. In response, the Board has questioned Dr. Paustenbach’s objectivity and
methods. See (Doc. 193-1 at 4).
Finally, the Defendants have submitted just short of 30 other affidavits saying that none
of them purchased chemicals containing PFCs from Industrial Chemicals. (Docs. 189-1–11, 13–
21, 23, 25–29). Additionally, the Defendants provided an affidavit from the managing director of
Omni-Chem136 stating that none of the products purchased or distributed by Industrial Chemicals
contained PFCs or are known to degrade into them. (Doc. 189-22).

II.

LEGAL STANDARD
A defendant may remove a case from state court if the action could have originally been

filed in federal court. See 28 U.S.C. § 1441(a). Generally, federal courts have jurisdiction over
civil cases where the amount in controversy exceeds $75,000 and complete diversity between the
parties exists. See 28 U.S.C § 1332; Triggs v. John Crump Toyota, 154 F.3d 1284, 1287 (11th
Cir. 1998) (noting that for the diversity requirement to be met, “every plaintiff must be diverse
from every defendant”).
Even if complete diversity is not present, an action may still be removable if the joinder
of the non-diverse parties was fraudulent. See Triggs, 154 F.3d at 1287. Joinder is fraudulent in
two circumstances: (1) where no possibility exists that the plaintiff can prove a cause of action
against the resident defendant; or (2) where the complaint contains outright fraud in the pleading
of jurisdictional facts. See id. The Eleventh Circuit has also recognized a related theory—
fraudulent misjoinder. Fraudulent misjoinder occurs when claims against a non-diverse
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defendant are joined to the claims against the diverse defendant, even though the claims share
“no real connection.” See id. at 1289.
The court determines whether a party has been fraudulently joined “based upon the
plaintiff's pleadings at the time of removal, supplemented by any affidavits and deposition
transcripts submitted by the parties.” Pacheco de Perez v. AT&T Co., 139 F.3d 1368, 1380 (11th
Cir. 1998). However, the court should proceed with caution in looking beyond the pleadings;
causation should not be conflated with jurisdiction. See Crowe v. Coleman, 113 F.3d 1536, 1538
(11th Cir. 1997) (“The fact that the plaintiffs may not ultimately prevail against the individual
defendants because of an insufficient causal link between the defendants' actions and the
plaintiffs’ injuries does not mean that the plaintiffs have not stated a cause of action for purposes
of the fraudulent joinder analysis.”). Jurisdictional analysis “must not subsume substantive
determination.” Id. (quoting B, Inc. v. Miller Brewing Co., 663 F.2d 545, 550 (5th Cir. Unit A
1981)).
The removing party’s burden is a “heavy one.” Crowe, 113 F.3d at 1538. A defendant
must demonstrate by clear and convincing evidence that a plaintiff fraudulently joined a resident
defendant. See Florence v. Crescent Res., LLC, 484 F.3d 1293, 1297 n.2 (11th Cir. 2007). And a
removing defendant asserting fraudulent joinder must show that the plaintiff could not possibly
state a claim against the resident defendant in state court. Triggs, 154 F.3d at 1287.
Conversely, a plaintiff’s burden is much lighter. He “need not have a winning case . . . for
the joinder to be legitimate.” Id. Rather, he need only show a “reasonable basis for predicting
that the state law might impose liability on the facts involved.” Crowe, 113 F.3d at 1538
(emphasis in original) (internal quotation marks omitted). Also, the court must “resolve all
questions of fact . . . in favor of the plaintiff.” Cabalceta v. Standard Fruit Co., 883 F.2d 1553,
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1561 (11th Cir. 1989). However, a question of fact must exist for the plaintiff to enjoy that
presumption; if the defendant provides undisputed evidence, the court may accept it. Legg v.
Wyeth, 428 F.3d 1317, 1323 (11th Cir. 2005). Doubt about a legal issue under state law must also
be resolved in favor of remand. See Crowe, 113 F.3d at 1538 (“To determine whether the case
should be remanded, the district court . . . must resolve any uncertainties about state substantive
law in favor of the plaintiff.”).

III.

DISCUSSION
The sole issue presented in the motion to remand is whether the Board properly joined

Industrial Chemicals, an Alabama corporation, to this action. The Defendants argue that
Industrial Chemicals was both fraudulently joined and misjoined to this action because the
company did not sell any chemicals containing PFCs to the Defendants or any other customers in
the Dalton area. The court will address both grounds on which Defendants seek to defeat
Plaintiff’s motion to remand.
A. Fraudulent Joinder
The removing Defendants have the heavy burden of proving “there is no possibility the
plaintiff can establish a cause of action against the resident defendant.” Crowe, 113 F.3d at 1538
(emphasis added). To determine whether they have met this burden, the court reviews both the
legal sufficiency of the complaint as well as the Plaintiff’s and Defendants’ factual allegations.
Id. The removing Defendants will prevail only if they prove, by clear and convincing evidence,
that none of Plaintiff’s claims against the resident Defendant have any possibility of success.
Therefore, these Defendants must prove that there is no possibility that Industrial Chemicals has
ever sold, distributed, transported, supplied, or disposed of any chemical products containing

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PFCs or PFC-producing compounds to or on behalf of any entity in the Dalton area since
Industrial Chemicals was founded in 1970. Defendants’ burden is regarded as “heavy” for good
reason. Now, the court will address why Defendants fail to meet that burden.
The court needs devote little time addressing the legal sufficiency of the Board’s
complaint, as the Defendants do not seriously challenge it. The Defendants only argue that the
Board’s general allegations indicate fraudulent joinder. However, when a plaintiff names several
defendants but does not allege specific conduct for each defendant, “allegations can be and
usually are to be read in such a way that each defendant is having the allegation made about him
individually.” Crowe, 113 F.3d at 1539. Therefore, a plaintiff’s pleading is not inadequate
merely because it does not contain specific individualized allegations against the resident
defendant.
The Defendants’ challenge focuses on the factual sufficiency of the Board’s claim against
Industrial Chemicals, arguing “[t]he law requires more” than the “speculation” the Board
provided inculpating Industrial Chemicals. (Doc. 189 at 3). The court disagrees with the
Defendants’ assessment for two reasons. First, the affidavits the Defendants submitted do not
conclusively establish that Industrial Chemicals never sold, distributed, transported, supplied, or
disposed of chemicals containing PFCs, or that would degrade into PFOS or PFOA compounds,
that eventually contaminated the Board’s water supply. Second, even if the affidavits do
establish that Industrial Chemicals never sold PFCs, or otherwise contributed to the PFC
contamination, the Board adequately disputes that evidence at this stage of the case.
1. Sufficiency of the Affidavits
The Defendants submitted affidavits from William Welch and Chip Welch to establish
that Industrial Chemicals never sold chemicals containing PFCs to Dalton customers, including
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the defendants. However, Chip Welch’s first affidavit attached to the notice of removal states
that Industrial Chemicals “does not have records regarding product sales made prior to 2005.”
(Doc. 2-2 at 3). Also, William Welch’s declaration that Industrial Chemicals has never sold or
distributed products containing PFCs is based solely on his memory and his knowledge of the
chemical structure of every product that Industrial Chemicals has sold since 1970. Given the lack
of records, the testimony of two officers that Industrial Chemicals has not sold products
containing PFCs over a forty-year span fails to present clear and convincing evidence that the
Board does not have any possibility of recovering against that company.
The Defendants’ other affidavits do not remedy this defect. If taken as true, the affidavits
would only establish that, since 2005, Industrial Chemicals has not provided chemicals
containing PFCs to other defendant companies; they would not establish that Industrial
Chemicals never provided chemicals containing PFCs to any customer near Dalton, Georgia.
Further, none of the affidavits speak to Industrial Chemicals’ waste transportation business. The
Defendants have not provided clear and convincing evidence that Industrial Chemicals did not
transport or dispose of PFCs upstream from Gadsden. Thus, Defendants’ affidavits leave open
the important question of whether the resident defendant may be found liable for contaminating
the Board’s water source with perfluorinated chemicals. With such an opening, the court cannot
say that Defendants have shown there is no possibility that Industrial Chemicals could be found
liable.
2. Whether the Board has Shown “Disputed” Issues
Defendants’ affidavits leave open the possibility that Industrial Chemicals’ actions, at
some point in time, contributed to the Board’s contaminated water supply. But even if the court
assumes that the Defendants’ affidavits effectively assert that no possibility exists that Industrial
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Chemicals could be liable to the Board, the Board has sufficiently challenged those affidavits so
as to create a dispute of fact. Importantly, the court must resolve that dispute of fact in favor of
the Board at this point of the litigation. See Crowe, 113 F.3d at 1542.
The Defendants have essentially asked for summary judgment, but the court cannot
consider such a request in this procedural posture. See (Doc. 189 at 13) (“Utterly missing from
plaintiff’s submissions . . . is any actual evidence or proof that Industrial Chemicals made or
distributed any product containing PFCs or that such compounds found their way into plaintiff’s
water supply.”). Although summary judgment and fraudulent joinder share similar procedures,
“the substantive standards are very different.” Crowe, 113 F.3d at 1542. The case law has not
always been clear about how the standards are different, but it has been clear that the standards
are different.
A key difference between fraudulent joinder and summary judgment appears in the
burden of production. Defendants seem to imply that the Board has an obligation similar to a
respondent’s burden of producing evidence under Rule 56. See Fed. R. Civ. P. 56 (“A party
asserting that a fact . . . is genuinely disputed must support the assertion by . . . citing to
particular parts of materials in the record.”). However, a fact may be sufficiently “disputed” for
the purpose of fraudulent joinder even if the same response would not be sufficient to survive
summary judgment because, for fraudulent joinder purposes, Plaintiff’s burden is simply to offer
some evidence to reasonably contest that of the Defendants. See Legg v. Wyeth, 428.F3d 1317,
1323 (11th Cir. 2005); See, e.g. Taylor Newman Cabinetry, Inc. v. Classic Soft Trim, Inc., 436 F.
App'x 888, 892 (fact was contested for fraudulent joinder analysis when plaintiff “generally
contested [defendant’s] version of events”). In this manner, defeating a fraudulent joinder motion
is a “lighter” burden for the plaintiff than at summary judgment.
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Defendants heavily lean on the affidavits of William Welch, Chip Welch, and Dr.
Paustenbach to show the absence of any possibility that the Board has a legitimate cause of
action against Industrial Chemicals. But the Board disputes those affidavits by attacking Chip
Welch’s lack of credentials that would qualify him to determine whether a chemical compound
contains PFCs. And while Defendants presented Dr. Paustenbach’s affidavit to shore up Chip
Welch’s declaration, his testimony is insufficient to prevent a dispute of fact. Dr. Paustenbach
concluded that none of the products that Industrial Chemicals sold to defendants in the carpet
manufacturing industry contain PFOA or PFOS. Again, this does not rule out the possibility that
Industrial Chemicals contributed to the Board’s injury by other means. But even if it did, the
Board satisfies its light burden of presenting some evidence contesting Dr. Paustenbach’s
affidavit. See Crowe, 113 F.3d at 1541. The Board does so by noting that many of his past
studies have suffered from defects. See (Doc. 193 at 13–15). Thus, Defendants’ affidavits are not
undisputed, and the court must resolve all contested issues of fact in favor of the Board. Crowe,
113 F.3d at 1541–42.
The Defendants’ broader contention is that Nelson v. Whirlpool Corp., 668 F. Supp. 2d
1368 (S.D. Ala. 2009) imposes a burden on the plaintiff to produce evidence inculpating the nondiverse defendant. But, even if it were controlling, Nelson does not impose such a burden of
production. While ostensibly relying on Nelson’s holding, the Defendants ignore the analytical
framework of the opinion—the application of Rule 11. See id. Instead, the Defendants hone in on
Judge Steele’s admonition that a plaintiff is not free to sue whomsoever he wishes simply
because no exculpating evidence exists—unassailable as a legal principle but inapplicable to this
case.
Nelson is not on point because the Board has conducted a reasonable investigation under
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the circumstances, satisfying the requirements of Rule 11. 3 In Nelson, the plaintiffs sued a party
without any evidence to support its theory of how the party could be liable to them, despite being
in possession of a means to obtain that evidence. The court in Nelson did not find fraudulent
joinder simply because the plaintiffs produced no inculpating evidence, but because the plaintiffs
were in a position to determine whether a defect existed for which the resident defendant could
be held responsible and elected not to do so. Under those circumstances, the investigation
undertaken was not reasonable. See Nelson, 668 F. Supp. 2d at 1377–78.
The plaintiffs’ deliberate inaction in the face of probative evidence in Nelson contrasts
with the Board’s position here. Here, the Defendants improperly claim the Board presented “no
evidence whatsoever” that Industrial Chemicals could be liable to it. But, the Board has produced
sufficient evidence to create “contested issues of fact” that the court must resolve in the
Plaintiff’s favor. See Crowe v. Coleman, 113 F.3d 1536, 1542 (11th Cir. 1997). The Board
knows, through its own testing and EPA’s confirmation, that PFCs contaminated its water
supply. It knows, from Industrial Chemicals’ own website and sales literature, that Industrial
Chemicals sells, distributes, transports, and disposes of chemical products to or on behalf of
companies in industries that have been known to use PFCs. The Board does not possess evidence
it could test to determine whether Industrial Chemicals caused the chemical presence in its water,
but it knows Industrial Chemicals distributed products known to contain PFCs. What more
investigation could the Board have undertaken at this point? Judge Steele’s admonition simply
does not apply to the facts here. The Board has not blindly sued a defendant and then pled that
the defendant lacks conclusive exculpating evidence. Instead, it has undertaken a reasonable

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Notably, Nelson v.Whirlpool Corp., 668 F. Supp. 2d 1368 (S.D. Ala. 2009) is only persuasive authority. Thus the
Rule 11 analysis is not the sole means of analysis available to this court.

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investigation under the circumstances.
Is the evidence enough to survive summary judgment? Perhaps not. But Rule 56 is not
the standard, and to apply it here would be premature. Despite the Defendants’ protestations to
the contrary, the evidence is inculpating, even if it is not conclusive. The Board is entitled to rely
on circumstantial evidence and inductive reasoning at this point; it is only required to generally
contest, not specifically refute, the Defendants’ version of events. The Board has done that.
B. Fraudulent Misjoinder
The Defendants also claim the Board fraudulently misjoined Industrial Chemicals
because “the factual nexus among alleged claims . . . does not satisfy the requirements of joinder
set forth in Rule 20 of the Federal Rules of Civil Procedure.” (Doc. 189 at 24).
Rule 20 permits plaintiffs to join claims against defendants if they assert a right to joint
and several relief arising out of the same occurrence and if the claims share any question of law
or fact. The rule is construed broadly. See United Mine Workers of Am. v. Gibbs, 383 U.S. 715,
724 (1966) (“Under the Rules, the impulse is toward entertaining the broadest possible scope of
action consistent with fairness to the parties; joinder of claims, parties and remedies is strongly
encouraged.”).
Whether and how the Board’s water supply became contaminated with PFCs is a
common question of fact among the claims against Industrial Chemicals and the other
Defendants. Further, the allegation that Industrial Chemicals supplied products containing PFCs
to Defendants who used them in their products, resulting in PFCs contaminating the Coosa
River, means that the Defendants acted in concert, and would be jointly and severally liable.
Therefore, the plaintiff’s complaint easily satisfies Rule 20. The Board did not fraudulently
misjoin Industrial Chemicals.
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IV.

CONCLUSION
Defendants have failed to show that no possibility exists that the Board could prevail on

its claims against Industrial Chemicals. Because the Defendants have failed to carry their burden
in demonstrating that the Board fraudulently joined Industrial Chemicals, complete diversity
does not exist and the court lacks subject matter jurisdiction over this case. The court will enter a
separate order consistent with this opinion, granting the Board’s motion and remanding this case
to Etowah County Circuit Court.
DONE this 25th day of September, 2017.

____________________________________
KARON OWEN BOWDRE
CHIEF UNITED STATES DISTRICT JUDGE

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