Williams et al v. Biomet Inc et al

Filing 113

OPINION AND ORDER: GRANTING 73 MOTION to remand. This case is hereby REMANDED to the Circuit Court of St. Louis County, Missouri for further proceedings ***Civil Case Terminated. Signed by Judge Robert L Miller, Jr on 2/29/16. (jld)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
BERNA WILLIAMS AND WILLIAM D.
WILLIAMS,
PLAINTIFFS,
VS.

BIOMET, INC. ET AL.,
DEFENDANTS.

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CAUSE NO. 3:14-CV-1955-RLM-CAN

OPINION and ORDER
Berna and William Williams brought suit in Missouri state court against
four Biomet companies and Select Orthopedics, Inc., Biomet’s distributor in
Missouri. The Williamses allege that Berna Williams’s M2a-Magnum hip implant
caused her injury, and bring claims for negligence, strict product liability,
misrepresentation, failure to warn, breach of implied warranty, breach of express
warranty, loss of consortium, and violation of the Missouri Consumer Protection
Act. The defendants removed the case to the Eastern District of Missouri based
on diversity of citizenship under 28 U.S.C. § 1446, and the Judicial Panel on
Multidistrict Litigation transferred the case into the Biomet multi-district
litigation docket.
This matter is before me on the Williamses’ motion to remand, which
argues that there isn’t complete diversity of citizenship. For diversity purposes,

the Williamses and Select are citizens of Missouri,1 and the four Biomet
defendants are citizens of Indiana. Biomet designed and manufactured Mrs.
Williams’s hip implant, while Select marketed, sold, and distributed the implant.
The defendants removed this case to federal court on the argument that Select’s
citizenship should be disregarded for diversity purposes, because Select was
fraudulently joined due to the Williamses’ inability to prevail on any claim
against it. The Williamses now argue that removal was improper, because they
have valid claims against Select in state court, so joinder of Select wasn’t
fraudulent.
For a federal court to have jurisdiction over a suit based on diversity, there
must be complete diversity of citizenship – no defendant may share the
citizenship of any plaintiff. 28 U.S.C. § 1332(a). A plaintiff can’t fraudulently join
a non-diverse defendant solely for the purpose of destroying diversity
jurisdiction. Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 763 (7th Cir.
2009). “Fraudulent” in this context doesn’t necessarily mean bad faith on the

In their response to the remand motion, the defendants point out that the complaint
alleges the Williamses are “residents” of Missouri, but says nothing about their
citizenship. To the extent that the defendants argue remand is inappropriate because
the Williamses’ citizenship hasn’t been adequately established, they are judicially
estopped from making such an argument. In its Notice of Removal, Biomet alleged that
the Williamses “are citizens and residents of St. Louis County, in the State of Missouri.”
Having itself relied on the Williamses’ Missouri citizenship and successfully removed
this case based on it, Biomet can’t argue to the contrary now. See Grochocinski v. Mayer
Brown Rowe & Maw, LLP, 719 F.3d 785, 795 (7th Cir. 2013) (discussing the equitable
doctrine of judicial estoppel as one that “protects the courts from being manipulated by
chameleonic litigants who seek to prevail, twice, on opposite theories.”).
1

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part of a plaintiff; it means that the claims against the non-diverse defendant
have no realistic chance of success. Poulos v. Naas Foods, Inc., 959 F.2d 69, 73
(7th Cir. 1992). To decide whether joinder was fraudulent in this sense, a court
must ask whether, “after resolving all issues of fact and law in favor of the
plaintiff . . . there is any reasonable possibility that the plaintiff could prevail
against the non-diverse defendant.” Schur v. L.A. Weight Loss Ctrs., 577 F.3d
752, 764 (7th Cir. 2009) (internal quotation marks omitted). The party seeking
removal – or, as here, resisting remand – bears the heavy burden of showing that
joinder was fraudulent. Id. at 763. If the removing defendant meets its heavy
burden of demonstrating fraudulent joinder, the district court “may ‘disregard’
the nondiverse defendant” for jurisdictional purposes, such that the fraudulent
joinder doctrine acts as “an ‘exception’ to the requirement of complete diversity.”
Morris v. Nuzzo, 718 F.3d 660, 666 (7th Cir. 2013) (quoting Walton v. Bayer
Corp., 643 F.3d 994, 999 (7th Cir. 2011)).
In deciding whether a defendant has been fraudulently joined, a court isn’t
limited to the pleadings and may consider summary judgment-type evidence
such as affidavits. Millman v. Biomet Orthopedics, Inc., No. 3:13-CV-77 RLMCAN, 2013 WL 6498394, at *2 (N.D. Ind. Dec. 10, 2013); Siegel v. H Group
Holding, Inc., No. 07 C 6830, 2008 WL 4547334, at * 3 (N.D. Ill. Apr. 9, 2008)
(“[A] limited use of affidavits and other evidence is permissible so long as the
evidence is not used to ‘pre-try’ the case.”). The fraudulent joinder analysis
requires a district court to apply state law to determine whether the plaintiff
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would have any reasonable possibility of success against the non-diverse
defendant in state court. Schur v. L.A. Weight Loss Centers, Inc., 577 F.3d 752,
764 (7th Cir. 2009). The parties agree that Missouri law governs this case.
The defendants believe Select can’t be held liable in Missouri court due to
Missouri’s Innocent Seller Statute, which protects mere sellers from product
liability. The statute provides:
1. A defendant whose liability is based solely on his status as a seller in
the stream of commerce may be dismissed from a products liability
claim as provided in this section.
2. This section shall apply to any products liability claim in which another
defendant, including the manufacturer, is properly before the court and
from whom total recovery may be had for plaintiff’s claim.
(Mo. Ann. Stat. § 537.762). The defendants argue that because this statute will
result in the immediate dismissal of any claim against Select in Missouri court,
Select’s citizenship doesn’t count for diversity analysis and this case was
properly removed.
While the Innocent Seller Statute may apply to several of the Williamses’
claims, the statute’s plain language doesn’t appear to reach others – and joinder
is proper if even one state court claim has a reasonable probability of success.
Count 3 of the complaint, titled “Misrepresentation against Select,” is the clearest
example of a claim to which the Innocent Seller Statute doesn’t seem to apply.
In that count, the Williamses allege that Select made various material
misrepresentations

and

omissions

about

the

Magnum

implants

in

communications to the Williamses and to their orthopedic surgeon, Dr. Maylack,

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and that the Williamses justifiably relied on these misrepresentations and
consequently suffered a loss.
Select’s liability under this theory isn’t based solely on its role as seller, as
the Innocent Seller Statute requires; rather, liability is based on Select’s
misrepresentations and omissions in communicating with the Williamses and
their doctor about the implant. The heart of the misrepresentation claim isn’t
Select’s status as seller, but rather particular false statements it made in the
course of business. The Missouri Innocent Seller Statute doesn’t protect sellers
or middlemen from claims that depend on their own culpable conduct, rather
than simply on their status as sellers of an allegedly defective product. See
Malone v. Schapun, Inc., 965 S.W.2d 177, 182 (Mo. Ct. App. 1997), opinion
adopted and reinstated after retransfer (June 1, 1998) (noting that under the
Innocent Seller Statute, “a seller is still liable for its own negligence or other
conduct other than its status as a seller in the stream of commerce.”).
That the Innocent Seller Statute doesn’t apply to claims against sellers for
misrepresentation is consistent with the purpose of the statute, which is
generally to “to protect a seller from becoming principally liable when there is a
culpable manufacturer or other culpable upline supplier.” Malone v. Schapun,
965 S.W.2d at 182. Unlike most types of product liability and failure to warn
claims, a misrepresentation claim doesn’t necessarily involve a culpable
upstream

manufacturer

at

all;

even

a

completely

defect-free

product

manufactured by a wholly innocent manufacturer can give rise to a claim for
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misrepresentation, if the seller lies to a consumer about the product’s features.
The

statute’s

purpose

is

to

protect

innocent

sellers

where

culpable

manufacturers can be sued instead. A misrepresentation claim involves a seller
who isn’t innocent and a manufacturer who may or may not be culpable, so it’s
a poor fit for the Innocent Seller Statute.
The defendants insist that the Innocent Seller Statute applies to all the
Williamses’ claims, but don’t discuss why the statute would apply to
misrepresentation claims specifically. Although they bear the burden of showing
that joinder is fraudulent (and therefore that the Williamses’ claims are doomed),
the defendants point only to cases applying the statute to bar product liability
and failure to warn claims. They identify no authority applying the Innocent
Seller Statute to defeat a misrepresentation claim. At least one federal court
applying Missouri law has denied a motion to remand when fraud and
misrepresentation were alleged, reasoning that because the complaint alleged
that the non-diverse seller knew of the product’s history of failures and
misrepresented them, the Innocent Seller Statute didn’t apply and the plaintiff
could state a colorable claim against the seller. See Morrison v. Sperian Prot.,
No. 4:09CV798 JCH, 2009 WL 2253464, at *4 (E.D. Mo. July 28, 2009). In the
absence of any authority to the contrary, I find this reasoning persuasive –
particularly because in the fraudulent joinder analysis, I must view all factual
and legal questions in the light most favorable to the Williamses. Schur v. L.A.
Weight Loss Ctrs., 577 F.3d at 764.
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In their Notice of Removal, the defendants argued that the Williamses can’t
bring a colorable claim against Select for misrepresentation because the affidavit
of David Whitman, the principal for Select, establishes that Select never made
any representations to the Williamses at all. Mr. Whitman testifies that to his
personal knowledge, no representative of Select “has ever had any direct dealings
or communications with” the Williamses. This testimony doesn’t eliminate all
reasonable possibility that the Williamses can prevail on their misrepresentation
claim against Select. For one thing, Mr. Whitman’s testimony denies only the
alleged communications between Select and the Williamses themselves, while
the misrepresentation count in the complaint also alleges that Select made
misrepresentations to the Williamses’ orthopedic surgeon. Moreover, Mr.
Whitman testifies only that he has no personal knowledge of agents of Select
communicating with the Williamses, which doesn’t prove that no such
communication could have taken place. In light of the complaint’s allegations
that Select misrepresented facts about the Magnum implant to the Williamses
and their doctor, Mr. Whitman’s affidavit isn’t enough to satisfy the defendants’
heavy burden of showing no reasonable possibility that the Williamses could
prevail on a misrepresentation claim against Select in a Missouri court.
Because the Williamses state a misrepresentation claim such that
Missouri law might impose liability upon Select under the facts of this case, it
isn’t necessary to address the other issues raised by the parties – such as
whether another subsection of the Innocent Seller Statute limits the statute’s
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jurisdictional effects, and if so whether that subsection is unconstitutional. The
misrepresentation claim at least is not clearly barred by Missouri’s Innocent
Seller Statute, and therefore Select’s joinder is not fraudulent, there is no
complete diversity of citizenship, and this court lacks subject matter jurisdiction.
Accordingly, the Williamses’ motion to remand (Doc. No. 73) is GRANTED.
This case is hereby REMANDED to the Circuit Court of St. Louis County,
Missouri for further proceedings.
SO ORDERED.
ENTERED: February 29, 2016

/s/ Robert L. Miller, Jr.
Judge
United States District Court

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