McPhate v. Shell Oil Company et al

Filing 13

ORDER REMANDING CASE TO STATE COURT. Signed by Judge Martin L.C. Feldman on 6/29/2016. (Attachments: # 1 Transmittal Letter)(caa)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

EDWARD MCPHATE

CIVIL ACTION

V.

NO. 16-4540

SHELL OIL COMPANY, ET AL.

SECTION F

ORDER AND REASONS
Before the Court is the plaintiff’s motion to remand.

For

the reasons that follow, the motion is GRANTED.
Background
This personal injury case arises out of a truck driver’s
allegation that he suffers from non-Hodgkin’s lymphoma caused by
prolonged work-related exposure to benzene and benzene-containing
products.
Employed as a contract truck driver from 1996 through 2009,
Edward McPhate claims that he regularly came into contact with
benzene

while

loading,

unloading,

and

transporting

petroleum

products. 1 Mr. McPhate loaded tank trucks at the Shell Oil Kenner,

1

According to the allegations of the state court petition, Mr.
McPhate worked for Dupre Transport, LLC from 1996 through 1999;
1

Shell Norco, Murphy Mereaux, Chalmette Refining, and Belle Chasse
Chevron facilities and unloaded the trucks at various locations in
Orleans and Jefferson Parishes.

On March 28, 2014, Mr. McPhate

was diagnosed with non-Hodgkin’s lymphoma, a terminal cancer of
the blood caused by benzene exposure.
On March 20, 2016, Mr. McPhate (a Louisiana citizen) sued
Murphy Oil USA, Inc.; Shell Oil Company; Chalmette Refining, LLC;
Schneider

National

Bulk

Carriers,

Inc.;

and

Chevron

Oronite

Company, LLC in the Civil District Court for the Parish of Orleans,
asserting virtually identical claims of negligence and strict
liability

against

the

manufacturers,

distributors,

sellers,

suppliers, or large industrial consumers of benzene and benzenecontaining

products.

In

particular,

he

alleges

that

all

defendants: knew or should have known of the hazards of the
products they manufactured, distributed, sold, supplied, owned,
transported, or used; were negligent in terms of the design, sale,
testing, recall, inspection, research, and failure to warn of their
products; and are strictly liability based on their failure to
warn.

Murphy timely removed the lawsuit to this Court on May 9,

2016,

and

all

defendants

Louisiana corporation.

consented,

except

for

Schneider,

a

The plaintiff now moves to remand the case

on the ground that he shares Louisiana citizenship with Schneider,

E/T Transport, Inc. from 2000 through 2005; and New Transport, LLC
from 2005 through 2009.
2

defeating

subject

matter

jurisdiction.

For

their

part,

the

removing defendants urge the Court to disregard Schneider’s local
citizenship on the ground that Schneider was fraudulently joined
to defeat diversity jurisdiction.
I.
A.
Although the plaintiff challenges removal in this case, the
removing defendant carries the burden of showing the propriety of
this Court's removal jurisdiction. See Manguno v. Prudential Prop.
& Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002); see also
Jernigan v. Ashland Oil, Inc., 989 F.2d 812, 815 (5th Cir. 1993).
Remand is proper if at any time the Court lacks subject matter
jurisdiction.

28

U.S.C.

§

1447(c).

Given

the

significant

federalism concerns implicated by removal, the removal statute is
strictly construed “and any doubt about the propriety of removal
must be resolved in favor of remand.”

Gutierrez v. Flores, 543

F.3d 248, 251 (5th Cir. 2008)(citation omitted); Gasch v. Hartford
Accident

&

Indem.

Co.,

491

F.3d

278,

281-82

(5th

Cir.

2007)(citations omitted).
B.
Federal Courts are courts of limited jurisdiction, possessing
only the authority granted by the United States Constitution and
conferred by the United States Congress. Howery v. Allstate Ins.

3

Co., 243 F.3d 912, 916 (5th Cir. 2001).

A defendant may generally

remove a civil action filed in state court if the federal court
has original jurisdiction over the case—that is, if the plaintiff
could have brought the action in federal court from the outset.
See 28 U.S.C. § 1441(a).

Suits not brought under federal law “may

not be removed if any of the parties in interest properly joined
and served as defendants is a citizen of the State in which such
action is brought.” 28 U.S.C. § 1441(b)(2); Int’l Energy Ventures
Mgmt., LLC v. United Energy Grp., Ltd., 818 F.3d 193, 199 (5th
Cir. 2016)(“when a properly joined defendant is a resident of the
same state as the plaintiff, removal is improper.”).

For a

defendant to invoke the Court's removal jurisdiction based on
diversity, "the diverse defendant must demonstrate that all of the
prerequisites of diversity jurisdiction contained in 28 U.S.C. §
1332 are satisfied," including that the citizenship of every
plaintiff is diverse from the citizenship of every defendant, and
the amount in controversy exceeds $75,000.

See 28 U.S.C. § 1332;

Smallwood v. Ill. Cent. R.R. Co., Inc., 385 F.3d 568, 572 (5th
Cir. 2004)(en banc).
C.
“The fraudulent joinder doctrine is a narrow exception to the
rule that diversity jurisdiction requires complete diversity.”
Smallwood v. Ill. Cent. R.R. Co., 352 F.3d 220, 222 (5th Cir.
2003). “The party seeking removal bears a heavy burden of proving
4

that the joinder of the in-state party was improper.” Smallwood,
385 F.3d at 574.

“Since the purpose of the improper joinder

inquiry is to determine whether or not the in-state defendant was
properly joined, the focus of the inquiry must be on the joinder,
not the merits of the plaintiff’s case.”

Id. at 573.

The removing

defendant may show improper joinder in one of two ways:

“(1)

actual fraud in the pleading of jurisdictional facts, or (2)
inability of the plaintiff to establish a cause of action against
the non-diverse party in state court.” Id.
In determining whether a party was improperly joined, all
contested factual issues and state law ambiguities are resolved in
favor of the plaintiff.

Gasch, 491 F.3d at 281.

“A defendant is

improperly joined if the moving party establishes that (1) the
plaintiff has stated a claim against a diverse defendant that he
fraudulently alleges is nondiverse, or (2) the plaintiff has not
stated a claim against a defendant that he properly alleges is
nondiverse.”

Int’l Energy Ventures Mgmt., LLC, 818 F.3d at 199

(emphasis in original).
establish

subject

matter

Because Schneider is nondiverse, to
jurisdiction

in

this

Court,

the

defendants have the burden of establishing that McPhate has failed
to state a claim against Schneider.

See id. at 207-08 (“because

Smallwood requires us to use the Rule 12(b)(6)-type analysis, we
have no choice but to apply the federal pleading standard embodied
in that analysis.”).

In doing so, the defendants must demonstrate
5

“that there is no possibility of recovery by the plaintiff against
an in-state defendant, which stated differently means that there
is no reasonable basis for the district court to predict that the
plaintiff might be able to recover against an in-state defendant."
Id. at 199-200 (citing Smallwood, 385 F.3d at 573).

The Court

underscores that the possibility of recovery must be “reasonable,”
not merely theoretical.

Smallwood, 385 F.3d at 573;

Great Plains

Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312
(5th Cir. 2002)("If there is arguably a reasonable basis for
predicting that the state law might impose liability on the facts
involved,

then

there

is

no

fraudulent

joinder.")(internal

quotation marks omitted).
II.
McPhate contends that his lawsuit should be remanded to state
court because he has stated a viable claim against all defendants,
including Schneider, the local defendant. 2
that

McPhate

Suggesting

that

and

Schneider

Schneider

share

was

There is no dispute

Louisiana

improperly

joined

citizenship.
to

defeat

The plaintiff also contends that removal was procedurally
defective because the diverse defendants failed to obtain consent
from the local defendant. This argument is without merit. Only
properly joined defendants must consent to removal. See Jernigan
v. Ashland Oil Inc., 989 F.2d 812, 815 (5th Cir. 1993)(“as a
general rule, removal requires the consent of all co-defendants.
In cases involving alleged improper . . .
joinder of parties,
however, application of this requirement to improperly or
fraudulently joined parties would be nonsensical[.]”).
2

6

diversity jurisdiction, the out-of-state defendants counter that
the

Court

should

disregard

Schneider’s

citizenship

and

deny

remand.
The diverse defendants submit that the state court petition
fails to allege any facts connecting Schneider to McPhate’s injury
such that there is no reasonable basis for this Court to consider
that McPhate might be able to recover against Schneider.

The

diverse defendants submit that Schneider is improperly joined
under Smallwood because McPhate’s claims against Schneider fail to
withstand a Rule 12(b)(6) analysis.

The Court disagrees.

To determine whether Schneider was improperly joined, the
Court must determine whether McPhate has pleaded “enough facts to
state a claim to relief that is plausible on its face.”

Bell Atl.

Corp. v. Twombly, 550 U.S. 544, 570 (2007). 3 McPhate contends that

3

Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a
pleading must contain a "short and plain statement of the claim
showing that the pleader is entitled to relief."
Ashcroft v.
Iqbal, 556 U.S. 662, 678-79 (2009)(citing Fed. R. Civ. P. 8).
"[T]he pleading standard Rule 8 announces does not require
'detailed factual allegations,' but it demands more than an
unadorned, the-defendant-unlawfully-harmed-me accusation." Id. at
678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
In considering a Rule 12(b)(6) motion, the Court “accept[s]
all well-pleaded facts as true and view[s] all facts in the light
most favorable to the plaintiff.” See Thompson v. City of Waco,
Texas, 764 F.3d 500, 502 (5th Cir. 2014) (citing Doe ex rel. Magee
v. Covington Cnty. Sch. Dist. ex rel. Keys, 675 F.3d 849, 854 (5th
Cir. 2012)(en banc)). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
7

he

has

adequately

pleaded

claims

liability as to all defendants.

for

negligence

and

strict

He notes that in his state court

petition he advances allegations as to all defendants, such as:
2.
Plaintiff was exposed daily to products distributed,
manufactured, [and] sold by the ... defendants in
Orleans Parish.
5.
At
all
material
times
herein,
defendants
were
manufacturers, distributors, sellers, suppliers, or
large industrial consumers of benzene or benzenecontaining products.
6.
While working as a contract tank truck driver from 1996
through 2009 he was exposed daily to high levels of
benzene when he unloaded and loaded gasoline and other
benzene containing products.
He was exposed to high
levels
of
benzene
from
products
manufactured,
distributed or sold by the defendants.
18.
Shell, Murphy, Chalmette Refining, Schneider, and
Chevron knew that they were exposing contract workers
such as Mr. McPhate to unsafe levels of benzene but
failed to warn the contract workers or provide
respiratory protection to save costs.

Challenging the technical sufficiency of such allegations, the
diverse defendants submit that “McPhate’s broad, general, and

misconduct alleged.” Iqbal, 556 U.S. at 678 (“The plausibility
standard is not akin to a ‘probability requirement,’ but it asks
for more than a sheer possibility that a defendant has acted
unlawfully.”). This is a “context-specific task that requires the
reviewing court to draw on its judicial experience and common
sense.”
Id. at 679.
“Where a complaint pleads facts that are
merely consistent with a defendant’s liability, it stops short of
the line between possibility and plausibility of entitlement to
relief.” Id. at 678 (internal quotations omitted) (citing Twombly,
550 U.S. at 557).

8

conclusory allegations against all the defendants in this suit do
not

meet

the

pleading

standard

required

to

support

remand.”

Notably, however, the Fifth Circuit applies the “common defense
rule” to assertions of improper joinder.

According to the rule,

“when, on a motion to remand, a showing that compels a holding
that there is no reasonable basis for predicting that state law
would allow the plaintiff to recover against the in-state defendant
necessarily compels the same result for the nonresident defendant,
there is no improper joinder; there is only a lawsuit lacking in
merit.”

Smallwood, 385 F.3d at 574.

“In such circumstances, the

allegation of fraudulent joinder is actually an attack on the
merits of plaintiff’s case as such—an allegation that . . . the
‘plaintiff’s case [is] ill founded as to all the defendants.’” Id.
(quoting Chesapeake & O.R. Co. v. Cockrell, 232 U.S. 146, 153
(1914)). “Such a showing cannot support an inference that the
joinder of the local defendant[] was fraudulent.” Id.

Insofar as

the diverse defendants simply argue that the plaintiff casts
generic allegations as to all defendants, the defendants fail to
discharge their heavy burden to prove that it was Schneider that
was improperly joined.
The Court expresses no opinion on the merits of McPhate’s
claim against Schneider (or any of the defendants), but merely
finds that the removing defendants have not carried their heavy
burden in showing that McPhate has no reasonable possibility of
9

recovery against Schneider.

Accordingly, mindful that doubts

about the propriety of removal must be resolved in favor of remand,
the plaintiff’s motion to remand is GRANTED.

Because this Court

lacks subject matter jurisdiction, the case is hereby remanded to
Civil District Court for the Parish of Orleans.

New Orleans, Louisiana, June 29, 2016

________________________
MARTIN L.C. FELDMAN
U.S. DISTRICT JUDGE

10