LaFoy et al v. Volkswagen Group of America, Inc. et al
MEMORANDUM AND ORDER. (See Full Order.) IT IS HEREBY ORDERED that Defendant Volkswagen Group of America, Inc. Motion to stay proceedings and enlarge time to answer is hereby GRANTED. [ECF No. 8 ]. IT IS FURTHER ORDERED that Plaintiffs' Motion to Expedite Briefings and Ruling on Plaintiffs' Motion to Remand [ECF No. 7 ] is hereby DENIED. IT IS FURTHER ORDERED that Defendant Volkswagen Group of America, Inc., shall file a status report on the need for a further stay on July 11th, 2016 if there has been no decision on transfer to MDL no. 2672. Signed by District Judge E. Richard Webber on 5/11/2016. (CBL)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
JOHN J. LAFOY, et al.,
VOLKSWAGEN GROUP OF AMERICA,
INC., et al.,
Case No. 4:16CV00466 ERW
MEMORANDUM AND ORDER
This matter comes before the Court on Plaintiffs’ Motion to Expedite Briefings and Ruling
on Plaintiffs’ Motion to Remand, [ECF No. 7] and Defendant Volkswagen Group of America
Inc.’s (Defendant) Motion to Stay Proceedings and Enlarge Time to Answer. [ECF No. 8].
This case concerns Plaintiffs’ alleged injuries from their purchase and use of Volkswagen
automobiles with “TDI® clean diesel engines.” Defendant removed this case to Federal Court
alleging jurisdiction on the basis of federal question jurisdiction under 28 U.S.C. § 1331; and
diversity jurisdiction under U.S.C. §§1332, 1441(a) and 1446 (b). Defendant’s federal question
jurisdiction is based on Plaintiffs’ state law claims arising under the Federal Clean Air Act and
diversity jurisdiction is based on Plaintiff Waterman being fraudulently misjoined, an exception to
the complete diversity requirement. [ECF No. 1].
Plaintiffs argue in their motion to remand removal was improper, as this Court lacks
subject matter jurisdiction, because there is not complete diversity between the parties, and their
claims do not arise under federal law. [ECF No. 6]. Defendant argues in its Memorandum in
Opposition jurisdiction is proper under federal question jurisdiction as each of Plaintiffs’ state law
claims alleges violations of the Federal Clean Air Act, and under 28 U.S.C. § 1332(a) jurisdiction
is proper because Plaintiff Waterman is fraudulently misjoined in the action since he has no
connection with the forum. [ECF No. 10]. Plaintiffs argue in their reply memorandum the Court
should resolve subject matter jurisdiction before resolving issues of personal jurisdiction, the
Eighth Circuit has rejected Defendant’s theory of “fraudulent misjoinder”, and the claims do not
involve a substantial federal question, simply because Plaintiffs reference a federal statute. [ECF
On Plaintiffs’ motion to expedite, they argue Defendant is simply trying to have this case
transferred to Multi District Litigation (“MDL”), and courts in this district historically granted
motions to expedite or remand prior to MDL transfer. [ECF No. 7]. Defendant responds
jurisdiction is proper, and remand is not in the interest of judicial economy. [ECF No. 12].
Plaintiffs’ motion to remand is fully briefed, and ready for decision; therefore, as Plaintiffs’ motion
to expedite pertains to briefing, the issue is now moot. However, the Court will consider Plaintiffs’
motion to expedite, pertaining to the ruling on the motion to remand.
Defendant argues in their motion to stay proceedings and enlarge time to answer, briefings
should be stayed until a decision is made as to whether this case will be transferred to MDL no.
2672 (Volkswagen “clean diesel” marketing, sales practices, and products liability litigation), since
significant progress has been made in regards to pleadings, discovery, and settlement negotiations,
under a Special Master in the MDL. [ECF No. 8]. Plaintiffs in their Memorandum in Opposition
contend a stay is inappropriate because there is clearly no federal jurisdiction, judicial economy is
best served by facilitating litigation in the appropriate forum, Plaintiffs would be prejudiced by not
respecting their choice of forum, and a transfer to MDL would create unnecessary delays. [ECF
II. STANDARD OF REVIEW
A putative transferor court is not prevented from making rulings and need not generally
suspend proceedings because an MDL transfer motion has been filed. In re Asbestos Products
Liab. Litig., 170 F. Supp. 2d 1348, at FN1 (J.P.M.L. 2001); see Manual for Complex Litigation
(Fourth) § 22.35. A stay pending the panel’s decision can increase judicial efficiency, but this
reasoning diminishes where the absence of federal jurisdiction is clear. Manual for Complex
Litigation (Fourth) § 22.35. “[The District] Court is in the best position to determine subject matter
jurisdiction, and waiting for a decision by the [Judicial Panel on Multidistrict Litigation] before
ruling on the motion to remand ‘would not promote the efficient administration of justice’”. Spears
v. Fresenius Med. Care N. Am., Inc., No. 4:13-CV-855 CEJ, 2013 WL 2643302, at *1 (E.D. Mo.
June 12, 2013) (quoting Stone v. Baxter Int'l, Inc., No. 4:08–CV–3201, 2009 WL 236116, at *2
(D.Neb. Jan. 30, 2009)).
The District Court also has the inherent power to stay its proceedings. In determining
whether to stay the decision, the Court must balance competing interests. Landis v. N. Am. Co.,
299 U.S. 248, 255 (1936); Miller v. Bayer HealthCare Pharm. Inc., No. 4:15CV1401 CDP, 2015
WL 5572801, at *1 (E.D. Mo. Sept. 22, 2015). In considering a motion to stay, a Court should
consider both the interest of judicial economy and the potential prejudice or hardship to the parties.
Rivers v. Walt Disney Co., 980 F. Supp. 1358, 1360 (C.D. Cal. 1997).
There are three pending motions presently before the Court in this case, all of which are
fully briefed, Plaintiffs’ Motion to Remand, Plaintiffs’ Motion to Expedite Briefing and Ruling on
Plaintiffs’ Motion to Remand, and Defendant’s opposing Motion to Stay Proceedings and Enlarge
Time to Answer. The Court will first address Defendant’s Motion for a Stay and to Enlarge Time
Defendant argues a stay in this case is appropriate because of the significant work already
done by the MDL; the Plaintiffs will not be prejudiced by a delay; Defendant will be unduly
prejudiced because of the duplicative work ongoing in the MDL; and judicial economy is not well
served by having this Court and the MDL both resolve pretrial and discovery issues. [ECF No. 9]
Plaintiffs respond, a motion to stay is inappropriate since federal jurisdiction is clearly absent,
judicial economy is best served when a forum does not have to interpret another forum’s law, and
a stay prejudices plaintiffs because of the unnecessary delay associated with a transfer to the MDL.
[ECF No. 14].
A. Federal Jurisdiction
Before the Court can begin the balancing of interests necessary to determine whether a stay
should be granted, the Court must first decide if federal jurisdiction is clearly absent. Where
federal jurisdiction is clearly absent, it significantly weighs in balance of denying a stay. Manual
for Complex Litigation (Fourth) § 22.35. Therefore the Court will first decide if Defendant
presents arguments which show a reasonable probability federal jurisdiction is present, before
balancing the competing interests in determining whether a stay is appropriate. Defendant removed
this case to Federal Court alleging jurisdiction on the basis of diversity jurisdiction under U.S.C.
§§1332, 1441(a) and 1446 (b); and federal question jurisdiction under 28 U.S.C. § 1331.
1. Diversity Jurisdiction
Defendant asserts removal is proper pursuant to 28 U.S.C. §1332(a) because diversity of
citizenship exists between Defendant and Plaintiffs who are properly joined. [ECF No. 1].
Plaintiffs argue remand is necessary, because Plaintiff Waterman and Defendant are both citizens
of Virginia, and therefore such complete diversity does not exist. Defendant replies Plaintiff
Waterman was fraudulently misjoined and should not be considered in determining if complete
A defendant may remove a case to federal court only if the claim could have been
originally brought in federal court. 28 U.S.C. § 1441; Merrell Dow Pharm. Inc. v. Thompson, 478
U.S. 804, 808 (1986). Courts have original jurisdiction over actions where complete diversity
exists between plaintiffs and defendants, and the amount in controversy exceeds $75,000. 28
U.S.C. § 1332(a). “Complete diversity of citizenship exists where no defendant holds citizenship in
the same state where any plaintiff holds citizenship.” OnePoint Solutions, LLC v. Borchert, 486
F.3d 342, 346 (8th Cir.2007).
The Eighth Circuit has not yet ruled if removal based on diversity of citizenship can be
thwarted where there is fraudulent misjoinder. In re Prempro Products Liab. Litig., 591 F.3d 613,
622 (8th Cir. 2010). Fraudulent misjoinder:
“occurs when a plaintiff sues a diverse defendant in state court and joins a viable claim
involving a nondiverse party, or a resident defendant, even though the plaintiff has no
reasonable procedural basis to join them in one action because the claims bear no relation
to each other. In such cases, some courts have concluded that diversity is not defeated
where the claim that destroys diversity has “no real connection with the controversy”
involving the claims that would qualify for diversity jurisdiction.”
Prempro, 591 F.3d at 620 (quoting Ronald A. Parsons, Jr., Should the Eighth Circuit Recognize
Procedural Misjoinder?, 53 S.D. L.Rev. 52, 57 (2008). In Prempro, the Eighth Circuit declined to
adopt or reject the fraudulent misjoinder doctrine finding common questions of law and fact were
likely to arise in the litigation, particularly in regards to causation, and there was no evidence
Plaintiff’s misjoinder was fraudulent or bordering a sham. Id. at 622.
It is undisputed, Defendant and Plaintiff Waterman are both citizens of Virginia; therefore,
complete diversity does not exist unless the Court adopts the theory of fraudulent misjoinder. In
similar cases before the Eastern District, Courts have ruled to conform to the Eighth Circuit,
declining to rule on the issue of fraudulent misjoinder. District Courts have denied federal
jurisdiction on the basis of fraudulent misjoinder without making a ruling on whether fraudulent
misjoinder is a proper legal theory, finding, even if the theory was proper, fraudulent misjoinder
was not present in these cases because common issues of fact and law exist and there is no
evidence of fraud in the pleadings. Hall v. Glaxosmithkline, LLC, 706 F. Supp. 2d 947, 949 (E.D.
Mo. 2010); Spears v. Fresenius Med. Care N. Am., Inc., No. 4:13-CV-855 CEJ, 2013 WL
2643302, at *3 (E.D. Mo. June 12, 2013); Coleman v. Bayer Corp., No. 4:10CV01639 SNLJ, 2010
WL 10806572, at *2 (E.D. Mo. Dec. 9, 2010).
Defendant argues Prempro can be distinguished in this case, because it is obvious Plaintiffs
joined their claims only to defeat diversity jurisdiction, and because Prempro is based on a flexible
test which allows for creating an adaptable response to promote judicial economy, and purchasing
a car is different from the prescription drug marketing described in Prempro. [ECF No. 10 at 1415]. Plaintiffs, in their reply motion to remand, argue jurisdiction is still not appropriate because
common questions of law or fact still remain between Plaintiffs and Defendant as in Prempro.
[ECF No. 19]. The Defendant bears the burden of proof to remove, and they have not cited any
facts or made allegations of any improper actions or claims taken by the Plaintiffs to join Plaintiff
Waterman. Further, the Court agrees with Plaintiffs, where there is a national marketing campaign
and all Plaintiffs purchased the same products, there are similar questions of law and fact. As such,
the Court finds diversity jurisdiction is clearly absent, as fraudulent misjoinder was not present
Federal Question Jurisdiction
Defendant also alleges removal is proper on the basis of federal question jurisdiction under
28 U.S.C. § 1331, since Plaintiffs’ state law claims arise under the Federal Clean Air Act, thus
subjecting the claims to federal question jurisdiction. [ECF No. 1]. Plaintiffs respond that merely
referencing a federal statute in a state law claim does not give rise to a federal question
jurisdiction. [ECF No. 19].
“An action ‘aris[es] under’ federal law: (1) where “federal law creates the cause of action
asserted,” and (2) in a “special and small category of cases” in which arising under jurisdiction still
lies. Vermont v. MPHJ Tech. Investments, LLC, 803 F.3d 635, 645 (Fed. Cir. 2015) (quoting Gunn
v. Minton, 133 S. Ct. 1059, 1064 (2013)). This category of cases allows for federal jurisdiction to
exist where “A state law claim which necessarily raises a stated federal issue, actually disputed and
substantial, which a federal forum may entertain without disturbing any congressionally approved
balance of federal and state judicial responsibilities.” Grable & Sons Metal Products, Inc. v. Darue
Engineering & Mfg., 545 U.S. 308, 314 (2005). The Supreme Court further refined this into a four
part test where federal jurisdiction arises under a state law claim “if a federal issue is: (1)
necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal
court without disrupting the federal-state balance approved by Congress.” Gunn, 133 S. Ct. at
To determine if the federal issues raised are “substantial”, the Court must analyze whether
the issues are significant to the federal system as a whole, or if they are only significant to the
particular parties in the immediate suit. Gunn, 133 S. Ct. at 1066. Recent Supreme Court case law
suggests there are two types of cases where the issue is substantial. The first category of cases is
where the outcome of the claim, turns on a new interpretation of federal law, and therefore impacts
a large number of cases. Municipality of Mayaguez v. Corporacion Para el Desarrollo del Oeste,
Inc., 726 F.3d 8, 14 (1st Cir. 2013). In this category, a claim is more likely to be substantial if it
involves pure issues of law, which could be applied to many cases, as opposed to pure issues of
fact, which would limit any precedential value. Id. citing Empire Healthchoice Assur., Inc. v.
McVeigh, 547 U.S. 677, 700–701 (2006). The second category of cases is where the resolution of
the issue has broader significance for the federal government, such as there is a direct interest of
the government for the availability of a federal forum to vindicate its own administrative action.
Municipality of Mayaguez, 726 F.3d at 14 (citing Gunn, 133 S.Ct. at 1066; Grable, 545 U.S. at
Each claim requires the Plaintiff to prove Defendant violated the Federal Clean Air Act.
Plaintiff alleges Defendant’s CEO has admitted Defendant’s violation of the Federal Clean Air
Act, but this still an unproven allegation at this stage, and therefore the federal issue must be
necessarily raised. Further, presently, the Court does not need to determine whether an actual
dispute exists, but whether the dispute is so clearly absent, it makes a finding federal jurisdiction
clearly absent. At this point, Plaintiffs only have allegations of admissions by Defendant, and
Defendant has not yet made an admission in this court, and therefore it cannot be said a dispute is
clearly absent here.
The possible substantial federal issue involves a determination of whether there is a Clean
Air Act violation. In Grable, the Court found a substantial federal issue existed in a quiet title
action brought against a third party who purchased property previously seized by the IRS, where
the plaintiff in the case argued the Government failed to provide notice, because the Government
had a strong interest in recovering unpaid taxes through the seizure of real property and the ability
to maintain clear and consistent terms for buyers of seized property. Similarly, a district court has
held where a state law claim required the interpretation of federal tariffs a substantial federal
government interest was in play, because federal courts could use this as precedent for
interpretation of different tariffs. Great Lakes Gas Transmission Ltd. P'ship v. Essar Steel
Minnesota, LLC, 103 F. Supp. 3d 1000, 1024-1025 (D. Minn. 2015). However, the Supreme Court
determined state law claims requiring the interpretation of a patent issue to determine if Defendant
committed malpractice was not a substantial issue, since no precedential value would be created
because federal courts were not bound to state decisions on this issue, and the decision would not
undermine the development of a federal unified body of patent law. Gunn, 133 S. Ct. at 1066-67. It
appears, Defendant can make reasonable arguments on whether there is a substantial federal issue
in this case, because a ruling here could be applied to a large number of cases, or the federal
government might have an interest to vindicate its own administrative action.
The Court must now determine if Defendant can establish a federal court may be capable of
resolving this issue without disrupting the federal-state balance approved by Congress. State
Courts, in which tort suits are lodged, are competent to apply federal law, and can determine an
appropriate recovery. Empire Healthchoice Assur., Inc., 547 U.S. 677 at 701. However, the Clean
Air Act requires citizen suits to be brought in federal district Court, showing the government has
an interest in litigating these disputes in a federal forum, and the Second Circuit has previously
found federal question jurisdiction over state law claims which referenced different portions of the
Clean Air Act. 42 U.S.C. 7604; Ormet Corp. v. Ohio Power Co., 98 F.3d 799, 807 (4th Cir. 1996).
While the Court does not make a determination on whether federal question jurisdiction is
appropriate, it cannot be said federal jurisdiction is clearly absent as Defendant is able to make a
reasonable argument for jurisdiction on the basis of federal question jurisdiction under 28 U.S.C. §
B. Appropriateness of Stay
Defendant’s motion to stay argues a stay conserves the resources of the parties, counsel and
judiciary. [ECF No. 9 at 3]. Plaintiffs contend a stay does not increase judicial efficiency, and a
stay prejudices the Plaintiffs. [ECF No. 14 at 3-6].
Plaintiffs argue they will be prejudiced with a stay because they lose the ability to choose
the forum of their choice, and the case will be significantly delayed with a transfer to MDL.
Defendant asserts they face hardship if the stay is denied, because Defendant would be required to
litigate this case once before this court and a second time before the MDL, where there has already
been significant discovery and briefing.
Defendant also argues a stay conserves judicial resources, since this Court and the MDL
will each have to resolve similar issues. Plaintiffs respond, judicial economy is best served by this
court resolving remand to avoid a foreign forum from interpreting the law of this forum. See T.F.
ex rel. Foster v. Pfizer, Inc., No. 4:12CV1221 CDP, 2012 WL 3000229, at *1 (E.D. Mo. July 23,
The Court attempts to balance the competing interests of Plaintiffs and Defendant, while
being mindful of conserving judicial resources. While the Court recognizes the prejudice to
Plaintiffs in granting a stay, the Court determines a stay is appropriate until transfer to MDL or
consolidation of cases is granted to avoid multiple mixed rulings on the issue of federal question
jurisdiction. This case is distinguished from cases Plaintiffs have cited because of possible federal
question jurisdiction. The Defendant does not clearly lack federal question jurisdiction, and the
interests of judicial economy require the stay of the motion to remand pending a transfer to MDL
or the grant of a motion to consolidate.
A stay is appropriate after a careful balancing of the competing interests of Plaintiffs and
Defendant, while being cognizant of conserving judicial resources. The Court, in performing this
balancing, determined federal question jurisdiction was not clearly absent, since Defendant could
make reasonable arguments the Clean Air Act Violations are necessarily raised, must be proved,
are a substantial federal issue and capable of resolution without disrupting the state-federal
balance. Further, when balancing the parties’ interests and judicial economy, a stay is appropriate,
despite the hardship it may cause to the plaintiffs, because of the prejudice to the Defendant and
the preservation of judicial resources.
IT IS HEREBY ORDERED that Defendant Volkswagen Group of America, Inc. Motion
to stay proceedings and enlarge time to answer is hereby GRANTED. [ECF No. 8].
IT IS FURTHER ORDERED that Plaintiffs’ Motion to Expedite Briefings and Ruling on
Plaintiffs’ Motion to Remand is hereby DENIED.
IT IS FURTHER ORDERED that Defendant Volkswagen Group of America, Inc., shall
file a status report on the need for a further stay on July 11th, 2016 if there has been no decision on
transfer to MDL no. 2672.
So Ordered this 11th Day of May, 2016.
E. RICHARD WEBBER
SENIOR UNITED STATES DISTRICT JUDGE
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