NEY v. OWENS-ILLINOIS, INC. et al
MEMORANDUM. SIGNED BY HONORABLE EDUARDO C. ROBRENO ON 8/11/2016. 8/12/2016 ENTERED AND COPIES E-MAILED.(amas)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN RE: ASBESTOS PRODUCTS
LIABILITY LITIGATION (No. VI) :
WILLIAM NEY individually and :
as executor of the estate
of LORETTA NEY
OWENS-ILLINOIS, INC., et al. :
MDL DOCKET NO. 875
E.D. Pa. Case No.
M E M O R A N D U M
EDUARDO C. ROBRENO, J.
AUGUST 11, 2016
Presently before the Court is Plaintiff’s motion to
remand the action to the Court of Common Pleas of Philadelphia
County. For the reasons that follow, the motion will be denied.
On March 11, 2014, William Ney and his wife Loretta
Ney filed a short form complaint in the Philadelphia Court of
Common Pleas alleging that Ms. Ney was exposed to asbestos in
her household from asbestos fibers brought home on clothing worn
by her father, Nicholas Grello, who was an insulator at the
Bethlehem Steel Plant from 1948 to 1953. They named as
defendants: Asbestos Corporation Limited; Crown, Cork & Seal
Co., Inc. (“Crown”) individually and as successor to Mundet Cork
Corporation (“Mundet”); Owens Illinois, Inc. (“OI”); and Union
Carbide Corporation. On April 25, 2014, two days after giving
her deposition, Ms. Ney died of mesothelioma. On June 2, 2014,
the parties deposed Anthony DelGrosso, one of Mr. Grello’s coworkers. During the deposition, Mr. DelGrosso testified that he
was unfamiliar with Mundet insulation. 1 (OI Resp. ECF No. 11-5,
p.3). On December 9, 2014, Mr. Ney filed an amended complaint
substituting his wife’s estate as a plaintiff and adding counts
under Pennsylvania’s Wrongful Death and Survival Acts.
On October 23, 2015, Mr. Ney noticed the deposition of
a Crown corporate designee. On October 30, 2015, Crown responded
that the deposition was unnecessary as it was planning to rely
on 15 Pa.C.S. § 1929.1, which protects successor companies from
their predecessor’s asbestos liabilities. 2 (Pl. Mot. ECF No. 9-1,
This is consistent with a 2013 affidavit from Mr.
DelGrosso in which he did not specifically identify Mundet
products as being among those around which he recalled Mr.
Grello working. (OI Resp. ECF No. 11-2).
15 Pa.C.S. § 1929.1 provides:
(a) Limitation on successor asbestos-related liabilities.—
(1) Except as further limited in paragraph (2), the
cumulative successor asbestos-related liabilities of a
domestic business corporation that was incorporated in
this Commonwealth prior to May 1, 2001, shall be
limited to the fair market value of the total assets
of the transferor determined as of the time of the
merger or consolidation, and such corporation shall
have no responsibility for successor asbestos-related
liabilities in excess of such limitation.
There is no question that Crown has already paid out, as the
successor of Mundet, more than the value of Mundet’s assets.
pp.7-9). Mr. Ney agreed to cancel the deposition on November 12,
2015 and to voluntarily dismiss Crown on April 18, 2016.
Crown was the only non-diverse defendant in the case
which prevented removal to this Court. With Crown dismissed, OI
filed a notice of removal pursuant to 28 U.S.C. §§ 1332 and 1446
on May 17, 2016. Even though OI filed the notice more than one
year after commencement of the action, which is typically
prohibited by 28 U.S.C. § 1446(c), it alleged that removal was
nonetheless appropriate as Plaintiff had acted in bad faith and
purposefully prevented removal by initially naming Crown as a
defendant without reasonable cause.
A party may not remove a case to federal court based
on diversity jurisdiction more than one year after the action
was commenced “unless the district court finds that the
plaintiff has acted in bad faith in order to prevent a defendant
from removing the action.” 28 U.S.C. § 1446(c)(1). The addition
of a diversity defeating defendant “is fraudulent if ‘there is
no reasonable basis in fact or colorable ground supporting the
claim against the joined defendant, or no real intention in good
faith to prosecute the action against the defendant or seek a
joint judgment.’” In re Briscoe, 448 F.3d 201, 216 (3d Cir.
2006) (quoting Abels v. State Farm Fire & Cas. Co., 770 F.2d 26,
32 (3d Cir. 1985)). A court may not delve into the merits of a
claim or defense when assessing the fraudulent joinder question.
Id. at 218 (citing Boyer v. Snap-on Tools Corp., 913 F.2d 108
(3d Cir. 1990)). However, in making this assessment, the court
may evaluate whether an action is invalid as a matter of law,
such as in the case of a binding statute barring liability. Id.
at 219 (concluding that “[i]f a district court can discern, as a
matter of law, that a cause of action is time-barred under state
law, it follows that the cause fails to present even a colorable
claim against the non-diverse defendant”).
“‘Since it would be extraordinary for a party
directly to admit a ‘bad faith’ intention, his motive must of
necessity be ascertained from circumstantial evidence.’” Forth
v. Diversey Corp., 13-CV-808-A, 2013 WL 6096528, at *3 (W.D.N.Y.
Nov. 20, 2013) (quoting Continental Ins. Co. v. N.L.R.B., 495
F.2d 44, 48 (2d Cir. 1974)). The removing party bears the burden
of showing that removal is appropriate. Frederico v. Home Depot,
507 F.3d 188, 193 (3d Cir. 2007). The removal procedures under
28 U.S.C. §§ 1446 and 1447 are strictly construed against
removal and all doubts are resolved in favor of remand. Batoff
v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir. 1992).
As stated, Plaintiff sued Crown both individually and
as the successor of Mundet. If he had a “reasonable basis in
fact or colorable ground supporting” either of these bases, the
present motion would be granted. However, based on the evidence
presented, the Court finds that there was no reasonable basis in
fact or law for naming Crown as a defendant.
Crown Named as the Successor to Mundet
OI first argues that Plaintiff named Crown as a
defendant in bad faith because 15 Pa.C.S. § 1929.1, a statute
that became effective on December 17, 2001, bars any liability
Crown had for Mundet products. Indeed, there is no dispute that
Plaintiff’s counsel knew of the statute and of its effect.
Plaintiff merely counters that while his counsel knew
that § 1929.1 shielded Crown from successor liability, he
apparently hoped that the statute would be found
unconstitutional by the Pennsylvania Superior or Supreme Court.
Specifically, before Plaintiff and his wife filed their
complaint, his counsel was aware that in a different case,
Markovsky v. Crown Cork & Seal Company, the plaintiff had raised
a number of constitutional challenges to the statute in the
Court of Common Pleas. No. 11100451, 2014 WL 348152, at *1 (Pa.
Com. Pl. Jan. 8, 2014). On September 12, 2013, the court
rejected the plaintiff’s arguments and found § 1929.1
constitutional. Id. at *2. Shortly after the ruling, the
plaintiff appealed the decision to the Superior Court.
Several months later on March 11, 2014, while the
appeal in Markovsky was pending, the Neys filed their complaint,
arguably hoping that the Superior Court would overturn § 1929.1.
(Pl. Mot. ECF No. 9, p.2). After the death of his wife,
Plaintiff filed an amended complaint on December 9, 2014. (Id.
at 3). At this time, the Markovsky appeal was still pending. As
is evident from the time line of events, although there was an
unrelated appeal pending in the Superior Court, when Plaintiff
filed his original and amended complaints the law of
Pennsylvania clearly dictated that Crown was not liable for
exposure to Mundet products pursuant to § 1929.1.
Moreover, as the subsequent history of Markovsky
shows, throughout the pendency of Plaintiff’s case, § 1929.1 has
continued to protect Crown from successor liability as: on
December 22, 2014, the Superior Court in Markovsky affirmed the
decision of the Court of Common Pleas, 107 A.3d 749 (Pa. Super.
2014), re-argument denied (Feb. 26, 2015); and on September 29,
2015 the Supreme Court denied the petition for allowance of
appeal. 125 A.3d 1202 (Pa. 2015).
Shortly after the Pennsylvania Supreme Court denied
the petition for appeal in Markovsky, Crown informed Plaintiff
that the corporate designee deposition that he noticed in late
October 2015 was unnecessary because Crown would be relying on §
1929.1 (Pl. Mot. ECF No. 9-1, pp.7-8). Plaintiff asserts that,
in light of the Markovsky precedent and the lack of exposure
evidence regarding Mundet products, he cancelled the deposition
on November 12, 2015 and ultimately agreed to dismiss Crown on
April 18, 2016. (Id. ECF No. 9, p.3). Thus, the decision to
dismiss Crown was made more than two years after Plaintiff
commenced the action.
It is clear that at the time the Neys filed their
complaint and throughout the course of the litigation, § 1929.1
was the law of Pennsylvania. The fact that an appeal on a
different case challenging the constitutionality of § 1929.1 was
pending, does not license Plaintiff to name a defendant as a
successor entity that is protected from suit under current law. 3
Under the circumstances, it is clear that Plaintiff had “no
reasonable basis in fact or colorable ground supporting” the
successor claim against Crown. In re Briscoe, 448 F.3d at 216
(internal quotation marks omitted). As Plaintiff has conceded,
“only where it is clear that the plaintiff cannot possibly
recover from the non-diverse defendant will the joinder be
deemed fraudulent.” (Pl. Reply ECF No. 13, p.7) (citing
Boomerang Recoveries, LLC v. Guy Carpenter & Co., LLC, No. 160222, 2016 WL 1594954, at * 4 (E.D. Pa. Apr. 21, 2016)). Here,
at no time during the pendency of the suit could Plaintiff have
possibly recovered from Crown as successor to Mundet. As a
Although Plaintiff filed short form complaints in the
Court of Common Pleas, which do not provide an opportunity to
raise individualized defenses and issues, the Court also notes
that at no time did Plaintiff raise any constitutional arguments
against § 1929.1 in his own case.
result, the Court is able to “discern, as a matter of law, . . .
that the cause fails to present even a colorable claim against”
Crown. In re Briscoe, 448 F.3d at 219.
In addition to the statutory bar, OI contends that
Plaintiff’s conduct during the case also confirms that he had no
intention of actually pursuing Crown as a legitimate defendant.
Specifically, OI asserts that the Neys had known since receiving
the 2013 affidavit of Mr. DelGrosso, the only relevant product
identification witness, that he did not recall any Mundet
products. See (OI Resp. ECF No. 11-2). Similarly, OI notes that
Plaintiff’s counsel did not ask any questions about Mundet at
Mr. DelGrosso’s deposition. See (Id. ECF Nos. 11-4, 11-5).
Instead, OI asserts correctly that it was the defendants who
asked Mr. DelGrosso about Mundet products, over Plaintiff’s
counsel’s objection. (Id. ECF No. 5, p.3). The Court notes that
in his motion for remand, Plaintiff misrepresents this event by
erroneously stating that “Plaintiff’s counsel asked Mr.
DelGrosso about Loretta Ney’s father’s (Nicholas Grello)
exposure to Mundet asbestos. Unfortunately, Mr. DelGrosso could
not identify Mundet asbestos products.” (Pl. Mot. ECF No. 9,
pp.2-3, 7). See Forth, 2013 WL 6096528, at *3 (“‘Both
inconsistent statements and implausible explanations have been
recognized as evidence of guilty knowledge.’”) (quoting United
States v. Villarreal, 324 F.3d 319, 325 (5th Cir. 2003)). OI
further argues that Plaintiff did not seek any real discovery
from Crown until October 2015, eighteen months after
commencement of the suit, when he noticed the corporate
designee’s deposition – which he quickly canceled. See Id.
(“‘[B]ad faith may be overt or may consist of inaction . . .
[such as] lack of diligence and slacking off.’”) (quoting Bank
of China v. Chan, 937 F.2d 780, 789 (2d Cir. 1991)).
Plaintiff asserts that although he and his wife knew
Mr. Grello was exposed to many asbestos-containing products when
he worked for Bethlehem Steel, they did not know to which
specific products he was exposed. Thus, they sued Crown to
protect the claim in case they later were able to substantiate
it with evidence of exposure to Mundet insulation. While
Plaintiff asserts that his counsel diligently investigated Mr.
Grello’s exposure, the evidence, as discussed above, does not
support that contention. Thus, the Court concludes that, in
addition to the law clearly protecting Crown from exposure to
Mundet products during the entire course of the case’s history,
the circumstantial evidence also support’s OI’s position. As a
result, OI has met its burden of proof in establishing that
Crown was joined as a successor defendant for the purpose of
destroying diversity jurisdiction. Plaintiff argues that
“[u]nless the claim is ‘wholly insubstantial and frivolous,’
joinder will not be deemed fraudulent.” (Pl. Reply ECF 13-1,
p.7) (citing In re Briscoe, 448 F.3d at 218). Here, given that
the law clearly precluded Crown’s liability for Mundet products,
the claim was indeed frivolous. 4
Crown Named Individually as a Defendant
OI asserts that Plaintiff only sued Crown individually
so that, in light of 15 Pa.C.S. § 1929.1, Crown’s inclusion
would not appear facially invalid. Plaintiff provides almost no
rationale for naming Crown individually as a defendant. He
merely states that he and his wife sued Crown individually
because they “had an obligation to investigate all possible
sources of asbestos exposure.” (Pl. Reply ECF No. 13-1, p.8).
However, Plaintiff previously explained in more detail that:
Crown Cork was named as a Defendant for a
liabilities as the successor to Mundet, a
manufacturer of asbestos insulation. In his
role as an insulator, there was a good faith
belief that Mr. Grello may have worked with
Mundet insulation during the course of his
employment at Bethlehem Steel.
(Pl. Mot. ECF No. 9, p.12); see also (Pl. Reply ECF No. 13-1,
p.4) (providing that “Plaintiff therefore initially named Crown
Plaintiff also argues that the fact that OI and Crown
asserted cross-claims against each other in their answers shows
that they took the claims against Crown seriously. However, as
noted by OI, the cross-claims all arose automatically pursuant
to Pa. R. Civ. P. 1041.1 which provides that in asbestos
actions, a defendant’s entry of appearance constitutes a denial
of all averments in the complaint, an allegation of all
affirmative defenses, and a claim for indemnification and
contribution from the other parties. Thus, the facts raised by
Plaintiff do not support his position.
Cork a defendant to protect claims if Mundet’s products were
identified as a source of Loretta Ney’s asbestos exposure”).
Likewise, Plaintiff provides only one reason for ultimately
dismissing Crown: “[a]fter a thorough review and analysis,
Plaintiff conceded that 15 Pa. C.S. § 1929.1 applied and . . .
extinguished his claim of liability against Crown Cork.” (Id.,
p.3). Simply put, even Plaintiff’s briefs do not serious defend
against the assertion that there was no legitimate reason for
naming Crown individually.
Further supporting OI’s contention is the fact that at
no time did Plaintiff pursue questions or discovery related
specifically to Crown products. As a result, the Court concludes
that OI has met its burden of proof in establishing that
Plaintiff did not name Crown individually as a defendant for any
legitimate purpose and that there was “no real intention in good
faith to prosecute the action against” Crown individually. In re
Briscoe, 448 F.3d at 216 (internal quotation marks omitted).
The law and the evidence presented shows that
Plaintiff had no reasonable basis in fact or colorable ground
supporting the claim against Crown. Thus, the Court concludes
that Plaintiff acted in bad faith in joining Crown as a
defendant for the purpose of destroying diversity jurisdiction.
As a result, OI timely removed this case and Plaintiff’s motion
for remand will be denied.
An appropriate Order follows.
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