Pan et al v. Sumitomo Rubber North America, Inc. et al

Filing 12

MEMORANDUM AND OPINION entered DENYING 5 MOTION to Remand. (Signed by Chief Judge Lee H Rosenthal) Parties notified.(leddins, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
§
§
Plaintiffs,
§
§
v.
§
§
SUMITOMO RUBBER INDUSTRIES,
§
LTD.; SUMITOMO CORPORATION OF §
AMERICA; SUMITOMO RUBBER USA, §
LLC; SUMITOMO RUBBER NORTH
§
AMERICA, INC.; SRI TIRE TRADING, §
LTD.; TREADWAYS, LLC; DISCOUNT §
TIRE COMPANY OF TEXAS, INC. and §
DISCOUNT TIRE DIRECT, INC.,
§
§
Defendants.
§

June 20, 2018
David J. Bradley, Clerk

YAN PAN AND MICHAEL CICCONE,

CIVIL ACTION NO. H-18-1201

MEMORANDUM AND OPINION
I.

Background
Yan Pan and Michael Ciccone filed suit in Texas state court after a single-vehicle

accident damaged Ciccone’s car and injured Pan, the driver. (Docket Entry No. 1-1 at 26, ¶ 15).
Pan and Ciccone allege that the accident occurred because a tire manufactured by Sumitomo
Rubber Industries and Sumimoto Rubber North America blew out. They sued Sumimoto for
strict products liability, negligence, and negligent representation. Id. at 27–31, ¶¶ 18–31. They
also sued Discount Tire Company of Texas, the company that sold, installed, inspected, and
serviced the tire, for negligence in installing, inspecting, and maintaining it. Id. at 31–32, ¶¶ 39–
41. Sumimoto removed on the basis of diversity jurisdiction, alleging that Discount Tire of
Texas, the in-state defendant, was improperly joined. 28 U.S.C. §§ 1332, 1441(b). Sumimoto
based its removal on a Texas statute that protects nonmanufacturing sellers from product-liability
suits, arguing that Pan and Ciccone have no reasonable basis to recover against Discount Tire
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Company of Texas under Texas law. See TEX. CIV. PRAC. & REM. Code § 82.003; (Docket Entry
No. 1 at 6, ¶17). Pan and Ciccone moved to remand, arguing that they adequately pleaded an
exception to that statute. (Docket Entry No. 5 at 2-3, ¶ 7).
Based on the pleadings, the motions and responses, the parties’ arguments and
submissions, and the applicable law, this court denies the motion to remand and dismisses
Discount Tire Company of Texas from this lawsuit as an improperly joined party. The reasons
are explained below.
II.

The Legal Standard
A defendant may remove a case to federal court when federal subject-matter jurisdiction

exists and the removal procedure has been properly followed. See 28 U.S.C. § 1441; 28 U.S.C. §
1332(a). Although there is complete diversity between Pan and Ciccone (Texas citizens) and the
Sumimoto defendants (citizens of Japan and California), Discount Tire Company of Texas is a
citizen of Texas. If properly joined, Discount Tire Company of Texas’s presence in the suit as
an in-state defendant precludes federal removal jurisdiction. The issue is whether Pan and
Ciccone have stated a valid state-law cause of action against Discount Tire Company of Texas.
“[A] removing defendant [need not] demonstrate an absence of any possibility of
recovery . . . the defendant must demonstrate only that there is no reasonable basis for predicting
that the plaintiff will recover in state court.” Gray ex rel. Rudd v. Beverly Enters.-Miss., Inc.,
390 F.3d 400, 405 (5th Cir. 2004) (emphasis in original). A “mere theoretical possibility of
recovery under local law” is not enough. See Badon v. RJR Nabisco, Inc., 236 F.3d 282, 286 n. 4
(5th Cir.2000); accord Ross v. Citifinancial, Inc., 344 F.3d 458, 462 (5th Cir. 2003).
In Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc), cert.
denied, 544 U.S. 992, 125 S.Ct. 1825, 161 L.Ed.2d 755 (2005), the Fifth Circuit clarified the

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procedure for determining whether there is a reasonable basis for recovery against the in-state
defendant. A court may conduct a Rule 12(b)(6) analysis, examining the allegations in the
complaint to determine whether they state a claim under state law against the in-state defendant,
or, after examining the pleadings, decide to conduct a summary inquiry. Smallwood, 385 F.3d at
573–74. Generally, if a plaintiff’s pleading survives the Rule 12(b)(6) analysis, then there is no
improper joinder. Guillory v. PPG Indus., Inc., 434 F.3d 303, 309 (5th Cir. 2005). The statecourt petition filed when the case is removed controls the analysis. Bell v. Thornburg, 743 F.3d
84, 85–86 (5th Cir. 2014) (per curiam) (citing Cavallini v. State Farm Mut. Auto Ins. Co., 44
F.3d 256, 264 (5th Cir. 1995) (“Limiting the removal jurisdiction question to the claims in the
state court complaint . . . permits early resolution of which court has jurisdiction, so that the
parties and the court can proceed with, and expeditiously conclude, the litigation.”)).
In determining whether a plaintiff has a reasonable basis for recovery on at least one
claim under state law, the district court is limited to the causes of action and allegations asserted
in the complaint. Campbell v. Stone Ins., Inc., 509 F.3d 665, 668–69 n. 2 (5th Cir. 2007); see
Freeport—McMoRan, Inc. v. K N Energy, Inc., 498 U.S. 426, 428, 111 S.Ct. 858, 112 L.Ed.2d
951 (1991) (per curiam). The district court must resolve all factual disputes and ambiguities in
state law in favor of the plaintiff. Travis, 326 F.3d at 649; McKee v. Kan. City S. Ry. Co., 358
F.3d 329. 333 (5th Cir. 2004). If the record reveals a reasonable basis of recovery on any cause
of action, a court must remand the entire suit to state court. Gray, 390 F.3d at 412 (presence of
unavailing claims does not defeat remand); Rainwater v. Lamar Life Ins. Co., 391 F.3d 636, 638
(5th Cir. 2004).
III.

Analysis
A.

Whether State or Federal Pleading Standards Govern the Improper Joinder
Inquiry
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In deciding a motion to remand based on jurisdiction when an in-state defendant is a
party, federal district courts must evaluate whether there is a claim against that party using the
federal pleading standards instead of the more lenient “fair notice standard” of Texas state
courts. Peña v. City of Rio Grande City, 879 F.3d 613, 617 (5th Cir. 2018) (“Pleadings must be
reviewed under the federal pleading standard because the question of improper joinder ‘[a]t
bottom . . . is solely about determining the federal court's jurisdiction.”’ (citation omitted)). This
court evaluates Pan’s and Ciccone’s claims under Rule 12(b)(6), which allows dismissal if a
plaintiff fails “to state a claim upon which relief can be granted.” FED. R. CIV. P. 12(b)(6). Rule
12(b)(6) must be read in conjunction with Rule 8(a), which requires “a short and plain statement
of the claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a) (2). A complaint
must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic
Corporation v. Twombly, 550 U.S. 544, 570 (2007). Rule 8 “does not require ‘detailed factual
allegations,’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me
accusation.”’ Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555).
B.

Whether the Petition Alleges a Reasonable Basis for the Plaintiffs to Recover
Against Direct Tire Company of Texas

The state-court petition asserts only state-law negligence claims against Discount Tire
Company of Texas. Chapter 82 of the Texas Civil Practice and Remedies Code governs product
liability actions. A “products liability action” is:
any action against a manufacturer or seller for recovery of damages arising out of
personal injury, death, or property damage allegedly caused by a defective product
whether the action is based in strict tort liability, strict products liability, negligence,
misrepresentation, breach of express or implied warranty, or any other theory or
combination of theories.
TEX. CIV. PRAC. & REM. CODE § 82.001. In 2003, the legislature added § 82.003, limiting a
plaintiff’s ability to recover against nonmanufacturing sellers in a products-liability action.
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Section 82.003 states that a nonmanufacturing seller “is not liable for harm caused to the
claimant by that product unless the claimant proves” that at least one of seven exceptions applies.
TEX. CIV. PRAC. & REM. CODE. § 82.003(a) (2003). The exceptions are as follows:
(1) that the seller participated in the design of the product;
(2) that the seller altered or modified the product and the claimant's harm resulted
from that alteration or modification;
(3) that the seller installed the product, or had the product installed, on another
product and the claimant's harm resulted from the product's installation onto the
assembled product;
(4) that:
(A) the seller exercised substantial control over the content of a warning or
instruction that accompanied the product;
(B) the warning or instruction was inadequate; and
(C) the claimant's harm resulted from the inadequacy of the warning or
instruction;
(5) that:
(A) the seller made an express factual representation about an aspect of the
product;
(B) the representation was incorrect;
(C) the claimant relied on the representation in obtaining or using the
product; and
(D) if the aspect of the product had been as represented, the claimant
would not have been harmed by the product or would not have suffered
the same degree of harm;
(6) that:
(A) the seller actually knew of a defect to the product at the time the seller
supplied the product; and
(B) the claimant's harm resulted from the defect; or

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(7) that the manufacturer of the product is:
(A) insolvent; or
(B) not subject to the jurisdiction of the court.
Id.
“[T]he [p]laintiffs’ pleadings need not specifically cite to any of the seven exceptions
. . . .” Casas v. The Tire Corral, Inc., 2005 WL 6773889, at *1 (S.D.Tex. Mar.31, 2005). “[S]o
long as the [p]laintiffs fairly state a claim that falls within any one or more of the exceptions,
remand is appropriate.” Id.
Discount Tire of Texas is a nonmanufacturing seller. Pan and Ciccone must adequately
state a claim that falls within one of § 82.003’s listed exceptions to have a reasonable basis for
holding Discount Tire of Texas liable. TEX. CIV. PRAC. & REM. CODE. § 82.003(a).
1.

The Allegations Against the Discount Tire Defendants

Pan and Ciccone allege the following:
17.
Discount Tire Defendants sold, installed, inspected, and serviced the
subject tire. Discount Tire Defendants’ negligence and related failure to warn
was also a proximate cause of this accident.
...
39.
Discount Tire Defendants were negligent and grossly negligent in the sale,
installation, inspection and maintenance of the tire in question. Discount Tire
Defendants negligently performed the installation, inspection and maintenance of
the tire in question, in violation of industry standards and failed to warn of th
eknown [sic] dangers. This improper installation, inspection and maintenance left
the defective tire on the vehicle. Discount Tire Defendants breached the duty they
owed to the public, such as Plsitniffs [sic]. Discount Tire Defendants’ actions and
inactions in regard to the installation, inspection and maintenance of the tire in
question constitute negligence, which was a proximate cause of Plaintiff’s [sic]
damages.
40.
Additionally, the occurrence in question was proximately caused by the
negligence and/or gross negligence of Discount Tire Defendants, their
agents,servants [sic] and/or employees, in one or more of the following nonexclusive particulars:
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a.

failing to take reasonable precautions for Plaintiffs’ safety;

b.
failing to do what a reasonably prudent seller, installer, and
repairer of a tire would have done in the same or similar circumstances;
c.

failing to properly evaluate the tire; and

d.

in additional ways as will be revealed during discovery.

41.
Such negligence was a prximate [sic] cause of the occurrence in question
and Plaintiff’s [sic] resulting damages.
(Docket Entry No. 1-1 at 27, 31–32, ¶¶ 17, 39–41).
2.

Negligent Installation

Pan and Ciccone allege that Discount Tire defendants’ negligent installation, inspection,
and maintenance of the tire was a proximate cause of their damages. (Docket Entry No. 1-1 at
31–32, ¶¶ 39–41). They further allege that the Discount Tire defendants “fail[ed] to take
reasonable precautions for Plaintiffs’ safety” and “fail[ed] to do what a reasonable prudent seller,
installer, and repairer of a tire would have done in the same or similar circumstances.” Id. They
argue that these allegations fall under the § 82.003(a)(3) exception for a nonmanufacturing seller
to be liable when it “installed the [tire], or had the [tire] installed, on another product and the
claimant’s harm resulted from the tire’s installation onto the assembled [car].” TEX. CIV. PRAC.
& REM. CODE. § 82.003(a)(3).

The allegations against the Discount Tire defendants are

insufficient.
Pan and Ciccone argue that the exception is applicable because the tire blew two months
after Discount Tire of Texas installed it in Ciccone’s car. (Docket Entry No. 5 at 3, ¶8). But the
timing allegation is not in the petition. Pan and Ciccone presented this allegation after removal
in their remand motion. Sumitomo argues that as a result, this court should not consider this
allegation in its analysis. (Docket Entry No. 10 at 8–9, ¶¶ 21–22).
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Even if the court considered this allegation, it does not “distinguish between harm arising
as a result of the defective product and harm arising as a result of the installation itself.” Gomez
v. Cooper Tire & Rubber Co., 2012 WL 12863171, at *8 (W.D. Tex. Dec. 28, 2012). Pan and
Ciccone present no allegations of faulty installation or inspection besides the two-month gap
between the installation and the blowout. In similar cases in which plaintiffs did not allege facts
showing how a nonmanufacturing seller’s work on a tire rather than a defective tire caused the
accident and damages, the courts have held that the plaintiffs did not state valid claims against
the sellers. See Martinez v. Cooper Tire & Rubber Co., 2012 WL 12894741, at *4 (S.D. Tex.
July 13, 2012); Casas v. The Tire Corral, Inc., 2005 WL 6773889, at *4 (S.D. Tex. Mar. 31,
2005) (“[T]he claimant’s harm must result from the installation itself, not the installation of an
allegedly defective product. None of the evidence before this court indicates that Tire Corral
incorrectly installed the tire rim; therefore, § 82.003(a)(3) does not provide an exception to Tire
Corral’s non-liability.” (emphasis in original)). Because Pan and Ciccone do not allege how the
Discount Tire defendants’ tire installation and inspection, as opposed to alleged defects in the
tire, caused their damages, they cannot claim the § 82.003(a)(3) exception to the general bar
against product liability claims against nonmanufacturing sellers. TEX. CIV. PRAC. & REM.
CODE. § 82.003(a)(3).
3.

Failure to Warn of Known Dangers

Pan and Ciccone also allege that the Discount Tire defendants “failed to warn of the
known dangers” in their state-court petition. (Docket Entry Nos. 10, 1-1 at 31, ¶ 39). The
§ 82.003(a)(4) exception allows recovery against a nonmanufacturing seller that “(A) . . .
exercised substantial control over the content of a warning or instruction that accompanied the
[tire],” if “(B) the warning or instruction was inadequate; and (C) the claimant’s harm resulted

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from the inadequacy of the warning or instruction.”

TEX. CIV. PRAC. & REM. CODE.

§ 82.003(a)(4). Exception § 82.003(a)(6) allows recovery against a nonmanufacturing seller that
“(A) . . . actually knew of a defect to the product at the time the seller supplied the product,” if
“(B) the claimant’s harm resulted from the defect.”
§ 82.003(a)(6).

TEX. CIV. PRAC. & REM. CODE.

Neither exception provides a reasonable basis to hold the Discount Tire

defendants liable. Pan and Ciccone do not allege facts showing that the § 82.003(a)(4) exception
applies. They do not allege that Discount Tire of Texas exercised substantial control over the
tire warnings or that the blow out and damages resulted from the inadequacy of the warning.
The § 82.003(a)(6) exception does not apply because the petition does not allege that the
Discount Tire defendants knew of any defect in the tire. See Evans v. Kawaski Motors Corp.,
USA, 2015 WL 4434073, at *5 (S.D. Tex. July 17, 2015) (the petition was insufficient under
§ 82.003(a)(6) because the plaintiffs did not explicitly allege that the defendants actually knew of
the product’s defect).
4.

Failure to Properly Evaluate the Tire

Pan and Ciccone allege that the Discount Tire defendants “fail[ed] to properly evaluate
the tire.” (Docket Entry No. 1-1 at 32, ¶ 40). This allegation does not provide a reasonable basis
for recovery against Discount Tire because § 82.003(a) does not make nonmanufacturing sellers
liable for failures in evaluating products. TEX. CIV. PRAC. & REM. CODE. § 82.003(a). A failure
to evaluate the tire is synonymous with a failure to inspect the tire, and “a seller does not have a
duty to inspect or test a product manufactured by another for latent defects and thus cannot be
held liable for failure to test or inspect.” Romo v. Ford Motor Co., 798 F. Supp. 2d 798, 806
(S.D. Tex. 2011) (citing Champion Mobile Homes v. Rasmussen, 553 S.W.2d 237, 243
(Tex.Civ.App.1977).

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IV.

Conclusion
Pan and Ciccone have not shown a reasonable basis to recover against the only in-state

defendants, Discount Tire Company of Texas and Discount Tire Direct, Inc. The court dismisses
those defendants as improperly joined parties.

Because the plaintiffs and the remaining

defendants are diverse, removal was proper on the basis of diversity jurisdiction. 28 U.S.C. §§
1332, 1441(b). Pan’s and Ciccone’s motion to remand, (Docket Entry No. 5), is denied.
SIGNED on June 20, 2018, at Houston, Texas.

_______________________________________
Lee H. Rosenthal
Chief United States District Judge

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