Kasal et al v. Stryker Corporation et al
Filing
30
ORDER signed by Judge J.P. Stadtmueller on 9/19/2017: GRANTING 17 Plaintiffs' Motion to Remand to State Court; DENYING as moot 6 and 26 Defendant Miles W. Green's Motions to Dismiss; and DIRECTING Clerk of Court to take all appropriate steps to effectuate the REMAND of this case back to the Milwaukee County Circuit Court. See Order. (cc: all counsel) (jm)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN
MARY KASAL and GEORGE KASAL,
v.
Plaintiffs,
STRYKER CORPORATION, AA
INSURANCE COMPANY, MILES W.
GREEN, BB INSURANCE
COMPANY, SENTRY INSURANCE
A MUTUAL COMPANY, and
AURORA HEALTH CARE METRO
INC.,
Case No. 17-CV-1001-JPS
ORDER
Defendants.
1.
INTRODUCTION
On July 19, 2017, Defendant Stryker Corporation (“Stryker”)
removed this matter to this Court from Milwaukee County Circuit Court.
(Docket #1). In its notice of removal, Stryker invoked the Court’s diversity
jurisdiction. Id. at 1. Though the parties appear non-diverse on the face of
the complaint, Stryker maintains that certain parties were fraudulently
joined to defeat diversity, and others should be realigned as plaintiffs. Id. at
2-8. On July 26, 2017, Defendant Miles W. Green (“Green”), a former Stryker
employee who is represented by the same counsel, filed a motion to dismiss
himself from this action for Plaintiffs’ failure to state any viable claims
against him. (Docket #6). Stryker further requests that Defendant Sentry
Insurance, A Mutual Company (“Sentry”) be realigned as a plaintiff in this
matter. (Docket #25 at 7-10).1
On August 10, 2017, Plaintiffs timely filed a motion to remand this
action to state court. (Docket #17); 28 U.S.C. § 1447(c). Stryker responded to
that motion, and replied in support of the motion to dismiss, on August 31,
2017. (Docket #25). On September 14, 2017, Plaintiffs submitted a reply in
favor of their motion to remand. (Docket #29). Though the issues raised by
both motions are intertwined, because the remand question goes to the
Court’s jurisdiction, Plaintiffs’ motion must be addressed first.2
2.
RELEVANT FACTS
The material facts are undisputed. They are drawn from Plaintiffs’
complaint, (Docket #1-1), and Green’s affidavit, (Docket #1-3). Plaintiffs,
Green, Sentry, and Defendant Aurora Health Care Metro, Inc. (“Aurora”)
are all citizens of Wisconsin, while Stryker is a citizen of Michigan. On May
11, 2016, Plaintiff Mary Kasal (“Mary”) was employed by Aurora. While
On September 5, 2017, Green filed another motion to dismiss, this time
directed at the crossclaim pleaded against him by Sentry. (Docket #26). The
crossclaim, and Green’s motion to dismiss it, are largely identical to the prior
motion. See id. Both of Green’s motions will be disposed of similarly.
1
Stryker’s arguments to the contrary are unsupported by citation to any
law. (Docket #25 at 10). As a logical proposition, the Court would have no power
to dismiss Green if it lacked jurisdiction in the first instance. See Estate of Minko ex
rel. Minko v. Heins, No. 14-CV-210-WMC, 2014 WL 1515557 at *1 n.1 (W.D. Wis.
Apr. 18, 2014) (“In Lister v. Stark, 890 F.2d 941 (7th Cir. 1989) . . . the Seventh Circuit
affirmed a district court’s grant of defendant’s motion to dismiss and denial of
plaintiff’s motion to remand issued in the same opinion, but did not address
whether the district court was required to consider those motions in any particular
order. Still, the correct order is elementary: if the district court had determined that
it lacked subject matter jurisdiction, and granted plaintiff’s motion to remand, any
other decision by that court, certainly including a motion to dismiss, would be null
and void.”).
2
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working at Aurora-owned St. Luke’s Hospital, Mary was injured when a
piece of equipment called a “Navigator” tipped over onto her. Plaintiffs
allege that the tipping was caused by the failure of one or more of the casters
on which the Navigator sat. They further allege that the Navigator was
manufactured and owned by Stryker and leased to Aurora at the time of
Mary’s injury. The incident caused damages to Mary in the form of personal
injuries and lost wages, and to Plaintiff George Kasal in the form of loss of
Mary’s society and companionship.
Plaintiffs assert three causes of action. The first is for negligence
against Stryker and Green. Plaintiffs include Green in this claim based on
their allegation that he “performed and oversaw service and maintenance
of Stryker machinery at Aurora,” presumably to include the Navigator.
(Docket #1-1 at 5). In his affidavit, Green maintains that he was merely a
sales representative for Stryker, “interfac[ing] with hospital and medical
personnel to sell and lease Stryker equipment [and] support[ing] surgeons
and their staff in using Stryker equipment during a case.” (Docket #1-3 at
2). Green avers that he was not responsible for maintenance of any Stryker
equipment, including the Navigator; that duty was laid on a different
department within Stryker.
Plaintiffs’ second cause of action is against Stryker alone for products
liability, namely producing the Navigator with defective casters. Plaintiffs’
final claim is stated against Sentry and Aurora for failing to cooperate in the
prosecution of her tort claims herein, thus extinguishing their right to
subrogation (both parties had provided worker’s compensation benefits to
Mary).
Page 3 of 10
3.
ANALYSIS
As noted above, Plaintiffs have asked the Court to remand this action
to state court because the parties are non-diverse. (Docket #18 at 1). This is
apparent on the face of their complaint; Plaintiffs, Green, and Sentry are all
citizens of Wisconsin, while Stryker is from Michigan. In an attempt to
remain in federal court, Stryker argues that neither Green’s nor Sentry’s
presence actually undermines diversity in this case, raising separate
arguments as to each. The Court begins with Green.
Stryker asserts that Green has been fraudulently joined in this action
to defeat diversity jurisdiction. The fraudulent joinder doctrine is an
exception to the requirement of complete diversity. Morris v. Nuzzo, 718
F.3d 660, 666 (7th Cir. 2013). The doctrine provides that “an out-of-state
defendant’s right of removal premised on diversity cannot be defeated by
joinder of a nondiverse defendant against whom the plaintiff’s claim has no
chance of success.” Id. (quotation omitted). The Seventh Circuit instructs
that
[t]o establish fraudulent joinder, a removing defendant must
show that, after resolving all issues of fact and law in favor of
the plaintiff, the plaintiff cannot establish a cause of action
against the in-state defendant. If the removing defendant can
meet this heavy burden, . . . the federal district court
considering removal may disregard, for jurisdictional
purposes, the citizenship of certain nondiverse defendants,
assume jurisdiction over a case, dismiss the nondiverse
defendants, and thereby retain jurisdiction.
Id. (citations and quotations omitted). Put another way, Stryker must show
that there is no reasonable possibility that Plaintiffs can state a cause of
action against Green in state court. Poulos v. Naas Foods, Inc., 959 F.2d 69, 73
(7th Cir. 1992); Gottlieb v. Westin Hotel Co., 990 F.2d 323, 327 (7th Cir. 1993).
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The standard of review applied to fraudulent joinder is even weaker
than that applied to a motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6). As the Third Circuit explains, “it is possible that a party
is not fraudulently joined, but that the claim against that party ultimately is
dismissed for failure to state a claim upon which relief may be granted.”
Batoff v. State Farm Ins. Co., 977 F.2d 848, 852 (3d Cir. 1992) (finding error
when “the district court [converted] its jurisdictional inquiry into a motion
to dismiss”). Instead, this Court is bound only to determine whether “the
claims against [Green] were not even colorable, i.e., were wholly
insubstantial and frivolous.” Id. Although Stryker’s burden in asserting
fraudulent joinder is heavy, the Seventh Circuit has held that “it need not
negate any possible theory that [Plaintiffs] might allege in the future: only
[their] present allegations count.” Poulos, 959 F.2d at 74.
Plaintiffs assert that they state a valid claim against Green for failing
to warn Mary of the known danger presented by caster failures on
Navigator machines. This is based on Green’s affidavit testimony provided
in conjunction with the motion to dismiss. Stryker responds that this
failure-to-warn theory is not the negligence claim Plaintiffs pleaded.
Rather, Plaintiffs have alleged that Green’s job duties included service and
maintenance of the Navigator, and that he was negligent in performing
those tasks. Stryker insists, citing Poulos, that Plaintiffs cannot rely on their
new failure-to-warn theory to avoid application of fraudulent joinder;
again, “only [their] present allegations count.” Id.
The standards applied to fraudulent joinder appear to sit in tension.
Morris provides that fraudulent joinder applies, “after resolving all issues
of fact and law” in Plaintiffs’ favor, only if they “cannot establish a cause of
action” against Green. Morris, 718 F.3d at 666 (emphasis added). Though
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Stryker weakly contends that Plaintiffs have not properly alleged a failureto-warn negligence theory, it is clear that Plaintiffs could do so under
Wisconsin law. See Kessel ex rel. Swenson v. Stansfield Vending, Inc., 714
N.W.2d 206, 212 (Wis. Ct. App. 2006); Schwartz v. State Farm Mut. Auto. Ins.
Co., 174 F.3d 875, 878 (7th Cir. 1999) (a court must turn to state law to predict
whether a cause of action could be stated). Further, as emphasized in Batoff,
the Court is constrained to assess whether the failure-to-warn theory is
“wholly insubstantial and frivolous,” not whether Plaintiffs could state a
valid claim against Green. Batoff, 977 F.2d at 852. Poulos, by contrast, seems
to require that the “cause of action” contemplated in Morris be expressly
pleaded, not merely a possibility. Poulos, 959 F.2d at 74.
A closer review of Poulos suggests that its holding is narrower than
Stryker believes. Gus Poulos (“Poulos”), a sales representative for Naas
Foods, Inc. (“Naas”), sued Naas pursuant to the Wisconsin Fair Dealership
Law (“WFDL”) for terminating his employment. Id. at 70. Poulos also sued
Ranks, Hovis, McDougall, PLC Group (“RHM”), which owned Naas. Id.
Poulos and RHM were citizens of Illinois, while Naas was based in Indiana.
Id. The case proceeded in Wisconsin state court through discovery and on
to dispositive motion practice. Id. The state court granted summary
judgment to RHM because, on the facts adduced by the parties, it could not
be held liable under the WFDL. Id. At that point, the parties became diverse
and Naas removed the case. Id. Poulos moved to remand, arguing that
RHM should still factor into the jurisdictional inquiry despite its dismissal,
while Naas alleged fraudulent joinder. Id. at 70-71.
Poulos opens its fraudulent joinder discussion by citing all of the
same standards as Morris. Id. at 73 (“The defendant must show that, after
resolving all issues of fact and law in favor of the plaintiff, the plaintiff
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cannot establish a cause of action against the in-state defendant. . . . At the
point of decision, the federal court must engage in an act of prediction: is
there any reasonable possibility that a state court would rule against the
non-diverse defendant?”) (emphasis in original). It went on to analyze
Poulos’ specific arguments:
Turning now to the merits, we agree with the district
court that Poulos failed to state any claim against RHM.
Under Wisconsin law, a parent corporation may be liable for
its subsidiary's delicts if “‘applying the corporate fiction
would accomplish some fraudulent purpose, operate as a
constructive fraud, or defeat some strong equitable claim.’”
Consumer’s Co-op v. Olsen, 142 Wis.2d 465, 475, 419 N.W.2d
211, 214 (1988) (quoting Milwaukee Toy Co. v. Industrial
Comm’n, 203 Wis. 493, 496, 234 N.W. 748 (1931)). Although
Poulos alleged that RHM controlled Naas, he alleged no
impropriety or disregard of Naas’ corporate form. Perhaps
more importantly, there is simply no indication that RHM’s
presence in the suit was required to avoid any possible fraud:
Poulos did not allege (nor, truthfully, could he allege) that the
assets of Naas would be insufficient to satisfy a judgment on
his claims.
Poulos argues that some facts might turn up to support
a claim against RHM. He reminds us that the Wisconsin judge
gave him leave to reinstate RHM should such facts turn up.
Naas disputes Poulos’ characterization of the court’s action,
arguing that the judge merely indicated his potential
willingness to reconsider, but the characterization doesn’t
matter. Although Naas bears a heavy burden to establish
fraudulent joinder, it need not negate any possible theory that
Poulos might allege in the future: only his present allegations
count. If Poulos’ theory were right, he could defeat diversity
jurisdiction by joining his grandmother as a defendant—
surely some set of facts might make her liable.
Based on the allegations in his complaint, Poulos had
no chance of recovering damages from RHM in a Wisconsin
court. Moreover, at no point in the state or federal
proceedings did Poulos attempt to fill the gaps in his
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complaint. Thus we may conclude that the joinder of RHM
was fraudulent without deciding whether Poulos could have
cured the problem with his complaint by amending it while
in federal court.
Id. at 73-74. (citations omitted).
Viewed in this context, Poulos’ line about “present allegations” does
not apply to the instant case. This action is still at the pleading stage, and
the only factual material Plaintiffs rely on for their failure-to-warn theory is
that provided by Green himself in his affidavit. It appears that Plaintiffs
could truthfully allege Green’s liability on such a theory. Further, Poulos’
claim against RHM was subject to discovery, considered by the state court,
and rejected on its merits. By contrast, Plaintiffs’ failure-to-warn theory has
not been tested in any fashion. Thus, Poulos’ concern about waiting
indefinitely for facts be discovered which support a defendant’s liability—
i.e., a party naming their own grandmother—need not materialize.
Plaintiffs can credibly assert a cause of action against Green.3
On the state of the complaint, Stryker is correct that the failure-towarn theory is not clearly pleaded. Under Morris and Batoff, and a more
Stryker’s primary citation on fraudulent joinder, Faucett, is inapposite.
There, the plaintiff was injured by a piece of mining equipment. Faucett v. IngersollRand Mining & Mach. Co., 960 F.2d 653, 654 (7th Cir. 1992). He sued the machine’s
manufacturer and a repairman who worked at the mine. Id. The repairman, a
citizen of the same state as the plaintiff, offered unrebutted testimony that he “had
absolutely nothing to do” with repairing the machine in question. Id. at 655. The
district court, and the Court of Appeals, found that the repairman was
fraudulently joined, and thus the action could remain in federal court despite his
continue presence in the case. Id. While Green’s affidavit establishes that he was
not responsible for maintaining the Navigator, he does not say that he had nothing
to do with the machine at all. Instead, Green concedes that he sold Stryker
equipment, including Navigators. Green’s position is not nearly as stark as the
Faucett repairman.
3
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complete appreciation of Poulos, the Court is not convinced that this matters
when resolving the motion to remand. Construing all issues of fact and law
in Plaintiffs’ favor, there is at least a reasonable probability that Plaintiffs
could state a cause of action against Green in Wisconsin court. The Seventh
Circuit teaches that “federal courts should interpret the removal statute
narrowly, resolving any doubt in favor of the plaintiff's choice of forum in
state court.” Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 758 (7th Cir.
2009). The Court concludes, then, that Green is not fraudulently joined to
this action. Green’s presence destroys diversity amongst the parties and
requires remand, and Plaintiffs’ motion to that effect must be granted.
Stryker’s arguments with regard to realigning Sentry as a plaintiff are thus
rendered moot.
A final note on Plaintiffs’ motion. The remand statute permits a court
to award fees and costs to a party that succeeds in obtaining remand. 28
U.S.C. § 1447(c). These amounts may be assessed “only where the removing
party lacked an objectively reasonable basis for seeking removal.” Martin v.
Franklin Capital Corp., 546 U.S. 132, 141 (2005).4 The laborious analysis
provided above was only necessary because Plaintiffs’ complaint was so
poorly pleaded. In fact, their request for remand was saved, by the skin of
its teeth, by the overwhelmingly favorable standard of review. Stryker had
more than an objectively reasonable basis to seek removal. Plaintiffs’
request for fees and costs will be denied.
For unknown reasons, all of Plaintiffs’ citations on the fee issue predate
Martin and apply a now-incorrect standard. See (Docket #18 at 9). Martin has been
in force for twelve years. Plaintiffs’ counsel should take care to ensure their
assertions of law are current to the present date (or at least this decade).
4
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4.
CONCLUSION
In light of the foregoing, Plaintiffs’ motion to remand must be
granted. Their request for fees and costs will be denied. Both of Green’s
motions to dismiss will be denied as moot.
Accordingly,
IT IS ORDERED that Plaintiffs’ motion to remand (Docket #17) be
and the same is hereby GRANTED; and
IT IS FURTHER ORDERED that Defendant Miles W. Green’s
motions to dismiss (Docket #6 and #26) be and the same are hereby
DENIED as moot.
The Clerk of the Court is directed to take all appropriate steps to
effectuate the remand of this case back to the Milwaukee County Circuit
Court.
Dated at Milwaukee, Wisconsin, this 19th day of September, 2017.
BY THE COURT:
_____________________________
J. P. Stadtmueller
U.S. District Judge
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