U.S. District Court for the Northern District of California, September 3, 2021
Plaintiff John Rathbun was diagnosed with terminal mesothelioma on July 8, 2020, and on December 22, 2020, he and his wife filed suit in state court, asserting claims for negligence, strict liability, negligent misrepresentation, fraud by nondisclosure, and loss of consortium. On April 30, 2021, Chattem removed this action to federal court on diversity grounds, and the plaintiffs have filed a motion to remand to state court.
The defendants argue that the two non-diverse defendants were fraudulently joined to defeat diversity jurisdiction. The Ninth Circuit has explained that there are two ways to establish fraudulent joinder: (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. Grancare, LLC v. Thrower by & through Mills, 889 F.3d 543, 548 (9th Cir. 2018). In the absence of fraud, if there is a possibility that a state court would find that the complaint states a cause of action against any of the resident defendants, joinder is proper and the matter must be remanded. Id.
The defendants claim that this case is solely between the plaintiffs and Chattem, who manufactured the only product specifically identified in the complaint. However, the complaint does make allegations regarding other non-specified asbestos-contained products manufactured and sold by other defendants. When considering a fraudulent joinder, the court must resolve all “doubts concerning the sufficiency of a cause of action because of inartful, ambiguous or technically defective pleading . . . in favor of remand.” ” Krivanek v. Huntsworth Grp. LLC, No. 15-CV-02466-HSG, 2015 U.S. Dist. LEXIS 120148, 2015 WL 5258788, at *2 (N.D. Cal. Sept. 9, 2015). In doing so, the court finds the defendants have failed to show that the plaintiffs would not be afforded leave to amend the complaint to cure any purported deficiencies, including by adding factual allegations concerning the plaintiff’s exposure to other products containing asbestos. Therefore, it is certainly possible that the plaintiffs may be able to state a claim against the resident defendants, and the defendants have failed to meet the steep burden of establishing fraudulent joinder. Because there is not complete diversity of citizenship, the court lacks subject-matter jurisdiction and thus grants the motion to remand. However, because the defendants did not lack an objectively reasonable basis for seeking removal, the court denied the request to award costs and fees.