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Newman v. DePuy Inc.

United States District Court, D. Idaho

September 21, 2016

ARIEL AND TIRAS NEWMAN, wife and husband, Plaintiffs,
v.
DePUY, INC., a corporation; DePUY SYNTHES SALES, INC., a corporation; DePUY ORTHOPAEDICS, INC., a corporation; NORTH IDAHO DAY SURGERY, LLC, an Idaho limited liability company d/b/a NORTHWEST SPECIALTY HOSPITAL; NSH NORTH IDAHO, INC. an Idaho Corporation, ABC CORPORATIONS 1-5; and JOHN DOES 1-5, Defendants.

          MEMORANDUM DECISION AND ORDER

          B. Lynn Winmill, United States District Court Chief Judge.

         Pending before the Court are numerous motions: a Motion to Dismiss filed by Defendants North Idaho Day Surgery, LLC and NSH North Idaho, Inc. (“Hospital Defendants”) (Dkt. 20), in which Defendants DePuy, Inc., DePuy Synthes Sales, Inc., and DePuy Orthopaedics, Inc. (“DePuy”) joined (Dkt. 23); Plaintiffs' Motion to Remand (Dkt. 26); Plaintiffs' Motion to Amend (Dkt. 16); Plaintiffs' Motion for Extension of Time (Dkt. 33); Plaintiffs' Motion to Seal Declaration (Dkt. 36); and DePuy's Motion for Protective Order (Dkt. 40). The Court has determined that oral argument would not significantly assist the decisional process.

         Procedurally, the Court should first consider the motion to remand before addressing the other motions. See Ladonicolas v. Beury, 21 F.3d 1114 (9th Cir. 1994). Because it finds that the Motion to Remand should be granted, the remaining pending motions shall be deemed moot, as further discussed below.

         BACKGROUND

         In June of 2013, Ariel Newman underwent spinal lumbar fusion surgery at North Idaho Day Surgery, LLC d/b/a Northwest Specialty Hospital (“Hospital Defendants”). According to Plaintiffs, Ms. Newman's doctor used defective DePuy surgical screws to perform the operation. As a result, Ms. Newman needed revision surgery and alleges that she suffered both physical and emotional injury, as well as economic loss. Compl. at ¶¶ 13, 14, 17, 23, 24.

         Plaintiffs, Idaho citizens, filed this action in Idaho state court against the DePuy screw manufacturers and the hospital where she received the surgery. See Id. Plaintiffs assert claims of strict liability, negligence, and products liability pursuant to the Idaho Products Liability Reform Act (IPLRA). Although the Hospital Defendants are Idaho residents, DePuy Defendants removed the case to federal court on January 20, 2016. The Hospital Defendants assert that Plaintiffs have no plausible cause of action against NIDS and NSH and that these defendants were fraudulently joined to foil diversity jurisdiction. See Notice of Removal at 3-14 (Dkt. 1). The Hospital Defendants moved to dismiss Plaintiff's Complaint on March 26, 2016. See Def. Brief in Support of Mot. to Dismiss at C (Dkt. 20-1). On April 29, 2016, Plaintiffs moved to remand this matter back to state court. Dkt. 26.

         LEGAL STANDARDS

         I. Motion to Remand

         Courts must strictly construe the removal statute against removal jurisdiction. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The strong presumption against removal jurisdiction means that the Defendants carry the burden to establish that removal is proper. Id. Where the defendant claims there is fraudulent joinder to justify removal, “there is an even greater burden on the defendant.” See Ballesteros v. Am. Standard Ins. Co. of Wisconsin, 436 F.Supp.2d 1070, 1072 (D. Ariz. 2006).

         Generally, removal jurisdiction is granted only when there is complete diversity of citizenship. However, there is an exception to this general rule where a non-diverse defendant has been fraudulently joined. The presence of a non-diverse defendant will be ignored if “the plaintiff fails to state a cause of action against a resident defendant, and the failure is obvious according to the settled rules of the state . . . .” See Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998). In other words, “the defendant must demonstrate that there is no possibility that the plaintiff will be able to establish a cause of action in State court against the alleged sham defendant.” Candy v. 474 Club LLC, 2007 U.S. Dist. LEXIS 7524, 2007 WL 1381806, *2 (D. Idaho 2007).

         ANALYSIS

         I. Motion to Remand

          In deciding a motion to remand, courts look to whether the case was properly removed to federal court in the first place. Salveson v. Western States Bankcard Ass'n, 731 F.2d 1423, 1426 (9th Cir. 1984). “Because of the ‘Congressional purpose to restrict the jurisdiction of the federal courts on removal, ' . . . federal jurisdiction ‘must be rejected if there is any doubt as to the right of removal in the first instance.'” Duncan v. Steutzle, 76 F.3d 1480, 1485 (9th Cir. 1996) (citations omitted). Here, the answer to that question hinges on whether the Hospital Defendants were fraudulently joined as defendants.

         Fraudulent joinder is a term of art. There is no requirement of actual fraud. Rather, “[i]f the plaintiff fails to state a cause of action against a resident defendant, and the failure is obvious according to the settled rules of the state, the joinder of the resident defendant is fraudulent.” McCabe v. General Foods Corp., 811 ...


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