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Schehrer v. Smith & Nephew, Inc.

United States District Court, D. Kansas

March 1, 2019

LISA S. SCHEHRER, Plaintiff,



         This case, which was removed to this Court from Kansas state court, presently comes before the Court on a motion by defendant Smith & Nephew, Inc. (“S&N”) to stay proceedings pending transfer of the case to multidistrict litigation (MDL) (Doc. # 4), and plaintiff's motion to remand the case back to state court (Doc. # 9). For the reasons set forth below, the Court concludes that diversity is lacking and S&N has not shown that all non-diverse defendants were fraudulently joined; accordingly, the Court grants plaintiff's motion, and the case shall be remanded to state court. In light of that ruling, the Court denies the motion for a stay.

         I. Background

         Plaintiff filed the instant action in the District Court of Johnson County, Kansas. Plaintiff, a Kansas resident, asserts claims against S&N, alleged to be a Delaware corporation with its principal place of business in Tennessee; Dr. Brian Kindred, alleged to be a Kansas resident; Robert Swindle, alleged to be a Kansas resident; and Mercury Medical Group, LLC (“Mercury”), alleged to be a Missouri corporation with its principal place of business in Kansas. Plaintiff alleges that she suffered harm resulting from the implantation of a particular medical device, the Birmingham Hip Resurfacing System (“BHR”), in her hips in two surgeries performed by defendant Kindred. Plaintiff further alleges that defendant S&N manufactured and sold the device; that defendant Swindle acted as a sales representative for S&N and provided advice concerning the choice of the device by Dr. Kindred and plaintiff; and that Mr. Swindle was employed by defendant Mercury, which markets and distributes S&N's products. Plaintiffs assert claims against all defendants for negligence, negligent misrepresentation, and violations of the Kansas Consumer Protection Act (KCPA), K.S.A. § 50-623 et seq.; and claims against S&N, Mercury, and Mr. Swindle for strict product liability and breach of express and implied warranties.

         S&N, purportedly acting with the consent of Mercury and Mr. Swindle and without objection from Dr. Kindred, removed the case to this Court. In its notice of removal, S&N asserts that the Court may exercise diversity jurisdiction because the other three defendants were fraudulently joined in this suit. S&N then filed with the Judicial Panel on Multidistrict Litigation (“JPML”) a notice that this case is a potential tag-along action in an existing MDL pending in the District of Maryland, and the JMPL conditionally transferred the case to MDL No. 2775, In re Smith & Nephew Birmingham Hip Resurfacing (BHR) Hip Implant Products Liability Litigation. The parties have now completed briefing to the JMPL on plaintiff's objection to the transfer.

         S&N has filed a motion requesting a stay of proceedings in this Court until the issue of the transfer to the MDL has been decided by the JPML. Plaintiff opposes a stay, arguing that the Court should decide her motion to remand the case back to state court based on a lack of diversity jurisdiction.

         II. Applicable Standards - Fraudulent Joinder

         S&N argues that the Court may exercise diversity jurisdiction in this case. To invoke such jurisdiction, “a party must show that complete diversity of citizenship exists between the adverse parties.” See Symes v. Harris, 472 F.3d 754, 758 (10th Cir. 2006). “Complete diversity is lacking when any of the plaintiff has the same residency as even a single defendant.” See Dutcher v. Matheson, 733 F.3d 980, 987 (10th Cir. 2013).

         In this case, plaintiff has alleged facts to show that she is a Kansas citizen and that defendants Kindred, Swindle, and Mercury are also Kansas citizens. See 28 U.S.C. § 1332(c)(1) (corporation is a citizen of both the state of its incorporation and the state of its principal place of business). S&N does not dispute the Kansas citizenship of those three defendants. S&N argues, however, that those defendants' Kansas citizenship should be ignored for purposes of assessing complete diversity because they have been fraudulently joined as parties to the lawsuit. Specifically, S&N argues that plaintiff has no claim against Mercury because Mercury did not exist at the time of the allegedly wrongful acts; that Mr. Swindle cannot be liable under the Kansas Product Liability Act (KPLA) because he was not a “product seller” and because he is protected by the KPLA's seller immunity provisions; and that Dr. Kindred enjoys immunity from liability under the KPLA. S&N further argues that to the extent plaintiff alleges medical malpractice by Dr. Kindred, such claims should be severed and remanded to allow the rest of the suit to remain in federal court.

         In the absence of actual fraud in the pleading of jurisdictional facts (which S&N does not allege here), fraudulent joinder requires the removing party to demonstrate the “inability of the plaintiff to establish a cause of action against the non-diverse party in state court.” See Dutcher, 733 F.3d at 988 (quoting Cuevas v. BAC Home Loans Servicing, LP, 648 F.3d 242, 249 (5th Cir. 2011)). “The defendant bears a heavy burden of proving fraudulent joinder, and all factual and legal issues must be resolved in favor of the plaintiff.” See Id. (quoting Pampillonia v. RJR Nabisco, Inc., 138 F.3d 459, 461 (2d Cir. 1998)). The defendant must “clear a high hurdle” to prove fraudulent joinder; the issue is not necessarily whether the plaintiff has stated a valid claim against the non-diverse defendant, but rather whether the defendant has proven the plaintiff's inability to state a claim in state court despite all legal and factual issues being decided in the plaintiff's favor. See Id. at 989.

         III. Analysis

         The Court concludes that S&N has failed to show that there is no possibility that plaintiff could establish a cause of action against Mr. Swindle in Kansas state court. Accordingly, because both plaintiff and Mr. Swindle are Kansas citizens, S&N cannot establish complete diversity in this case as required for this Court's exercise of jurisdiction, and the Court need not consider S&N's arguments with respect to Mercury and Dr. Kindred.[1]

         The KPLA defines as a “[p]roduct liability claim” any claim for harm caused by the manufacture, design, or warnings of the relevant product, including actions based on strict liability, negligence, breach of express or implied warranty, breach of a duty to warn, and any other substantive legal theory. See K.S.A. § 60-3302(c). Accordingly, as this Court has previously noted, all of a plaintiff's theories “that sound in product liability are merged into one product liability claim.” See Cooper v. Zimmer Holdings, Inc., 320 F.Supp.2d 1154, 1158 (D. Kan. 2004) (Lungstrum, J.).

         S&N first argues, in its notice of removal and in its brief in opposition to the remand motion, that Mr. Swindle cannot be liable under the KPLA because he is not a “product seller” as defined by the KPLA. The KPLA ...

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