Knudson v. Systems Painters, Inc.
31 I.E.R. Cas. (BNA) 1669, 2011 U.S. App. LEXIS 4642, 634 F.3d 968 (2011)
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Rule of Law:
To establish fraudulent joinder of a non-diverse defendant, a removing defendant must prove that there is no reasonable basis in fact and law for the plaintiff's claim against that defendant; joinder is not fraudulent if there is arguably a reasonable basis for predicting that state law might impose liability.
Facts:
- John E. Knudson worked for Long Refrigeration, Inc., installing HVAC systems at two Wal-Mart construction sites in Missouri.
- Systems Painters was hired to paint the interiors of the same stores.
- Systems Painters allegedly covered the stores' openings with plastic and used heaters to apply paint at elevated temperatures, which 'shrink-wrapped' the buildings and created a thick cloud of paint particulate in the unventilated spaces.
- Knudson and his co-workers had difficulty seeing and breathing due to the paint particulate and complained about the conditions to their supervisor, Randy Long.
- Long, a co-employee of Knudson, 'demanded' that Knudson and other employees continue working in the hazardous environment to ensure the HVAC contract was completed on time.
- Long provided masks that Knudson claims were 'cheap and inadequate,' which became so clogged with particulate that employees had to remove them to breathe.
- As a result of inhaling the paint particulate, Knudson alleges he suffered severe, permanent, and disabling lung injuries.
Procedural Posture:
- John E. Knudson filed a lawsuit against Randy Long (a Missouri citizen) and Systems Painters (a Texas citizen) in Missouri state trial court.
- Long filed a motion to dismiss, arguing he was immune from suit under Missouri's workers' compensation laws.
- The Missouri state trial court granted Long's motion and dismissed him from the case.
- After Long's dismissal, Systems Painters removed the case to the U.S. District Court for the Western District of Missouri, asserting diversity jurisdiction.
- Knudson filed a motion to remand the case to state court, arguing Long's original presence destroyed diversity of citizenship.
- The U.S. District Court denied Knudson's motion to remand, finding that Knudson had fraudulently joined Long.
- The U.S. District Court then certified its order denying remand for an interlocutory appeal.
- Knudson applied for the interlocutory appeal, which the U.S. Court of Appeals for the Eighth Circuit granted.
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Issue:
Does a plaintiff fraudulently join a non-diverse defendant supervisor, thereby permitting removal to federal court, when there is an arguable basis under state law that the supervisor's actions of ordering an employee into a known hazardous environment could constitute an affirmative act of negligence, creating an exception to co-employee immunity under workers' compensation laws?
Opinions:
Majority - Melloy, Circuit Judge
No. A plaintiff does not fraudulently join a non-diverse defendant when there is arguably a reasonable basis for predicting that state law might impose liability on that defendant. To prove fraudulent joinder, the removing defendant must show that the plaintiff's claim has 'no reasonable basis in fact and law,' a standard that requires more than merely showing the claim could be dismissed under a Rule 12(b)(6) motion. Here, Missouri's workers' compensation law provides an exception to co-employee immunity for 'affirmative negligent acts' that create additional danger. Citing state precedent like Groh v. Kohler, the court reasoned that a supervisor who directs an employee to work in a condition known to be hazardous, even if the supervisor did not create the hazard, may be found to have committed such an affirmative act. Because Long allegedly demanded Knudson continue working in a poorly ventilated site despite knowing of the breathing difficulties, there is a reasonable basis to predict Missouri law might impose liability on him. Therefore, Long was not fraudulently joined, his Missouri citizenship destroys complete diversity, and the federal court lacks subject-matter jurisdiction.
Analysis:
This case reinforces the high burden on defendants seeking to prove fraudulent joinder in the Eighth Circuit. It clarifies that the 'no reasonable basis in fact and law' standard is more favorable to the plaintiff than the Rule 12(b)(6) 'failure to state a claim' standard, thereby protecting the plaintiff's choice of forum. The decision underscores that in fraudulent joinder analyses, federal courts must resolve all doubts about state law in favor of the plaintiff and remand to state court if any arguable claim exists. This precedent makes it more difficult for out-of-state defendants to remove cases by challenging the inclusion of a local defendant, especially when state law on the issue is not definitively settled against the plaintiff.
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