Kuperstein Ex Rel. Kuperstein v. Hoffman-Laroche, Inc.

District Court, S.D. New York
457 F. Supp. 2d 467, 2006 WL 2930203, 2006 U.S. Dist. LEXIS 74239 (2006)

ELI5:

Rule of Law:

A defendant seeking to remove a case to federal court based on diversity jurisdiction bears a heavy burden to prove fraudulent joinder by showing through clear and convincing evidence that there is 'no possibility' the plaintiff can state a valid cause of action against the non-diverse defendant under state law.

Facts:

Eileen, Steven, and Michael Kuperstein are residents of New York.
Dr. Donald Lawrence and his practice, Doctors 4 Kids, are also residents of New York.
Dr. Lawrence prescribed the medication Lariam to the infant, Michael Kuperstein.
The Kupersteins allege that Michael suffered severe injuries, including permanent cognitive deficits, as a direct result of taking Lariam.
Hoffman-La Roche, Inc. and Roche Laboratories, Inc. (collectively 'Roche'), the companies that market Lariam, are foreign corporations, not residents of New York.

Procedural Posture:

The Kupersteins filed suit against Roche (a foreign corporation) and the Doctor Defendants (New York residents) in the Supreme Court of the State of New York, a state trial court.
The Kupersteins sent Roche a Statement of Damages claiming $25 million.
Roche filed a notice of removal to the U.S. District Court for the Southern District of New York (a federal trial court), asserting diversity jurisdiction.
The Kupersteins filed a motion to remand the case back to state court, arguing that complete diversity was lacking because both the plaintiffs and the Doctor Defendants were residents of New York.

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Issue:

Is the joinder of non-diverse resident defendants fraudulent, thereby precluding remand to state court, when the plaintiff's complaint pleads a colorable cause of action for lack of informed consent against those defendants under state law?

Opinions:

Majority - Scheindlin, District Judge

No. The joinder of the Doctor Defendants was not fraudulent because the plaintiff's complaint states a colorable cause of action against them under New York law. A defendant claiming fraudulent joinder faces a heavy burden and must demonstrate by clear and convincing evidence that there is 'no possibility' the plaintiff can succeed on any claim against the non-diverse defendant. Here, the Kupersteins' complaint adequately pleaded all three elements of a lack of informed consent claim as required by New York Public Health Law § 2805(d): breach of the standard of care, that a prudent person would not have consented if informed, and that the lack of consent was the proximate cause of the injury. Because New York courts would likely find this claim sufficient to survive a motion to dismiss, it easily satisfies the less stringent standard for fraudulent joinder analysis. Therefore, complete diversity is lacking, and the case must be remanded to state court.

Analysis:

This case reinforces the exceptionally high burden placed on defendants attempting to establish fraudulent joinder to secure federal diversity jurisdiction. It underscores that federal courts will conduct a lenient review of the plaintiff's state law claims, resolving all doubts in favor of remand. The decision clarifies that as long as even one claim against a non-diverse defendant is 'colorable' or has any possibility of success under the state's liberal pleading standards, the joinder is proper, and the federal court must relinquish jurisdiction. This precedent significantly limits the ability of out-of-state corporate defendants to remove cases from state court when a local party, such as a doctor or retailer, is also plausibly implicated in the dispute.

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