Because of the numerous advantages of litigating personal injury cases in federal court, many out-of-state defendants seek to remove their cases from state court to federal court. To remove, the moving party must show that none of the defendants are citizens of the forum state. If even one defendant is a citizen of the forum state, the action may not properly be removed. Nevertheless, federal law recognizes a doctrine known as the improper joinder rule, which provides a narrow exception to the complete diversity requirement for diversity jurisdiction in federal courts. The improper joinder rule allows for removal of an action to federal court if the removing party can show that the plaintiff cannot establish a cause of action against the instate defendant(s). It is a difficult burden for the removing party to meet because the removing party must show that “there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an instate defendant.” Sanders v. Husqvarna, Inc., No. 3-12-258, slip op. at 3, (S.D. Tex., Oct. 22, 2012).
In Sanders, plaintiff Jimmy Sanders purchased a riding lawnmower manufactured by Husqvarna Consumer Outdoor Products. When Sanders attempted to start the lawnmower, an explosion occurred and the resulting fire burned him. Sanders subsequently filed a product liability suit in Texas state court against Husqvarna and the dealer that sold the lawnmower to Sanders. Husqvarna removed the action to federal court, arguing that the dealer could not plausibly be held liable because of a Texas statute that provides immunity to nonmanufacturing sellers of defective products. Immunity under the statute is not absolute, however. If the plaintiff can establish any of the seven exceptions to immunity listed in the statute, the nonmanufacturing dealer may be held liable for the sale of a defective product.
In Sanders, the plaintiffs alleged in their petition that the lawnmower was defective and that the dealer knew or should have known of the defect that caused the plaintiffs’ injuries. Because actual knowledge is one of the seven exceptions listed in the statute, the court ruled that the plaintiffs pleaded sufficiently to allege the exception to the statute. In finding that it was plausible for the dealer to be liable under Texas’ product liability statute, the court reaffirmed how difficult it is for a defendant to meet its burden of showing “there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the in-state seller in state court.” On the other hand, the plaintiffs met their burden by alleging that the nonmanufacturing seller had knowledge of the defect that allegedly caused the plaintiffs’ injuries.
The court acknowledged that the allegations contained a low “level of specificity,” but nevertheless remanded the case to state court. The court pointed out that remand is appropriate when the notice pleading standard has been met and plaintiffs plead facts sufficient to show that a cause of action exists against the instate defendant. Defendants seeking to remove have a high burden to meet and Husqvarna was not able to overcome the plaintiffs’ allegations.
Defendants seeking removal on diversity of citizenship grounds should be aware of the high burden they face. While it may be possible to remove based on the doctrine of improper joinder, the law makes it very difficult to establish diversity jurisdiction under such a narrow exception.