Frederick v. Mercedes-Benz USA, LLC

LISA FREDERICK, et al., Plaintiffs, v. MERCEDES-BENZ USA, LLC, et al., Defendants.

CIVIL ACTION NO. H-20-745

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

June 11, 2020

MEMORANDUM AND OPINION

In late 2019, Arthur Frederick was injured while driving. He later died from his injuries. Lisa Frederick, his widow, and other family members, individually and on behalf of Arthur Frederick's estate, sued Durga Acharya, the driver of another vehicle involved in the incident; Mercedes-Benz USA, LLC; Group 1 Automotive; and TK Holdings, Inc. (Docket Entry No. 1-6). The plaintiffs brought a state-law negligence claim against Durga Acharya, who they allege "violently struck" Frederick's car. (Id. at ¶¶ 13, 17). The plaintiffs brought products liability, strict-products liability, and breach-of-warranty claims against the other defendants, on the theory that Frederick's car was defective because the air bags did not deploy, exacerbating his injuries. (Id. at ¶¶ 18-31). Acharya and Group 1 Automotive are Texas citizens, but Mercedes-Benz USA and TK Holdings are not.

Mercedes-Benz timely removed on the basis of federal diversity jurisdiction, arguing that Acharya, Group 1, and TK Holdings were improperly joined. (Docket Entry No. 1). The plaintiffs moved to remand and to amend the complaint to add GPI TX-DMII, a Texas citizen and the dealership that serviced Arthur Frederick's car, and to amend their allegations against Acharya. (Docket Entry Nos. 3, 4).

Based on the complaint, the motions and responses, the arguments of counsel, the record, and the applicable law, the court denies the plaintiffs' motion to remand, (Docket Entry No. 3), and denies the motion to amend, (Docket Entry No. 4). The improperly joined defendants are dismissed, without prejudice. The reasons for these rulings are set out below.

I. Background

On October 26, 2019, Arthur Frederick was struck while driving his 2012 Mercedes C250 with an airbag system allegedly manufactured by TK Holdings, Inc. (Docket Entry No. 1-6 at ¶ 13). The plaintiffs allege that "[w]hile driving, [Arthur Frederick] was violently struck by Defendant Acharya," and that the airbags in Arthur Frederick's vehicle failed to deploy. (Id.). Arthur Frederick died from his injuries a few weeks later. (Id. at ¶ 16).

The plaintiffs submitted the following diagram from the investigating officer's crash report, illustrating how the incident occurred:

Image materials not available for display.

(Id. at ¶ 14).

In its notice of removal, Mercedes-Benz submitted the complete crash report, which contradicts the plaintiffs' narrative of the events leading to Arthur Frederick's death. (See DocketEntry No. 1-25). According to the crash report, Unit 1, a truck,¹ struck the back of Unit 3, Arthur Frederick's vehicle, causing it to spin out into the far-left lane. (Docket Entry No. 9 at 20; see also Docket Entry No. 1-25). Unit 1 then struck Unit 4, Acharya's vehicle, pushing it into the right side of the freeway. (Id.; see also Docket Entry No. 1-25). The diagram the plaintiffs submitted comes from this crash report and demonstrates Mercedes-Benz's account. (Id.; see also Docket Entry No. 1-25). The diagram and the crash report do not show a causal connection between Acharya's vehicle and the crash.

Lisa Frederick, Arthur's widow, and several other family members brought a negligence suit on behalf of Arthur's estate in state court against Acharya, a Texas citizen. (Docket Entry No. 1-5). The plaintiffs amended the petition to include products-liability claims against Mercedes-Benz USA, LLC, Group 1 Automotive, and TK Holdings. (Docket Entry No. 1-6 at ¶¶ 10-12).

Mercedes-Benz USA, LLC is a Delaware corporation with a principal place of business in Georgia. (Docket Entry No. 1 at 4). Group 1 Automotive is a Texas corporation. (Docket Entry No. 1-6 at ¶ 11). The plaintiffs did not allege citizenship for TK Holdings, but Mercedes-Benz alleges that TK is a Delaware corporation with its principal place of business in Michigan. (Docket Entry No. 1 at 11-12).

II. The Legal Standard

A. Improper Joinder

In general, a defendant may remove to federal court "any civil action brought in a State court of which the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). "To remove a case based on diversity, the diverse defendant must demonstrate that all of the prerequisites of diversity jurisdiction contained in 28 U.S.C. § 1332 are satisfied."Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 572 (5th Cir. 2004) (en banc). "A case may be removed pursuant to 28 U.S.C. § 1332 if there is complete diversity of citizenship and the amount in controversy is greater than $75,000 exclusive of interests and costs." Allen v. Walmart Stores, L.L.C., 907 F.3d 170, 183 (5th Cir. 2018).

"[A] district court is prohibited by statute from exercising jurisdiction over a suit in which any party, by assignment or otherwise, has been improperly or collusively joined." Smallwood, 385 F.3d at 572 (emphasis omitted) (citing 28 U.S.C. § 1359). Improper joinder can be established by showing the "inability of the plaintiff to establish a cause of action against the non-diverse party in state court." Travis v. Irby, 326 F.3d 644, 647 (5th Cir. 2003). The issue is "whether the defendant has demonstrated that there is no possibility of recovery by the plaintiff against an in-state defendant, which stated differently means that there is no reasonable basis for the district court to predict that the plaintiff might be able to recover against an in-state defendant." Smallwood, 385 F.3d at 573. The court "must resolve all ambiguities of state law in favor of the non-removing party." Ross v. Citifinancial, Inc., 344 F.3d 458, 463 (5th Cir. 2003) (citing Travis, 326 F.3d at 649). "The burden of persuasion on those who claim improper joinder is a heavy one." Davidson v. Georgia-Pacific, L.L.C., 819 F.3d 758, 765 (5th Cir. 2016) (alteration omitted) (quoting Travis, 326 F.3d at 649).

A "court may conduct a Rule 12(b)(6)-type analysis, looking initially at the allegations of the complaint to determine whether the complaint states a claim under state law against the in-state defendant." Smallwood, 385 F.3d at 573. In most cases, "if a plaintiff can survive a Rule 12(b)(6) challenge, there is no improper joinder." Id. A court may find that in some cases, "hopefully few in number, . . . a plaintiff has stated a claim, but has misstated or omitted discretefacts that would determine the propriety of joinder." Id. "In such cases, the district court may, in its discretion, pierce the pleadings and conduct a summary inquiry." Id.

B. Leave to Amend

Federal Rule of Civil Procedure 15(a) allows a party to amend his or her pleading once without seeking leave of court or the consent of the adverse party at any time before a responsive pleading is served. FED. R. CIV. P. 15(a). After a responsive pleading is served, a party may amend only by "leave of court or by written consent of the adverse party." Id.

Although leave to amend pleadings is freely given when justice requires, leave to amend "is not automatic." Moore v. Manns, 732 F.3d 454, 456 (5th Cir. 2013). "If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court." 28 U.S.C. § 1447(e). When a party seeks to add a nondiverse party, the court should scrutinize the amendment "more closely than an ordinary amendment." Moore, 732 F.3d at 456 (quoting Hensgens v. Deere & Co., 833 F.2d 1179, 1182 (5th Cir. 1987)).

To determine whether to permit a nondiverse party's joinder after removal, the court must balance the equities using four factors: (1) the extent to which the purpose of the amendment is to defeat federal jurisdiction; (2) whether the plaintiff has been dilatory in asking for amendment; (3) whether the plaintiff will be significantly injured if the amendment is not allowed; and (4) other equitable factors. Hensgens, 833 F.2d at 1182.

Granting the plaintiffs' motion for leave to amend would destroy diversity and this court's subject-matter jurisdiction. The Hensgens factors apply.

III. Analysis

A. The Motion to Remand

The plaintiffs argue that the court lacks diversity jurisdiction because Mercedes-Benz's removal violates the forum-defendant rule and Mercedes-Benz failed to obtain the consent of all defendants before removing the case.² (Docket Entry No. 3 at 8). Mercedes-Benz responds that because the in-state defendants were improperly joined, diversity jurisdiction exists. (Docket Entry No. 9 at 5-6). As required under Smallwood, the court will examine whether the defendant has demonstrated that there is no reasonable possibility of recovery by the plaintiffs against each in-state defendant. See Smallwood, 385 F.3d at 573.

1. Durga Acharya

The plaintiffs brought a negligence claim against Durga Acharya, the driver of one of the vehicles involved in the crash that caused Arthur Frederick's death. (See Docket Entry No. 1-5). The only allegation about Acharya's involvement in the crash is that he "violently struck" Arthur Frederick's vehicle. (Docket Entry No. 1-6 at ¶ 13). Because Mercedes-Benz argues that the plaintiffs have misstated the facts, the court may "pierce the pleadings." The crash report attached to the removal notice makes clear that Acharya's vehicle, "Unit 4," did not strike Arthur Frederick's vehicle, "Unit 3," but was instead ahead of Arthur Frederick's vehicle. (See Docket Entry No. 9 at 20; see also Docket Entry No. 1-25). The report describes how the "Unit 1" truck struck Arthur Frederick's vehicle, which spun out to the left lane. (Id.). The truck kept going and hit the rear of Acharya's vehicle. (Id.). There is no indication that Acharya struck or was struck by Arthur Frederick's vehicle or otherwise contributed to cause his injuries or death. (Id.).

The plaintiffs dispute the...