Palmquist v. Hain Celestial Grp., Inc.

103 F.4th 294

Sarah PALMQUIST, Individually and as Next Friend of E.P.,a minor; Grant Palmquist, Plaintiffs—Appellants, v. The HAIN CELESTIAL GROUP, INCORPORATED;Whole Foods Market, Incorporated, also known as Whole FoodsMarket Rocky Mountain/southwest, L.P., Defendants—Appellees.

No. 23-40197

United States Court of Appeals, Fifth Circuit

FILED May 28, 2024

Appeal from the United States District Court for the Southern District of Texas, USDC No. 3:21-CV-90, Jeffrey Vincent Brown, U.S. District Judge

Russell S. Post (argued), Owen Joseph McGovern, Bennett James Ostdiek, Beck Redden, L.L.P., Houston, TX, Kurt B. Arnold, Attorney, Micajah Boatright, Arnold & Itkin, L.L.P., Houston, TX, Austin Brumbaugh, Jason R. LaFond, Constance Hankins Pfeiffer, Esq., Yetter Coleman, L.L.P., Houston, TX, for Plaintiffs—Appellants.

Michael Xavier Imbroscio, Paul Schmidt (argued), Covington & Burling, L.L.P., Washington, DC, Thomas Clark Wright, Eric Bradley Boettcher, Raffi Melkonian, Wright, Close & Barger, L.L.P., Houston, TX, Brian Gregory Cano, Fee, Smith, Sharp & Vitullo, L.L.P., Houston, TX, for Defendant—Appellee The Hain Celestial Group, Incorporated.

Bradley Eugene Chambers (argued), Emma Short, Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., Houston, TX, for Defendant—Appellee Whole Foods Market, Incorporated.

Before Stewart, Clement, and Ho, Circuit Judges.

Carl E. Stewart, Circuit Judge:

In 2021, Grant and Sarah Palmquist, individually and on behalf of their minor son ("Palmquists"), sued baby-food manufacturer, Hain Celestial Group, Inc. ("Hain"), and grocery retailer, Whole Foods Market, Inc. ("Whole Foods"), in Texas state court, seeking damages for their son Ethan's physical and mental decline that began when he was about thirty months old. Following removal, the district court dismissed Whole Foods as improperly joined and granted judgment as a matter of law in favor of Hain during trial. The Palmquists appeal the district court's (1) dismissal of Whole Foods on improper joinder grounds, (2) denial of the Palmquists' motion to remand, and (3) grant of Hain's motion for judgment as a matter of law. For the reasons that follow, we hold that the Palmquists were entitled to a remand to state court because the allegations in their state-court complaint stated plausible claims against Whole Foods. Thus, we REVERSE the district court's judgment denying the Palmquists' motion to remand, VACATE the final judgment of the district court, and REMAND with instructions for the district court to remand the case to the state court.

I. FACTUAL AND PROCEDURAL HISTORY

A. Factual Background

Sarah Palmquist gave birth to Ethan in September 2014 after a healthy and uneventful pregnancy. During the first two years of his life, Ethan met or exceeded developmental milestones The Palmquists allege that during this time, Ethan almost exclusively consumed Hain's Earth's Best Organic Products, which the Palmquists purchased from Whole Foods.

When he was about thirty months old, Ethan's "social, language, and behavior[al]" skills rapidly regressed. Ethan's parents, Grant and Sarah, visited numerous physicians and specialists for a diagnosis and appropriate treatment. They aver that those medical tests revealed that Ethan suffered from several physical and mental disorders. Ethan's physical ailments include seizure disorder, chronic diarrhea, epileptiform disorder (excessive and abnormal brain activity), hypotonia (abnormally decreased muscle tone), and mitochondrial dysfunction. Ethan's mental diagnoses range from intellectual disability to anxiety and aggression. Some physicians attributed most, if not all, of Ethan's symptoms to autism spectrum disorder or major neurocognitive disorder. Some physicians also diagnosed Ethan with heavy-metal poisoning. While the Palmquists assert that heavy metal toxicity caused Ethan's symptoms, Hain attributes the entirety of Ethan's disabilities to autism.

In 2021—several years after Ethan's heavy metal toxicity diagnosis—the House Oversight and Reform Committee released a report ("Committee Report") demonstrating that certain baby foods, including Hain's, contained elevated levels of toxic heavy metals, including arsenic, lead, cadmium, and mercury. The Committee Report also revealed that: (1) Hain's Earth's Best Organic Products contained up to 129 parts per billion ("ppb") inorganic arsenic; (2) some of Hain's ingredients contained as much as 352 ppb lead; and (3) Hain did not test for mercury.¹

From 2014 to 2019, Hain only tested some ingredients in its baby foods for toxic metals but did not test the finished products. In 2019, in an effort to reduce the heavy-metal concentration in its products, Hain stopped using a vitamin pre-mixed ingredient, switched to a lower-arsenic-content rice for its infant cereal, and started final-product testing.

B. Procedural History

Attributing the high levels of toxic metals appearing in Ethan's blood tests to his consumption of Earth's Best Organic Products, the Palmquists sued both Hain and Whole Foods in Texas state court in 2021, alleging strict-products-liability and negligence claims against Hain and breach-of-warranties and negligence claims against Whole Foods.² The Palmquists sought to show that heavy-metal exposure causes heavy-metal poisoning and that Ethan's consumption of heavy metals in Hain's products caused his heavy-metal poisoning and resultant cognitive decline. Hain removed the case to federal court, contending that Whole Foods, a multinational supermarket chain headquartered in Austin, Texas, was improperly joined to defeat diversity jurisdiction.³

After removal, the Palmquists filed an amended complaint (the "second amended complaint") that purportedly "clarified their allegations against Whole Foods under the federal pleading standard." In their second amended complaint, the Palmquists sought to clarify that their breach-of-warranties cause of action included claims that Whole Foods expressly represented to the public and to the Palmquists that Hain's baby food was safe. The Palmquists also added a negligent-undertaking claim against Whole Foods.

After amending their complaint, the Palmquists moved to remand the suit, countering that they had viable claims against Whole Foods under the Texas Products Liability Act⁴ and the Deceptive Trade Practices Act ("DTPA"). The Palmquists based their remand motion on the details in their second amended complaint.

The district court determined that any new claims could not be considered because jurisdiction "is resolved by looking at the complaint at the time [the] petition for removal [was] filed." Specifically, the district court concluded that the Palmquists added a new breach of express warranty claim in the second amended complaint, in addition to their new negligent-undertaking claim. Nonetheless, even considering the purportedly new express breach-of-warranty claim the district court concluded that, under the Texas Civil Practice & Remedies Code § 82.003(a), "[g]enerally, retail sellers such as Whole Foods are not liable for the harm caused by the products they sell." The district court subsequently determined that the Palmquists had improperly joined Whole Foods and dismissed their claims against it.

The Palmquists' claims against Hain proceeded in federal court. Prior to trial, Hain moved for summary judgment. The Palmquists' marketing-defect claim, manufacturing-defect claim, and negligent-testing claim all survived summary judgment. On February 6, 2023, a jury trial on the merits commenced. On February 15, 2023, Hain filed a written motion under Rule 50(a) of the Federal Rules of Civil Procedure, requesting that the court enter judgment as a matter of law because the Palmquists (1) failed to either prove specific causation or offer expert testimony to support general causation and (2) lacked sufficient evidence to establish that Ethan had heavy-metal toxicity. On February 17, 2023—after the Palmquists had rested—the court heard, considered, and orally granted in its entirety Hain's motion for judgment as a matter of law under Rule 50(a) finding that the Palmquists had presented "no evidence of general causation." The court explained that the jury "heard no testimony from a qualified expert that the ingestion of heavy metals can cause the array of symptoms that Ethan suffers from, much less any evidence of at what level those metals would have to be ingested to bring about those symptoms." The court ultimately concluded that "the law is clear that such testimony is necessary to show general causation." The Palmquists filed this appeal.

II. STANDARD OF REVIEW

Denial of a remand motion and the determination that a party is improperly joined are reviewed de novo. Int'l Energy Ventures Mgmt., L.L.C., v. United Energy Grp. Ltd., 818 F.3d 193, 199 (5th Cir. 2016) (denying a remand motion); Kling Realty Co., Inc. v. Chevron USA, Inc., 575 F.3d 510, 513 (5th Cir. 2009) (analyzing improper joinder). "[W]e have recognized two ways to establish improper joinder: (1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court." Smallwood v. Ill. Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (en banc) (internal quotation marks and citations omitted). However, this court reviews a district court's procedure for determining improper joinder only for abuse of discretion. Kling Realty Co., 575 F.3d at 513; Guillory v. PPG Indus., Inc., 434 F.3d 303, 309-10 (5th Cir. 2005).

III. DISCUSSION

The Palmquists contend that the district court erred in its improper joinder analysis and erroneously denied their remand motion. The Palmquists challenge the court's conclusion that they are unable to recover against Whole Foods based on the claims alleged in either their state-court pleading or their second amended complaint. They argue that their second amended complaint detailed viable claims—already alleged in their...