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Thomas v. Exxon Mobil Corp.

United States District Court, E.D. Louisiana

April 25, 2017

TRAVIS THOMAS ET AL.
v.
EXXON MOBIL CORPORATION ET AL.

         SECTION “H” (2)

          ORDER AND REASONS ON MOTION

          JOSEPH C. WILKINSON, JR. UNITED STATES MAGISTRATE JUDGE.

         This is a personal injury action alleging liability for damages caused to plaintiffs Travis Thomas, his wife and minor children by his long-term exposure to benzene in gasoline. The lawsuit was filed in state court and removed to this court based on diversity jurisdiction by all defendants except Jafri's Faith, Inc. (“Jafri's”), which has not appeared in the action. Notice of Removal, Record Doc. No. 1. The removing defendants, Exxon Mobil Corporation, Shell Oil Company, Ingram Barge Company, Frontier Merger Sub LLC, Cash America, Inc. of Louisiana[1] and Gentilly, LLC (collectively “defendants”), contend in their notice of removal that plaintiffs fraudulently joined Jafri's, a Louisiana citizen, to defeat diversity jurisdiction. Id. at p. 2 ¶ 2, p. 5 ¶ 11 et seq.

         Plaintiffs promptly moved to remand the action to state court. The presiding district judge denied the motion. Order and Reasons, Record Doc. No. 26. In assessing whether plaintiffs had alleged a cause of action against the non-diverse defendant to avoid a finding of fraudulent joinder, the district judge “conduct[ed] an analysis similar to that employed in the context of [Fed. R. Civ. P.] 12(b)(6), asking whether there is a legal basis for recovery assuming the facts in the complaint as true.” Id. at p. 2. The court applied the Rule 12(b)(6) standard to plaintiffs' petition, which “must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face. A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quotation omitted).

         The district court held that the petition's

sole factual allegation specific to Jafri's is that it sold gasoline to [Travis Thomas]. The Petition contains no specific factual allegations relative to Jafri's knowledge of defects in the product at issue. Plaintiff's boilerplate statement that all “defendants knew or should have known of the health hazards inherent in the products” at issue is a legal conclusion and lacks sufficient specificity. Accordingly, the Court finds that Jafri's is fraudulently joined, as the Petition does not provide a legal basis for recovery against it. The Motion to Remand is therefore denied.

         Record Doc. No. 26 at p. 4. The order did not expressly dismiss plaintiffs' claims against Jafri's. Plaintiffs were not given an opportunity to amend to cure any pleading deficiencies before the ruling.

         No return of service on Jafri's had been filed in the state court record when this action was removed to federal court. After plaintiffs' motion to remand was denied, the Clerk of Court directed plaintiffs to file a return of service on Jafri's. Record Doc. No. 27. Plaintiffs did so on March 14, 2017. Record Doc. No. 28. The return of service shows that the petition was served on Jafri's before the lawsuit was removed, but the return was not filed in the state court record until five days after the removal. Id. On March 21, 2017, the court ordered plaintiffs to prosecute their claims against Jafri's or risk dismissal for failure to prosecute. Record Doc. No. 29.

         Ten days later, plaintiffs filed a Motion for Leave to File First Amended Complaint, Record Doc. No. 31, which is pending before me. They seek to add allegations against Jafri's in new paragraphs 37 through 40 of their proposed amended complaint to “cure the defects of the original Petition for Damages and permit remand to the state court.” Id. at p. 2. The amended complaint also adds allegations against Shell in its new paragraphs 37 through 39 and 41 through 44, although plaintiffs do not mention these new allegations in their motion. Record Doc. No. 31-1. Defendants filed timely opposition memoranda, arguing against allowing the amendment regarding Jafri's because it would destroy diversity of citizenship, the sole basis for this court's subject matter jurisdiction. Like plaintiffs, defendants do not mention the new allegations against Shell. Record Doc. Nos. 32-35, 38. Plaintiffs received leave to file a reply memorandum. Record Doc. Nos. 39, 40, 41. No scheduling order has yet been entered.

         Having considered the written submissions of the parties, the record and the applicable law, IT IS ORDERED that the motion is GRANTED for the following reasons.

         ANALYSIS

         Federal Rule of Civil Procedure 15(a) provides that leave to amend pleadings “shall be freely given when justice so requires.” Because the policy of Rule 15 is to permit liberal amendment of pleadings in the absence of substantial prejudice to defendants that cannot be cured by other means, Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 597 (5th Cir. 1981), Rule 15(a) evinces a bias in favor of granting leave to amend. Unless there is a substantial reason to deny leave to amend, the discretion of the district court is not broad enough to permit denial. Stripling v. Jordan Prod. Co., 234 F.3d 863, 872 (5th Cir. 2000) (citing Foman v. Davis, 371 U.S. 178, 182 (1962); Leffall v. Dallas Indep. Sch. Dist., 28 F.3d 521, 524 (5th Cir. 1994); Martin's Herend Imports, Inc. v. Diamond & Gem Trading U.S. Am. Co., 195 F.3d 765, 770 (5th Cir. 1999); Dussouy, 660 F.2d at 597-98). Thus, “[t]he court should freely give leave when justice so requires, ” Fed.R.Civ.P. 15(a)(2), but such leave “is by no means automatic.” Wimm v. Jack Eckerd Corp., 3 F.3d 137, 139 (5th Cir. 1993) (quotation omitted). Relevant factors to consider include “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party, and futility of amendment.” Id. Futility in this context means “that the amended complaint would fail to state a claim upon which relief could be granted. . . . [Thus, ] to determine futility, we will apply the same standard of legal sufficiency as applies under Rule 12(b)(6).” Stripling, 234 F.3d at 873 (quotations and citations omitted); accord Fenghui Fan v. Brewer, 377 F.App'x 366, 367 (5th Cir. 2010).

         In addition, a court generally should not dismiss an action under Rule 12(b)(6) because it fails to state a claim upon which relief may be granted, which, as the court stated in the prior ruling in the instant case, requires essentially the same analysis as the fraudulent joinder standard, without giving plaintiffs “at least one chance to amend” the complaint. Hernandez v. Ikon Office Solutions, Inc., 306 F.App'x 180, 182 (5th Cir. 2009); accord Great Plains Trust Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 329 (5th Cir. 2002). Plaintiffs have not previously been provided an opportunity to amend to cure pleading deficiencies.

         Defendants contend that the court's prior ruling that plaintiffs failed to state a claim against Jafri's upon which relief may be granted and that Jafri's was improperly joined as a defendant “is tantamount to a dismissal.” Record Doc. No. 33 at p. 2 (Shell and Exxon Mobil's memorandum in opposition). Defendants argue that the failure to dismiss Jafri's explicitly is “‘a mere technicality'” because “the denial of plaintiffs' motion to remand ‘effectively dismissed the [. . . non-diverse] defendants by finding that the plaintiffs failed to state a claim against them.'” Id. at p. 3 (quoting Holmes v. Entergy Corp., No. 98-3119, 1999 WL 288774, at *2 (E.D. La. May 6, ...


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