Several parents whose premature infants developed necrotizing enterocolitis (NEC) after being fed cow’s milk-based formula at Pennsylvania Hospital sued the manufacturers of the formula, as well as the hospital, in Pennsylvania state court. The parents alleged that the manufacturers’ products caused NEC and that the hospital failed to warn of the risks and implement policies to protect patients. Some plaintiffs were Pennsylvania citizens and others from New Jersey. The hospital and its related entities were named as defendants, and the claims against them were based on state law.
After the lawsuits were filed, the manufacturers removed the cases to federal court. The United States District Court for the Eastern District of Pennsylvania transferred the cases to a multidistrict litigation proceeding in the Northern District of Illinois. The plaintiffs’ initial motion to remand was granted after the district court found that the claims against the hospital were potentially viable, defeating removal on diversity grounds. The cases returned to Pennsylvania state court, where discovery proceeded and the hospital was later dismissed with prejudice after the state court sustained preliminary objections. The plaintiffs did not immediately appeal. The manufacturers then removed the cases a second time, arguing that the hospital had been fraudulently joined solely to defeat diversity jurisdiction. The district court denied the plaintiffs’ motion to remand, this time concluding that the plaintiffs’ lack of active pursuit of claims against the hospital showed “no real intention in good faith to prosecute the action,” amounting to fraudulent joinder.
On interlocutory appeal, the United States Court of Appeals for the Seventh Circuit reversed. The Seventh Circuit held that fraudulent joinder exists only where a plaintiff makes false jurisdictional allegations or has no chance of success against the non-diverse defendant, taking all facts and law in the plaintiff’s favor. The court held that the plaintiffs’ litigation conduct and subjective intent are not proper bases for finding fraudulent joinder. The case was remanded for further proceedings.
This article was first published by Legal Newsline.
