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WARE v. CIBA SPECIALTY CHEMICALS CORPORATION

United States District Court, D. New Jersey


August 4, 2004.

BOBBY WARE, et al., Plaintiffs,
v.
CIBA SPECIALTY CHEMICALS CORPORATION, et al., Defendants.

The opinion of the court was delivered by: JEROME SIMANDLE, District Judge

OPINION

Residents of Alabama filed this class action complaint in the Superior Court of New Jersey, Law Division, Atlantic County, alleging that they were harmed when defendant companies negligently manufactured, transported, and disposed solid and liquid wastes near McIntosh, Alabama. The defendant companies are Ciba Specialty Chemicals Corp. ("Ciba"), Ciba-Geigy Corp. ("Ciba-Geigy"), Novartis Corp.*fn1 ("Novartis"), Freehold Cartage, Inc. ("Freehold"), Olin Corp. ("Olin"), and Arch Chemicals, Inc. ("Arch").

  Defendant Freehold is a New Jersey corporation. Defendants removed the case to this Court citing diversity jurisdiction, arguing that the New Jersey citizenship of Freehold should be disregarded notwithstanding 28 U.S.C. § 1441(b)'s requirement that, in a diversity case removed to federal court, no defendant may be a citizen of the forum state. Defendants assert that even though Defendant Freehold is a citizen of New Jersey, it is not a "properly joined" defendant but is instead a defendant which was improperly joined to defeat removal jurisdiction.

  For the reasons set forth herein, this Court finds that Freehold was properly included as a defendant. Therefore, this Court does not have subject matter jurisdiction because a proper defendant, Freehold, is a citizen of the forum state, and the removal violates 28 U.S.C. § 1441(b). The Court will remand the case to New Jersey Superior Court.

  I. BACKGROUND

  On January 20, 2004, Plaintiffs filed this class action in the Superior Court of New Jersey, Atlantic County, alleging that Defendants negligently and/or purposely manufactured harmful liquid and solid wastes, transported hazardous wastes, and created inadequate disposal areas for the waste at plants located near McIntosh, Alabama (Compl., Count I, ¶ 3, Count III, ¶ 2), which has placed Plaintiffs, who are all Alabama residents, in a position of enhanced risk of injury. (Id. ¶ II.4.) The issue on this motion is whether Freehold is a proper defendant in the action, so the Court will limit its discussion to this issue.

  Since 1952, Ciba,*fn2 Ciba-Geigy,*fn3 and Novartis*fn4 have operated a chemical manufacturing plant on property located two miles northeast of McIntosh, Alabama. (Id., Count I, ¶ 1.) Ciba-Geigy also owns and operates a chemical manufacturing plant in Toms River, New Jersey, from which it allegedly transported its hazardous waste to the McIntosh, Alabama, site for disposal at a rate of approximately 710,000 pounds per year. (Id. ¶ I.2.) For this transportation from New Jersey to Alabama, Ciba-Geigy allegedly hired Freehold Cartage, a New Jersey corporation. (Id. ¶ I.3.) Plaintiffs have alleged that Freehold negligently transported the hazardous waste from New Jersey to the Ciba plant in Alabama, where it was negligently disposed of by the Ciba defendants. (Id., Count II, ¶ 4.)*fn5

  Based in part on certain environmental tests at the Alabama site, Plaintiffs filed the present action seeking medical monitoring to ensure that any health issues from their exposure to the hazardous chemicals would be immediately detected. In addition to the present suit, there are two putative class action lawsuits pending in the United States District Court for the Southern District of Alabama, seeking relief for property damage from the same exposure. Plaintiffs filed one suit against the Ciba Defendants,*fn6 and one against the Olin Defendants;*fn7 neither includes a claim against Defendant Freehold. (Def. Ciba Br. at 2; Def. Olin Br. at 4.)

  On April 8, 2004, the Ciba Defendants removed the case to this court, asserting diversity jurisdiction. (Bennett Cert., Exs. F, G, H.) Noting that Freehold is a New Jersey corporation, the Court raised the question of removability sua sponte in a letter to counsel on April 14, 2004.

  As a result, on April 26, 2004, the Ciba Defendants and the Olin Defendants filed motions for a declaration that this Court has subject matter jurisdiction based on the improper joining of a New Jersey corporation. Freehold Cartage has since joined their motions. Plaintiffs have opposed the Defendants' motions, asserting that Freehold was properly joined as a defendant in this action.

  II. DISCUSSION

  A. Standard of Review

  Civil actions brought in a state court may generally be removed to district court if the district court has original jurisdiction. 28 U.S.C. § 1441(a). Where removal is premised on diversity jurisdiction, as it is here, the action is "removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." 28 U.S.C. § 1441(b) (emphasis added). The issue here is whether Freehold, a citizen of the State where this action was brought, is a party that was "properly joined."

  In the Third Circuit, the removing party has a "heavy burden" to justify removal and may avoid remand only by demonstrating that the defendant sued in his home state was fraudulently joined. Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir. 1992) (quoting Steel Valley Author v. Union Switch & Signal Div., 809 F.2d 1006, 1012 n. 6 (3d Cir. 1987), cert. dismissed, 484 U.S. 1021 (1988)). "Removal statutes are to be strictly construed against removal and all doubts should be resolved in favor of remand" Batoff, 977 F.3d at 851 (quoting Steel Valley, 809 F.2d at 1010); see also Samuel-Bassett v. KIA Motors America, Inc., 357 F.3d 392, 396 (3d Cir. 2004). Therefore, "a district court must resolve all contested issues of substantive fact in favor of the plaintiff and must resolve any uncertainties as to the current state of controlling substantive law in favor of the plaintiff." Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990), cert. denied, 498 U.S. 1085 (1991). If even the possibility exists that a state court "would find the complaint states a cause of action against any one of the resident defendants, the federal court must find that joinder was proper and remand the case to state court." Batoff, 977 F.2d at 851 (citing Boyer, 913 F.2d at 111).

  A properly joined defendant is one against whom the plaintiff states a colorable claim and intends to prosecute the action. Batoff, 977 F.2d at 851. Joinder is therefore fraudulent "where there is no reasonable basis in fact or colorable ground supporting the claim against the joined defendant, or no real intention in good faith to prosecute the action against the defendants or seek a joint judgment." Id. (citing Boyer, 913 F.2d at 111). A claim is not colorable if it is "wholly insubstantial and frivolous." Id. at 852 (citing Bell v. Hood, 327 U.S. 678, 682-683 (1946)). The mere fact that plaintiff's motive may be to defeat diversity does not itself establish fraudulent joinder. Abels v. State Farm Fire & Casualty Comp., 770 F.2d 26, 32 (3d Cir. 1985).

  In considering whether a party was properly joined, the Court must determine whether the allegations of the complaint state a colorable claim, not whether the complaint would survive a motion to dismiss or a motion for summary judgment. Batoff, 977 F.2d at 852-853 (finding the court was "presented with a `colorable' claim even if [the claim] ultimately may not withstand a motion to dismiss in state court); see also Boyer, 913 F.2d at 112 (reversing district court grant of summary judgment because it "stepped from the threshold jurisdictional issue into a decision on the merits"). Where there are colorable claims asserted, "the court may not find that the non-diverse parties were fraudulently joined," even if the claim against that party is eventually dismissed on the merits. Batoff, 977 F.2d at 852 (citing Boyer 913 F.2d at 113).

  B. Analysis

  The plaintiffs assert that they have properly joined Freehold, the cartage company that transported the allegedly hazardous chemicals from New Jersey to Alabama. The Ciba Defendants and Olin Defendants, though, assert that the joinder was fraudulent because (1) Alabama law applies to these claims, (2) neither Alabama nor New Jersey law recognizes transporter liability under the circumstances alleged in the complaint, and (3) Alabama law does not recognize the cause of action for medical monitoring asserted here.

  1. Choice of Law

  Defendants argue that Alabama law should apply to this action. Plaintiffs argue that this Court should not engage in choice of law analysis in determining whether it has subject matter jurisdiction over this case. As noted above, this Court must not decide whether joinder of the resident defendant was fraudulent based on its view of the merits of the case, but only decide whether there is a colorable basis for the Plaintiffs' cause of action. Batoff, 977 F.2d at 851. Indeed, the Third Circuit has expressly stated that "a federal court cannot engage in a choice of law analysis where diversity jurisdiction is not first established." Abels, 770 F.2d at 33 n. 10. Therefore, while this Court does not decide which state's law applies, the Court does find that Plaintiffs have stated a colorable claim that New Jersey law could apply to the claims against Freehold.

  New Jersey choice of law rules apply where New Jersey is the forum for the litigation. Erny v. Estate of Merola, 171 N.J. 86, 94 (2002) (citing Fu v. Fu, 160 N.J. 108, 117-118 (1999)). New Jersey rules "employ a flexible governmental-interest analysis to determine which state has the greatest interest in governing the specific issue that arises in the underlying litigation." Erny, 171 N.J. at 94.

  New Jersey employs an issue-by-issue approach to choice of law analysis and "recommends that each issue be decided by `the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties.'" Id. at 95 (quoting Restatement (Second) of Conflict of Laws § 145(1)(1971)). Specifically, damages issues like the medical monitoring in this case "are characterized as appropriate for an issue-specific determination with respect to which state has the dominant policy interest." Id. at 96. Furthermore, Erny quotes the Restatement where it provides:

In an action for personal injury, the local law of the state where the injury occurred determines the rights and liabilities of the parties, unless, with respect to the particular issue, some other state has a more significant relationship . . . to the occurrence and the parties, in which event the local law of the other state will be applied.
Restatement, supra § 146 (quoted by Erny, 170 N.J. at 95-96).

  A reasonable basis exists to conclude that New Jersey law could apply to the claims against Freehold. Freehold's alleged negligent transportation of New Jersey hazardous wastes originated from a New Jersey-regulated facility, and it is not wholly insubstantial to assert that the State of New Jersey has a policy interest in regulating a New Jersey waste-hauling corporation that is transporting an average of 710,000 pounds of hazardous waste from a New Jersey plant to a different state. The potential New Jersey interest may be heightened when one considers that the New Jersey hazardous wastes are being transported by a New Jersey corporation to an out-of-state facility owned and operated by the same waste-generating company. This Court does not decide whether New Jersey law applies to the claims against Freehold; however, it does find that it is possible that New Jersey law could apply. Therefore, Plaintiffs do have a colorable basis for asserting that New Jersey law applies to the complaints against Freehold.*fn8

  2. Transporter Liability

  The Court further finds that there is a reasonable basis for a claim against Freehold based on New Jersey's common law cause of action for transporter liability. (Def. Ciba Br. at 8.) The defendants agree that New Jersey's standard for transporter liability is outlined in Kenney v. Scientific, Inc., 204 N.J. Super. 228 (Law Div. 1985). (Def. Ciba Br. at 9-10.)*fn9 To state a valid claim, a plaintiff must allege among other things that either (1) the hauler selected the disposal site which he knew or had reason to know was hazardous or (2) the hauler did not select the disposal site but knew or had reason to know "that the site selected by the generator is dangerous or has become dangerous" and continued to make deliveries. Kenney, 204 N.J. Super. at 262.

  Here, the defendants argue that there is no reason to believe that Freehold, which did not select the disposal site, knew or had reason to know that the selected site had become dangerous. Plaintiffs, though, have alleged that Freehold "negligently and/or purposefully transported hazardous waste" to a site where "the chemicals and waste transported . . . were negligently and improperly disposed of." (Compl., Count II, ¶¶ 3,4.) Thus, within the bounds of this allegation is an assertion that Freehold reasonably should have known that the disposal site was dangerous and continued to negligently or purposefully transport waste there. Plaintiffs are not required to prove their allegations against Freehold in this forum in order to demonstrate that joinder was not improper. The Court finds, based on the circumstances alleged in the complaint, that Plaintiffs have a reasonable basis for the cause of action against Freehold under New Jersey law.

  The Court does not here determine whether or not Plaintiffs will be able to sustain this claim as the Court is not called upon to predict whether the claim would survive a substantive motion to dismiss. It is enough that Plaintiffs have asserted a colorable claim against Freehold; therefore, this Court cannot find that Freehold was not "properly joined."

  3. Cause of Action for Medical Monitoring

  Finally, the Court finds that, if new Jersey law is applied, Plaintiffs have stated a colorable claim against Freehold for medical monitoring. Defendants' argument is premised on the undisputed fact that Alabama law does not recognize a cause of action for medical monitoring. See Southern Bakeries, Inc. v. Knipp, 852 So.2d 712, 718 (Ala. 2002); Hinton v. Monsanto Co., 813 So.2d 827, 830 (Ala. 2001). For the reasons stated above, though, the Court has found that there is a colorable basis for application of New Jersey law, which does allow a cause of action for medical monitoring. See Ayers v. Township of Jackson, 106 N.J. 557, 608 (1987) (recognizing the use of a court-supervised fund to "administer medical-surveillance payments in mass exposure cases").

  It is true that Defendants have sought only medical monitoring relief in this action, stating that:

The members of the class are not currently seeking damages in this proceeding for any diseases related to their exposure to these site-related contaminants. Plaintiffs and class members are seeking to establish a program and/or fund for medical monitoring of all class members for the potential adverse health effects from exposure.
(Compl., Class Allegations, ¶ 4.) Defendants argue that Plaintiffs, therefore, have a motive to sue in New Jersey to take advantage of this law.

  Regardless of the plaintiffs' motives for this suit, a federal court cannot hear the suit unless federal subject matter jurisdiction is first established. Abels, 770 F.2d at 33 n. 10. Where there is a colorable basis for liability against Freehold under New Jersey law, the Court cannot find that naming Freehold as a defendant was improper. Accordingly, the Court will allow the claims against Freehold to proceed and will remand this case to the State court because this Court lacks jurisdiction over the subject matter.

  The proper forum is the Superior Court of New Jersey, which is the court of competent jurisdiction to address the merits, if any, of Plaintiffs' clams.

  III. CONCLUSION

  For the foregoing reasons, the Court holds that Freehold has been properly joined and this Court does not have subject matter jurisdiction upon removal pursuant to 28 U.S.C. § 1441(b); therefore, the Court will remand this case to State court.

  ORDER

  This matter having come before the Court upon the motions of Defendants Ciba Specialty Chemicals Corp., Ciba-Geigy Corp., Novartis, Corp., Olin Corp., and Arch Chemicals, Inc., for a declaration that this Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1441, [Docket Items 5-1, 9-1]; the Court having reviewed the submissions of the parties; and the Court finding, for the reasons stated in the Opinion of today's date, that Plaintiffs' joinder of Defendant Freehold Cartage, Inc., was not improper;

  IT IS this 4th day of August, 2004, hereby

  ORDERED that the motion of Defendants Ciba Specialty Chemicals Corp., Ciba-Geigy Corp., and Novartis, Corp., for a declaration that this Court has subject matter jurisdiction, [Docket Item 5-1], be, and hereby is, DENIED; and

  IT IS FURTHER ORDERED that the motion of Defendants Olin Corp. and Arch Chemicals, Inc., for a declaration that this Court has subject matter jurisdiction, [Docket Item 9-1], be, and hereby is, DENIED; and

  IT IS FURTHER ORDERED that this case be REMANDED to New Jersey Superior Court, Atlantic County, Case No. ATL-L-243-04.


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