We’re not law professors. We don’t typically read opinions with an eye to where they fit (or don’t) in some grand jurisprudential scheme. We’re litigators, so we read opinions with an eye to whether they can help our clients win.
Thus, when Johnson v. American Towers, LLC, ___ F.3d ___, 2015 WL 1321535 (4th Cir. March 25, 2015), popped up in one of our automatic searches (due to a stray citation to Riegel v. Medtronic, Inc., 552 U.S. 312 (2008)), we were inclined to pass it by, since preemption under the Federal Communications Act is not exactly something that arises in our sandbox very often. If you have an FCC tort preemption issue, you’ll want to read Johnson for that reason, but our discussion here won’t interest you much.
Johnson is also a removal/remand case, and that aspect of the case bears comment.
We love removal, because it also helps win cases. Here’s what happened in Johnson on the removal front. Plaintiffs are the family of a prison guard injured in what he claims was a “hit” arranged by a prisoner through the use of a contraband cell phone. Not knowing whose phone was involved, they sued much of the cellular communication industry, claiming they should have “blacked out” the prison so that prisoners would not have illicit access to the cellular airwaves (apparently the FCC does not allow such blackouts, which was the substantive ground for preemption). Johnson, 2015 WL 1321535, at *1. To destroy diversity, and keep the case in in South Carolina state court, plaintiff also sued local cell tower owners. Id.
Defendants removed the case on the basis that the tower owners were fraudulently joined. Id. at *4 (they also claimed federal subject matter jurisdiction, but lost on that ground). We know all too well the notoriously plaintiff-friendly standard for fraudulent joinder – “that there is no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant.” Id. (citation and quotation marks omitted). The basis for the defendant’s successful fraudulent joinder argument (the one that matters to us) was FCC preemption:
We agree that a finding of federal preemption would mean that [plaintiffs] would have “no possibility” of success on their state-law complaint against [nondiverse defendant]. Accordingly, we now turn to the federal preemption question underlying this case. In doing so, we conclude that the Communications Act preempts [plaintiffs’] claims against [that defendant]. Because [it] was fraudulently joined, the district court did not err in denying [plaintiffs’] motion to remand.
Id. at *5. The court concluded “that the Communications Act clearly preempts [plaintiffs’] state-law tort claim” and that they therefore did “not have a ‘glimmer of hope’ of succeeding” against the nondiverse defendant – thus establishing fraudulent joinder. Id. at *6.
Having quite properly decided the threshold jurisdictional question first, the Johnson court turned to the dismissal of the non-diverse defendants. Referencing the prior preemption discussion (“[a]s we discussed above”; “[c]onsistent with our discussion in Section II.C., supra”) the court held that the claims against them were likewise preempted. Id. at *7.
This ruling is a bigger deal than it seems, because a number of other circuits require remand of cases where the same argument that supports a finding of fraudulent joinder also provides a dispositive defense on the merits to the remaining defendants. This so-called “[c]ommon-defense exception,” Walton v. Bayer Corp., 643 F.3d 994, 1001 (7th Cir. 2011), was one of the grounds that plaintiffs used to keep defendants bottled up in Illinois’ notorious Madison and St. Clair Counties. As described by Walton(before finding the exception wasn’t met):
This brings us to the plaintiff’s alternative argument for why complete diversity is absent. The nondiverse defendants . . . are distributors, like the pharmacy. If the learned-intermediary doctrine applies with equal force to them, and therefore negates a duty to warn of dangers of which they were unaware, and thus creates a defense common to all the defendants, the case has to be remanded to the state court. For, as we mentioned earlier, a plaintiff can defeat the fraudulent-joinder exception to the requirement of complete diversity of citizenship by proving that his claim against the nondiverse defendant is no weaker than his claim against the diverse defendants. Especially if the claims are identical, the diverse defendants really are just arguing that the suit has no merit, period. And that is a ground not for removal but for asking the court in which the suit was filed − the state court − to dismiss the suit.
Walton, 643 F.3d at 1001 (citing cases from Third, Fifth, and Ninth Circuits) (emphasis added).
Not in the Fourth Circuit. In Johnson, the court first found fraudulent joinder on the basis of FCC preemption, and then found that the plaintiffs had not stated a claim against the remaining, diverse defendants – both on the exact same preemption rationale. Thus, the “common defense exception” that holds sway in some circuits, plainly does not exist in the Fourth Circuit. At minimum, there’s now a circuit split, which might be a reason for the United States Supreme Court to review the issue.
This “common defense exception” to fraudulent joinder can loom large in our drug/device cases. Both implied generic preemption and express PMA preemption would equally bar claims asserted against the product manufacturer as well as that same product’s often non-diverse distributors. Fraudulent joinder is a demanding enough standard for defendants as it is; there doesn’t need to be any exception that allows plaintiffs to gain a jurisdictional benefit by bringing blatantly preempted claims against non-diverse defendants. Federal courts are just as capable of preventing plaintiffs from gaming the system in this way as are state courts.