Cathy Walton alleges that she suffered serious injuries as a result of taking a prescription drug manufactured by a Bayer Corporation affiliate and sold at a pharmacy operated by Niemann Foods. She brought suit against Bayer and Niemann in Illinois state court, alleging that the two defendants failed to warn of the drug's serious side effects. Although Niemann is an Illinois citizen, Bayer removed the case to federal court on the grounds that Niemann was improperly joined. Chief Judge Herndon (S.D. Ill.) denied Walton's request to remand and dismissed Niemann, with prejudice. Walton abandoned prosecution of the suit after that order. The court later dismissed the suit with prejudice when Walton refused to comply with a discovery order. Walton appeals.

In their opinion, Judges Cudahy, Posner, and Manion affirmed. The Court first confirmed its own appellate jurisdiction, notwithstanding Bayer's argument that Walton should not be allowed to turn a non-appealable interlocutory order into an appealable order by abandoning the case. The Court distinguished the cases Bayer cited and concluded that there was nothing wrong with her tactic. She should be allowed to risk her claim's success on being right about jurisdiction. The Court next turned to the question of the district court's jurisdiction. It rejected Walton’s first argument that the complaint did not meet jurisdictional amount. Her alleged injuries are quite serious and suggest that she is seeking at least the jurisdictional amount -- and she has not exercised her absolute ability to defeat removal by committing to accept no more than the jurisdictional amount. The Court also rejected her argument that a minor procedural defect precluded federal jurisdiction. The Court turned to her principal argument -- lack of complete diversity. Walton argued both that Niemann was a proper defendant and that, if it was not, fraudulent joinder's "common defense" exception applied. With respect to the first of those arguments, the Court looked to the "learned intermediary" doctrine, under which one's prescribing physician is principally responsible for warning a patient of a drug's side effects and a manufacturer is excused from any obligation to warn. Under Illinois law, a pharmacy like Niemann is only obligated to warn a customer of risks that are known to it but possibly unknown to the prescribing physician (for example, potential interactions with other prescriptions dispensed by the pharmacy). Since Walton did not allege that Niemann had such knowledge, Niemann had no obligation to warn and was properly dismissed. With respect to Walton's second argument, the Court turned to the common defense exception to fraudulent joinder. Under that doctrine, if a plaintiff makes identical claims against both the diverse and non-diverse defendants, a fraudulent joinder argument is really an attack on the merits of the entire case. That attack must be resolved in the state court. If, therefore, Bayer and Niemann both have the same learned intermediary defense, it must be resolved in state court. That is not the case, however. Walton alleges that Bayer concealed the drug's side effects, even from physicians. The two defendants therefore do not share a common defense, the exception to fraudulent joinder does not apply, and the district court properly dismissed Niemann. As an aside, the Court noted that a Walton victory based on the common defense exception in the appellate court would have resulted in a remand, only for Walton to lose in state court. The doctrine of judicial estoppel would not allow Walton to argue in the appellate court that her claims against Bayer and Niemann were identical and then argue in state court that her claim against Bayer was different.