Billy Joe Shaw v. Dow Brands, Inc.

994 F.2d 364, 1993 WL 166324

• Court: Court of Appeals for the Seventh Circuit
• Decided: July 13, 1993
• Docket: 92-2323
• Status: Published

Opinions

CUMMINGS, Circuit Judge.

Billy Joe Shaw claims his lungs were permanently damaged when, on August 12, 1990, he-tried to clean his bathroom. Shaw mixed something called “X-14 Instant Mildew Stain Remover” with Dow Bathroom Cleaner, a product manufactured by defendant. Though he opened the windows, set the ceiling fan swirling and let the air conditioner blow, Shaw was twice overcome by the fumes. When an hour later he found it hard to breathe, Shaw went to a doctor and eventually was put in the hospital to treat a lung condition known as Bronchiolitis Obliterans, allegedly caused by exposure to toxic fumes.

Shaw sued a series of companies including Dow Brands, Inc. (“Dow Brands”), its parent and 100 percent owner, Dow Chemical Co. (“Dow Chemical”), along with the manufacturer of the X-14 mildew stain remover, Block Household Products Co. (which had dissolved and was not in existence when the complaint was filed), Block Drug Co. Inc. (“Block”), and the store that sold the stain remover, Wal-Mart. Shaw filed his suit in Massac County, Illinois; Dow Brands had it removed to federal court in the Southern District of Illinois. The district judge decided that Shaw’s state law strict liability and negligence claims for failure to warn were pre-empted by the Federal Insecticide, Fungicide and Rodenticide Act, more commonly and easily referred to as FIFRA, 7 U.S.C. § 136 et seq.. Based on a recent Supreme Court decision, we affirm the district court’s pre-emption finding. We also hold that Shaw is properly in federal court despite two vexing jurisdictional issues that, inexplicably, did not come up until we raised the matter with the parties just before oral argument.

Plaintiffs first jurisdictional claim (when prodded by our order of December 29, 1992) is that-the $50,000 jurisdictional minimum in a diversity case has not been met. 28 U.S.C. § 1332(b).¹ Any defect in the removal procedure, or the lack of subject matter jurisdiction, requires a remand. In re Amoco Petroleum Additives Co., 964 F.2d 706, 708 (7th Cir.1992). Jurisdiction exists in a removal action if the case might have been brought in federal court to begin with. Grubbs v. General Elec. Credit Corp., 405 U.S. 699, 702, 92 S.Ct. 1344, 1347, 31 L.Ed.2d 612 (1972). Normally, the federal court in a removal action determines the amount in controversy by merely looking at plaintiffs state court complaint, Davenport v. Proctor & Gamble Mfg. Co., 241 F.2d 511, 513 (2d Cir.1957), along with the record as a whole. See Oglesby v. RCA Corp., 752 F.2d 272, 275, 278 (7th Cir.1985). In Illinois, however, tort claimants may not specify exact damages in their complaint beyond a limit set by the local circuit court rule. Ill.Rev.Stat. 735 ILCS 5/2-604. Thus Shaw’s complaint, which in accordance with Illinois law and the local rule asked only for damages “in excess of $15,000” (R. 2 at 18), gives no hint whether the real amount in controversy is greater than $50,000, in which case we have subject matter jurisdiction, or between $15,000 and $50,000, in which case we don’t.

Dow’s petition for removal stated a good faith belief that the amount in controversy was greater than $50,000 (R. 1 at 2). Shaw not only didn’t take issue with this claim but stated blithely in the jurisdictional statement of his opening brief to this Court, “This action is between citizens of different states and the amount in controversy exceeds Fifty Thousand Dollars ($50,000)” (plaintiffs brief at 1). But after we questioned the parties about this and other discrepancies between the state court complaint and the removed action, Shaw took up the jurisdictional issue with a vengeance; he now steadfastly maintains that his complaint is worth less than the $50,000 threshold. Thus at oral argument we had the privilege of witnessing a comic scene: plaintiffs personal injury lawyer protests up and down that his client’s injuries are as minor and insignificant as can be, while attorneys for the manufacturer paint a sob story about how plaintiffs life has been wrecked.

As the dissent explains, a plaintiff is in the best position to know how much his claim is worth, and we deem a plaintiffs request for damages to have been made in good faith. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938). Even this understates the law because, as Justice Holmes said, “the party who brings a suit is master to decide what law he will rely upon.” Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25, 33 S.Ct. 410, 411, 57 L.Ed. 716 (1913). It follows that a plaintiff may evade federal court by simply asking for less than the jurisdictional amount, St. Paul, 303 U.S. at 294, 58 S.Ct. at 592, so long as the plaintiff, should she prevail, isn’t legally certain to recover more. In re Shell Oil, 966 F.2d 1130, 1131 (7th Cir.1992). Indeed, the burden rests on the defendant in a removal action to prove that the amount in controversy is sufficient. Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 37, 66 L.Ed. 144 (1921). Defendants seeking removal may meet that burden by a preponderance of the evidence, McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936), which we take to mean proof to a reasonable probability that jurisdiction exists.²

Permitting a plaintiff to dictate the forum is more difficult, however, when the plaintiffs complaint is necessarily ambiguous because of state law. A most absurd (and unsatisfactory) result would be to deny jurisdiction in each tort case from Illinois because the complaint filed in state court is unclear about the amount in controversy. Judge Shadur’s answer is that, before the defendant seeks to remove a case, she should request the specific amount in controversy from the plaintiff by interrogatory. Illinois allows such interrogatories despite the generalized cap on damages claims in complaints. Thus before a case is ever removed it will be clear how much the plaintiff is requesting and the defendant may proceed accordingly. Judge Shadur’s suggestion is eminently sensible and we recommend it to removal-minded defendants in Illinois. We stop short, however, of declaring that this is the only means by which a defendant can establish to a reasonable probability that jurisdiction exists.

Judge Shadur’s solution also doesn’t tell a federal court how to deal with cases that have already been removed, such as this one. We could punish Dow Brands for not figuring out that it should have fired off an interrogatory to Shaw before seeking removal, and remand the case to state court. But the interrogatory procedure in Illinois is optional, and if appellate judges are not mind readers, Amoco Petroleum Additives, 964 F.2d at 708-709, neither are litigants. See A.O. Smith Corp. v. Lewis, Overbeck & Furman, 979 F.2d 546, 549 (7th Cir.1992). We cannot expect Dow in this case to have divined from reading tea leaves that before seeking removal it had to pry a firm number out of Shaw by interrogatory. We recently discussed another alternative to simple remand: a stipulation by plaintiff after removal that if the case is remanded, he will not seek more than $50,000 in damages. Shell Oil, 966 F.2d at 1131-1132. We ultimately rejected the stipulation procedure in Shell Oil by writ of mandamus. 970 F.2d 355, 356 (7th Cir.1992) (per curiam). Stipulation is problematic because it conflicts with a legal maxim that jurisdiction depends on the situation at the time of removal, St. Paul, 303 U.S. at 293, 58 S.Ct. at 592; In re Carter, 618 F.2d 1093, 1101 (5th Cir.1980), certiorari denied, 450 U.S. 949, 101 S.Ct. 1410, 67 L.Ed.2d 378 (1981), and that once a case is successfully removed a plaintiff cannot do anything to defeat federal jurisdiction and force a remand. St. Paid, 303 U.S. at 294, 58 S.Ct. at 592; see Kellam v. Keith, 144 U.S. 568, 12 S.Ct. 922, 36 L.Ed. 544 (1892) (suggesting that basis for removal must exist both at time complaint is filed and at time of removal). It seems unfair to defendants if a plaintiff can simply wait to see if her case is removed and then, once it is, have it sent back to state court by agreeing to a stipulation that the amount in controversy will not surpass $49,999.

We need not decide whether such cases as a general matter should be remanded for more factfinding (to state or federal district court) because in this instance Shaw has already conceded that his claim is worth more than $50,000: by not contesting removal when the motion was originally made, and by jurisdictional statements to this Court in his first brief. As noted, jurisdiction must exist at the time of removal, St. Paul, 303 U.S. at 293, 58 S.Ct. at 592, and once removal has been perfected plaintiffs may not manipulate the process to void the removal. As the Supreme Court has emphasized:

If the plaintiff could, no matter how bona fide his original claim in the state court, reduce the amount of his demand to defeat federal jurisdiction the defendant’s supposed statutory right of removal would be subject to the plaintiffs caprice. The claim, whether well or ill founded in fact, fixes the right of the defendant to remove, and the plaintiff ought not to be able to defeat that right and bring the cause back to the state court at his election.

St. Paul, 303 U.S. at 294, 58 S.Ct. at 592. The dissent suggests that we must trust Shaw’s lawyer, who is in a superior position to know the value of his client’s claim, because “[b]oth from oral argument and from [an] affidavit, it is L ] clear that Shaw’s lawyer is a knowledgeable practitioner in the personal injury field who knows all about his case * * * ” (dissent at p. 21). But presumably Shaw’s lawyer was as knowledgeable when he assured us in his opening brief that his client’s claim was worth more than $50,-000 as when he later assured us that his client’s case was worth less than $50,000. Again, according to the dissent, Shaw’s counsel could not have filed suit in federal court to begin with without violating Rule 11 because he knew that his client’s case could not equal the jurisdictional amount. But Shaw’s lawyer also signed the brief that assured us jurisdiction was intact; it is indeed a wonder that he shouldn’t be subject to sanctions for swearing one thing in one brief and then swearing the opposite thing in a subsequent affidavit after it became clear that telling a new story might benefit his client. If we were to permit Shaw to get away with this, we would be allowing him to manipulate defendants in the very manner that is prohibited by the rule in St. Paul: once removal is perfected, the plaintiff cannot suddenly decide that, after all, the amount in controversy is less than the jurisdictional amount so that the case must go shuttling back to state court.³

Shaw’s second jurisdictional argument is that removal is defective because not all defendants consented, which they must. Chicago, Rock Island & Pac. Ry. Co. v. Martin, 178 U.S. 245, 248, 20 S.Ct. 854, 855, 44 L.Ed. 1055 (1900). In this instance, Shaw filed suit against four defendants and only one, Dow Brands, signed the removal petition. A petition is considered defective if it fails to explain why the other defendants have not consented to removal. Northern Ill. Gas Co. v. Airco Industrial Gases, a Division of Airco, Inc., 676 F.2d 270, 273 (7th Cir.1982). Dow Brands gave no such explanation; therefore, its petition was defective on its face, although neither the parties nor the district court raised the matter until our order shortly before oral argument. In the meantime, Dow Brands has submitted an affidavit that purports to explain the absence of Block, Wal-Mart and Dow Chemical. The affidavit raises two questions: should we allow this belated explanation, and is the explanation convincing?

Removal petitions may be freely amended for thirty days after a defendant receives a copy of the state court complaint, or is served, whichever comes first. 28 U.S.C. § 1446(b). Of course, the thirty days elapsed long ago in this case. Although the time limit is said to be strictly applied, Northern Ill. Gas, 676 F.2d at 273, the time limit is not jurisdictional, Ryan v. State Bd. of Elections of the State of Ill., 661 F.2d 1130, 1134 (7th Cir.1981), and in fact amendments to correct “defective allegations of jurisdiction” are permitted under 28 U.S.C. § 1653 at any time. “The question is whether [the petition for removal] was so defective as to be incurable.” Kinney v. Columbia Savings & Loan Ass’n, 191 U.S. 78, 80, 24 S.Ct. 30, 31, 48 L.Ed. 103 (1903). In this determination the court may look at the entire record of state court proceedings. Powers v. Chesapeake & Ohio Ry. Co., 169 U.S. 92, 101, 18 S.Ct. 264, 267, 42 L.Ed. 673 (1898). Here, Dow Brand’s petition was plainly sloppy in not explaining what happened to the other defendants, but since the issue was not raised until the appellate stage, McKay v. Boyd Constr. Co., 769 F.2d 1084, 1087 (5th Cir.1985) (party may waive right to challenge removal), and since the absence of the other defendants was justified — as we will explain shortly — we are not willing to punish Dow Brands for what is, after all, a technicality that doesn’t go to the heart of jurisdiction.

Block was not served until January 21, 1992, or nearly a month after the removal petition was filed on December 23, 1991, so that its consent was not needed. Richards v. Harper, 864 F.2d 85, 87 (9th Cir.1988); P.P. Farmers’ Elevator Co. v. Farmers Elevator Mut. Ins. Co., 395 F.2d 546, 547-548 (7th Cir.1968). Similarly, Wal-Mart had been dismissed from the suit before removal. Since it was no longer subject to the jurisdiction of the state court, it could not be removed to federal court. 14A CHARLES Alan Wright, Arthur R. Miller & Edward H. Cooper, FEDERAL Practice and Procedure § 3721 (1985). That leaves Dow Chemical, the parent and 100 percent owner of Dow Brands. Nominal or formal parties need not join in removal. Ryan, 661 F.2d at 1134. A defendant is nominal if there is no reasonable basis for predicting that it will be held liable. 14A Wright, Miller & Cooper § 3731 n. 10. It is unclear whether parent corporations are per se nominal parties. But in this case Dow Chemical had no connection with the manufacture, sale or distribution of Dow Bathroom Cleaner; it engaged in no independent alleged wrongdoing but was joined solely because of the acts of its subsidiary. In any event, counsel for Dow Brands has sworn in an affidavit — undisputed by Shaw — that it had obtained Shaw’s agreement to dismiss Dow Chemical voluntarily before removal and that, in any event, Dow Chemical consents to removal. Whether this dismissal actually occurred isn’t obvious from the record, but one would think that the plaintiff would have noticed the disappearance of a defendant somewhere on the way to the appellate court. Again, Shaw seems not to have minded until we raised the issue; his own submissions to this Court are styled “Billy Joe Shaw, Plaintiff-Appellant, vs. Dow Brands, Inc., Defendant-Appellee” — no mention of Dow Chemical. In short, the agreement of Shaw to drop Dow Chemical, Dow Chemical’s belated consent, the fact that Dow Chemical is probably nominal, and Shaw’s acquiescence all combine to convince us the parent’s missing signature on the removal petition does not defeat jurisdiction.

Turning at last to the substantive question, we must decide whether federal pre-emption of an area of regulation also prohibits state common law tort actions. The district judge found that because of FI-FRA, the federal law in question, Shaw could not bring a damages action claiming that the label on Dow Bathroom Cleaner was defective because Congress alone may regulate the labels and warnings on such products. FIFRA, enacted in 1947, was originally intended as a licensing and labeling statute for pesticides. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 991, 104 S.Ct. 2862, 2866, 81 L.Ed.2d 815 (1984). Amendments in 1972 strengthened the law, and it became a comprehensive regulation of the sale and use of pesticides and other chemicals including such products as bathroom cleaners. Wisconsin Public Intervenor v. Mortier, — U.S. --, -, 111 S.Ct. 2476, 2480, 115 L.Ed.2d 532. (1991).

The Supremacy Clause, found at Article VI cl. 2 of the Constitution, proclaims that state laws which “interfere with, or are contrary to the laws of congress, made in pursuance of the constitution” are invalid. Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 6 L.Ed. 23 (1824). Whether a federal statute pre-empts state law turns on congressional intent. Ingersoll-Rand Co. v. McClendon, 498 U.S. 133, 137-138, 111 S.Ct. 478, 482, 112 (1990). That intent may be explicit in the statute itself, Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604 (1977); Fidelity Fed. Sav. & Loan Ass’n v. de la Cuesta, 458 U.S. 141, 153, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664 (1982); in this case it is, at least as far as labeling and packaging are concerned. The Act says flatly: “Such State shall not impose or continue in effect any requirements for labeling or packaging in addition to or different from those required under this subchap-ter.” 7 U.S.C. § 136v(b). The Supreme Court recently noted the absolutist nature of FIFRA’s pre-emption in the labeling and packaging context even as it held that FI-FRA does not pre-empt generalized state regulation of pesticides. Mortier, - U.S. at -, 111 S.Ct. at 2486. Since the parties do not dispute that Congress has exclusive jurisdiction in labeling and packaging, the only question is: how exclusive is exclusive? Shaw maintains that there is still room for common law tort actions for defective labels.

Shaw’s argument is appealing because, unlike federal regulations which firms are required to follow, common law duties may be simply ignored by defendants. See, e.g., Ferebee v. Chevron Chemical Co., 736 F.2d 1529, 1540-1541 (D.C.Cir.1984), certiorari denied, 469 U.S. 1062, 105 S.Ct. 545, 83 L.Ed.2d 432 (1984) (despite pre-emption under FIFRA, state may decide that manufacturer should bear the risk for compensating losses). Indeed, they are smart to do so if the cost of compensating victims is less than the cost of altering the behavior that gives rise to the suit. On the other hand, damages actions, just like regulatory mandates, cause companies to modify their economic decisions. It would be silly to pretend that federal lawmakers, seeking to occupy a whole field of regulation, wouldn’t also be concerned about the distorting effects of tort actions.

In any event, Shaw’s argument about common law actions evaporated last summer when the Supreme Court decided Cipollone v. Liggett Group, Inc., — U.S. -, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992). That opinion held that sweeping congressional efforts to pre-empt state regulation also bar state damages claims. Although the Court said that “there is no general, inherent conflict between federal pre-emption of state warning requirements and the continued vitality of state common law damages actions,” id. at -, 112 S.Ct. at 2618, it also held that a broad statement in a federal law prohibiting state regulation does, in fact, wipe away common law attempts to impose liability on top of the federal regulation. Id. at - -, 112 S.Ct. at 2619-2621.

The federal laws at issue in Cipollone were the Federal Cigarette Labeling and Advertising Act (“1965 Cigarette Act”) and the Public Health Cigarette Smoking Act of 1969 (“1969 Cigarette Act”), 15 U.S.C. §§ 1331-1340. These laws are responsible for, among other things, the surgeon general’s warnings that grace the sides of cigarette packages. The pre-emption provision in the 1965 Cigarette Act was quite narrow and said, “No statement relating to smoking and health shall be required in the advertising of [properly labeled] cigarettes.” Id. at -, 112 S.Ct. at 2618. Congress’ emphasis on the words “statement” and “advertising” led the Court to conclude that the 1965 Cigarette Act only pre-empted state and federal rules that might require additional warnings, but not state law damages actions. The 1969 Cigarette Act, however, was much broader; it barred not merely “statements” but any “requirement[s] or prohibition^] * * * imposed under State law.” Id. at -, 112 S.Ct. at 2619. This language, the Court held, sig-nalled legislative intent to ban common law tort actions along with direct state regulation.⁴ As Justice Stevens wrote:

The phrase “[n]o requirement or prohibition” sweeps broadly and suggests no distinction between positive enactments and common law; to the contrary, those words easily encompass obligations that take the form of common law rules. As we noted in another context, “[state] regulation can be as effectively exerted through an award of damages as through some form of preventive relief. The obligation to pay compensation can be, indeed is designed to be, a potent method of governing conduct and controlling policy.”

Id. at -, 112 S.Ct. at 2620 (quoting San Diego Building Trades Council v. Garmon, 359 U.S. 236, 247, 79 S.Ct. 773, 780, 3 L.Ed.2d 775 (1959)).

In order to succeed in the wake of Cipol-lone, then, Shaw would have to show that FIFRA’s pre-emption language is less sweeping than the language of the 1969 Cigarette Act. Yet we can discern no significant distinction at all — FIFRA says that “[s]uch State shall not impose * * * any requirements for labeling or packaging in addition to or different from those required * * *,’’ while the cigarette law says “[n]o requirement! s] or prohibitionfs] * * * imposed under State law” shall be permitted. Both seem equally emphatic: “[n]o requirements or prohibitions” is just another way of saying a “[s]tate shall not impose * * * any requirements.” Not even the most dedicated hairsplitter could distinguish these statements. If common law actions cannot survive under the 1969 cigarette law, then common law actions for labeling and packaging defects cannot survive under FIFRA. The Tenth Circuit recently held the same thing. Arkansas-Platte & Gulf Partnership v. Van Waters & Rogers, Inc., 981 F.2d 1177, 1179 (10th Cir.1993) (“We believe also the prohibition of ‘any’ requirement is the functional equivalent of ‘no’ requirement. We see no difference between the operative effect of the two acts”). Because Cipollone destroyed whatever argument Shaw might have had about pre-emption, we are compelled to affirm the district court decision that FIFRA bars this action.

1 . We reject Dow's perfunctory argument that FIFRA confers federal question jurisdiction.

2 . St. Paul holds that when a plaintiff asserts federal jurisdiction, the defendant may challenge the amount in controversy, but the plaintiff’s contentions will stand unless it appears to a legal certainty that the claim is actually worth less than the jurisdictional amount. 303 U.S. at 289, 58 S.Ct. at 590. This standard should not be confused, however, with what a defendant must prove to invoke jurisdiction in a removal action. A number of district courts in this circuit have held that the defendant must establish more than $50,000 in controversy to a "reasonable probability.” See, e.g., Johnson v. Core-Vent Corp., No. 90 C 613, 1990 WL 51253, 1990 U.S.Dist.Lexis 4225 (N.D.Ill.1990); Robert Kulasik Assoc. v. CBS Boring & Machine Co., Inc., No. 90 C 0425, 1990 WL 65800, 1990 U.S.Dist.Lexis 5551 (N.D.Ill.1990); Cole v. Freightliner Corp., No. 89-2170-0, 1991 WL 42163, 1991 U.S.Dist.Lexis 3408 (N.D.Ill.1991); Montgomery v. Ford Motor Co., No. 90 C 2440, 1991 WL 2423, 1991 U.S.Dist.Lexis 282 (N.D.Ill.1991). Others have suggested a more stringent test. See, e.g., Navarro v. LTV Steel Co., 750 F.Supp. 928, 929 (N.D.Ill.1990) (requiring certainty); Maki v. Keller Indus., Inc., 761 F.Supp. 66, 68 (N.D.Ill.1991) (high degree of probability not sufficient); Navarro v. Subaru of Am. Operations Corp., 802 F.Supp. 191, 193-194 (N.D.Ill.1992) (certainty required). We think the Supreme Court dictated the proper standard in McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct. 780: "If his allegations of jurisdictional facts are challenged by his adversary in any appropriate manner, he must support them by competent proof. And where they are not so challenged, the court may still insist that the jurisdictional facts be established or the case be dismissed, and for that purpose the court may demand that the party alleging jurisdiction justify his allegations by a preponderance of evidence." Id. at 189, 56 S.Ct. at 785 (emphasis added). We hold that the test set forth in McNutt is satisfied if a defendant in a removal action can show to a reasonable probability that more than $50,000 is in controversy.

3 . After this opinion was sent to the printer, Judge Shadur located a recent decision from the Fifth Circuit that supposedly conflicts with our view of jurisdiction: Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia (ANPAC) v. Dow Quimica de Colombia S.A., 988 F.2d 559 (5th Cir.1993). In that ease, however, the Fifth Circuit took pains to point out that the plaintiff never asserted his claim was worth more than $50,000 (unlike Shaw), and that the plaintiff objected to removal in a "timely" fashion (also unlike Shaw). Since our holding against Shaw is premised on his having conceded that more than $50,000 is in controversy, and there are no facts in Asociación Nacional even remotely similar, we do not understand why this case is relevant and do not agree with the dissent's implication that the majority opinion somehow creates a conflict between the circuits.

4 . This section of Justice Stevens' opinion was joined by only three other justices. Two others, however, advocated complete pre-emption based on the 1969 Act. Cipollone, — U.S. at - -, 112 S.Ct. at 2632-2634 (Scalia, J., concurring in the judgment in part and dissenting in part). We take this concurrencc/dissent coupled with Justice Stevens’ opinion to constitute a majority for the proposition that such a sweeping pre-emption provision bars state damages claims.