[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 04-13489 ELEVENTH CIRCUIT
October 25, 2005
________________________
THOMAS K. KAHN
CLERK
D. C. Docket No. 04-00435 CV-S-NE
CARL LEGG,
DOROTHY LEGG,
Plaintiffs-Appellees,
versus
WYETH, f.k.a. American Home Products Corporation,
WYETH PHARMACEUTICALS, INC.,
f.k.a. Wyeth-Ayerst Labs, Inc.,
Defendants-Appellants.
________________________
Appeal from the United States District Court
for the Northern District of Alabama
_________________________
(October 25, 2005)
Before EDMONDSON, Chief Judge, BIRCH and COX, Circuit Judges.
COX, Circuit Judge:
Plaintiffs, Dorothy and Carl Legg (the “Leggs”), filed a seven-count complaint
in an Alabama state court against several defendants, including some Wyeth entities,
Indevus Pharmaceuticals, Inc., and three Wyeth sales representatives. Wyeth
removed this case to federal court, contending that the Plaintiffs fraudulently joined
three of Wyeth’s sales representatives as defendants in an effort to defeat federal
diversity jurisdiction. On the Plaintiffs’ motion, the court remanded the case, and
ordered that Wyeth pay the Plaintiffs’ attorneys’ fees and costs under 28 U.S.C. §
1447(c) as Wyeth’s removal had been “improper.” (R.2-24 at 2.) Wyeth appeals the
district court’s order awarding attorneys’ fees and costs to the Plaintiffs. We reverse.
I. BACKGROUND & PROCEDURAL HISTORY
Carl and Dorothy Legg, citizens of Alabama, brought this action in the Circuit
Court of Madison County, Alabama against Wyeth, a citizen of Delaware and New
Jersey, Indevus Pharmaceuticals, Inc., a citizen of Delaware and Massachusetts, and
three Wyeth sales representatives: Stacy Stubblefield, Michael Sullivan, and Betsy
Weaver. Sullivan is alleged to be a citizen of Georgia; Stubblefield and Weaver are
alleged to be citizens of Alabama. Carl Legg contends he took Wyeth’s anti-obesity
drug Redux and, as a result, developed valvular heart disease. Dorothy Legg claims
loss of consortium.
2
Wyeth removed the matter to the United States District Court for the Northern
District of Alabama. Wyeth alleged that federal jurisdiction was proper under 28
U.S.C. § 1332 (diversity jurisdiction), and that the Leggs fraudulently joined three
sales representatives to destroy diversity. Wyeth attached affidavits of the sales
representatives in support of its contention that the sales representatives were
fraudulently joined. Wyeth then moved to transfer the case to the United States
District Court for the Eastern District of Pennsylvania for consolidation with similar
cases pending before the Multi-District Litigation Panel. Before reviewing that
motion, the district court granted the Leggs’s motion to remand, concluding that
diversity did not exist. The court found that the sales representatives were not
fraudulently joined because there was a “possibility” that the Leggs could prevail in
their claims against them. The court reached this conclusion on the face of the
complaint, concluding that it could not consider the affidavits provided by Wyeth.
The court also concluded that the Leggs stated a possible cause of action for innocent
or negligent misrepresentation against Betsy Weaver, even if her affidavit was taken
as true. In a separate order, the district court granted the Leggs attorneys’ fees and
costs in the amount of $1,982.49. Wyeth appeals the grant of attorneys’ fees and
costs.
3
II. STANDARD OF REVIEW
We may review the merits of a remand order in considering whether the district
court abused its discretion by awarding attorneys’ fees and costs under 28 U.S.C. §
1447(c). Fowler v. Safeco Ins. Co. of Am., 915 F.2d 616, 617 (11th Cir. 1990).
While 28 U.S.C. § 1447(d) bars our review of a remand such as this one based on lack
of subject matter jurisdiction, the statute does not “exclude the district court’s
assessment of costs from appellate review.” Id. at 617. As the Fifth Circuit has
explained, “[w]hile we may not review the decision to remand itself, we must, as part
of our examination of the award of fees, consider the objective validity of the
removing party’s efforts, at the time that party attempted to remove the case.”
Hornbuckle v. State Farm Lloyds, 385 F.3d 538, 541 (5th Cir. 2004). We review the
district court’s award of attorneys’ fees and costs for an abuse of discretion. Fowler,
915 F.2d at 617. An error of law is an abuse of discretion. Wexler v. Lepore, 385
F.3d 1336, 1338 (11th Cir. 2004). Therefore, an award of attorneys’ fees based on
a legally erroneous remand order constitutes an abuse of discretion.
III. CONTENTIONS OF THE PARTIES
Wyeth contends on appeal that the district court erred in concluding that
Wyeth’s removal was improper, and therefore that no fees or costs should have been
awarded the Leggs. Wyeth argues that the district court erred in refusing to consider
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unrebutted evidence submitted by it in support of removal. Wyeth also argues that
the district court erred in concluding that the Leggs stated possible claims against
Betsy Weaver based on innocent or negligent misrepresentation, even if her affidavit
was taken as true. The Leggs defend the decision of the district court, and assert that
the decision to award fees and costs was not an abuse of discretion, even if we would
have decided the matter differently.
IV. DISCUSSION
This lawsuit by the Leggs is but one of thousands of cases brought by plaintiffs
across the country who claim they suffer from valvular heart disease because they
took one of Wyeth’s diet drugs.1 A common strategy employed by the plaintiffs in
these cases is to name local parties, often Wyeth’s local sales representatives, as
defendants, thus defeating Wyeth’s right to remove a case to federal court.2 The
Multidistrict Litigation Court, which has overseen a large part of this litigation,
concluded that this joinder can “only be characterized as a sham, at the unfair expense
1
These lawsuits were consolidated by the Judicial Panel on Multidistrict Litigation in the
United States District Court of the Eastern District of Pennsylvania. A Nationwide Class Action
Settlement Agreement was then executed by Wyeth and the diet drug plaintiffs. See In re Diet
Drugs, Nos. 1203, 99-20593, 2000 WL 1222042, at *5 (E.D. Pa. Aug. 28, 2000). The Settlement
Agreement permits Class Members who meet certain eligibility criteria to opt out and assert a claim
against Wyeth in the tort system. The Leggs opted out of the Settlement Agreement. Wyeth
estimates that approximately 50,000 plaintiffs have opted out and filed suit. Appellant Br. at 5.
2
Federal diversity jurisdiction under 28 U.S.C. § 1332 requires “complete diversity” - the
citizenship of every plaintiff must be diverse from the citizenship of every defendant. See, e.g.,
Palmer v. Hosp. Auth. of Randolph County, 22 F.3d 1559, 1564 (11th Cir. 1994).
5
not only of [Wyeth] but of many individuals and small enterprises that are being
unfairly dragged into court simply to prevent the adjudication of lawsuits against
[Wyeth], the real target, in a federal forum.” Anderson v. Am. Home Prods. Corp.,
220 F. Supp. 2d 414, 425 (E.D. Pa. 2002). Indeed, there are dozens of district court
decisions finding that Wyeth sales representatives were fraudulently joined as
defendants to defeat federal diversity jurisdiction.3 Wyeth contends that this is such
a case.
The Leggs named three local sales representatives as defendants in this case.
Michael Sullivan, the first sales representative named as a defendant in this suit,
submitted an affidavit to the district court stating that he is “a citizen and resident of
3
For examples from this circuit, see Clay v. Wyeth, No. 5:04-cv-192-OC-10GRJ at 14 (M.D.
Fla. Aug. 17, 2004) (magistrate judge’s report and recommendation noting that the plaintiff “has
offered nothing - whether sworn or unsworn” to rebut the sworn statements made by the sales
representative and concluding that Wyeth’s removal of the case was proper); Sobowski v. Wyeth, No.
5:04-cv-96-Oc-10GRJ at 3-4 (M.D. Fla. June 24, 2004) (considering defendants’ affidavits and
finding that the evidence “does not give rise to a reasonable inference that the sales representatives
knew or should have known of the drug’s harmful effects” and that the representatives were “joined
only to prevent removal”); Davis v. Wyeth, No. 4:03-cv-128 (CDL) at 13 (M.D. Ga. June 10, 2004)
(concluding that plaintiff’s evidence did not refute the defendants’ “sworn affidavit statements that
they had no knowledge that the diet drugs were linked to valvular heart disease,” and finding that
the joinder of the non-diverse defendants was fraudulent); Fowler v. Wyeth, No. 3:04-cv-83/MCR
at 8-9 (N.D. Fla. May 14, 2004) (concluding that based on defendants’ declarations that they did not
sell the diet drug, plaintiffs could not maintain any of their asserted causes of action; also noting that
once “Wyeth presented the declarations to the Court, Plaintiffs could not continue to rely upon their
unsupported allegations in the complaint”); Lewis v. Wyeth, No. 3:04-cv-81/MCR at 8 (N.D. Fla.
Apr. 29, 2004) (similarly concluding that the sales representative’s “uncontroverted declaration is
sufficient to demonstrate that he was fraudulently joined in this lawsuit”); Petty v. Wyeth, No. 3:04-
cv-82/MCR at 8-9 (N.D. Fla. Apr. 28, 2004) (finding that the “uncontroverted declarations of [the
sales representatives] are sufficient to demonstrate that they were fraudulently joined in this
lawsuit”).
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the State of Georgia.” (R.1-1 at Ex. B.) If that is true, Sullivan’s presence would not
defeat diversity jurisdiction. The second sales representative, Stacy Stubblefield,
claims he never sold Redux. In his affidavit, Stubblefield swore that he “never
advertised, assembled, created, designed, detailed, distributed, labeled, made,
manufactured, marketed, packaged, promoted, sold, sterilized, supplied, tested, or
warranted Pondimin or Redux, or trained [] anyone to do so.” (R.1-1 at Ex. B.)
Finally, the third sales representative, Betsy Weaver, admitted that she “promoted
Redux to licensed healthcare providers and answered their questions about the drug
based on information provided to me by Wyeth.” (Id.) However, Weaver asserts that
she had no knowledge of Redux’s alleged association with valvular heart disease until
the allegation was first publicized:
My knowledge of the drugs I detailed was derived exclusively
from education provided to me by Wyeth. Wyeth provided me with the
FDA-approved package inserts and other information regarding the
drugs I detailed. I had no involvement in the development or
preparation of package inserts for any drugs, and had no control over
content or other written warnings.
I was not expected, as a field sales representative, to conduct
independent research regarding the drugs I detailed, and did not do so.
I was not expected to, and did not, review independent scientific studies
published in journals unless they were supplied to me by Wyeth.
I was not aware of any alleged association between Pondimin
and/or Redux and valvular heart disease until the time such an allegation
was first publicized. I was not aware before that time of any published
study, report or other literature which claimed that an association exists
between Pondimin and/or Redux and valvular heart disease.
7
(Id.) Wyeth attached these three affidavits as exhibits to its notice to remove this case
to federal court. In the notice of removal, Wyeth alleged that the action could have
originally been filed in federal court because complete diversity of citizenship exists
between the properly joined parties, and that the three sales representatives were
fraudulently joined.
In response to the sales representatives’ affidavits, the Plaintiffs did not dispute
Sullivan’s sworn statement that he was a citizen of Georgia, nor did they respond to
Stacey Stubblefield’s sworn statement that he never promoted or sold Redux. In an
effort to rebut Weaver’s sworn statement that she did not know of Redux’s alleged
connection with valvular heart disease, the Plaintiffs pointed out to the district court
that all of Wyeth’s sales representatives had to participate in a Sales Training
Program. The Plaintiffs submitted to the court a copy of Wyeth’s Sales Training
Program. (R.2-14 Ex. B.) But the document does not contain any warning to the
sales representatives that Redux may cause valvular heart disease. Nor does the
corresponding package insert, provided as a part of the Sales Training Program,
provide any warning to the sales representatives that Redux may cause valvular heart
disease. Thus, the material the Plaintiffs submitted to the court in fact reinforces
Weaver’s sworn statement that she was never told by the company that Redux may
8
cause valvular heart disease and did not learn of the risk until it first became publicly
known.4
The district court refused to consider the affidavits by the sales representatives.
Instead, the court concluded that the Plaintiffs stated a possible cause of action for
fraud against both Stubblefield (who said he never sold the drug) and Weaver (who
sold it, she said, not knowing it could be dangerous). The court reasoned that the
questions of whether the individual defendants “actually sold or promoted Redux, and
whether the individual defendants actually conveyed incorrect or misleading
information to [P]laintiff Carl Legg’s healthcare providers, both go to the merits of
plaintiffs’ claims.” (R.2-19 at 10.) In reaching its conclusion that the Plaintiffs stated
a possible cause of action against the sales representatives, the district court relied
solely on various allegations in the Plaintiffs’ complaint. (R.2-19 at 9-11.)
We conclude that Wyeth’s efforts to remove this case to federal court were
objectively valid and reasonable. “Costs are assessed in a case of ‘improvident
removal.’” Fowler, 915 F.2d. at 618. This is not a case of improvident removal.
Wyeth presented the court with affidavits from its sales representatives to establish
4
Not only did the Plaintiffs fail to dispute Weaver’s sworn statement that she did not know
that Redux may cause valvular heart disease, the Plaintiffs also failed to show that Weaver had ever
promoted or sold the drug to Carl Legg’s prescribing physician. Legg’s prescribing physician was
not identified in the complaint. (R.1-1 Ex. A.) The Plaintiffs did submit affidavits from four other
physicians, but none of these doctors were Legg’s prescribing physician, nor did they have any
connection to this case. (R.2-14 Ex. A.)
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that they were fraudulently joined. The district court erred in refusing to consider
these affidavits.
We have explained before that “[t]he determination of whether a resident
defendant has been fraudulently joined must be based upon the plaintiff’s pleadings
at the time of removal, supplemented by any affidavits and deposition transcripts
submitted by the parties.” Pacheco de Perez v. AT&T Co., 139 F.3d 1368, 1380 (11th
Cir. 1998) (emphasis added). The proceeding appropriate “for resolving a claim of
fraudulent joinder is similar to that used for ruling on a motion for summary judgment
under Fed. R. Civ. P. 56(b).” Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir.
1997) (quoting B, Inc. v. Miller Brewing Co., 663 F.2d 545, 549 n.9 (5th Cir. Unit A
1981)). In such a proceeding, the district court must “resolve all questions of fact .
. . in favor of the plaintiff.” Cabalceta v. Standard Fruit Co., 883 F.2d 1553, 1561
(11th Cir. 1989). But there must be some question of fact before the district court can
resolve that fact in the plaintiff’s favor. In this case, for example, the Plaintiffs did
not dispute Stubblefield’s sworn statement that he never promoted or sold the drug
Redux. With no response from the Plaintiffs, there was no question of fact for the
court to resolve. The same goes for Weaver, who asserted that she did not know
Redux may cause valvular heart disease. The Plaintiffs offered no evidence to
dispute this sworn statement. When the Defendants’ affidavits are undisputed by the
10
Plaintiffs, the court cannot then resolve the facts in the Plaintiffs’ favor based solely
on the unsupported allegations in the Plaintiffs’ complaint. As the Fifth Circuit has
explained:
While such a procedure requires that all disputed questions of fact be
resolved in favor of the nonremoving party, as with a summary judgment
motion, in determining diversity the mere assertion of metaphysical
doubt as to the material facts [is] insufficient to create an issue if there
is no basis for those facts. So also as with a summary judgment motion:
[W]e resolve factual controversies in favor of the nonmoving party,
but only when there is an actual controversy, that is, when both parties
have submitted evidence of contradictory facts. We do not, however, in
the absence of any proof, assume that the nonmoving party could or
would prove the necessary facts.
Badon v. RJR Nabisco, Inc., 224 F.3d 382, 393-94 (5th Cir. 2000) (emphasis in
original) (internal citations omitted).
In ignoring the Defendants’ affidavits in this case, the district court relied on
our holding in Crowe v. Coleman, 113 F.3d 1536 (11th Cir. 1997). Crowe, however,
did not preclude relying on affidavits in resolving a question of fraudulent joinder.
In fact, in Crowe, as in our other cases addressing fraudulent joinder, we found it
entirely proper for the district court to consider affidavits submitted by the
defendants. See id. at 1538 (In considering a removal alleging fraudulent joinder,
“the court may consider affidavits and deposition transcripts submitted by the
parties.”). The defendants’ affidavits in Crowe were properly before the district
11
court, and “we [took] them into account in deciding the limited question of whether
a possibility exists that Plaintiffs have stated a . . . cause of action against Coleman.”
Id. at 1541. The district court erred in Crowe because it resolved the case in the
defendants’ favor when there were sworn statements submitted by both the
defendants and the plaintiffs. In the case at bar, the Defendants submitted sworn
affidavits that were undisputed and, in such a case, a court cannot resolve the
question of fraudulent joinder by refusing to consider the defendants’ submissions.
But that is clearly what the district court did. In doing so, the district court committed
a legal error, and a legal error is an abuse of discretion. See Wexler, 385 F.3d at 1338.
The district court articulated another reason for ignoring Weaver’s affidavit and
remanding the case to state court. The district court reasoned that even if Weaver had
no pre-publicity knowledge that Redux may cause valvular heart disease, she might
still be liable in Alabama courts for innocent or negligent misrepresentation. But on
this record, this conclusion has no support in Alabama law. In Fisher v. Comer
Plantation, Inc., 772 So. 2d 455 (Ala. 2000), the Alabama Supreme Court held that
“those who are only conduits through which faulty information is supplied by one
person to a third person cannot be held liable for fraud unless they acted in bad faith.”
Id. at 463. Assuming that Weaver innocently passed on incorrect information about
Redux to Carl Legg’s physician, under Fisher she could not be liable for innocent
12
misrepresentation. See also Montgomery Rubber & Gasket Co. v. Belmont Mach.
Co., 308 F. Supp. 2d 1293, 1298 (M.D. Ala. 2004) (“At most, [plaintiff] alleges that
[defendant agent] was an innocent conduit through which [defendant seller]
defrauded [plaintiff]. As [the defendant agent] correctly notes, forwarded information
that is incorrect cannot form the basis of liability unless the information was relayed
in bad faith.”) (citing Fisher, 772 So. 2d at 463).
The Plaintiffs, in their complaint, allege that “[e]ach of the [d]efendants
negligently and recklessly represented . . . that Redux was safe to ingest and that the
utility of Redux outweighed any risk in use for the intended purpose of weight loss
or control.” (R.1-1 Ex. A. at ¶ 83.) Astonishingly, the Plaintiffs make this allegation
against all the individual Defendants, including Stacy Stubblefield, who swore under
oath that he never promoted or sold Redux. This sworn statement was never disputed
by the Plaintiffs. With no evidence that Stubblefield had anything to do with Redux,
there is no reasonable possibility that Plaintiffs can establish a cause of action against
him for negligent misrepresentation under Alabama law.
Nor is there any reasonable possibility, based on this record, that Plaintiffs can
establish a cause of action for negligent misrepresentation against Betsy Weaver. The
Alabama Supreme Court has adopted the Restatement (Second) of Torts § 552 (1997)
as the law of Alabama in cases involving negligent misrepresentation. Fisher, 772
13
So. 2d at 461 (citing Boykin v. Arthur Andersen & Co., 639 So. 2d 504, 509-10 (Ala.
1995)). In applying the elements of the claim from the Restatement, Alabama’s
Supreme Court instructs that liability for negligent misrepresentation is “predicated
upon the existence of a duty.” Fisher, 772 So. 2d at 463 (citing Colonial Bank of
Alabama v. Ridley & Schweigert, 551 So. 2d 390, 395 (Ala. 1989)). To hold an
employee of a corporation personally liable for the negligent acts of the corporation,
“there must have been upon his part such a breach of duty as contributed to, or helped
bring about, the injury; that is to say, he must be a participant in the wrongful act.”
Crigler v. Salac, 438 So. 2d 1375, 1380 (Ala. 1983) (quoting Fletcher’s Cyclopedia
of Corporations § 1137 at 208 (1975)); see also Turner v. Hayes, 719 So. 2d 1184,
1188 (Ala. Civ. App. 1997) (“[C]orporate employees are liable personally for the
wrongful action of the company or its other employees only if they personally
participate in the tort.”).
Plaintiffs have not presented any evidence that Weaver knew of any valvular
heart disease risk, nor have Plaintiffs presented any evidence to support the allegation
that Weaver should have known of this risk. Without this evidence, there is no
reasonable possibility that an Alabama court would conclude that Weaver personally
breached a duty to the Plaintiffs. If Wyeth knew or should have known of Redux’s
harmful effects and did not tell Weaver, that might be a basis for a claim against
14
Wyeth, but it would not support the conclusion that Weaver herself “personally
participated in the tort” or breached a duty to the Plaintiffs. See Turner, 719 So. 2d
at 1188. Quite simply, there is no reasonable basis to predict that an Alabama court
would find Weaver, as an individual employee, personally liable for any wrongful
action by Wyeth in the absence of evidence that Weaver either knew or should have
known of Redux’s allegedly dangerous effects.5
The removal process was created by Congress to protect defendants. Congress
“did not extend such protection with one hand, and with the other give plaintiffs a bag
of tricks to overcome it.” McKinney v. Bd. of Trustees of Mayland Cmty. Coll., 955
F.2d 924, 928 (4th Cir. 1992) (quoting McKinney v. Bd. of Trustees of Mayland Cmty.
Coll., 713 F.Supp. 185, 189 (W.D.N.C. 1989)). As the Supreme Court long ago
admonished, “the Federal courts should not sanction devices intended to prevent a
removal to a Federal court where one has that right, and should be equally vigilant to
protect the right to proceed in the Federal court.” Wecker v. Nat’l Enameling &
Stamping Co., 204 U.S. 176, 186, 27 S. Ct. 184, 188 (1907). Given that the record
5
The potential for legal liability “must be reasonable, not merely theoretical.” Great Plains
Trust Co v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir. 1992). In considering
possible state law claims, possible must mean “more than such a possibility that a designated
residence can be hit by a meteor tonight. That is possible. Surely, as in other instances, reason and
common sense have some role.” Braden v. Wyeth, CV-04-PT-235-E (N.D. Ala. June 30, 2004).
Without any evidence that Weaver knew or should have known Redux was dangerous, it is hard to
conclude, applying reason and common sense, that the Plaintiffs have a viable claim against her
under Alabama law.
15
supports Wyeth’s allegation that these sales representatives were fraudulently joined
by the Plaintiffs, there was nothing “improvident” or unreasonable in Wyeth’s effort
to remove this case to federal court. See Fowler, 915F.2d. at 616. Thus, the district
court abused its discretion in awarding attorneys’ fees and costs to the Plaintiffs.
V. CONCLUSION
The judgment of the district court awarding the Leggs attorneys’ fees and costs
is REVERSED.
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