Proctor v. Worthington Cylinder Corporation

Background

Taos and Kelly Proctor, who are husband and wife, sued Worthington Cylinder Corporation, The Coleman Company, Inc., Walmart Inc., and Dignity Health in state court. The Proctors sued the first three companies because Taos Proctor was injured after using a propane cylinder and torch manufactured, distributed, and/or sold by one or more of them. Taos Proctor also asserted a medical-malpractice claim against Dignity Health, alleging that it negligently treated his injuries.

The Proctors filed the case in state court in January 2019. The first three defendants—the Product Defendants—removed it to federal court in December 2019. They argued that the federal court had diversity jurisdiction if Dignity Health, which they claimed had been fraudulently joined, was disregarded.

Removal-timing dispute

Federal law generally requires a defendant to remove a case within 30 days after receiving the initial pleading. If the initial pleading does not make the case removable, a defendant may instead remove within 30 days after receiving an amended pleading, motion, order, or other paper showing for the first time that the case is removable.

The Product Defendants argued that their December 2019 removal was timely under this second 30-day period. They said they did not initially know, and should not have known, that Dignity Health had been fraudulently joined. They relied on the Proctors’ failure to conduct discovery against Dignity Health, their failure to insist that Dignity Health attend mediation, and a November 2019 notice that Dignity Health had made a California settlement offer under section 998. The offer provided for a waiver of costs in exchange for dismissal with prejudice.

The Proctors argued that the Product Defendants had received notice of removability earlier, including through an alleged agreement that Dignity Health need not participate in mediation. The court noted, however, that the removal statute expressly refers to a writing or other paper, and it did not resolve the broader dispute over whether the Proctors’ alleged lack of intent to pursue the claim could itself establish fraudulent joinder.

Court’s reasoning and ruling

The court rejected the argument that Dignity Health’s settlement offer was an “other paper” from which removability could first be ascertained. Even if Dignity Health believed Taos Proctor’s claim had little value, its opening settlement offer had little probative value regarding whether the Proctors intended to pursue their claim against Dignity Health. The offer did not add anything to the Product Defendants’ ability to determine that the case was removable.

The court concluded that the Product Defendants were ultimately relying on the Proctors’ conduct and statements, rather than on a qualifying paper. It therefore granted the Proctors’ motion to remand. The court denied the Proctors’ request for fees under 28 U.S.C. § 1447(c), directed the Clerk to remand the case to state court and close the federal file, and stated that the order disposed of Docket No. 12.