Greenberg v. Kolmar Laboratories, Inc.

Background

Ann Greenberg filed the case in New York state court against Kolmar Laboratories, Inc. She later amended the complaint to add Johnson & Johnson and Johnson & Johnson Consumer Inc. as defendants. Greenberg asserted negligence and strict-liability claims arising from alleged exposure to asbestos-containing talc products in Johnson’s Baby Powder. She alleged that Kolmar manufactured, designed, tested, supplied, labeled, or distributed the products and learned about asbestos contamination in talc products.

The Johnson & Johnson Defendants removed the case to the Southern District of New York based on diversity jurisdiction, which generally allows federal courts to hear qualifying disputes involving citizens of different states. The parties agreed that Kolmar was a citizen of New York, the state where the case was filed. Federal law generally bars removal based solely on diversity jurisdiction when a properly joined and served defendant is a citizen of the state where the lawsuit was filed.

Greenberg moved to remand, meaning to return the case to state court, and also requested attorneys’ fees and costs. The Johnson & Johnson Defendants argued that Kolmar had been fraudulently joined. Fraudulent joinder is a rule that allows a federal court to disregard a non-diverse defendant if the removing party proves by clear and convincing evidence that the plaintiff committed outright pleading fraud or had no possibility of stating a claim against that defendant in state court.

The court also noted that Greenberg’s death did not prevent it from deciding the fully briefed remand motion. The opinion states that the Johnson & Johnson Defendants had filed a notice of her death and that the parties provided no authority showing that her death deprived the court of jurisdiction to decide the remand motion.

Analysis

The court applied New York’s more lenient pleading standards because the question was whether Greenberg had at least some possibility of recovering against Kolmar in New York state court. The court explained that factual and legal uncertainties had to be resolved in Greenberg’s favor at this stage.

First, the Johnson & Johnson Defendants argued that Greenberg stopped using Johnson’s Baby Powder in 1974, while Kolmar did not begin manufacturing it until 1980. Greenberg’s interrogatory response stated that she used the product from approximately 1944 to 1974, but her deposition testimony stated that she used it until approximately 1984 or 1985. The court found that this created a factual dispute. The court also found a factual dispute about when Kolmar began manufacturing the product, noting a 1966 document referring to Johnson’s Baby Dusting Powder and the defendants’ lack of support for their assertion that this was a different product.

Second, the Johnson & Johnson Defendants argued that Greenberg had not plausibly alleged that she used products made specifically by Kolmar. The court found that her allegations identifying Kolmar’s involvement in the manufacture, design, testing, supply, labeling, and distribution of asbestos-containing talc products were sufficient to create at least some possibility of recovery under New York’s pleading standard. The court declined to resolve factual questions that might ultimately matter to liability because the defendants had not shown that recovery was impossible.

Third, the Johnson & Johnson Defendants argued that Kolmar was immune from liability as a “mere contractor” or component-part manufacturer. The court found a factual dispute about whether any plans and specifications supplied to Kolmar were so obviously defective that a reasonably careful manufacturer would have known of the danger. Evidence concerning possible industry knowledge of asbestos risks in talc supported that dispute. The court therefore rejected the fraudulent-joinder argument.

Ruling

The court held that Kolmar was not shown to be fraudulently joined and therefore concluded that it lacked subject matter jurisdiction over the action. Judge John P. Cronan granted Greenberg’s motion to remand and ordered the case returned to the Supreme Court of the State of New York, New York County. The Clerk was directed to close the federal case.

The court separately denied Greenberg’s motion for attorneys’ fees and costs. Although the court rejected the defendants’ removal arguments, it found that they had an objectively reasonable basis for seeking removal, including their reliance on Greenberg’s earlier statement that she stopped using Johnson’s Baby Powder in 1974. The opinion does not decide whether Greenberg will ultimately prevail on her negligence or strict-liability claims.