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Barlow v. Colgate Palmolive Co.

United States Court of Appeals, Fourth Circuit

November 25, 2014

JOYCE BARLOW, Plaintiff - Appellee,
v.
COLGATE PALMOLIVE COMPANY, Defendant -- Appellant, and JOHN CRANE-HOUDAILLE, INCORPORATED; E.L. STEBBING & COMPANY, INC.; HAMPSHIRE INDUSTRIES, INC., f/k/a John H. Hampshire Company; UNIVERSAL REFRACTORIES COMPANY; J.H. FRANCE REFRACTORIES COMPANY; THE GOODYEAR TIRE & RUBBER COMPANY, f/k/a Kelly Springfield Tire Company; MCIC, INC., and its remaining Director Trustees, Robert I. McCormick, Elizabeth McCormick and Patricia Schunk; CBS CORPORATION, a Delaware Corporation f/k/a Viacom, Inc., Successor by merger to CBS Corporation, a Pennsylvania Corporation, f/k/a Westinghouse Electric Corporation; METROPOLITAN LIFE INSURANCE COMPANY; A.W. CHESTERTON COMPANY; CERTAINTEED CORPORATION, individually and as successor to Bestwall Gypsum Co.; KAISER GYPSUM COMPANY, INC.; UNION CARBIDE CORPORATION; INTERNATIONAL PAPER COMPANY, individually and as successor in interest to Champion International Corporation and U.S. Plywood Corp.; BAYER CROPSCIENCE, INC., individually and as successor in interest to Benjamin Foster Co., Amchem Products, Inc., H.B. Fuller Co., Aventis CropScience USA, Inc., Rhone-Poulenc AG Company, Inc., Rhone-Poulenc, Inc. and Rhodia, Inc.; COOPER INDUSTRIES, INC., individually and as successors in interest to Crouse Hinds Co.; PFIZER CORPORATION; SCHNEIDER ELECTRIC USA, INC., f/k/a Square D Company, individually and as successor in interest to Electric Controller and Manufacturing Co.; GEORGIA-PACIFIC, LLC, individually and as successor to Bestwall Gypsum Co.; FOSTER WHEELER CORPORATION; THE WALLACE & GALE ASBESTOS SETTLEMENT TRUST; CONWED CORPORATION; GENERAL ELECTRIC COMPANY; GEORGIA PACIFIC CORPORATION, individually and as successor in interest to Bestwall Gypsum Co., Defendants. CLARA G. MOSKO, Plaintiff - Appellee,
v.
COLGATE PALMOLIVE COMPANY, Defendant -- Appellant, and JOHN CRANE-HOUDAILLE, INCORPORATED; E.L. STEBBING & CO., INCORPORATED; HAMPSHIRE INDUSTRIES, INC., f/k/a John H. Hampshire Company; UNIVERSAL REFRACTORIES COMPANY; J.H. FRANCE REFRACTORIES COMPANY; THE GOODYEAR TIRE & RUBBER COMPANY, f/k/a Kelly Springfield Tire Company; MCIC, INC., and its remaining Director Trustees, Robert I. McCormick, Elizabeth McCormick and Patricia Schunk; CBS CORPORATION, a Delaware Corporation f/k/a Viacom, Inc., f/k/a Westinghouse Electric Corporation; METROPOLITAN LIFE INSURANCE COMPANY; A.W. CHESTERTON COMPANY; CERTAINTEED CORPORATION, individually and as successor to Bestwall Gypsum Co.; KAISER GYPSUM COMPANY, INC.; UNION CARBIDE CORPORATION; INTERNATIONAL PAPER COMPANY, individually and as successor in interest to Champion International Corporation and U.S. Plywood Corp.; BAYER CROPSCIENCE, INC., individually and as successor in interest to Benjamin Foster Co., Amchem Products, Inc., H.B. Fuller Co., Aventis CropScience USA, Inc., Rhone-Poulenc AG Company, Inc., Rhone-Poulenc, Inc. and Rhodia, Inc.; COOPER INDUSTRIES, INC., individually and as successors in interest to Crouse Hinds Co.; PFIZER CORPORATION; SCHNEIDER ELECTRIC USA, INC., f/k/a Square D Company, individually and as successor in interest to Electric Controller and Manufacturing Co.; FOSTER WHEELER CORPORATION; THE WALLACE & GALE ASBESTOS SETTLEMENT TRUST; CONWED CORPORATION; GEORGIA-PACIFIC, LLC, individually and as successor to Bestwall Gypsum Co.; 3M COMPANY; MALLINCKRODT, INC.; CROWN, CORK & SEAL CO., INC.; KOPPERS COMPANY, INC.; WALTER E. CAMPBELL CO., INC.; KRAFFT-MURPHY COMPANY, individually and as successor to National Asbestos Company, a dissolved Delaware Corporation; AC& R INSULATION CO., INC.; COTY, INC.; JOHNSON & JOHNSON; LUZENAC AMERICA INC.; R.T. VANDERBILT COMPANY, INC.; BAYER CORPORATION, as successor in interest to Sterling Drug, Inc., and Sterling-Winthrop Inc.; GENERAL ELECTRIC COMPANY, Defendants

Argued September 18, 2014.

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[Copyrighted Material Omitted]

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Appeals from the United States District Court for the District of Maryland, at Baltimore. (1:12-cv-01780-WMN; 1:12-cv-01781-WMN). William M. Nickerson, Senior District Judge.

ARGUED:

Faith Elizabeth Gay, QUINN, EMANUEL, URQUHART & SULLIVAN, LLP, New York, New York, for Appellant.

Jeffrey John Utermohle, LAW OFFICES OF PETER G. ANGELOS, Baltimore, Maryland, for Appellees.

ON BRIEF:

Thomas P. Bernier, SEGAL MCCAMBRIDGE SINGER & MAHONEY, Baltimore, Maryland; William B. Adams, QUINN EMANUEL URQUHART & SULLIVAN, LLP, New York, New York, for Appellant.

Jennifer L. Lilly, Thomas Kelly, Craig Silverman, LAW OFFICES OF PETER G. ANGELOS, Baltimore, Maryland, for Appellees.

Before NIEMEYER, KING, SHEDD, DUNCAN, WYNN, DIAZ, and FLOYD, Circuit Judges, and DAVIS, Senior Circuit Judge. Judge Floyd wrote the opinion, in which Judges Niemeyer, King, Shedd, Duncan, and Diaz joined. Judge Wynn wrote a separate opinion concurring in part and dissenting in part. Senior Judge Davis wrote a dissenting opinion.

OPINION

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FLOYD, Circuit Judge:

This appeal involves the interplay between 28 U.S.C. § 1447(d), which prohibits federal courts from reviewing orders remanding cases to state court, and Federal Rules of Civil Procedure 11 and 60(b)(3), which provide means for federal courts to remedy and deter the perpetration of fraud on the courts. Despite strong evidence that the plaintiffs in these consolidated actions misrepresented their intent to pursue claims against certain defendants, the lower court found that § 1447(d) deprived it of jurisdiction to either impose certain sanctions under Rule 11 or afford relief under Rule 60(b)(3). Because we conclude that using these rules to safeguard the courts from fraud does not amount to the " review" proscribed by § 1447(d), we reverse.

I.

A.

This action arises from asbestos litigation brought by two individuals in Maryland state court. Plaintiffs Joyce Barlow and Clara Mosko separately sued Colgate--Palmolive Company--among numerous other companies[1]--and asserted that each of the defendants' products had at some point exposed them to asbestos. As to Colgate, Plaintiffs' theory was that the company's " Cashmere Bouquet" line of powder makeup products contained harmful levels of asbestos and had thereby contributed to Plaintiffs' health problems.

Despite Plaintiffs' joinder of in-state defendants, Colgate removed the two cases to federal court on the basis of diversity of citizenship--asserting fraudulent joinder of the in-state defendants, and alleging that Plaintiffs' deposition testimony and interrogatory responses demonstrated that they did not intend to pursue a claim against any defendant other than Colgate, a diverse defendant.[2]

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Plaintiffs' counsel[3] then moved to remand the cases to state court, arguing that Plaintiffs had viable claims against the non-diverse defendants. In a motion for remand in Barlow's case, counsel represented the following:

[T]here is some circumstantial evidence to suggest Ms. Barlow could possibly have been exposed to asbestos-containing products while working at RMR Corporation. . . . The evidence is certainly circumstantial, but it cannot be said that there is no possibility that a claim could be successfully proven against any of the non-diverse defendants.

(J.A. 106.) In support, Barlow's counsel cited Barlow's statement to a physician on or about June 21, 2011, that she " may have been" exposed to asbestos while working the assembly lines of RMR Corporation.[4] (Id. at 96, 145.) Although Plaintiffs' counsel admitted that the evidence of liability was hardly " unequivocal," counsel maintained that Barlow's testimony showed " that there is a possibility that Ms. Barlow could successfully pursue a claim against the non-diverse defendants." (Id. at 114.)

Based on the above representations, the district court (Judge Nickerson) remanded Barlow's case to state court. The district court relied solely on the claim that Barlow was exposed to asbestos at RMR Corporation: " Barlow argues that her joinder of the in-state defendants was not fraudulent because there remains a possibility that she was exposed to asbestos while working at RMR Corporation . . . . As a result, the Court finds that joinder of the in-state defendants here was not fraudulent . . . ." (Id. at 367-68.)

Similarly, in Mosko's case, Plaintiffs' counsel represented that she may have a viable claim against at least one of the non-diverse defendants:

[I]t was certainly plausible at the time [that Mosko] filed her Complaint that local defendants should be implicated. . . . In fact, Plaintiff's counsel do have some circumstantial evidence that Ms. Mosko may have been exposed to asbestos at the Department of Agriculture in the form of invoices [from an in-state defendant, Walter E. Campbell Co., Inc.].

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(Id. at 247.) Based on the above representations,[5] the district court (Judge Quarles) found a possibility that Ms. Mosko could successfully pursue a claim against the non-diverse defendants and remanded Mosko's case to state court. (Id. at 351-61.) In doing so, the district court relied solely on the claim that Mosko was exposed to asbestos at the Department of Agriculture (DOA) building: " Mosko has shown more than a 'glimmer of hope' of recovering against . . . an in-state defendant[] for exposure during the renovations in the DOA building. Therefore, removal was improper." (Id. at 358-59.)

B.

Shortly after returning to state court, Plaintiffs filed a joint motion to consolidate their cases with two other asbestos-related cases.[6] Colgate opposed the motion, arguing that it could not receive a fair trial in a consolidated proceeding because the alleged sources of asbestos (other than Cashmere Bouquet) were too different among the cases. In a reply brief, Plaintiffs made the following statements, which contradict their representations to the federal district court judges:

[Plaintiffs] allege exposure to asbestos-containing Cashmere Bouquet powder products only and do not allege exposure to any other asbestos, asbestos-containing products or asbestos-containing dust in any other form. . . . Colgate attempts to highlight alleged differences in Plaintiffs' worksites and occupations as well as their alleged exposures to [other] asbestos-containing products. However, neither Plaintiffs' worksites nor their occupations are relevant to this consolidation review because each of the Plaintiffs were exposed, in their homes, to asbestos-containing Cashmere Bouquet only. . . . The occupations or worksites of the Plaintiffs should not affect the consolidation of these cases for trial because not one of the Plaintiffs testified that they were exposed to asbestos as a result of their employment. . . . In short, there is absolutely no evidence to indicate or even suggest that the Plaintiffs were exposed to asbestos in any form other than Cashmere Bouquet.

(J.A. 474-76 (paragraph breaks omitted) (emphases added).)

At a hearing on Plaintiffs' consolidation motion, the state court judge told Plaintiffs' counsel, " I can't believe you actually told Judge Nickerson and Judge Quarles one thing and tell me another." (Id. at 494.) The judge then posed the following question to Plaintiffs' counsel: " It is a one-defendant case, right?" Counsel answered, " Yes." (Id.)

C.

After the post-remand hearing, Colgate moved in the district court for relief from Plaintiffs' purported misrepresentations. Specifically, Colgate sought relief under Rule 11 of the Federal Rules of Civil Procedure and asked that the district court sanction Plaintiffs' attorneys by imposing monetary penalties, referring them to the state bar, and awarding any other relief that the district court deemed appropriate. The nearly identical motions in Barlow's and Mosko's separate cases were consolidated before Judge Nickerson. A hearing was held on these motions, at which Plaintiffs'

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counsel claimed that the statements made in federal court were " legal conclusion[s]" and " legal argument[s]," not " factual contention[s]" subject to Rule 11 sanctions. (Id. at 1070-71.) Post-hearing, Colgate moved for relief under Rule 60(b)(3) as a supplement to its Rule 11 motions. In its Rule 60(b)(3) motions, Colgate sought vacatur of the remand orders.

On June 26, 2013, Judge Nickerson " denied" Colgate's motions. (Id. at 1107, 1109.) Although the district court characterized the allegations in the motions as " substantial" and acknowledged that the different statements by Plaintiffs' counsel " appear to be in sharp conflict," the court concluded that 28 U.S.C. § 1447(d) deprived it of jurisdiction to vacate or strike its remand orders. (Id. at 1106, 1108.) The district court further stated that " [w]ere the Court to consider other possible sanctions, it would decline to impose them." (Id.) It was " not convinced that counsel's conduct is sanctionable" because the alleged misrepresentations were " ...


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