Shook v. Avon Products, Inc. (2019)

Our plain-English summary of Shook v. Avon Products, Inc. (U.S. District Court, Western District of Pennsylvania, July 16, 2019).

Rosemarie Shook sued Johnson & Johnson, Avon, Imerys Talc America and others in Allegheny County, Pennsylvania state court, alleging injury from her use of J&J talc products. She had been diagnosed with metastatic malignant pleural mesothelioma in October 2018. Imerys, a talc supplier, filed for Chapter 11 bankruptcy in Delaware the day after she sued. J&J removed the case to federal court, arguing it was "related to" the Imerys bankruptcy because of indemnification clauses in its supply agreements and shared insurance. Shook moved to remand. The magistrate judge recommended remand. J&J had not shown related-to jurisdiction: the indemnification terms were contingent and would need further litigation, and shared insurance was not enough under Third Circuit precedent. Alternatively, equitable grounds supported remand because Shook might die before a consolidated Delaware proceeding resolved her claims, she had asked for a jury trial, and her claims were state-law product liability claims better left to state court. The recommendation also called for denying her motion for hearing as moot.

We wrote this summary from the court's opinion with the help of AI. It is not the court's wording, and it is not legal advice. The full opinion is below.

The decision

• Court: U.S. District Court, Western District of Pennsylvania
• Decided: July 16, 2019
• Docket: Civil Action No. 19-457
• Stage: Jurisdiction, venue or removal
• State: Pennsylvania

Outcome. The magistrate judge recommended granting plaintiff Shook's motion to remand to the Allegheny County Court of Common Pleas, rejecting Johnson & Johnson's bankruptcy "related to" removal, and denying her motion for hearing as moot.

What the court held. A defendant removing under bankruptcy "related to" jurisdiction must show the action itself affects the debtor's rights or liabilities without further litigation; contingent indemnification agreements and shared insurance are not enough. Remand was also supported on equitable grounds.

Issues decided: Asbestos Bankruptcies, Insurance Coverage, Venue, Removal and Transfer.

The people and their exposure

• Rosemarie Shook: pleural mesothelioma

Who	Work	Where	When	Products
Rosemarie Shook	user of talc products			talc and vermiculite, Johnson & Johnson personal talc products

The defendants

• Johnson & Johnson (manufacturer)
• Johnson & Johnson Consumer, Inc. (manufacturer)
• Avon Products, Inc. (manufacturer)
• Imerys Talc America, Inc. (supplier)

Decisions this opinion cites

Earlier decisions in our library that the court cited:

• In re Combustion Engineering, Inc. (U.S. Court of Appeals, Third Circuit, 2004). The Third Circuit vacated the District Court's order confirming Combustion Engineering's prepackaged Chapter 11 plan, vacated the § 105(a) injunction protecting Basic and Lummus, and remanded for further findings on the two-trust structure, with the insurers' appeals largely dismissed for lack of standing.

The court's opinion

The text below is Google Scholar's copy of the court's opinion, a public record. Numbers in brackets, such as [*921], mark where each page of the printed reporter begins.

ROSEMARIE SHOOK, Plaintiff,

v.

AVON PRODUCTS, INC., ET AL., Defendants.

Civil Action No. 19-457

July 16, 2019.

United States District Court, W.D. Pennsylvania.

ROSEMARIE SHOOK, Plaintiff, represented by Lawrence R. Cohan, Anapol, Schwartz, Weiss, Cohan, Feldman & Smalley, P.C., Mark A. Linder, The Lanier Law Firm, P.C., pro hac vice & Matthew A. Bole, Welch Gold Siegel PC.

JOHNSON & JOHNSON & JOHNSON & JOHNSON CONSUMER, INC., f/k/a JOHNSON & JOHNSON CONSUMER

COMPANIES, INC., Defendants, represented by Katherine A. Lowery, Kelley Jasons McGowan Spinelli Hanna & Reber, LLP & Christopher S. Arnold.

REPORT AND RECOMMENDATION

ECF Nos. 5 & 12

LISA PUPO LENIHAN, Magistrate Judge.

I. RECOMMENDATION

It is respectfully recommended that Plaintiff's Emergency Motion to Remand to State Court and Abstention (ECF No. 5) be granted and that the case be remanded to the Court of Common Pleas of Allegheny County, Pennsylvania. It is also recommended that Plaintiff's Motion for Hearing (ECF No. 12) be denied as moot.

II. REPORT

A. Facts

Presently before the Court is Plaintiff Rosemarie Shook's ("Plaintiff" or "Shook") Emergency Motion to Remand (ECF No. 5). Defendants Johnson & Johnson and Johnson & Johnson Consumer, Inc. (collectively "J&J" or "Defendants") filed their Notice of Removal (ECF No. 1) and Brief in Opposition to the Motion to Remand (ECF No. 10). On July 8, 2019, Plaintiff filed a Reply Brief (ECF No. 11) and the matter is now ripe for disposition.

On February 12, 2019, Plaintiff commenced her personal injury asbestos-related action in the Court of Common Pleas of Allegheny County against Defendants based on her use of Johnson & Johnson personal talc products. (ECF No. 5-5.) Plaintiff amended her Complaint on March 11, 2019. (ECF No. 1-2.) The Amended Complaint names numerous other Defendants including Imerys Talc America, Inc. ("Imerys"), one of J&J's talc suppliers. (Id.) On February 13, 2019, Imerys and two related entities filed a petition for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware. (ECF No. 1 ¶ 1.)

On April 22, 2019, J&J removed this action pursuant to 28 U.S.C. §§ 1334 and 1452, and stating as grounds for removal that the case was "related to" Imerys' Chapter 11 bankruptcy proceeding. (ECF No. 1 ¶¶ 16-21.) This civil action is one of five (5) similar lawsuits J&J removed to the Western District of Pennsylvania from mid-April to early May, 2019. See Mendicino v. Johnson & Johnson, No. 2:19-cv-448-MJH (W.D. Pa. April 18, 2019) (motion to remand pending); Rash v. American Talc Co., No. 1:19-cv-114-SPB (W.D. Pa. April 22, 2019) (motion to remand pending); Herron v. Avon Prod., Inc.,

No. 2:19-cv-467-NBF (W.D. Pa. April 24, 2019) (motion to remand pending); Kaufman v. Johnson & Johnson Consumer, Inc., No. 2:19-cv-520 AJS (W.D. Pa. May 3, 2019) (granting remand).

On April 18, 2019, a few days before their removal of this action, J&J filed a Motion to Fix Venue for Claims Related to Imerys' Bankruptcy in the District of Delaware ("Motion to Fix Venue") in which it sought to consolidate 2,400 talc actions in the District of Delaware on the basis that "all individual state-law personal injury or wrongful death claims against [J&J] are `related to' the [Imerys'] bankruptcy. . . ." See ECF No. 1-4 & 5. J&J later sought to provisionally transfer 2,400 federal and state personal injury and wrongful death actions on an emergency and ex parte basis pending the court's decision on the Motion to Fix Venue. The request for provisional transfer was denied on May 9, 2019. See In re Imerys Talc Am., Inc., No. 19-mc-00103-MN (D. Del. May 9, 2019) (ECF No. 11-8). An order on the Motion to Fix Venue has not yet been issued. In support of her Emergency Motion to Remand, Plaintiff argues that this Court does not have jurisdiction over Plaintiff's claims pursuant to 28 U.S.C § 1334 (b); that the Court is required to remand the case due to mandatory abstention pursuant to 28 U.S.C. § 1334 (c)(2), and that in any event, equitable remand is warranted in this case pursuant to 28 U.S.C. § 1452(b). (ECF No. 5 at 8-31.) Plaintiff emphasizes the exigency of the motion in that Shook was diagnosed with metastatic malignant pleural mesothelioma in October 2018 at the age of 61, and her condition continues to deteriorate rapidly. (ECF No. 5 at 7.)

In opposition to Plaintiff's Motion to Remand, J&J urges the Court to defer ruling on the motion until after the District of Delaware issues an order on J&J's Motion to Fix Venue. In the alternative, J&J argues that the Motion should be denied because J&J properly removed this civil action under the Federal Rules of Bankruptcy Procedure and relevant bankruptcy statutes. Finally, J&J argues that the United States District Court for the District of Delaware has the sole authority to ultimately fix venue and decide whether the action and claims against J&J asserted in thousands of similar actions should be centrally administered in Delaware as "related to" the Chapter 11 cases of Imerys. (ECF No. 10 at 11-28.) As of July 8, 2019, 414 cases have been remanded across the country. (ECF No. 11-2.) Another 239 cases may be remanded soon. See In re Motions to Remand Removed State Court Talc Actions, Proposed Findings of Fact and Conclusions of Law, No. 19-1692 (Bankr. D.N.J. July 2, 2019) (considering 239 motions to remand) ECF No. 11-3. J&J directs the Court to five (5) cases where courts have expressly declined to rule on remand and abstention until the District of Delaware first rules on the venue motion. (ECF No. 10 at 27 & n.17.) The Court could uncover no citations in the record where remand was denied.

B. Legal Standard

A defendant seeking removal bears the burden of establishing subject matter jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994). The United States Supreme Court in Kokkonen noted the following: Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree. It is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction. 511 U.S. at 377 (internal citations omitted). Moreover, "[w]ithout jurisdiction the court cannot proceed at all in any cause. Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause." Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94 (1989) (quoting Ex parte McCardle, 74 U.S. 506, 514 (1868)).

C. Analysis

Here, J&J removed this action pursuant to federal "related to" jurisdiction as provided in 28 U.S.C. §§ 1452(a) and 1334(b). Section 1452(a) provides for removal of cases over which the district court has jurisdiction pursuant to 1334(b). 28 U.S.C. § 1452(a). Section 1334(b) provides that district courts have jurisdiction over "all civil proceedings arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. § 1334(b). Relatedly, § 1452(b) provides that even if a court has subject matter jurisdiction over a removed action, "[t]he court to which such claim or cause of action is removed may remand such claim or cause of action on any equitable ground." 28 U.S.C. § 1452(b).[1]

According to J&J, this Court has "related to" jurisdiction over the removed claims because of contractual indemnifications contained in supply agreements between J&J and Imerys, and because of Imerys' alleged rights to shared insurance with J&J. (ECF No. 10 at 13-20.)

J&J has failed to carry its burden of demonstrating "related to" jurisdiction. The United States Court of Appeals for the Third Circuit has held that a civil action that is "a mere precursor to the potential third party claim for indemnification" that cannot on its own "determine any rights, liabilities, or course of action of the debtor" is not related to an ongoing bankruptcy action. Pacor, Inc. v. Higgins, 743 F.2d 984, 995 (3d Cir. 1984), overruled on other grounds by Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 129 (1995); discussed in, In re Combustion Eng'g, Inc., 391 F.3d 190, 226 (3d Cir. 2005). "Even with an indemnification agreement, a court lacks `related to' jurisdiction if the non-debtor's recovery is predicated upon the results of a subsequent action for indemnification." In re W.R. Grace & Co., 412 B.R. 657, 667 (D. Del. 2009), aff'd, 591 F.3d 164 (3d Cir. 2009). J&J has not shown that they would benefit from indemnification provisions without subsequent litigation. In fact, the contingencies set out in the express language of the indemnification agreements cited by J&J indicate otherwise, specifically § 10 of the "1989 Agreement"[2] and § 7(a)(iv) of the "2001 Agreement."[3] See ECF No. 1-5 at 17 & quoted in ECF No. 5 at 13. Importantly, J&J argues that other contractual provisions also provide for the possibility of indemnification from J&J to Imerys, demonstrating that indemnification is not automatic but subject to extended litigation. See J&J Memorandum in Support of Motion to Fix Venue, ECF No. 1-5 at 17 ("Debtors claim that J&J owes them a duty to defend." (citing 1989 Agreement § 11 & 2011 Agreement ¶ 6)); ("Debtors claim J&J must protect them against `any and all' losses, including attorneys' fees they incur. . . .").

J&J also argues that "related to" jurisdiction exists by virtue of shared insurance between J&J and the Debtors. ECF No. 10 at 16. The United States Court of Appeals for the Third Circuit, however, indicated that it "rejected the idea that shared insurance. . . was `a sufficient basis for the kind of unity of interest that could give rise to related to jurisdiction.'" In re W.R. Grace & Co., 591 F.3d 164, 173 (3d Cir. 2009) (discussing Combustion Eng'g, 391 F.3d at 232). The contingent nature of the indemnification language provides further doubt as to the unity of interest between J&J and Imerys. See McCartney v. Integra Nat. Bank North, 106 F.3d 506, 511 (3d Cir. 1997) (identity of interests arises where "there is such identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor[]") (quoting A.H. Robins Co. v. Piccinin, 788 F.2d 994, 999 (4th Cir. 1986)).

Therefore, on this record, the Court must conclude that it lacks "related to" subject matter jurisdiction and that remand is appropriate.

Even if this Court has subject matter jurisdiction, the Court nevertheless finds that equitable grounds support remand. See 28 U.S.C. § 1452(b). First, if this case is tried with thousands of other cases removed to the Delaware Bankruptcy Court, there is the possibility that Plaintiff may die before her claims are adjudicated. She has requested a jury trial for her state law claims and is entitled to the same. In addition, a review of the Amended Complaint reveals that Plaintiff asserts only state law product liability claims against non-debtor, J&J. In fact, all claims against the other non-debtor Defendants sound in state tort law. In the interest of comity, these state law issues are better left to the state court, and it is recommended that Plaintiff's case be remanded to the Court of Common Pleas of Allegheny County.

In light of the above, the Court will not discuss Plaintiff's remaining arguments.

III. CONCLUSION

For the reasons discussed above, it is respectfully recommended that Plaintiff's Emergency Motion to Remand to State Court and Abstention (ECF No. 5) be granted and that the case be remanded to the Court of Common Pleas of Allegheny County, Pennsylvania. It is also recommended that Plaintiff's Motion for Hearing (ECF No. 12) be denied as moot. In accordance with the Magistrate Judges Act, 28 U.S.C. § 636(b)(1)(B) and (C), and Rule 72.D.2 of the Local Rules of Court, the parties are allowed fourteen (14) days from the date of service of a copy of this Report and Recommendation to file objections. Any party opposing the objections shall have fourteen (14) days from the date of service of objections to respond thereto. Failure to file timely objections will constitute a waiver of any appellate rights.

[1] Section 1452(b) also provides that an order entered remanding a claim or cause of action on any equitable ground, "is not reviewable by appeal or otherwise by the court of appeals under section 158(d), 1291, or 1292 of this title or by the Supreme Court of the United States

under section 1254 of this title." 28 U.S.C. § 1452(b).

[2] Section 10 of the "1989 Agreement" provides as follows:

Seller's Indemnity. Seller shall indemnify, defend and hold harmless Buyer. . . from and against all liabilities arising out of any violation by Seller of any law, ordinance, regulation or rule or the order of any court or administrative agency, and from and against all liabilities arising out of any claim by an employee, agent, or contractor of Seller arising in connection with this Agreement; provided, however, that Seller shall not indemnify Buyer for any such liabilities to the extent that such liabilities arise from: (i) the acts or omissions of Buyer; or (ii) the acts or omissions of Seller which were directed by Buyer. . . .

[3] Section 7(a)(iv) of the "2001 Agreement" states as follows:

(iv) Excluding those matters set out in the preceding clauses (i), (ii), (iii), Seller shall indemnify, defend and hold harmless Buyer. . . from and against all liabilities arising our of any violation by Seller of any law, ordinance, regulation, or rule or the order of any court or administrative agency, and from and against all liabilities arising out of any claim by an employee, agent, or contractor of Seller arising in connection with this Agreement, provided however, that Seller shall not indemnify Buyer for any such liabilities to the extent that such liabilities arise from: (i) the acts or omissions of Buyer; or (ii) the acts or omissions of Seller which were directed by Buyer.

Sources

• The opinion on Google Scholar
• Pennsylvania asbestos laws
• Pennsylvania asbestos exposure sites