May 27, 2016

Frivolous Retaliatory Lawsuit Could Set Ominous Precedent in Mass Torts

In the world of mass torts, there is no shortage of scheme or artifice plaintiffs’ counsel will use to try to avoid the removal of lawsuits to federal court. However, it would be unreasonable and unjustified for a defendant, or its counsel, to face retaliatory litigation simply for attempting to exercise removal rights conferred through federal statute and rules of court. Nonetheless, that’s exactly what’s happening in a recent case that began in a West Virginia state court.

It is no secret that plaintiffs usually seek to prevent removal of a state court action by joining a non-diverse defendant to the case, even though they typically have no intention of seeking or establishing any liability against that defendant. Plaintiffs seldom, if ever, try to evade diversity jurisdiction by arguing or stipulating that the plaintiffs will not accept damages in excess of $75,000.

However, the plaintiff in a West Virginia state court case filed against Volkswagen Group of America (Morris I) tried this novel tactic. He sued Volkswagen for claims arising out of Volkswagen’s diesel-emissions testing and certification for some of its cars. The plaintiff’s state court complaint sought both compensatory and punitive damages, as well as “such other and further relief, both legal and equitable, as justice …require[s].” Despite seeking punitive damages and all equitable relief available, the plaintiff included the following “stipulation” in his prayer for damages, in an attempt to avoid federal jurisdiction:


Morris I raises factual and legal issues substantially similar to those at issue in the multidistrict litigation pending in California, styled In re: Volkswagen “Clean Diesel” Marketing, Sales Practices, and Products Liability Litigation, No. 3:15-md-2672 (N.D. Cal.).

Volkswagen removed the action to the Southern District of West Virginia on December 10, 2015, ignoring the plaintiff’s attempt to limit the amount sought to less than $75,000. Then, because Morris I raised questions of fact similar or identical to those at issue in the California MDL, Volkswagen designated the case as a “tag-along” case to be transferred to the California MDL.

On December 15, the plaintiff filed a motion to remand the case back to state court. The U.S. Judicial Panel on Multidistrict Litigation (JPML) issued a conditional transfer of Morris I to the California MDL on December 16. The plaintiff failed to file any objection to the conditional transfer within the seven days required by the JPML’s Rule 7.1, and Morris I was subsumed into the California MDL. This did not sit well with the plaintiff’s counsel.

In a surprising turn of events on February 17, 2016, the plaintiff sued Volkswagen and its lawyers for fraud and statutory obstruction of justice in Morris vs. Neale, et al., No. 2:16-cv-02847 (S.D. W. Va. 2016) (Morris II)1. He alleged that Volkswagen and its lawyers made false and fraudulent statements to the state and federal courts by “maliciously” misrepresenting that the amount in controversy exceeded $75,000, in order to remove Morris I to the California MDL.

The defendants have moved to dismiss Morris II, arguing that all of the plaintiff’s claims are: (1) preempted by the federal judiciary’s plenary power to decide subject matter jurisdiction; (2) barred by the litigation privilege; and (3) deficient as a matter of law. The plaintiff has since sought leave to amend his complaint to add RICO claims, essentially alleging that the defendants have engaged in a fraudulent scheme or practice of fraudulent removal of cases to federal court through intentional misrepresentations to various federal courts around the country. All motions are currently briefed and are being considered by the federal court in West Virginia.

Looking past the merits of the plaintiff’s arguments for remand in Morris I (which is still pending before the California MDL), the claims and arguments set forth in Morris II appear to have little to no merit and border on the frivolous and sanctionable2. The dispute over whether diversity jurisdiction exists in Morris I, like most disputes over federal jurisdiction, necessarily depends on nuanced legal argument of established precedent, and is subject to the federal court’s analysis and interpretation. Once a defendant has removed a lawsuit, the burden then falls back to the plaintiff to establish why remand must be granted.

Here, the plaintiff’s protestation appears to be more an issue with the rules established by the JPML, and his inability to follow those rules in a timely manner, than a valid, good-faith argument concerning federal subject matter jurisdiction. A plaintiff’s attack on a defendant, or its counsel, based on the right to remove an action based on federal statutes, established precedent and legal argument through a collateral lawsuit claiming fraud or RICO violations is itself an abuse of process, and should not stand. To decide otherwise would effectively preclude a defendant from seeking to exercise its removal rights pursuant to federal statute for fear of subjecting it and its lawyers to additional liability simply for making otherwise valid legal arguments. We anticipate that the court will shut down the plaintiff’s attempt to punish Volkswagen for relying on the plaintiff’s substantive claims and ignoring the plaintiff’s attempt to stipulate away federal jurisdiction.

1 Morris II was also originally filed in state court but removed by the defendants. The plaintiff does not contest that removal of Morris II was proper.

2 Plaintiff’s briefing in the motion to dismiss and the motion to amend the Morris II complaint is riddled with inflammatory references, including: (1) invocation of what the plaintiff terms the “Goebbels principle” (quoting Nazi propaganda minister Joseph Goebbels); and (2) an analogy that compares the removal of Morris I to a terror attack against counsel in the courtroom. The plaintiff's briefing focuses not on JPML procedures or the relevant law cited by Volkswagen, but rather on his unsupported view of Volkswagen's conduct in removing Morris I. 

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