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In Asbestos Personal Injury Case, Fourth Circuit Holds That District Court Could Not Strike Remand Order and Retrieve Remanded Case from State Court as Sanction Against Plaintiffs

Barlow v. Colgate Palmolive Co. & Mosko v. Colgate Palmolive Co.
Nos. 13-1839 & 13-1840 (United States Court of Appeals for the Fourth Circuit, April 30, 2014)
by Colleen K. O’Brien, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www.ca4.uscourts.gov/Opinions/Published/131839.P.pdf

In Barlow v. Colgate Palmolive Co. and Mosko v. Colgate Palmolive Co., two (2) cases involving the removal of an asbestos personal injury case to Maryland Federal Court and subsequent remand to Maryland State Court, the Fourth Circuit Court of Appeals held that the order remanding the case for lack of subject matter jurisdiction was not reviewable on appeal or otherwise, under 28 U.S.C. § 1447(d). The Court rejected Defendants’ collateral attack on the remand orders seeking sanctions against Plaintiffs’ counsel under Fed. Rules Civ. P. 11 and 60 for making alleged misrepresentations to the federal court relating to the existence of subject matter jurisdiction. The Court affirmed the order of the district court insofar as it ruled that it lacked jurisdiction. Judge Davis wrote the majority opinion, in which Judge Cogburn joined, however, Judge Floyd wrote a dissenting opinion agreeing with the Defendant’s position.

By way of factual background, Joyce Barlow and Clare Mosko separately sued Colgate and a variety of other companies in Maryland state court, asserting that each of the defendants’ products had at some point exposed them to asbestos. With respect to Colgate, the plaintiffs’ theory was that its “Cashmere Bouquet” line of powder makeup products contained unhealthy levels of asbestos and had thereby contributed to the 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 as to the in-state defendants, and alleging that the plaintiffs’ deposition testimony and interrogatory responses demonstrated that they did not intend to pursue a claim against any defendant other than Colgate, a citizen of Delaware and New York.

After removal, the plaintiffs’ lawyers moved to remand the cases to state court, arguing that they had viable claims against the nondiverse defendants. The district court agreed, finding that although only Colgate’s Cashmere Bouquet products had been identified by the plaintiffs as the source of their asbestos exposure, there was still more than a “glimmer of hope,” that the plaintiffs could identify a basis to recover against the nondiverse defendants as discovery proceeded. The cases were remanded.

Just days after the remand orders were handed down, counsel for the plaintiffs asked the State Court to consolidate the two (2) cases because, among other reasons,“[a]ll [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.” (emphasis added). Colgate then promptly moved in the district court for vacatur of the remand order as a sanction. The district court denied the motion, finding that reconsideration of the remand order is prohibited by the removal statute and pertinent Circuit law. The district court stated further that it was “not convinced that counsel’s conduct is sanctionable” because the alleged misrepresentations were “attributable to different attorneys in markedly different litigation contexts.”

On appeal, Colgate contended that it was error for the district court to rule that it did not have the authority to consider whether plaintiffs’ counsel committed misconduct and whether such misconduct warranted relief from the Remand Orders. Colgate maintained that the district court had authority, pursuant to its inherent authority and Rules 11 and 60(b)(3) of the Federal Rules of Civil Procedure, to strike the remand orders as a sanction for counsel’s alleged misrepresentation regarding the existence of subject matter jurisdiction.

The federal removal statute generally prohibits review of orders remanding removed cases. To the majority, it was a long standing principle that entry of an order remanding a case to state court divests the district court “of all jurisdiction in [the] case and preclude[s] it from entertaining any further proceedings of any character, including the defendants’ motion to vacate the original remand order.” This provides for finality so that jurisdictional litigation comes to an end and the parties can proceed to the merits and avoid unnecessary delay and expense. If Congress wanted to carve out an attorney-misconduct exception to the prohibition on review of remand orders, it would have done so. Thus, because the remand orders were not reviewable on appeal or otherwise, the district court correctly ruled that it lacked jurisdiction to revisit its remand orders. The Court affirmed the order of the district court insofar as it ruled that it lacked jurisdiction. Judge Floyd dissented, however, citing to numerous cases where other circuits and even the Supreme Court had spoken on the propriety of Rule 11 sanctions even when a district court was without jurisdiction.

In a scathing dissent, Judge Floyd opined that the district court had, at a minimum, jurisdiction to consider Colgate’s Rule 11 motion for sanctions and to fashion appropriate relief, if any. In addition, since Colgate never argued that the district court erred in remanding the cases—only that the district court erred in subsequently denying Colgate’s post-remand motions—§ 1447(d) did not prohibit the Court from vacating the remand orders pursuant to Fed. R. Civ. P. 60(b)(3) if it was determined that such relief was warranted. According to Judge Floyd: “If a litigant could flout his duty of candor before a district court and secure remand by misrepresentation, knowing that such remand is never subject to vacatur, he would lose all incentive to present the facts of a case honestly to the court during removal. Righting this wrong and protecting the sanctity and integrity of judicial proceedings overrides the value of any purported finality of a remand order.” Under the facts of this case, it would be an abuse of a district court’s discretion to not award sanctions. Overall, Judge Floyd would have: 1) reversed the district court’s denial of Colgate’s Rule 11 motion for sanctions and would have sanctioned plaintiffs and their counsel; 2) would reverse the district court’s denial of Colgate’s Rule 60(b)(3) motion for lack of jurisdiction; and, 3) would vacate the remand orders and return the cases back to the district court.