Sherfey v. Johnson & Johnson, PICS Case No. 14-0135 (E.D. Pa. Jan. 29, 2014) Kelley, J. (27 pages).

U.S. DISTRICT COURT - EASTERN

The Legal Intelligencer

CIVIL PROCEDURE

Diversity Jurisdiction • Forum Defendant Rule • Domicile • Fraudulent Joinder • Statute of Limitations •

Sherfey v. Johnson & Johnson, PICS Case No. 14-0135 (E.D. Pa. Jan. 29, 2014) Kelley, J. (27 pages).

Where a court has already ruled in a case with substantially similar facts on the domicile of a corporate defendant, the court will adopt similar findings; and where allegations of actions by corporate officers amount to nonfeasance instead of malfeasance, such officers are not liable under the participation theory and are fraudulently joined to an action involving their company, and therefore remand pursuant to the forum defendant rule is improper. Denied.

Plaintiff Stacy Sherfey, administrator of the estate of her child, Tracen Sherfey, brought the instant suit against defendants arising from Tracen's death in Nevada alleged to be the result of defective Children's Tylenol manufactured, distributed and sold by defendants.

Defendants removed the action, which was followed by plaintiff's motion to remand on the basis of the forum defendant rule. Defendants opposed plaintiff's motion, arguing that the corporate defendants were domiciled in New Jersey and that the individual defendants domiciled in Pennsylvania were fraudulently joined.

The parties contested the issue of the principal place of business of corporate defendant McNeil. Plaintiffs alleged McNeil had its principal place of business in Pennsylvania, while defendants contended it was located in New Jersey. The court noted that there were several cases against defendants arising from substantially similar facts as this case, and in all cases plaintiffs were attempted to remand on the basis of the forum defendant rule. The court in the other cases awaited the decision in one of the cases, Moore v. Johnson & Johnson, on the issue of McNeil's principal place of business. The instant court adopted the Moore court's finding of a principal place of business in New Jersey.

The instant court then considered whether the individual defendants who were officers of the corporate defendants, had been fraudulently joined. The court noted that fraudulent joinder could only be found where plaintiff's claims were "wholly insubstantial and frivolous" and where recovery was a "clear legal impossibility". The court further noted that for the individual defendants to have individual liability for the actions of their respective corporations, they must be held to be liable under the participation theory, which requires the plaintiff to establish that the officer engaged in misfeasance rather than nonfeasance. While plaintiff attempted to establish affirmative acts on the part of the individual defendants, the court found that plaintiff's allegations largely amounted to asserting that the individual defendant should have known the consequences of their actions, rather than establishing that defendants directed the manufacture and distribution of defective Tylenol. Consequently, the court ruled that plaintiff had not alleged malfeasance on the part of the individual defendants and had therefore fraudulently joined them, and dismissed plaintiff's claims against all individual defendants.

Finally, defendants also contended that the two year statute of limitations in Pennsylvania had run on plaintiff's claim against the individual defendants. Defendants also proactively rejected arguments that the discovery rule or fraudulent concealment tolled the statute of limitation. Although plaintiff contended that the Nevada discovery rule applied in the instant case, the court ultimately did not need to rule on the issue, as they had dismissed the claims against the individual defendants for fraudulent joinder.