There is no reasonable basis to remand Cazares v. Ortho El Paso, P.A., 2020 WL 4562231 (W.D. Tex. Aug. 7, 2020) because there is no reasonable basis for plaintiff’s strict liability claims against a hospital.  And that is sufficient.

That, however, is not what the magistrate who first ruled on plaintiff’s motion to remand concluded.  While giving lip service to the reasonable basis standard, he actually required a “settled rule” rejecting plaintiff’s theory of liability.  That was a few steps too far.

Plaintiff brought suit in state court in Texas alleging he was injured after receiving an injection of a drug he alleges was contaminated.  Id. at *1.  In addition to suing the manufacturer of the drug, plaintiff sued the hospital where he received the injection.  Id.  Plaintiff’s causes of action were for strict liability, manufacturing defect, negligence, breach of express warranty, and breach of implied warranty.  Specifically against the hospital, plaintiff asserted his strict liability and breach of warranty claims – products liability claims.  While plaintiff is a resident of Texas, all of the defendants, except the hospital, are not.  So, the manufacturing defendants removed the case to federal court alleging that the hospital had been fraudulently joined.  Id.

The motion was originally presented to the magistrate who acknowledged that the standard for determining if a party has been fraudulently joined is whether there is a “reasonable basis for the district court to predict that [Plaintiffs] might be able to recover against [the hospital defendant] in state court.”  Id. at *3.  The magistrate was also correct in stating that to answer that question, the district court should look to the decisions of the state’s highest court or lacking any it should be guided by the decisions of the state’s intermediate appellate court.  Id.  But where the magistrate erred was in tacking on a requirement that fraudulent joinder existed only if there was a “settled rule under Texas law” that plaintiff could not recover against the hospital.  He reasoned that because there is no “settled rule” in Texas regarding whether a hospital could be liable for breach of express warranty, that allowed for reasonable probability that plaintiff could recover against the hospital in state court.  On this basis he recommended the case be remanded.  Id.

The manufacturer defendants objected and the district court judge rejected the magistrate’s recommendation.  In other words, the court denied remand.  Defendants’ primary objection was that the “settled rule” requirement “improperly narrowed” the “no-reasonable basis” analysis.  Id. at *7.  The court agreed.  The district court judge found the Fifth Circuit to be clear in its adoption of only the no-reasonable basis standard.  See Smallwood v. Illinois Cent. R.R. Co., 385 F.3d 568, 573 (5th Cir. 2004) (“To reduce possible confusion, we adopt [the no reasonable basis] phrasing of the required proof and reject all others….”).  The magistrate impermissibly heightened defendants’ burden.  Defendants had to demonstrate no reasonable basis to predict that plaintiffs may recover against the hospital; “it is not their burden, however, to show that Texas state courts have conclusively eliminated the possibility.”  Cazares, at *7.

Applying the proper standard, the court then examined the Texas case law that the magistrate had found unpersuasive.  Such as a Texas appellate court decision explicitly holding that a plaintiff could not recover against a medical center for breach of express warranty. Cobb v. Dallas Forth Worth Medical Center—Grand Prairie, 48 S.W.3d 820, 826–27 (Tex. App. 2001).  The magistrate thought that opinion was too “brief” on the issue to warrant consideration. Or, all of the other cases cited by defendants which while not specifically addressing breach of express warranty, did hold that claims for strict liability and/or breach of implied warranty were not viable against medical providers.  Cazares, at *7-8.

First and foremost, it was not up to the magistrate to decide whether Cobb controlled or not – it does.

Pursuant to Fifth Circuit precedent, it is not within a federal court’s discretion to decide whether it agrees with a state appellate court on issues of state law: a [federal] court must follow the decisions of intermediate state courts’ unless there is ‘convincing evidence that the highest court of the state would decide differently.

Id. at *8 (citations omitted).  The court found no convincing evidence that the Texas Supreme Court would decide the viability of products liability claims against medical providers any differently.  Even if Cobb were not enough, the other cases cited by defendants held that medical providers are not “sellers” of goods and without a sale there could be no breach of implied warranty.  Id. at *9.  Since Texas law applies the same definition of “sale” and “seller” to express warranty claims, there is no reason to believe that Texas courts would rule differently in an express warranty case.  While the magistrate did not address the issue, the rulings in these cases likewise preclude plaintiff’s strict liability claim against the hospital.

Because plaintiff cannot prevail on any of its claims against the hospital, the hospital is not properly joined.  Since all properly joined defendants are diverse, the case stays in federal court.