Plaintiffs often prefer to be in state court, and when we first started doing a lot of product liability litigation way back when, we were struck by how much time and effort plaintiffs spent trying to evade federal jurisdiction and litigating motions to remand to state court.  We don’t wonder so much anymore.  Jaded, we guess.  We cannot, however, help but monitor the cases and find ourselves drawn to cases involving fraudulent joinder of non-diverse defendants.  You know the drill:  The plaintiff sues an out-of-state drug or medical device company in state court and, in order to avoid complete diversity of citizenship, the plaintiff also sues some local defendant.  A local doctor, local hospital, local distributor, whatever.  Sometimes it works and plaintiffs stay in state court; and sometimes it does not.

One group of local defendants for which this tactic should rarely work is sales representatives, and a recent order in Illinois explains why.  In Elrod v. Bayer Corp., No. 19-cv-06048, 2020 WL 4284416 (N.D. Ill. July 27, 2020), the Illinois plaintiff sued a number of medical device-related entities from other locales, and to avoid removal to federal court, she also sued an Illinois sales representative.  Id. at *1.

Let’s pause here.  What liability could a sales representative possibly bear to a medical device patient?  Claims in connection with the sale of the device would be against the manufacturer, so it should not be an option merely to add the sales representative’s name to the complaint.  There should have to be a separate breach of duty attributable directly to the sales representative.  If not, then no dice.

That is essentially what the district court ruled in Elrod v. Bayer.  The defendants removed the case to federal court, and when the plaintiff moved to remand, the defendants argued that the local sales representative’s Illinois citizenship should be disregarded because she was fraudulently joined.

In the Seventh Circuit, “[t]o establish fraudulent joinder, a removing defendant must show that, after resolving all issues of fact and law in favor of the plaintiff, the plaintiff cannot establish a cause of action against the in-state defendant.”  Id. at *2 (citations omitted).  The standard is whether “the plaintiff has any reasonable possibility of success” under the applicable state law.  Id.

The plaintiff argued there was a “reasonable possibility” that an Illinois court would hold the sales representative liable for negligent misrepresentation.  But the district court rejected that argument because the sales representative owed the plaintiff no duty:

Illinois courts have rejected the notion that agents of a company “have to independently substantiate their employer’s representations absent any facts the representations were untrue.” . . .  [Thus,] no legal duty imposing liability can be placed on the [device manufacturer’s] sales representative(s) without any factual findings suggesting that sales representative(s) were knowingly marketing a product with knowledge that the information on the sales brochures was inaccurate.

Id. at *4 (citations omitted).  This is what we were getting at before.  Representing the manufacturer and acting as its agent is not alone sufficient to establish potential liability.  There has to be something more, something specific to the sales representative giving rise to a legal duty.

It therefore was not “reasonably possible” for the Elrod plaintiff to succeed against the sales representative under Illinois law because the sales representative owed no duty.  The plaintiff had alleged that the sales representative “knew or had reason to know” that informational brochures and other statements about the device were false or misleading.  But those conclusory allegations “failed to allege any facts suggesting that the [sales representative] knew or should have known anything about the truth or falsity of [the manufacturer’s] statements.”  Id.

Moreover, although the failure to allege facts (as opposed to legal conclusions) in the complaint would have been enough to establish that the sales representative was fraudulently joined, the manufacturer took the additional measure of submitting a declaration from the sales representative.  In the declaration, the representative “specifically states that she lacked any knowledge about the truth or falsity of the statements, and even lacked the education level to test the veracity of [the manufacturer’s] statements.”  Id. at *5.

Ruling that “an uncontested affidavit of a nondiverse defendant is a sufficient basis to find fraudulent joinder,” the district court easily found that the defendant had demonstrated that the sales representative was fraudulently joined.  Id. at *5 & n.2.  As we said, sometimes plaintiffs succeed in evading removal jurisdiction, and sometimes they do not.  In this case, the plaintiff’s addition of the sales representative to the complaint was for naught.  The case remains properly in federal court.