Products Liability Law Reporter

A federal district court held that a defendant failed to prove fraudulent joinder of a tire retailer in a products liability case arising out of a tire separation incident.

Eleazar Marin purchased four Michelin tires for his Ford Excursion from Discount Tire Co. of New Mexico, Inc., in Hobbs, N.M. Years later, while his daughter was driving the vehicle in Texas, the front driver-side tire experienced a catastrophic tread separation, leading to a crash that killed the daughter, Marin’s wife, and their grandchild. A New Mexico lawsuit against Michelin North America, Inc., and Discount Tire Co. of New Mexico, alleged strict liability, manufacturing defect, design defect, failure to warn, breach of implied warranty, negligence, and respondeat superior. The defendants removed the case to federal court on the basis of diversity jurisdiction. Although the defendants acknowledged that Discount Tire is a citizen of New Mexico, the defense argued that the plaintiffs had fraudulently or improperly joined Discount Tire, which, they claimed, should be disregarded for purposes of removal. The plaintiffs filed a motion to remand, arguing that the defendants were unable to show fraudulent joinder.

Granting the motion, the district court noted that a defendant seeking removal bears a heavy burden of proving fraudulent joinder. Citing case law, the court said that to establish fraudulent joinder, the removing party must demonstrate actual fraud in the pleading of jurisdictional facts or the inability of the plaintiff to establish a cause of action against the nondiverse party in state court. The court rejected the argument that under Texas substantive law, a nonmanufacturing defendant like Discount Tire was immune from liability. Such immunity may not apply to Discount Tire, the court found, noting that an exception to Tex. Civ. Prac. & Rem. Code §82.003(a)(6) permits recovery against nonmanufacturing merchants where a seller actually knew of a product defect when the seller supplied the product and the claimant’s harm resulted from the defect. The plaintiffs’ allegations that Discount Tire knew or should have known about the tire’s dangers satisfies the actual knowledge requirement, the court found, adding that the plaintiffs also asserted their harm resulted from those alleged defects.

Thus, the court concluded that the defendants failed to show that the plaintiffs could not establish a cause of action against Discount Tire even under Texas substantive law. Therefore, the court held, Discount Tire had not been fraudulently joined.

Citation: Grano v. Michelin N. Am., Inc., 2022 WL 4598480 (D.N.M. Sept. 30, 2022).

Plaintiff counsel: Jeffrey Cluff and Sam L. Fadduol, both of Lubbock, Texas.