Palmquist v. Hain Celestial Group

In Palmquist v. Hain Celestial Group, the U.S. Court of Appeals for the Fifth Circuit reversed a judgment against our clients, reinstated their claims, and remanded them to state court. This case involves one of the first cases among many pending nationwide alleging toxic heavy metal contamination of baby food — a risk identified by a recent Congressional report. The Fifth Circuit did not find it necessary to decide the merits of the claims because it held that the federal district court lacked jurisdiction — a ruling that has numerous implications for removal jurisdiction in cases removed from state court to federal court.

The Palmquist family originally sued a baby-food manufacturer and a grocery retailer in Texas state court. The Palmquists alleged that the defendants had manufactured and sold baby food that was contaminated with heavy metals, causing the Palmquists’ young son to develop severe mental and physical disabilities. The manufacturer removed the case to federal court on the basis that there was no viable claim against the in-state retailer and thus federal diversity jurisdiction existed. The district court agreed and dismissed the retailer from the case. At the conclusion of trial, the district court ultimately granted the manufacturer’s motion for judgment as a matter of law, reasoning that it was impossible to prove that heavy metal toxicity was the cause of the child’s injuries.

The Palmquist family challenged both rulings on appeal. The Fifth Circuit reversed the district court’s denial of the plaintiff’s motion to remand and dismissal of the retailer, vacated the district court’s take-nothing judgment in favor of the manufacturer, and instructed the district court to remand the entire case to state court.

The Fifth Circuit’s opinion contains several holdings that will be significant in future cases involving removals to federal court. First, the court ruled that when a case is removed from state to federal court on improper joinder grounds, the removed plaintiff can file an amended complaint that clarifies its allegations against the non-diverse defendant in order to conform the state-court pleading to the newly-applicable federal pleading standards. Although the removed plaintiff cannot add new claims to defeat federal jurisdiction, clarification of the factual basis and legally material details of the existing claims is permitted and must be considered when a district court rules on the plaintiff’s motion to remand.

Second, Texas law allows products liability claims against nonmanufacturing sellers only under limited circumstances, such as when the seller made an express misrepresentation about the product. Rejecting the reasoning of the district court in this case and several other federal district courts, the Fifth Circuit concluded that “fairly generalized statements” about a product may be “adequate enough to support a claim against a nonmanufacturing seller,” especially “where a seller purports to have specialized knowledge.” This ruling aligns the federal jurisprudence construing nonmanufacturing seller liability with decisions by the Texas appellate courts and the Texas Supreme Court.

Third, the court held that when a district court erroneously denies a motion to remand and the jurisdictional defect is not subsequently cured by voluntary dismissal of the claims against the non-diverse defendant, all of the district court’s later actions must be vacated — even a final judgment following a trial on the merits — and the entire case must be remanded to state court due to lack of subject matter jurisdiction. This holding means the Palmquists will have the right to pursue all their claims, against both defendants, in state court.

The appeal was handled and argued by Beck Redden appellate partner Russell Post, with the assistance of Beck Redden partner Owen McGovern and associate Bennett Ostdiek.