Post-bankruptcy company removes MC asbestos cases; judge remands one

Steve Gonzalez Mar. 17, 2008, 7:54am

Judge Herndon

A Fortune 500 company that recently emerged from bankruptcy has removed nine Madison County asbestos suits to federal court.

Dana Companies LLC argued March 3 that the parties have a complete diversity of citizenship and the plaintiffs from four different states seek damages in excess of $75,000.

A supplier of supplier of axles, driveshafts, structural sealings and thermal management products, Dana Companies was recently reorganized under Chapter 11 after having declared bankruptcy March 3, 2006. It emerged from bankruptcy on Jan 31.

The cases removed to federal court in East St. Louis were filed prior to its bankruptcy, however under Section 326 of the U.S. Bankruptcy Code the cases were automatically stayed until bankruptcy proceedings were completed.

Represented by Heyl, Royster, Voelker and Allen of Edwardsville, Dana Companies argues for removal since it is the only remaining defendant in the cases.

Dana Companies also argues that since a one-year period it has to remove cases was tolled during bankruptcy, its notices of removal are timely.

Based in Toledo, Ohio, Dana employs 35,000 people in 28 countries and in 2006, reported $8.5 billion in sales, with more than half of that revenue coming from outside of the U.S.

Dana argues that the Seventh Circuit has held the jurisdiction is established where there is a "reasonable probability" that more than $75,000 is in controversy. It argues that each count in the nine cases removed seek damages in excess of $75,000.

One case has already been remanded back to Madison County by U.S. Chief District Judge Daid Herndon.

Two days after the removal of Wisconsin plaintiff Joseph Berger's case, Herndon remanded on a sua sponte order.

Sua sponte is Latin for "of one's own accord," and is a legal term that means to act spontaneously without prompting from another party, and is usually applied when a judge takes action without a prior motion or request from the parties in the case.

"Upon a threshold review, the Court observes what is a fatal jurisdictional problem," Herndon wrote in his four page order March 5.

"Without jurisdiction the court cannot proceed at all in any cause," Herndon added. "Jurisdiction is power to declare the law, and when it ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause."

Herndon said federal judges are "obliged to police the constitutional and statutory limitations on their jurisdiction" and should raise and consider jurisdictional issues regardless of whether the matter is ever addressed by the parties to the suit.

Citing case law from Howell v. Tribune Entertainment Co., 106 F.3d 215, 217 (7th Cir. 1997) Herndon said complete diversity means that "none of the parties on either side of the litigation may be a citizen of the state of which a party on the other side is a citizen."

For the purposes of federal diversity jurisdiction, a corporation is deemed a citizen of both the state in which it is incorporated and the state where its principal place of business is located.

"In this suit, Defendant, although formerly a corporation, is now an LLC," Herndon wrote.

"However, in the Notice of Removal based upon diversity jurisdiction, Defendant has failed to properly plead the citizenship of all its comprising members," Herndon wrote. "Instead, Defendant merely states that "[It] is, and was at the time Plaintiff filed this action, a corporation organized under the laws of the State of Ohio, with its principal place of business in Toledo, Ohio; therefore, Dana is a citizen of Ohio for purposes of determining diversity."

He wrote that Dana's failure to properly plead the citizenship of the LLC places into question whether the citizenship between the parties is completely diverse which causes him to approach the case as if jurisdiction does not exist.

"Consequently, the Court does not have the authority to 'consider the merits of a case over which it is without jurisdiction,"' Herndon wrote citing case law from Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 379 (1981).

The other eight cases are assigned to District Judge G. Patrick Murphy after fellow district judges Reagan and Stiehl recused themselves.

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124 SW Adams St
Peoria, IL 61602

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