Summary of a Recent
Judicial Development in
Biotechnology

Court Disregards Citizenship of Fraudulently Joined Party,
Permits Removal to Federal Court

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In In re Genetically Modified Rice Litigation, 618 F. Supp. 2d 1047, 2009 WL 799599 (E.D. Mo. 2009), the United States District Court for the Eastern District of Missouri found no reasonable factual basis for the plaintiffs' joinder of a resident defendant, and thus disregarded the resident defendant's citizenship for diversity purposes and held that removal to the federal district court was proper because complete diversity existed between the remaining parties.

Background

Plaintiff rice farmers, all Texas citizens, brought this action against Bayer, a corporation based in Germany and involved in the development and testing of genetically-modified rice, and a Texas rice retailer, because of their alleged contamination of the United States rice supply. Id. at *1. The plaintiffs brought state law claims against the Texas retailer for negligence, fraud, fraud by nondisclosure, gross negligence, trespass, and conversion, alleging that he "worked with Bayer to test, plant, and harvest genetically modified rice" on his property, thereby contaminating his marketable rice which was ultimately sold to the plaintiffs. Id. They claimed that the retailer had a duty to inform them of his experiments with the genetically modified strains of rice, and that his failure to take proper precautions to prevent contamination resulted in the contamination of their rice. Id. at *2. The defendants successfully removed the action to the federal district court, and the plaintiffs moved to remand the case back to the state court. Id.

Analysis and Holdings

The court explained, "Under the doctrine of fraudulent joinder, a court may disregard the citizenship of a non-diverse defendant who was frivolously joined in an effort to defeat removal," meaning that "there exists no reasonable basis in fact and law supporting a claim against the resident defendants." Id. at *3. The court found no reasonable factual basis for the allegation that the Texas retailer ever tested or grew the genetically modified strains of rice complained of by the plaintiffs, and moreover, none of the plaintiffs offered any evidence that they had ever purchased rice seed from the retailer or planted the specific variety of rice known to contain traces of genetic modification. Id. at *2-5. The court concluded that it was not sufficient for the plaintiffs to merely "have a hunch" that the retailer was involved in the rice contamination, and therefore it disregarded the retailer's citizenship pursuant to the doctrine of fraudulent joinder. Id. at *5. Because there was complete diversity between the plaintiffs and Bayer, the court held that removal to the federal district court was proper. Id. at *5.

The case was decided on March 24, 2009.