Supreme Court Sets Sights on Fifth Circuit Ruling in Autism Baby Food Case

REASONS FOR GRANTING THE PETITION

The decision below conflicts with decisions of other courts of appeals, flouts the reasoning of this Court’s decisions, and guarantees that judicial and party resources will be wasted.

This case is an ideal vehicle to address either question presented, each of which in- dependently warrants reversal of the Fifth Circuit’s decision and reinstatement of the district court’s final judgment.

This Court’s review is plainly warranted. Sup. Ct. R. 10(a).

The panel decision entrenches the Fifth Circuit squarely on the wrong side of an existing 3-2 circuit split about whether a district court’s final judgment as to completely diverse parties must be vacated when an appellate court later determines that the district court erred in dismissing a nondiverse defendant as fraudulently joined.

In this case, the Fifth Circuit aligned itself with the Eleventh Circuit in holding that a final judgment must be vacated in such circumstances.

Three other circuits disagree, requiring that a district court’s final judgment should be preserved.

In particular, an Eighth Circuit case materially identical to this one came out the opposite way.

Junk v. Terminix Int’l Co., 628 F.3d 439, 442–43 (8th Cir. 2010).

The circuit conflict on this important and recurring question is intractable, perpetuates divergent jurisdictional rules in different regions, and imposes intolerable burdens on courts and parties.

In addition, the panel forged a new path, not embraced by any other court of appeals we are aware of, when it created a new exception to the foundational rule that jurisdiction in removed diversity cases is determined as of the time of removal.

On appeal and in the district court, Respondents never argued that their complaint at the time of removal stated a colorable claim against Whole Foods.

But the Fifth Circuit held that Respondents could resuscitate that failed claim by filing a post-removal amended complaint with new factual allegations.

That holding was error, creates enormous inefficiencies, and should be reversed.

The second question presented is closely related to the question this Court is considering in Royal Canin U.S.A., Inc. v. Wullschleger, No. 23-677 (argued Oct. 7, 2024).

If this Court opts not to grant the petition on one or both questions, it should hold the petition for the decision in Royal Canin and then grant the petition, vacate the Fifth Circuit’s decision, and remand for further consideration in light of Royal Canin.

I.     The Court Should Grant Review To Resolve A Circuit Split About Whether A District Court’s Final Judgment As To Completely Diverse Parties Must Be Vacated When It Is Later Determined That The Court Erred By Dismissing A Non-diverse Party At The Time Of Removal.

The decision below further entrenches an existing circuit conflict between the Fifth and Eleventh Circuits on one side, and the Fourth, Eighth, and Ninth Circuits on the other.

The conflict could not be more stark: on materially identical facts, the Eighth Circuit reached the opposite conclusion to the Fifth Circuit here.

Junk v. Terminix Int’l Co., 628 F.3d 439, 442–43 (8th Cir. 2010).

The approach adopted by the Fifth and Eleventh Circuits cannot be squared with the clear implications of this Court’s decisions in Caterpillar Inc. v. Lewis, 519 U.S. 61 (1996), and Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826 (1989).

And it guarantees that enormous judicial and party resources will go to waste in those circuits.

This Court should grant the petition to settle this important jurisdictional question.

The Fifth Circuit committed legal error and deepened a circuit conflict when it held that the district court’s final judgment must be reversed and the case remanded to state court because, in the panel’s view, the district court erred in dismissing non-diverse defendant Whole Foods years earlier.1

1 Petitioners strongly disagree with the Fifth Circuit’s conclu- sions (1) that Respondents’ amended complaint states a viable claim under Texas law against Whole Foods and (2) that the dis- trict court erred in dismissing Whole Foods as fraudulently joined. Although nothing in this petition should be viewed as concessions on these points, those questions are not presented in this petition and this Court need not reach them in order to ad- dress the questions that are presented here and to reverse.

The panel reasoned that the district court lacked subject matter jurisdiction at the time it entered judgment because, if the district court had not dismissed Whole Foods, the parties would not have been diverse.

Pet.App. 22a–23a.

But there is no question that there was complete diversity between the parties that litigated the issues to final judgment in the district court.

At least three courts of appeals correctly hold in those circumstances that a district court has subject matter jurisdiction and that its judgment should remain intact; two hold the opposite.

The first question presented is important and recurring—and the division among the courts of appeals is intractable.

Because jurisdictional rules should be uniform throughout the federal system, this Court should grant the petition and reverse the Fifth Circuit’s decision.

The Fifth and Eleventh Circuits’ rule guarantees immense waste of judicial and party resources in cases where a district court makes an early remand error in a diversity case before proceeding with the case and entering final judgment as to completely diverse parties.

Although in such cases, there is complete diversity among the parties that litigate the case to final judgement, the Fifth and Eleventh Circuits would require that all of that judicial work be erased, and the case remanded to state court to start anew.

That approach is intolerably wasteful and in- efficient, undermines principles of finality, and has no doctrinal foundation or practical benefit.

The Supreme Court on Monday added one new case, involving procedural issues that arose in a lawsuit claiming that an organic baby food caused a child’s case of autism spectrum disorder, to its docket for the 2025-26 term.

The announcements came on a list of orders from the justices’ private conference on Friday, April 25.

The justices granted a petition for review filed by Hain Celestial Group, the makers of Earth’s Best organic baby food, which is sold at (among other stores) Whole Foods.

In 2021, Sarah and Grant Palmquist sued both Hain and Whole Foods in a Texas state court, alleging that heavy metals in Earth’s Best baby food had caused their son’s autism spectrum disorder.

As a general rule, businesses often prefer to litigate disputes in federal courts because they believe that federal courts are more predictable and efficient, and less influenced by local politics, than state courts.

Because the Palmquists are residents of Texas and Hain was based in Delaware and New York, Hain moved the case to federal court, relying on diversity jurisdiction – a doctrine that allows federal courts to hear cases involving adverse parties from two different states.

Hain contended that federal courts could still take up the case because Whole Foods, which is based in Texas, was protected under state law as an “innocent seller” of the product and therefore had been improperly added to the case.

The Palmquists amended their complaint to add new claims against Whole Foods and sought to send the case back to the state court, but the federal court denied that request and dismissed Whole Foods from the case.

Nearly two years later, the case went to trial, and the district court eventually entered a ruling in Hain’s favor.

The Palmquists went to the U.S. Court of Appeals for the 5th Circuit, which sent the case back to state court with instructions to start fresh.

It concluded that because the federal trial court was wrong when it dismissed Whole Foods from the case, it effectively lacked the power to enter the judgment against the Palmquists.

Hain and Whole Foods came to the Supreme Court, asking the justices to weigh in, which they agreed to do on Monday.

Posted in Cases in the Pipeline, Merits Cases
Cases: The Hain Celestial Group, Inc. v. Palmquist