Products Liability Law Daily Wrap Up, JURISDICTION—BABY PRODUCTS—U.S.: Supreme Court to consider removal question in tainted baby food case, (Apr 29, 2025)

By Susan Engstrom and Susan L. Smith, J.D., M.A.

The Court will decide whether a federal district court’s final judgment regarding completely diverse parties must be vacated if an appellate court later finds that the lower court erred by dismissing a non-diverse party at the time of removal.

The U.S. Supreme Court has granted a petition to review a Fifth Circuit decision that remanded a products liability suit brought against baby food manufacturer The Hain Celestial Group, Inc. and seller Whole Foods Market, Inc. The suit, which was filed in Texas state court by the parents of a child diagnosed with heavy-metal poisoning, was removed by Hain based on diversity jurisdiction. The federal district court dismissed Texas-based Whole Foods with prejudice after finding it was fraudulently joined, and subsequently granted judgment as a matter of law to Hain. The Fifth Circuit reversed, holding that the lower court erred in finding that Whole Foods was improperly joined and in denying the parents’ motion to remand. The High Court agreed to consider Hain and Whole Foods’ question of whether a district court’s final judgment as to completely diverse parties must be vacated when an appellate court later determines that the lower court erred by dismissing a non-diverse party at the time of removal (Palmquist v. The Hain Celestial Group, Inc., No. 23-40197 (5th Cir. May 28, 2024), cert. granted, sub nom. The Hain Celestial Group, Inc. v. Palmquist (U.S. Apr. 28, 2025) (No. 24-724)).

Background. During the first two years of the child’s life, he consumed, almost exclusively, Hain’s Earth’s Best Organic Products, which the parents purchased from Whole Foods. The child exceeded developmental milestones for the first two years of his life, but his social, language, and behavioral skills rapidly regressed at about 30 months. Some physicians attributed the child’s symptoms to autism spectrum disorder or neurocognitive disorder, while others diagnosed him with heavy-metal poisoning. In 2021, a House Oversight and Reform Committee report found that certain baby foods, including Hain’s, contained elevated levels of toxic heavy metals. The parents attributed the high levels of toxic metals that appeared in their son’s blood tests to his consumption of Earth’s Best Organic Products, and sued Hain and Whole Foods in state court.

District court opinion. Hain removed the case to federal district court, contending that Whole Foods was improperly joined to defeat diversity jurisdiction. The parents filed an amended complaint to clarify their allegations against Whole Foods under the federal pleading standard and moved to remand the suit. The parents argued that they had viable claims against Whole Foods under the Texas Product Liability Act and the Deceptive Trade Practices Act. After determining that the parents failed to present evidence of general causation, as there was no testimony from a qualified expert regarding the ingestion of heavy metals, the district court dismissed Whole Foods as improperly joined. Subsequently, the district court granted judgment as a matter of law in favor of Hain.

Appeal. The parents appealed the district court’s (1) dismissal of Whole Foods on improper grounds; (2) denial of their motion to remand; and (3) grant of Hain’s motion for judgment as a matter of law. The parents contended that their second amended complaint detailed viable claims alleged in their original state court petition against Whole Foods, thus defeating diversity jurisdiction. Specifically, their state-court petition alleged a breach of warranties claim against Whole Foods before the case was removed to federal court, and their amended federal court complaint merely contained new allegations clarifying how those claims satisfied the newly applicable federal pleading standards. Thus, the parents argued that they stated a claim against Whole Foods, which defeated diversity jurisdiction.

Fifth Circuit opinion. The appellate court found that the language in the parents’ as-removed complaint was broad enough to encompass both breach of express and implied warranties claims. Although that language generally discussed Whole Foods’ implied warranties, it also discussed Whole Foods’ express representations regarding Hain’s products. Thus, the appellate court determined that the district court erred in concluding that the parents added a new breach of express warranty claim in their second amended complaint.

The appellate court also conducted a Rule 12(b)(6)-type analysis, a federal pleading standard, initially looking at the allegations in the complaint to determine whether it stated a claim under state law against the in-state defendant. The court has previously held that when defendants challenge the pleadings on the merits after a case has been removed to federal court, plaintiffs should be permitted leave to amend their complaint to conform to the federal pleading standard. The appellate court noted that a plaintiff should not be penalized for adhering to the pleading standards of the jurisdiction in which the case was originally brought. Although Hain contended that previous cases foreclosed the district court’s examination of the post-removal second amended complaint, the Fifth Circuit disagreed, stating that post-removal filings may be considered to the extent they clarify or amplify the claims actually alleged in the removed pleading. The appellate court found that the parents clarified their existing breach of warranties claim with supporting jurisdictional facts.

Section 82.003(a)(5) of the Texas Products Liability Act governed whether Whole Foods was potentially liable in this action. This section provides that a nonmanufacturing reseller may not be held liable unless (1) the seller made an express factual representation about an aspect of the product; (2) the representation was incorrect; (3) the claimant relied on the representation in obtaining or using the product; and (4) if the aspect of the product had been as represented, the claimant would not have been harmed by the product or would not have suffered the same degree of harm. The parents contended that they pleaded sufficient facts to establish that the exception to Section 82.003(a)(5) applied. Hain contended that the parents could not satisfy the first element of Section 82.003(a)(5) because the only allegations set forth in the operative complaint were generalized, positive statements, which are not actionable under Texas law. Hain argued that the statements must be about its baby food products specifically. Whole Foods made similar arguments, asserting that generalized, positive statements are not actionable under Section 82.003(a)(5). The appellate court noted that the district court adopted this reasoning in denying the parents’ motion to remand.

The Fifth Circuit stated that Hain, Whole Foods, and the district court all relied on decisions from federal courts for the proposition that alleged misrepresentations may be too general to be actionable. The appellate court noted that this was a problem because federal courts sitting in diversity apply state substantive law. Further, the Fifth Circuit stated that any ambiguities of state law must be resolved in favor of remand. Neither Hain nor Whole Foods pointed to any Texas cases to support the argument that Whole Foods’ representations about the quality of Hain’s food were too generalized.

The parents alleged that Whole Foods represented that it carefully vets its products to make sure they meet high standards by researching ingredients, reading labels, and auditing sourcing practices. Further, the Whole Foods business model depends on this reputation and customers’ willingness to pay a premium for products that Whole Foods advertises as healthy and high quality. The appellate court accepted these facts as true and interpreted ambiguities of state law in favor of the parents. The Fifth Circuit, therefore, concluded that the district court erred in (1) determining that there was no possibility of recovery under Section 82.003(a)(5); (2) concluding that Whole Foods was improperly joined; and (3) denying the parents’ motion to remand.

Petition. In their petition to the Supreme Court, Hain and Whole Foods asked the following questions:

1. Whether a district court’s final judgment as to completely diverse parties must be vacated when an appellate court later determines that it erred by dismissing a non-diverse party at the time of removal.

2. Whether a plaintiff may defeat diversity jurisdiction after removal by amending the complaint to add factual allegations that state a colorable claim against a nondiverse party when the complaint at the time of removal did not state such a claim.

The Supreme Court granted certiorari but limited its review to the first question.

Attorneys: Sarah E. Harrington (Covington & Burling LLP) and Thomas C. Wright (Wright, Close & Barger, LLP) for The Hain Celestial Group, Inc. Bradley E. Chambers (Baker, Donelson, Bearman, Caldwell & Berkowitz, PC) for Whole Foods Market, Inc.

Companies: The Hain Celestial Group, Inc.; Whole Foods Market, Inc.

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