Supreme Court Case May Spark Consumer ‘Vertical Forum Shopping’

The US Supreme Court’s decision to review a case involving allegations of heavy metals in baby food has the potential to address issues surrounding plaintiffs’ forum shopping in consumer litigation over allegedly defective products.

The justices on Monday agreed to hear Hain Celestial Group Inc.‘s challenge to a US Court of Appeals for the Fifth Circuit decision last year that vacated a judgment in the company’s favor after finding the lower federal court didn’t have jurisdiction.

The suit by Sarah and Grant Palmquist, who said Hain’s Earth’s Best baby food caused their child to develop autism, was part of a wave of litigation that followed a 2021 congressional report stating that multiple commercial baby food products contained elevated levels of heavy metals. A 2023 Bloomberg Law investigation also found that more than 30 baby food products contained heavy metals like lead, arsenic, and cadmium.

Industry groups are now watching to see whether the Supreme Court will allow the Palmquists and other consumer plaintiffs to get a complete redo in state court after losing in a federal court that didn’t have jurisdiction in the first place.

“What this is about is giving those plaintiffs an automatic second bite at the apple,” said Laurence Ebner, executive vice president and general counsel of the Atlantic Legal Foundation. The organization, which says it advocates for individual liberty, efficient government, and sound science in judicial proceedings, submitted an amicus brief supporting Hain and urging the justices to take the case.

Because the appeals court vacated the judgment, the plaintiffs can “present the same expert testimony all over again, but this time to a presumably friendlier Texas state court judge,” Ebner said.

By vacating the district court’s decision and sending the case back to state court, “the Fifth Circuit has enabled post-judgment vertical forum shopping,” he said.

Years of Litigation

The Palmquists originally sued in Texas state court in 2021 under state law, also naming Whole Foods Market Inc. as a defendant.

Hain removed the case to federal court and argued that Austin, Texas-based Whole Foods was improperly joined solely to defeat federal diversity jurisdiction, which requires that all defendants be domiciled in different states from the plaintiffs. The baby food maker said Texas Law immunizes sellers from liability for products it didn’t manufacture, so the Palmquists had no valid claims against the grocer.

The couple then filed an amended complaint that they said clarified their breach-of-warranty and negligence claims based on Whole Foods’ marketing about how it vets the products it sells.

The case proceeded to trial after the district court dropped Whole Foods as a defendant and rejected the Palmquists’ motion to remand to state court. The court ultimately granted Hain’s Rule 50 motion for judgment as a matter of law, finding that the Palmquists’ marketing and manufacturing defect claims failed because they couldn’t show causation between their child’s symptoms and heavy metal ingestion.

On appeal, the Fifth Circuit said the district court wrongly dismissed Whole Foods from the case, revived the Palmquists’ claims, and sent the case back to state court for further proceedings.

Hain petitioned the Supreme Court to review the Fifth Circuit’s decision, arguing the appeals court “created a new exception to the foundational rule that jurisdiction in removed diversity cases is determined at the time of removal.”

The baby food maker said upholding the decision will create “enormous inefficiencies.”

‘Too Bad, So Sad’

Forcing the parties to spend more time litigating the case after more than a year and extensive discovery is “egregious,” said Erica Klenicki, vice president and deputy general counsel of the National Association of Manufacturers. The organization, along with other consumer product industry associations, also filed an amicus brief supporting Hain.

If the Fifth Circuit’s decision stands, it’s likely more plaintiffs will improperly join retailers in run-of-the mill product liability cases, Klenicki said.

But for the most part federal courts have said if there was no jurisdiction “too bad, so sad,” said Steve Herman, special counsel at Fishman Haygood LLP. “It’s black letter rule that you can’t have parties consent to jurisdiction, and that’s effectively what” Hain is arguing, he said.

In their opposition to Hain’s Supreme Court petition, the Palmquists argued that the lack of diversity at the time of judgment wasn’t just present when the case was removed, but a fundamental jurisdictional problem. They said that as a result, vacatur and remand were the correct and “inescapable” decision.

Herman said the Supreme Court could make an exception for cases that go to a verdict. But if they accept Hain’s argument, the effect would be that “the parties’ position on jurisdiction can be controlling,” which “would be a sea change,” he said.

Hain’s petition presented two questions for review, but the Supreme Court only agreed to consider the first: whether a state court must start over after an appeals court says the federal trial court wrongly said it had jurisdiction. The other question was about whether plaintiffs can defeat diversity jurisdiction after removal by amending their complaint.

Herman said the first question is “less consequential” than the second, which would have a “more practical effect on the way people litigate cases.”

But if the Supreme Court sides with the Palmquists, more plaintiffs will try to join non-diverse defendants “as kind of an insurance policy” to keep their cases alive, Klenicki said.

The case is Hain Celestial Group Inc. v. Palmquist, U.S., No. 24-724.