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For some reason, when we identify three things in a group, in our heads we hear them to the beat of “lions and tigers and bears, oh my!” from the Wizard of Oz.  It works with lots of things – apples, bananas and pears, oh my; iphones, droids and blackberries, oh my; vanilla, chocolate and strawberry, oh my!  And then that got us thinking about other things that come in threes.  Three strikes and you’re out and three goals in a hat trick.  There were Three Stooges (OK, technically there have been more Stooges, but we won’t go there) and Three Musketeers (again, you can argue with us about  D’Artagnan).    There are three Jonas Brothers and there were three Bee Gees.  Now, we feel like we are on an episode of the $10,000 Pyramid:  Blind mice, men in a tub, sheets to the wind – “things that come in threes.”
All that to segue into today’s case which touches on three of our favorite topics – fraudulent joinder, TwIqbal, and MDLs.  The case – Johnson v. DePuy Orthopaedics, Inc., 2012 U.S. Dist. LEXIS 74450 (N.D. Ohio May 30, 2012) is one of eleven essentially identical cases to be decided in the ASR Hip Implant MDL.  And, we are happy to report that the court decided that a claim brought against a local distributor constituted fraudulent joinder.  And, we are even happier to report that in reaching that conclusion, the court applied TwIqbal pleading standards to the motion to remand.
The context is quite familiar in our line of work.  Plaintiff sues diverse manufacturer and non-diverse distributor in state court; manufacturer removes to federal court on grounds of fraudulent joinder; plaintiff moves to remand; case gets transferred to MDL.
But here is where things get interesting.  To prove fraudulent joinder

the removing party must demonstrate there is no possibility that the plaintiff will be able to establish a cause of action against the nondiverse defendant in state court.

Id. at *4.  A defendant’s burden of proof on fraudulent joinder is “substantial” and all doubts are resolved in favor of the plaintiff.  Id. at *4-5.  Sounds a bit like the standard on a Rule 12(b)(6) motion to dismiss.  So, we applaud the court’s analogy to TwIqbal pleading standards, even though Rule 12 was not technically applicable to fraudulent joinder:

In sum, courts generally agree on the following two rules when deciding motions to remand that involve allegations of fraudulent joinder. First, even if the district court “pierces the pleadings” to consider summary-judgment-type evidence (such as depositions, affidavits, etc.), the proper standard for evaluating that evidence remains akin to that of a Rule 12(b)(6) motion  to dismiss, and is arguably even more deferential. Second, any contested issues of fact must be construed in the plaintiff’s favor.

Id. at *5-6 (quoting Walker v. Philip Morris USA, Inc., 2011 WL 5119441, *7 (6th Cir. 2011).  After all, if the whole point of the fraudulent joinder doctrine is that parties are being sued for no good reason – then we wholeheartedly agree that on a motion for remand, plaintiff’s “factual allegations must be enough to raise a right to relief above the speculative level.”  Johnson, 2012 U.S. Dist. LEXIS at *13 (quoting Twombly).
In the 21-page Johnson complaint, the distributor was only mentioned four times – the distributor is a Kentucky company that distributes/promotes ASR hip implants in Kentucky and distributed/promoted the hip implant implanted in plaintiff.  Id. at *9-10.  The complaint then goes on to allege failure to warn, design defect, manufacturing defect, negligence, breach of warranty and assorted other claims collectively against all defendants.  Id. at *10-11.  Applying the TwIqbal standard to plaintiff’s motion to remand, the court found:

the allegations against [the distributor] . . . fall well below the threshold required to meet the plausibility standard required under Twombly, . . . Plaintiffs’ allegations fail to distinguish between the [manufacturer’s] allegedly wrongful acts and those of [the distributor].  Assuming the facts as alleged against [the distributor] to be true, without a modicum of additional facts, Plaintiffs have failed to establish a colorable basis for liability. Additionally, there are no independent claims asserted against [the distributor] nor do Plaintiffs seek specific relief against this Defendant.

Id. at *13-14 (citations omitted).  The court cites several other cases where “global” or “collective” allegations were insufficient to state a cause of action.  Id. at *11-12.  With no factual support to back up his allegations against the distributor, plaintiff failed to state a claim against that non-diverse defendant, who was therefore found fraudulently joined, dismissed and the motion to remand was denied.  Id.  We like the legal analysis and we like the result – we hope more courts follow suit.
But we also promised you something about MDLs.  In addition to his motion to remand, plaintiff also filed a motion for reconsideration of Case Management Order No. 5 – an order addressing the Plaintiff Preliminary Disclosure Form applicable to all 4,400+ MDL cases.  Plaintiff argued he could not comply with CMO 5 until the court ruled on the motion to remand.  While the court recognized that threshold issues, such as subject matter jurisdiction, need to be decided before rulings are made on the merits, MDL orders that don’t go to the merits apply to cases despite pending jurisdictional remand motions.  Id. at *14-18.  In other words, because of the “unique challenges posed by complex litigation” – including that new cases enter the MDL throughout the pendency of the litigation – an MDL court has significant discretion in managing its docket.  Deciding all individual remand, jurisdictional or pleadings motions before addressing common issues – such as adoption of a disclosure form – “would undermine the goal of promoting the convenient, just and efficient conduct of the actions.”  Id. at *18-19.  Bottom line, as long as your case is pending in the MDL, you have to abide by the MDL rulings.   And, if TwIqbal is the standard for deciding fraudulent joinder, we hope many more cases stay in MDLs (or at least in federal court).