This post is from the non-Reed Smith side of the blog.
We embrace all defense wins on this blog. From the small and routine to the precedent-setting. From discovery violations to appeals and everything in between. And we are certainly no strangers to talking about removal issues. So, of course we want to share with our readers H.R. ex rel. Reuter v. Medtronic, Inc., 2014 WL 554454 (S.D. Ohio Feb. 13, 2014), and more specifically, the court’s decision that defendant properly removed the case in light of “substantial federal issues” within the meaning of Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308 (2005). But, don’t go filing your removal papers quite yet. Anything involving Grable is hardly a one size fits all argument, and we caution everyone to look closely at all aspects of your case (especially the jurisdiction) before attempting to squeeze anything into this slender and contorted federal question category.
The Grable argument isn’t new. We’ve pondered it before because the restriction of theories via PMA preemption to “parallel” claims involving FDA violations does seem to push that type of case towards Grable. But frankly, our idea hasn’t had much success. Which also isn’t surprising. The general principle is to use the presence of an issue implicating federal law – but something less than a federal cause of action – as a basis of obtaining subject matter jurisdiction in federal court. Removal is appropriate where a state court claim “necessarily raise[s] a stated federal issue [that is] actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities.” Grable, 545 U.S. at 312. That last part, about “balance,” means that by definition Grable doesn’t apply to anything involving large numbers of cases. So look elsewhere for jurisdictional panaceas.
H.R. is an InFuse case. If you haven’t been following our other InFuse posts, InFuse is a PMA, Class III medical device. In almost all of the InFuse cases, including H.R., plaintiffs’ claims are based on alleged off-label promotion of the device which they claim violates the FDCA. The combination of a PMA device and plaintiff’s extensive, and nearly exclusive, reliance on detailed FDCA-related allegations involving off-label promotion are what made H.R. a particularly strong vehicle for advancing the Grable substantial federal question argument.
As applied by the court in H.R., the Grable test has three parts. First, is there a disputed federal issue? Here, the court’s analysis closely follows Riegel v. Medtronic, Inc., 552 U.S. 312, 318, 128 S.Ct. 999, 169 L.Ed.2d 892 (2008) – focusing on the rigorous PMA process through which the InFuse device passed before entering the market. Because state-law claims involving PMA medical devices are preempted if they impose a requirement that is “different from or in addition to” regulations imposed by the FDA
[p]laintiffs must allege an injury that plausibly arises from the violation of an identifiable federal standard. Therefore, plaintiffs cannot prevail unless they allege and ultimately prove a violation of federal law. Accordingly, Plaintiffs’ claims clearly implicate federal law.
H.R., 2014 WL 554454 at *4 (citations and quotation marks omitted).
Step two: does the matter contain significant federal issues? This part of the test has four sub-parts: 1) does the case involve an agency’s compliance with a federal statute; 2) is the federal question important; 3) will deciding the federal question resolve the case; and 4) will deciding the federal question control numerous other cases? H.R., at *5. You may be starting to understand why this isn’t a widely used argument. In this case, the court found only the first factor unsatisfied. Because plaintiff was arguing virtually exclusively that defendant “should be found liable for . . . promotion of the InFuse through an off-label manner,” id. at *1, the court concluded that the federal questions raised were important.
[T]his Court will be required to decide as a threshold question whether defendants violated federal law and therefore this case presents a substantial federal question.
Id. at *5. The court also didn’t mince words deciding that “resolution of the federal issues in [defendant’s] favor would end the case.” Id. We agree; the cases discussed in our other InFuse posts prove that this is true.
The critical factor is the last one. The court’s ruling on the final factor establishes the real but – we must emphasize, very narrow − circumstances in which substantial federal question jurisdiction will be found:
While the number of cases like this one is likely to be small, because very few medical devices are subject to Section 360k(a), and only a portion of those cases involve allegations of off-label promotion, it is clear that the federal issue presented by this case is not anomalous or isolated, but likely to be present in other cases involving medical devices that have received premarket approval from the FDA.
Id. (citing Jenkins v. Medtronic, Inc., 2013 U.S. Dist. LEXIS 165787 (W.D. Tenn. Nov. 21, 2013).
The final part of the Grable test is whether conferring federal jurisdiction would upset the state-federal jurisdictional balance. The obvious tension between subpart 4 of step two (that the issue “control numerous other cases” in order to be “important”) and the last step’s mandate that nothing “upset” jurisdictional “balance” by allowing removal of too many cases, reminds us of the oft-cited “narrow” gap between express and implied preemption in PMA cases. On Grable removals, our side has to thread a gap that’s every bit as difficult as what we say the other side has to pass through on the merits in these cases.
The analysis in H.R. turned on the device at issue first being a PMA device and that Congress has “expressly prescribed the regulation of [such devices] to federal law.” Id. at *6. But that’s not all. Relying again on Jenkins, the court found the off-label promotion aspect to be critical in conferring federal jurisdiction. The question of off-label promotion is complex (involving several regulations) and “necessarily involve[s] an issue closely bound by federal law,” since the whole issue of “off-label” is tied to the FDA approved label itself. Id. However, it “would have a microscopic effect on the state-federal jurisdictional balance,” because there just aren’t that many cases in which off-label promotion is effectively the be all and end all of the litigation. Id. (citations and quotation marks omitted).
We note that while H.R. seems to use the terms Class III and PMA interchangeably, they are not. Even the vast majority of Class III devices aren’t PMA, but rather are approved through the §510k process. That cuts down the number of cases in and of itself.
Moreover, not every PMA device case can raise a plausible parallel violation claim. While vague violation claims might not survive TwIqbal, the application of the federal pleading standard in removal cases is controversial, as we’ve discussed here. All too often defendants will be removing on the basis of relatively vague allegations that the defendant might have violated something. In Grable cases, a defendant must be prepared to demonstrate a suitably complex and closely tied federal issue controlling the case. If we can’t, we lose. In this instance, however, detailed off-label promotion allegations were a sufficient trigger.
We don’t want judges motivated to write sweeping, negative opinions about Grable removals to discourage their overuse – because those opinions will be harmful in that limited number of cases, like H.R., where Grable does apply. Not only that, a failed Grable removal can have deleterious effects on the individual case. Judges evaluating the removal issues – with a motivation to find a reason to remand – may well go further than is necessary, and opine on the underlying preemption questions. Yeah, the standards are different, but try explaining away unhelpful language in the same state-court system that you removed the case to get away from in the first place. We see adverse substantive language all too often in fraudulent joinder cases, and would like to avoid similar problems with Grable. You don’t want to be left with both a state court action and an order that will haunt you on the merits of the preemption issue that is your most powerful defense.
Clearly, H.R. had all the right ingredients for substantial federal question jurisdiction. But that mix is a rarity. So, while this is a great result, we caution our readers who may be pondering the possibility of the argument to step back and take a hard look first. Don’t cut your own throat, not to mention make bad precedent. While we can’t recommend any particular course of action in any particular case, we think asserting Grable jurisdiction only makes sense where the case raises a federal issue of similar complexity and import to H.R. − something more than the mere question of whether a well-defined federal requirement was violated. For example, we don’t think that the sort of simple and widely copied parallel claim of manufacturing defects exemplified by the lousy Bausch decision are likely to produce favorable precedent. Rather, look for substantial questions of statutory and/or regulatory interpretation—comparable to the Infuse issues involving off-label promotion and/or the preemptive effect of PMA for combination devices where less than all the components are used. Indeed, in H.R., the court determined that the federal question presented was substantial in part because it would force the court to decide “whether premarket approval imposes preemptive federal requirements only with respect to specific uses, or instead imposes preemptive federal requirements with respect to the device generally.” 2014 WL 554454, at *4 n.6.
That seems pretty rare, and it’s meant to be. Instances where the claimed FDCA violations are both complicated and central to the litigation are uncommon – that’s why Grable works. It’s one, and frankly the principal, reason federal courts find conferring federal jurisdiction in them less likely to “disturb the balance” between the state and federal courts. Many, probably most, Grable arguments that we’ve seen fail do so because they prove too much – their adoption would open the door to removal of a large number of state tort cases because some federal matter (say, preemption) is merely at issue. It’s that “narrow gap” again, but the fewer and farther between the Grable-worthy cases are, the more likely they are to be held Grable-worthy in the first place.
So what are we saying? First, the possibility of Riegel-PMA preemption alone isn’t nearly enough – that’s lost every time it’s been raised. Let’s stop that merry-go-round. Second, even most “parallel” claims won’t surmount the Grable hurdles – they just aren’t complicated enough, and allowing Grable (once again) would prove too much. If judges sense the Grable doctrine being invoked too freely, we’ll see a backlash in which courts reject it even in cases that present truly “substantial” federal questions. So we urge judicious use, staying away from cases that only present relatively straight-forward questions of whether a federal violation has occurred. H.R. demonstrates the possibility of substantial federal question jurisdiction viable under the right circumstances. But those circumstances are fairly limited, as was intended by the Supreme Court in Grable.