The last time we wrote about Flagg v. Stryker Corp., we thought it would be the last time we’d write about Flagg v. Stryker Corp. Pain and frustrated resignation oozed from Bexis’s keyboard as he wrote that a Fifth Circuit panel had ordered remand of the removed complaint, even though defendants had a solid basis for removal. Along with the manufacturers of the toe implant device that was the subject of the complaint, the Louisiana plaintiff had also sued his doctors for malpractice, and his doctors were also from Louisiana. The purpose, at least in part, seemed clear: to defeat diversity and keep the complaint in state court. But Louisiana law requires plaintiffs to exhaust the administrative procedures set out in the Louisiana Medical Malpractice Act (“LMMA”) before suing their doctors in court. And the plaintiff (admittedly) had not done so. So the non-diverse doctors were not proper defendants, and removal on the basis of diversity seemed appropriate. In fact, plaintiff never moved to remand, instead requesting a stay while he tried to complete the LMMA’s administrative procedures, a request that the district court denied.
On appeal, however, the Fifth Circuit panel addressed diversity jurisdiction sua sponte and held that it didn’t exist. As we discussed in our last post on this case, the panel noted that the LMMA had procedural “outs,” its administrative process wasn’t always a prerequisite to filing suit, and that it was reasonable to conclude that plaintiff could still win its medical malpractice claims even though they may have been filed early. With that, and little more, the Fifth Circuit ordered remand. As we mentioned, we thought that was the end of it.
We were wrong.
The Fifth Circuit conducted an en banc review of the panel’s remand decision and, last week, issued a resounding 11-4 decision reversing it. More impressive than the decision itself was its simplicity. The LMMA and Louisiana case law require a malpractice plaintiff to complete the administrative process before filing suit. Plaintiff had not done so when the complaint was removed. And a federal court determining the propriety of removal must base its determination on the facts at the time of removal. (Slip Op. at 7-8.) Accordingly, removal was appropriate. The Fifth Circuit reversed the panel and returned the case to them to consider the district court’s separate decision to dismiss the claims against the manufacturers under FRCP 12(b)(6). (Id. at 12.)
Ah! That feels better. It’s now four days later, and Bexis is still smiling.
Having explained its clear and simple analysis, the court then dealt with some of the arguments that muddled the panel’s earlier ruling. Plaintiff and the dissent argued that the LMMA’s administrative process was not comprehensive and not designed to finally adjudicate plaintiff’s malpractice claims. (Id. at 7.) Maybe, maybe not. But so what? For purposes of determining whether the non-diverse doctors were proper defendants, the court’s considerations were simple: “if a statute requires the plaintiff to exhaust his administrative remedies before filing suit, we enforce that statutory mandate as written.” (Id. at 10.) Next, plaintiff argued that he actually completed the LMMA’s administrative process but after defendants had removed the complaint. (Id. at 11.) Answer: it doesn’t matter. Again, the appropriateness of removal depends on the facts at the time of removal, not later. (Id. at 11.)
This is a big victory. It not only affects this case, but many, many others that had been removed on similar grounds. Those other cases were already pending in federal court and, since subject matter jurisdiction cannot be waived, the panel’s earlier decision could have rendered them all, as we put it last time, “walking dead” in federal court. Not anymore. They are alive, well and still breathing in federal court.
Last time around we wrote this: “The moral of the story is that, by violating the Louisiana statute and improperly joining the defendant under state law, under Flagg, the plaintiff is nonetheless rewarded with a substantial federal procedural advantage requiring remand of the case.” Now there is a new moral: Louisiana plaintiffs who want to sue out-of-state manufacturers of medical devices have to do so in federal court.
Sure, they can choose to try to find a reason that the administrative process is waived or wait until the process is completed before filing in state court. But we suspect that, for a number of reasons, many plaintiffs’ lawyers won’t want to wait. The real targets of these lawsuits are the manufacturers anyway. That, of course, is why this was such a good decision.
Congratulations to Doug Moore, Meera Sossamon and Quentin Urquhart at Irwin Fritchie Urquhart & Moore for a great victory.