Removal

Subscribe to Removal
Photo of John Sullivan

Court Finds Fraudulent Joinder by Relying on a Sales Rep’s Affidavit and Common Sense

Buckles v. Coombs, 2016 U.S. Dist. Ct. LEXIS 180784 (S.D. Fla. Jan. 4 2017), is a decision that illustrates how a defendant’s proper introduction of facts via an affidavit and a court’s introduction of common sense into its decision process can come together to result in the denial of a plaintiff’s motion to remand an action to state court.

In Buckles, the plaintiff alleged that she was injured due to an allegedly defective cutting device used in her knee replacement. In her state-court complaint, she sued not only the diverse manufacturer, Howmedica, but its non-diverse sales rep. The defendants, having seen that move before, claimed fraudulent joinder of the sales rep and removed the action to federal court based on diversity jurisdiction.

Plaintiff moved to remand the action back to state court. Plaintiff argued that the sales rep was, in fact, a proper defendant because he had been negligent in promoting, marketing, testing and warning about the device—and so on. She supported these arguments with nothing more than the allegations in her complaint, which were fairly broad and conclusory. That was her mistake.

The court made clear that the proper standard under which a court should determine whether a non-diverse defendant has been fraudulently joined is like that applied to summary judgment motions, not the standard for motions to dismiss: “A district court’s process for resolving a claim of fraudulent joinder is similar to that used for ruling on a motion for summary judgment.” Id. at * 5 (citing Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997). And the defendants were relying on more than the general allegations in the complaint. They offered facts from the sales rep himself in an affidavit in which he specifically refuted the general allegations of the complaint:

As set forth in [the sales rep’s] affidavit, however: (1) he was present during [plaintiff’s] surgery “only to facilitate bringing the implants to the operating room and for no other purpose” (2) he did not call on [plaintiff’s] surgeon at any time prior to her surgery on August 21, 2012, or anytime thereafter (3) he did not “promote, advertise, represent, recommend or sell” the Cutting Guide used during [plaintiff’s] surgery; (4) he had no involvement in the preoperative imaging for [plaintiff’s] Cutting Guide and had no other involvement in the planning of her surgery; and (5) he has no medical training, but rather, relies on the materials and information provided to him by Howmedica in carrying out his job duties.

Id. at *8.Continue Reading Court Finds Fraudulent Joinder by Relying on a Sales Rep’s Affidavit and Common Sense

Photo of Bexis

What follows is a post authored by Jaclyn Setili, a Reed Smith associate.  She is discussing what we believe is the first extension of Mensing/Bartlett preemption to claims involving pharmacies – something we’ve previously proposed as theoretically possible, but had yet to see.  As always, our guest posters are entitled to 100% of the credit (and any blame) for their blogposts.

********

As a Mitten native (that’s Michigan for the uninitiated), this guest blogger is regularly on the lookout for good news connected with her home state.  Typically this involves events of the sporting championship variety, but cause for celebration has been scarce of late on that front (see, e.g., Michigan football, an impressive early season dominance culminating in two close late season losses and a devastating defeat in the Orange Bowl; the Red Wings, currently sitting in last place in their division and slipping progressively further away from a Stanley Cup title since their last championship win in 2008; and the Lions, every year, forever). Even reports of Detroit’s flourishing restaurant scene and a slot in the New York Times’ 52 Places to Go in 2017 fail to inspire much collective awe from this guest blogger’s big-coastal-city friends and colleagues.

As it turns out, however, we need only look a few months back to the In re Lipitor MDL (which we have blogged about before, most recently here, and in which all but one of the cases have now been dismissed) for such news.  In In re Lipitor (Atorvastatin Calcium) Marketing, Sales Practices and Products Liability Litigation, 2016 WL 7368203 (D.S.C. Nov. 1, 2016), the district court ultimately granted plaintiffs’ motions to remand, but in the process became the first court ever (as far as we know) to apply impossibility preemption to bar warning claims against a pharmacist selling a branded drug.

The details: The two actions at issue were originally filed in Michigan state court; each plaintiff alleged that Lipitor caused her to develop Type II diabetes, and that the manufacturer failed to properly disclose the risks associated with the drug.  That defendant removed both cases to the Eastern District of Michigan based on diversity jurisdiction; from there the cases were transferred to the MDL court.  Plaintiffs named a local pharmacy in order to destroy diversity.  While the parties agreed that the pharmacy and at least one named plaintiff in each case were residents of Michigan, defendants claimed that the pharmacy was fraudulently joined and that the non-Michigan plaintiffs were fraudulently misjoined.  Plaintiffs moved to remand.

As we and the MDL court know all too well, to establish that a nondiverse defendant has been fraudulently joined, a removing party in the Fourth Circuit must show either:  (1) “outright fraud” in plaintiff’s pleading of jurisdictional facts, or (2) that there is no possibility that plaintiff would be able to establish a cause of action against the in-state defendant in state court.  2016 WL 7368203, at *1 (emphasis added).  That is always an uphill battle.  Here, defendants argued that there was no possibility that plaintiffs could state a claim against the pharmacy where plaintiffs allegedly purchased the drug under Michigan law for four reasons:  (a) their claims were preempted by federal law, (b) Michigan’s seller immunity statute bars pharmacy claims, (c) the pharmacy had no duty to warn plaintiffs, and (d) the learned intermediary theory further barred plaintiffs’ claims.

Of primary importance for our purposes is the court’s analysis of the first ground, preemption.  The court first noted plaintiffs’ admission that they “may not have a claim regarding labeling with respect to . . . a pharmacy.”  Id. at *2.  The court swiftly concluded that even if it were possible to state such a claim, it would be preempted by federal law because, under the Federal Drug and Cosmetic Act, “a pharmacy has no authority to unilaterally change a drug’s label.”  Id.  Thus, any claims based on labeling were preempted under PLIVA, Inc. v. Mensing, 131 S. Ct. 2567, 2571 (2011).  In other words, the court concluded that there was no possibility that plaintiffs could establish a cause of action against a pharmacist based on labeling.  That result is a first, and could be a big deal.Continue Reading Guest Post – MDL Court: Preemption Leaves No “Glimmer of Hope” for Labeling Claims Against a Pharmacy

Photo of Michelle Yeary

This post is from the non-Reed Smith side of the blog.

There are two key rulings in Addelson v. Sanofi S.A., 2016 WL 6216124 (E.D. Mo. Oct. 25, 2016). Neither is novel or complex. The court can’t exercise personal jurisdiction over an out-of-state defendant on claims made by an out-of-state plaintiff and said out-of-state plaintiff can’t be used to defeat federal diversity jurisdiction. Their significance lies more in the fact that they were issued by the Eastern District of Missouri.

Defendant Sanofi (the U.S. subsidiary) is a Delaware corporation with its principal place of business in New Jersey. Id. at *1. Plaintiff Addelson is a resident of St. Louis County, Missouri. Plaintiff Braxton is a New Jersey resident. Plaintiffs both were prescribed and used the prescription medication taxotere in their home states. Id. Plaintiffs have no relationship with each other.

Plaintiffs’ counsel filed a single complaint on behalf of both women in state court in Saint Louis, Missouri – a known judicial hellhole favored by the plaintiffs’ bar. So, why join these two women? Plaintiff Addelson is a Missouri resident who suffered her alleged injury in Missouri which establishes personal jurisdiction for this incident over Sanofi. Plaintiff Braxton is a New Jersey resident which means there is no diversity between her and Sanofi which also means the case can’t be removed to federal court. Clearly a not-too-subtle attempt by plaintiffs to bring and keep this case in state court in St. Louis. Unfortunately, this is a tactic that has worked in Missouri. Missouri’s joinder rules have been broadly interpreted to often allow plaintiffs’ counsel to join together groups of plaintiffs from different states with nothing in common except use of the same product. So, 1 Missouri plaintiff gets you the connection to Missouri and 1 plaintiff from defendant’s home state defeats diversity and keeps you in state court.Continue Reading Misjoined Plaintiffs Can’t Be Used to Forum Shop

Photo of Bexis

This is a guest post, by Jaimee Farrer, an associate at Reed Smith.  We’re always looking for new twists that can help in efforts to remove cases to federal court, and the case Jaimee describes does that, relying on an MDL standing severance order to short circuit what might have been lengthy and complex joinder arguments.  As always, our guest posters should get full credit (and any blame) for their analyses.  With that said, take it away Jaimee.

***********

We’re used to seeing judges split the baby when it comes to ruling on Daubert motions, for example.  Courts frequently allow an expert to testify about some of his/her opinions while excluding his/her other opinions, thereby giving both sides a little of what they want.  But remand decisions are usually black and white with a clear winner and a clear loser.  Either a case gets to remain in federal court and the defendants are the happy victors or the case gets remanded to state court, leaving the defendants to sulk and bemoan their fate.  But in today’s opinion, In Re Benicar (Olmesartan) Products Liability Litigation, 2016 WL 4059650 (D.N.J. July 27, 2016), which comes courtesy of the Benicar MDL Court, both scenarios happened simultaneously . . . well at least sort of.

Seventy-nine plaintiffs joined in filing a Complaint in the Circuit Court of the City of St. Louis, Missouri, against five defendants, two Daiichi Sankyo affiliates and three Forest Laboratories affiliates.  2016 WL 4059650 at *1-2.  In their Complaint, the plaintiffs alleged generally that they were injured by drugs developed and marketed by the defendants. Id. at *1.  The defendants removed the action to the Eastern District of Missouri, claiming diversity jurisdiction. Id.  The defendants concurrently moved to stay the case pending MDL transfer, which was granted. Id.  Plaintiffs predictably moved to remand, arguing lack of complete diversity. Id.  There things stood for several months while MDL transfer occurred. Id. at 2.  After the transfer, the stay was lifted, allowing the District of New Jersey to rule on the plaintiffs’ remand motion. Id.

At this point, in a multi-plaintiff case, we usually see arguments about fraudulent joinder, fraudulent misjoinder, or alternatively about personal jurisdiction. See here and here, for examples.  Not this time.  In ruling on remand, the Court conducted a cursory analysis of the citizenship of the parties and determined that thirty-five of the seventy-nine plaintiffs were citizens of the same state where at least one of the defendants has its principal place of business or is incorporated. Id. at *2.  That’s usually bad news for defendants.Continue Reading Guest Post – Benicar MDL Court: An Unconventional, but Relatively Simple, Remand Decision

Photo of Bexis

Here’s some more inside baseball on grounds for removing cases from state to federal court.  In brief, the issue is this: does the “bad faith” standard added to the removal statute (28 U.S.C. §1446(c)(1)) in 2011 approximate the fraudulent joinder standard so that fraudulent joinder becomes a form of “bad faith” not subject to the one-year limit otherwise imposed on removals by reason of diversity of citizenship?  Fraudulent joinder is also an exception the “voluntary/involuntary” rule.  E.g., Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d 529, 532 (5th Cir. 2006); Mayes v. Rapoport, 198 F.3d 457, 461 n.8 (4th Cir. 1999); Insinga v. LaBella, 845 F.2d 249, 254 (11th Cir. 1988).

We wish to acknowledge the assistance of Emily Kimmelman, a Reed Smith 2016 summer associate, in compiling the research for this post.

In 2011 (effective January 6, 2012), Congress passed the Federal Courts Jurisdiction & Venue Clarification Act (the “JVCA”).  The JVCA did a number of things, which we discussed here (back then (in 2011), we were most interested in Congress having left intact the statutory language that allows removal before service).  What we’re discussing today is the JVCA’s creation of a “bad faith” exception in 28 U.S.C. §1446(c)(1).  Specifically, §1446(c)(1) provides for diversity jurisdiction removal, even after one year if “the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.”

Nothing is certain, except the controversy over how the bad faith exception interacts with the fraudulent joinder exception to the voluntary-involuntary rule.  Everybody knows the standard for fraudulent joinder.  It exists where “there is no reasonable basis in fact or colorable ground supporting the claim against the joined defendant, or no real intention in good faith to prosecute the action against the defendants or seek a joint judgment.”  In re Briscoe, 448 F.3d 201, 217 (3d Cir. 2006).Continue Reading Fraudulent Joinder & Bad Faith – Explaining Another Removal Muddle

Photo of John Sullivan

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.Continue Reading All Was Not Lost: Fifth Circuit Issues En Banc Decision Reversing Panel’s Earlier Remand Ruling in Flagg v. Stryker Corp.

Photo of John Sullivan

Last week, the Judge in the Biomet hip implant MDL denied a plaintiff’s motion for remand, upholding Biomet’s fraudulent joinder argument based on Maryland’s “sealed container doctrine.”  Laughlin v. Biomet, Inc., 2016 WL 626514 (N.D. Ind. Feb. 17, 2016).  The plaintiff made defect claims against not only Biomet, Inc., the manufacturer, but also the local distributor of the device.  The purpose was clear.  The local distributor, like the plaintiff, was a Maryland citizen, and so its presence as a defendant would defeat diversity and prevent removal to federal court.

But distributors in Maryland have a defense to product liability claims under Maryland’s sealed container doctrine if they received the product in a sealed container, did not know and could not reasonably have known of the defect, and did not manufacture, design or alter the product.  Id. at *2 (citing Md. Code Ann., Cts. & Jud. Roc. §5-405(b)).  So, when Biomet removed the case to federal court, it submitted a declaration from the distributor with testimony establishing all these elements of the sealed container doctrine.  Id. at *3.  And that was enough.Continue Reading Biomet Hip Implant MDL Judge Upholds Fraudulent Joinder Removal Based on Sealed Container Doctrine

Photo of Bexis

Back in September, we reported on Flagg v. Stryker Corp., 801 F.3d 456 (5th Cir. 2015), which reversed a nearly ten-year trend in Louisiana product liability litigation recognizing diversity jurisdiction where plaintiffs improperly sued in-state medical malpractice defendants in violation of Louisiana’s medical review board pre-submission requirement.

Literally hundreds of cases have been removed…

Photo of Bexis

Here are a couple of non-litigation related matters that we thought our readers need to know about.

First, the FDA.  We’ve pointed out before that the FDA’s “intended use” regulations for drugs (21 C.F.R. §201.128) and devices 21 C.F.R. §801.4) both contain the following potentially disturbing language:

[I]f a manufacturer knows, or has knowledge of facts that would give him notice that a device introduced into interstate commerce by him is to be used for conditions, purposes, or uses other than the ones for which he offers it, he is required to provide adequate labeling for such a device which accords with such other uses to which the article is to be put.

This language has the potential, if the FDA wanted to, to allow the prosecution of a drug or device manufacturer for an “adulterated”/”misbranded” product (for not having “adequate labeling”), merely because that manufacturer KNEW ABOUT off-label use of its products – forget promotion (truthful or otherwise). Fortunately, the FDA generally has not read this language literally.  Instead it requires prior agency approval of warnings about risks peculiar to off-label uses (we discussed that here).Continue Reading The FDA Tiptoes – and Congress Splashes Into – the 21st Century

Drug & Device Resources

Bexis’ Book

FDA-regulated products now account for an estimated one-fifth of overall economic activity in the U.S. They have also been the focus of a litigation explosion. This timely guide covers all aspects of litigation involving drugs, medical devices, vaccines and other FDA-regulated prescription products.
Learn More About This Book