Fraudulent Joinder

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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.

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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

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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

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A recent pelvic mesh case in the District of Maryland, Sullivan v. Calvert Memorial Hospital, No. PJM 14-118, Memorandum Opinion (D. Md. July 30, 2015), offers an interesting and useful take on federal jurisdiction when plaintiffs name local doctors as co-defendants.  You know the drill.  In order to manipulate the forum and avoid removal jurisdiction in a case against an out-of-state product manufacturer, plaintiffs will sometimes join a local doctor as a co-defendant.  One response could be to remove the case to federal court on the basis that the local doctor was fraudulently joined, a strategy that is legally sound and often successful when dealing with intermediaries in the chain of distribution, such as distributors and pharmacies.  Those kinds of defendants do not owe independent duties to plaintiffs and have zero involvement in the design, manufacturing, and labeling of drugs and medical devices (setting aside the potentially vexing issues presented by 3D-printed medical devices, but that is a topic for another day.)  Their citizenship therefore should be disregarded.

Fraudulent joinder with doctors is more complicated because doctors obviously do owe duties of care to their patients, so we tend to approach cases involving doctors also from the point of view of fraudulent misjoinder.  Under fraudulent misjoinder, the defendant argues that the federal court should disregard the citizenship of the local or non-diverse co-defendant because the claims against that defendant are distinct from the product liability claims against product manufacturer.  The case most often cited as the landmark for fraudulent misjoinder is Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1360 (11th Cir. 1996)), and as the argument goes, product liability claims on the one hand are based on facts and law different from medical malpractice claims on the other hand.  It is as though two different lawsuits were improperly joined under one caption, which gives the district court discretion to disregard the citizenship of the non-diverse or local doctors and retain federal diversity jurisdiction.  (We discussed severance of malpractice claims from product liability claims here, although not in the context of federal jurisdiction.)

Some courts have been slow to adopt fraudulent misjoinder, sometimes citing Tapscott as a minority rule and often ignoring Tapscott altogether.  And that is where Sullivan v. Calvert comes in.  In Sullivan, the plaintiff’s surgical team allegedly left a piece of a catheter in the plaintiff’s bladder during a procedure to insert a transvaginal sling.  Op. at 2.  The Maryland plaintiff therefore sued multiple Maryland healthcare providers alleging medical malpractice for leaving the catheter behind, but she also separately pleaded product liability claims against the transvaginal sling manufacturer.  Id. at 3.Continue Reading Using Severance Under Rule 21 To Preserve Removal Jurisdiction

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We’re not law professors.  We don’t typically read opinions with an eye to where they fit (or don’t) in some grand jurisprudential scheme.  We’re litigators, so we read opinions with an eye to whether they can help our clients win.

Thus, when Johnson v. American Towers, LLC,___ F.3d ___, 2015 WL 1321535 (4th Cir. March 25, 2015), popped up in one of our automatic searches (due to a stray citation to Riegel v. Medtronic, Inc., 552 U.S. 312 (2008)), we were inclined to pass it by, since preemption under the Federal Communications Act is not exactly something that arises in our sandbox very often.  If you have an FCC tort preemption issue, you’ll want to read Johnson for that reason, but our discussion here won’t interest you much.Continue Reading “Common” Defense No Bar to Removal in Preemption Case

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This just happened yesterday down in Texas.  The defendant in this 77-plaintiff action raised fraudulent joinder/misjoinder and lack of personal jurisdiction in removing the case. Locke v. Ethicon, C.A. No. 4:14-CV-2648, slip op. (S.D. Tex. Nov. 10, 2014).  The defendant won, as the out-of-state (and non-diverse) plaintiffs were dismissed due to lack of personal jurisdiction under Daimler AG v. Bauman, 134 S. Ct. 746 (2014).  No other remand-related grounds (such as fraudulent (mis)joinder) had to be reached.

Of even greater importance is the “how to” aspect of Locke.  Can a court determining a remand petition decide a question of personal jurisdiction (the Bauman issue) prior to a question of subject matter jurisdiction (fraudulent (mis)joinder)?  The Locke court said “yes,” relying on Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 586-87 (1999).  Slip op. at 3-4 & n.3.  That’s critical, because unless a court can reach the Bauman issue first, it would have to find some basis to dismiss the non-diverse plaintiffs under fraudulent (mis)joinder standards – and those standards are much more difficult to satisfy.  The Supreme Court, however, had resolved this issue in Ruhrgas.

[T]he Court notes that the two motions present the Court with a procedural dilemma.  If the Court addresses the question of subject matter jurisdiction first, then [one of the plaintiffs’] New Jersey citizenship destroys diversity, thereby justifying remand for the Texas state court to resolve the personal jurisdiction issue.  Alternatively, if the Court addresses the question of personal jurisdiction first and finds for the defendants, dismissal would simultaneously reduce the number of plaintiffs to one and permit the Court to retain jurisdiction over the case.  It is well settled that a district court has discretion to dispose of jurisdictional questions in a manner that promotes judicial economy.

Locke, slip op. at 3 (citing Ruhrgas and other cases following it).  This is the first time (we ran a search) that Ruhrgas has been invoked in a fraudulent (mis)joinder remand where the basis for fraudulent joinder is inability of nondiverse plaintiffs to obtain personal jurisdiction over the defendant under Bauman.Continue Reading Breaking News: Win On Post-Bauman Personal Jurisdiction Avoids Fraudulent (Mis)Joinder Pitfalls

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Like pharmaceutical and medical device manufacturers, it is not surprising that compounding pharmacies facing personal injury/products liability litigation prefer the typically more defense-friendly federal arena over the often more challenging (to put it mildly) state court system.  But as today’s case demonstrates, that may not be the easiest path for compounders to follow.

The case…

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Some plaintiff lawyers seem horrified at the prospect of showing up in federal court.  How else to explain the machinations to prevent diversity jurisdiction?  What is it about federal courts that they dislike so much?  The assignment of one judge who will stick with the case and thereby come to learn its frailties?  The proclivity…

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

We often struggle for a clever title or catchy phrase on which to hang our posts.  Hence, the frequent sidebars into pop culture, sports, history, and music.  But today, the court handed us our opening on a silver platter – permitted gamesmanship v.…

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