New Stuff

Miscellaneous day today, just before Memorial Day (remember to raise a glass to the common foot soldier this holiday) and the official start of summer − courtesy of our readers.


Number one:

A tip of the cyber-cap to Mike Imbroscio at Covington and Bart Sullivan at Fox Galvin for sending us Aranda v. Walgreen Co., No. 12-cv-337-DRH, slip op. (S.D. Ill. May 23, 2012).  Aranda demonstrates that, after the Seventh Circuit’s Walton decision finding fraudulent joinder of pharmacies under Illinois law, plaintiffs in the southern Illinois hellholes (St. Clair, this time) still haven’t given up.  After getting caught falsely alleging the diversity of another party (slip op. at 3-4), the plaintiffs (71 of them) argued in Aranda that despite Walton, a pharmacy could be liable.

The plaintiffs in Aranda correctly observed that there is an exception to pharmacy non-liability in Illinois where the pharmacist has actual, subjective knowledge of a reason why a particular drug is contraindicated in a particular patient.  Happel v. Wal-Mart Stores, Inc., 766 N.E.2d 1118 (Ill. 2002) (actual knowledge of synergistic adverse effect of two drugs).  See slip op. at 8-10 (discussing Happel).

But so what?

None of the 71 blatantly misjoined plaintiffs in Aranda alleged any facts suggesting that the actual knowledge exception in Happel had anything whatsoever to do with their purported claims.  To the contrary, the only allegations were the usual “knew or should have known” failure-to-warn boilerplate.  Slip op. at 11-12. Thus, the Aranda plaintiffs had nothing to take their cases outside of the Seventh Circuit’s controlling Walton opinion:

Despite plaintiffs’ arguments to the contrary, the Court finds that this is the Walton case all over again.  Plaintiffs allege that the manufacturing defendants and [the pharmacist] did not provide adequate warnings; they do not allege that [the pharmacist] had specific knowledge of each individual plaintiffs’ susceptibility to the adverse side effects of [the drug].  Clearly it is possible to allege for each plaintiff individually his or her medical susceptibility and how [the pharmacist] knew of that condition.  While this may seem like a daunting task with so many plaintiffs in one complaint, it is perhaps not as daunting as preparing a different complaint for each plaintiff or paying a filing fee for each plaintiff.  Nonetheless, this is what Walton requires, and the allegations in this case come nowhere near the situation in Happel where the Illinois Supreme Court found a narrow duty existed. Accordingly, the motion to remand is denied.

Aranda, slip op. at 12 (emphasis added).  Boilerplate pleaded on behalf of a large number of improperly joined plaintiffs − hence the dig about failing to pay filing fees − doesn’t cut it.  And so these 71 plaintiffs will stay in federal court, where they will almost certainly be severed and required to pay the proper filing fee.

Good job.

Number two:

There’s also this hearing transcript in Lukas-Werner v. Novo Nordisk, A/S, No. 1009-13177 (Or. Cir. Multnomah Co. May 11, 2012), rejecting Conte and the entire concept of brand-name liability in generic drug consumer cases.  Here’s the decisive part of the hearing:

THE COURT:   Well, this is really interesting.  I think plaintiff’s argument has a lot of appeal, but that's not my job here today.  I am required to attempt to predict -- and I need a much bigger crystal ball than I am using -- what the Oregon Supreme Court would do with this theory.  And my best prediction is that the Oregon Supreme Court would not recognize the innovator liability theory in these circumstances.

Frankly, I was thinking I don’t really care about defendant’s arguments about what causes of action the plaintiffs might have still brought against [other parties].  That's not the question before me.  The question is does this particular pleading state a cause of action under the Oregon common law, regardless of what other things might have been there and weren't there.

The only reason I think there is any place for that argument in this motion, actually, is thinking that the Oregon Supreme Court, when it takes this issue up, will look at Article I, Section 10 of the Oregon Constitution and look at the Mensing case and say where that provision in our constitution says every man (sic) shall have a remedy by due course of law for injury done him (sic), and his person, property or reputation, would they say that in light of the U.S. Supreme Court's ruling in Mensing there has to be innovator liability for that remedies clause to be given effect and meaning?  And they would look and say, “Well, even if it’s not that particular remedy, are there others and so on.”  So, you know, I’m not ignoring that argument completely, but I think it's really tangential to the core issue here.

And I do not think the Oregon Supreme Court would conclude that the innovator, the original manufacturer of a drug responsible for its labeling, has a duty arising out of the FDA regulations to the consumers or prescribers of all generic versions of its drug.

And the plaintiffs acknowledge that foreseeability alone won’t get them there.  That really is kind of what it amounts to, because the regs don’t permit the manufacturer of a generic that doesn’t want to go through the labeling process to do anything other than use the innovator’s labeling. That makes the harm foreseeable to the innovator.

I don’t think we can get there from here.  So I’m granting the defendant's motion.  I do it reluctantly, but I’m granting it.

Transcript at 25:2-26:21.

Reading the rest of the transcript, we’re pleased (but not at all surprised) to see that defendants have picked up on the fact (which we discussed here) that Conte itself is an endangered species in California since the California Supreme Court’s rejection of pure foreseeability as a basis for product liability in O’Neil v. Crane Co., 266 P.3d 987 (Cal. 2012).  See Transcript at 4:15-21 (“the O’Neil decision . . . swallows Conte up and spits it out”).  Nice metaphor.  There follows (pp. 4-5) admitted “speculation” about why the California Supreme Court didn’t accept an appeal in Conte itself.  Since Bexis briefed the Conte petition for PLAC, he has his own speculation on that front to pass along.  At the time, Bexis heard from long-time members of the California bar that the justices largely didn’t come from civil litigation backgrounds, and weren’t all that interested in the area.  Only really “big” products cases − such as the asbestos-related issue in O’Neal can get their attention − despite Bexis letter brief in Conte laying out the parade of horribles.  Anyway, it’s all speculation.

On the merits, this particular Conte win is particularly gratifying because:  (1) it rejects a new plaintiff’s argument that we can expect to see elsewhere;  (2) it’s in state, rather than federal court;  (3) Oregon is not a particularly conservative jurisdiction, and (4) Oregon borders California, indicating that Conte isn’t having the kind of reach that earlier California product liability craziness (can you say "market share liability"?) did.

Thanks to Angela Higgins at Baker Sterchi for passing the transcript along.

Another Win For Removal Before Service

We’ve learned of another win for removal before service in our local federal court, the Eastern District of Pennsylvania. In Boyer v. Wyeth Pharmaceuticals, Inc., C.A. No. 12-739, slip op. (E.D. Pa. April 25, 2011), the case was removed “before any defendant had been served.”  Id. at 1. The plaintiff sued Pfizer, a non-Pennsylvania defendant, and Wyeth, a Pennsylvania “forum defendant.”  The non-forum defendant (Pfizer) was the removing party.  Id.


As usual, the argument in Boyer came down to a choice between the “plain meaning” of the removal statute (21 U.S.C. §1441(b)), and the plaintiff’s claim that removal before service was some sort of gimmick that courts simply should not allow, no matter what Congress provided.  The court (Judge Ludwig) came down on the side of plain meaning.  Slip op. at 2-6 (collecting cases – including some we haven’t cited before in the blog).

A couple of notes about Boyer:

First, the court drew a distinction between removal before service by the forum as opposed to the non-forum defendant, and suggested that remand is more appropriate “where the unserved removing party was the forum defendant.”  Boyer, slip op. at 4 n.2.  We don’t think that should matter, but to the extent that it does – a word to the wise is sufficient.  If the defendant has a choice (and in Boyer we think there was), then always have the non-forum defendant do the removing.  No use handing the other side an issue that can be avoided.

Second, the plaintiff in Boyer did something a little unusual – serving the forum defendant anyway after the case was removed, and claiming that made a difference.  One reason that argument’s unusual is probably that it’s quite meritless.  As the court observed, “[t]he propriety of removal is determined as of the date of removal.”  Slip op. at 4 (citing Wright & Miller).

So if you’re keeping track, Boyer is one more win for the good guys.  We’ll close the way the court did:

[T]he propriety of pre-service removal has been recognized. . . .  [T]he removal statutes expressly permit defendants to remove state court actions to federal court prior to service.  The pre-service removal of this action by a non-forum defendant where the forum defendant had not been served prior to removal was proper under the unambiguous language of §1441(b).

Boyer, slip op. at 4-5 (citations omitted).

If At First You Don't Succeed....

Sometimes good ideas don’t prevail the first time – or even the first few times – they make their appearance.  With that in mind we bring to your attention Windle v. Synthes USA Products, Inc., 2012 U.S. Dist. Lexis 52397 (N.D. Tex. April 13, 2012).  Windle was a removal attempt – an unsuccessful one – in a PMA device case.  Premarket approval means, of course, that preemption bars virtually every claim, except the so-called “parallel violation” claim, that is, a state-law claim that parallels some sort of FDCA violation.


Such claims are relatively hard to come by, as our post-Riegel preemption scorecard indicates.

And as some of the cases on our post-Riegel preemption scorecard also hold, under TwIqbal (at least a lot of courts’ interpretations of it), the plaintiff must plead what was violated, the nature of the violation, how the violation caused injury – things like that.  Some states, the so-called “fact-pleading” states (like Pennsylvania) have traditionally required even more intensive pleading than the federal courts.  Some other states have adopted TwIqbal.

Windle highlights an interesting possible consequenceof TwIqbal-compliant “parallel violation” claims.  That is, it’s possible, at least in some cases, that the very same factual pleading necessary to push a parallel violation claim over the TwIqbal pleading threshold might also plead a sufficient embedded federal issue to justify removal of the case to federal court under the oft-cited but rarely met federal question test enunciated in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308 (2005).  Usually, plaintiffs get to hide behind the “well-pleaded complaint rule” and frame their claims as state-law causes of action in order to keep them out of federal court.  However, to the extent that a combination of Riegel preemption and TwIqbal pleading flush plaintiffs out from under the well-pleaded complaint rule and require the pleading of FDCA violations with considerable exactitude, then the complaint starts looking more and more like the kind of action that could be removed to federal court under Grable.

Now, the defendant in Wimble didn’t get to the promised land of the federal courts, but consider how it stated the Grable test:

[F]ederal question jurisdiction exists where (1) resolving a federal issue is necessary to resolution of the state-law claim; (2) the federal issue is actually disputed; (3) the federal issue is substantial; and (4) federal jurisdiction will not disturb the balance of federal and state judicial responsibilities.

2012 U.S. Dist. Lexis 52397, at *16 (citation and quotation marks omitted).

The court in Wimble didn’t dispute that item one (an FDCA violation being “necessary”) and item two (the violation being “actually disputed”) are met in post-Riegel PMA preemption cases.  2012 U.S. Dist. Lexis 52397, at *18-19.  Rather the defendant came up short because the violation was not necessarily “substantial.”  Id. at *19-20.  Instead, the violation “could be as straightforward as deciding whether the responsible party did or did not furnish the information required by FDA regulation.”  Id. at *20.

For the purposes of this post, we’ll take the Wimble court’s statement as gospel.  Some, perhaps even most, claimed “parallel violation” claims might well be simple and straightforward enough to flunk the “substantial” federal question prong of Grable.

But we invite our readers to ponder whether the converse is also true.  There may well be other PMA preemption cases where the plaintiff’s FDCA violation claims are complex and involved.  The violation allegations could well run on for several pages in the complaint – especially if the plaintiff copied some complicated MDL or similar pleading verbatim (it does happen).

Further, to the extent that these instances of complicated and pervasive FDCA violation allegations are, indeed, relatively few, then pushing them into federal court would be less likely to “disturb the balance” between the state and federal courts.  Many, perhaps most, Grable arguments that we’ve seen fail because they prove too much – their adoption would open the door to removal of large number of state tort cases because some federal matter (say, preemption) is merely at issue.  It’s something of a tautology, 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.

In light of all that, we’re not recommending any particular action in any particular case – only alerting our colleagues to the possibility of the argument that:  (1) the more that post-Riegel PMA preemption cases rise or fall on allegations of violations of the federal FDCA, and (2) the more that plaintiffs are forced plead these purported federal violations in gory detail, then (3) the chances increase that the prerequisites to Grable federal question jurisdiction are met, as long as (4) the defendant’s arguments are sufficiently tied to a particularly involved claim of FDCA violation so that the plaintiff can’t make a plausible floodgates argument.

We’ll be looking for cases that fit this syllogism, and we invite our readers to do the same.

GSK Citizenship Issue On Appeal

We can’t say much of substance about this issue, as we represent GlaxoSmithKline in certain matters, but a remedy is in sight (we hope) for the peculiar situation that has developed with respect to GSK’s citizenship for purposes of diversity jurisdiction.  Currently, that issue is a huge muddle – with two judges of the Eastern District of Pennsylvania holding that GSK is a citizen of Delaware.  See Johnson v. Smithkline Beecham Corp., 2012 WL 1057435 (E.D. Pa. March 29, 2012) (Diamond, J.); White v. SmithKline Beecham Corp., 2010 WL 3119926 (E.D. Pa. Aug. 6, 2010) (McLaughlin, J.).  Another Eastern District judge, however, has ruled on several occasions that GSK is a citizen of Pennsylvania.  Brewer v. SmithKline Beacham Corp., 774 F. Supp.2d 720 (E.D. Pa. 2011); Patton v. SmithKline Beecham Corp., 2011 WL 6210724 (E.D. Pa. Dec. 14, 2011); Maldonado v. SmithKline Beecham Corp., 2011 WL 7069430 (E.D. Pa. Dec. 12, 2011) (all Savage, J.).


This dispute centers around the application of the “nerve center” test for corporate citizenship.  Its basis is quite simple:  GSK would rather be in federal court than in the Philadelphia Court of Common Pleas hellhole, and plaintiffs prefer the opposite result.  If GSK is a Delaware citizen, then it is diverse and entitled to a federal venue.  If it is a Pennsylvania citizen, then it has been sued in its own "home" state court, and it is stuck in state court.

Without commenting on the underlying facts, we’re pleased to note that Judge Diamond in the Johnson case has decided to certify the issue for immediate interlocutory appeal to the Third Circuit.  2012 WL 1057435, at *8-9.  It’s difficult for this type of issue to be appealed because remands (what Judge Savage did) are not appealable orders.  As Judge Diamond noted in his certification order, the current “uncertainty is extremely troubling.”  Id. at *9.  At least now (assuming the Third Circuit accepts the appeal – which all parties appear to agree that it should) we’ll have some definitive determination of the citizenship of a party defendant in numerous cases.

What A Difference An MDL Transfer Makes

Thanks to Jim Fraser at Venable for passing along a nice fraudulent misjoinder finding in the Fosamax MDL, Welsh v. Merck Sharpe & Dohme Corp., C.A. No. 11-3045, slip op. (D.N.J. April 3, 2012).  Welsh originated in Missouri state court, and demonstrates the lengths to which plaintiffs will go if given free reign to misjoin plaintiffs and defendants in order to defeat diversity.  Missouri, you see, is in the Eighth Circuit, and that circuit has essentially refused to recognize fraudulent misjoinder.  See In re Prempro Products Liability Litigation, 591 F.3d 613 (8th Cir. 2010).  Here, the defendants were saved from the grotesque misjoinders allowed by the Eighth Circuit by the felicitiously timed creation of the Fosamax MDL, venued in New Jersey.  Unlike the Eighth Circuit, the Third Circuit recognizes fraudulent misjoinder.  In re Briscoe, 448 F.3d 201 (3d Cir. 2006).

The complaint in Welsh was a mess.  First, it involved "91 plaintiffs who are citizens of 28 different states."  Slip op. at 2.  Second, the claimed injuries were vaguely alleged simply as "long bone fractures," id., which as the court noted could mean anything from the fingers to the femur.  Id. at 7 n.5.  Third, the complaint glommed together the branded manufacturer of Fosamax with a variety of differently situated alleged generic manufacturers "without affirmatively identifying the specific manufacturers against whom [plaintiffs] bring actions."  Id. at 8.  In short, the complaint was a gross, indistinct, incomprehensible mess alleging nobody's injury and not identifying the product that anybody took.

That's where plaintiffs will go if the courts don't stop them.  No further justification of TwIqbal is necessary.

That fine mess thus more than satisfied both prongs of fraudulent misjoinder:  (1) that there is a misjoinder and (2) that it is egregious.  Slip op. at 5-6.  Helpfully, the Welsh court observed that fraudulent misjoinder "is particularly relevant to large pharmaceutical product liability actions."  Id. at 6

These factual variances allude to a larger problem with joinder of so many drug product liability claims.  Toxic tort cases raise more complicated issues of causation and exposure. . . .  Joinder of plaintiffs ina drug product liability case in no way promotes judicial efficiency or convenience. . . . [H]ere . . . 91 Plaintiffs allege such unspecific injuries as to make it impossible to determine how the Plaintiffs share any connection.

Id. at 8 (citations and block quote from a Rezulin case omitted).  Equally egregious, 73 of the 91 plaintiffs were completely diverse from any of the defendants.  The diversity of the remaining 18 could not be determined because none of them alleged which defendants' products they claimed to have consumed.  Id. at 9 (commenting on "and/or" pleading).

In light of the large number of parties and the spectacularly imprecise pleading, the court in Welsh had no trouble concluding that the misjoinder was an intentional effort by the plaintiffs to subvert diversity jurisdiction:

Plaintiffs' obfuscation in naming Defendants suggests an element of collusion intended to deprive Defendants of removal jurisdiction in federal court.  Moreover, the factual, temporal, and geographic diversity among Plaintiffs' claims wholly disregards the purpoes of permissive joinder because these are claims that no reasonable person would normally expect to be tried together.

Slip op. at 9.  "Accordingly, the Court concludes that joinder was undertaken to thwart Defendants' statutory right of removal to federal court."  Id. at 10.

The plaintiffs evidently drafted their morass of a complaint confident that Eighth Circuit precedent protected them from any sort of judicial review.  The MDL transfer here made all the difference and allowed these defendants to bring this absurd pleading to light and to obtain the relief to which they were so plainly entitled.

Removal News

There hasn’t been a lot of talk about this, but Congress just passed, and the President signed, something called the" Federal Courts Jurisdiction and Venue Clarification Act of 2011," H. R. 394, P.L 112-63, copy here.  As far as we’re concerned, this new act (we’ll call it, creatively, “the Act”) is as significant for what it didn’t do as for what it did.


The Act completely rewrote 28 U.S.C. §1441(b).  Why’s that important?  Because the literal language of §1441(b) – “removable only if none of the parties in interest properly joined and served is a citizen of the State in which such action is brought” – is what allows removal prior to service to trump the so-called “forum defendant” loophole.  As we’ve pointed out in many posts (most of which you can access from here), the “and served” qualifier to the forum defendant loophole means that, if an otherwise diverse action is removed before an in-state defendant is served, then that defendant’s citizenship, according to the statute, must be ignored and the action is properly in federal court.

That’s the express language of the statute.  The plaintiffs have responded with a mushy, result-oriented counter-argument that surely Congress didn’t mean what it said; that result would be absurd. As we’ve mentioned, some benighted courts have bought that rationale.

Well, that argument just went out the window.  Why?  Because in the Act (the 2011 one mentioned above), Congress had the opportunity to change §1441(b) if it was uncomfortable with the result dictated by that section's express terms.  It didn’t.  Quite the contrary, while Congress completely rewrote §1441(b) in the Act, it retained (and arguably improved, see this law review article, pp. 162-63) the “properly filed and served” language verbatim in the new version.  After the Act, here’s how §1441(b) now reads:

(b) REMOVAL BASED ON DIVERSITY OF CITIZENSHIP. – (1) In determining whether a civil action is removable on the basis of the jurisdiction under section 1332(a) of this title, the citizenship of defendants sued under fictitious names shall be disregarded.

(2) A civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

Act §103(a)(3) (emphasis added).

Thus Congress reenacted the identical language of the statute that plaintiffs claim creates an “absurd” result.  When amending statutes, Congress is presumed to appreciate how the existging language is being interpreted in the courts.  E.g., Forest Grove School Dist. v. T.A., 129 S.Ct. 2484, 2492 (2009) (“Congress is presumed to be aware of a[] . . . judicial interpretation of a statute and to adopt that interpretation when it re-enacts a statute without change”) (citation and quotation marks omitted) (there are lots of similar cases).  Obviously, in the case of removal before service, Congress didn’t consider elimination of the forum defendant rule to be “absurd” in the least.   Rather, the forum defendant rule is itself an anachronism of earlier times when local prejudice against “foreigners” – that is, those from other states – was much greater than in the extremely mobile society of the Twenty-First Century.

So we think that the Act, by re-enacting verbatim the “and served” caveat to the forum defendant rule, has effectively ratified the validity of pre-service removal as a means of escaping hellhole jurisdictions where diversity is otherwise present.

What else is there in the Act?

Probably of most import to practicing litigators, Congress cleaned up the controversy about whether the 30-day removal period began to run with the first, or with the last, defendant to be served, where (as is usually the case these days) more than one defendant is sued.  Congress adopted the majority (but hardly unanimous) rule measuring time from the date of the last service – the so-called “last served defendant” rule.  See Act §103(b)(3)(B) (creating a new 28 U.S.C. §1446(b)(2)(B) specifically addressing this issue).  Earlier served defendants, even if they independently blew the 30-day removal period, may nevertheless consent to a timely petition filed by a later-served defendant.  Id. (creating a new 28 U.S.C. §1446(b)(2)(C) specifically addressing this issue).

Also, Congress has codified the formerly judge-made (but extremely long-standing) gloss on §1446, and now formally requires that all defendants (except those otherwise statutorily excluded) join in a diversity-based removal petition.  See Act §103(b)(3)(B) (creating a new 28 U.S.C. §1446(b)(2)(A) specifically addressing this issue).

Plaintiffs like to play hide-the-ball with the amount in controversy ("AiC") (currently $75,000 - that hasn't changed) in potentially removable cases.  The Act addresses this problem, as well, by providing that, where the AiC is not plainly stated in the complaint, any later filing (such as discovery) that yields AiC information establishing a demand above the limit required for diversity-based removal is treated as “another paper” that creates a new window for removal of the case.  See Act §103(b)(3)(C) (creating a new 28 U.S.C. §1446(c)(3)(A) specifically addressing this issue).

Also regarding the jurisdictional AiC, any dispute over what the plaintiff is actually demanding is to be resolved by the court on a “preponderance of the evidence” basis (some courts had imposed more restrictive proof standards). Id. (creating a new 28 U.S.C. §1446(c)(2)(B) specifically addressing this issue).  Note, this section of the Act consistently refers to "§1332(a)," meaning that it doesn't apply to AiC disputes under the Class Action Fairness Act, which is codified elsewhere, at 28 U.S.C. §1332(d).

There’s now a catch-all escape valve from the one-year limit (from time of suit commencement) for removing a diverse action.  If the court finds that the plaintiff acted in “bad faith” in any way to prevent removal, the one-year limit doesn’t apply.  See Act §103(b)(3)(C) (creating a new 28 U.S.C. §1446(c)(1) specifically addressing this issue).  This “bad faith” exception also applies to AiC issues.  Id. (creating a new 28 U.S.C. §1446(c)(3)(B) specifically addressing this issue).

Another change involves cases in which there are mixed removable (usually federal question) and non-removable (usually non-diverse tort claims) parts of a complaint.  Under the Act, the entire action can be removed (as at present) but once in federal court it’s now mandatory to sever the non-removable parts of the litigation and remand them to state court.  Conversely, defendants not affected by the removable parts, need not consent to removal.  See Act §103(a)(4) (amending §1441(c)).

Given the date that the Act was enacted, it will become effective on January 6, 2012.  From that day forward, it applies to all commenced in state (for removal purposes) or federal court.

NOTE:  The Act also contains amendments affecting jurisdiction and venue, but that’s beyond the scope of this post. Here are a couple of write ups of the Act that cover those aspects.

New Stuff #2

Our continuing interest in removal/remand strategies for extricating our clients from state-court hellholes comes as no surprise to anyone who’s been following our blog for any length of time.  In particular, we’ve advocated and (we flatter ourselves) helped to popularize the technique of pre-service removal – see our most recent prior post here.


Basically, pre-service removal eliminates a loophole in the federal removal statute that allows plaintiffs to keep cases in which diversity of citizenship indisputably exists in state court through the device of suing an in-state defendant - if that defendant has been "properly joined and served."  Pre-service removal eliminates this “forum defendant” loophole by removing the action to federal court before the plaintiff has sued the in-state defendant (or, indeed, has served anybody at all).

We’re pleased to pass along a new win on this issue in New Jersey, which is pretty much the pre-service removal “ground zero,” given the number of pharmaceutical manufacturers with the misfortune of being headquartered in this notoriously pro-plaintiff jurisdiction.  The case is Poznanovich v. AstraZeneca Pharmaceuticals LP, No. 3:11-cv-04001-JAP-TJB, slip op. (D.N.J. Dec. 12, 2011).

Poznanovich is a Nexium case where the plaintiff – an Illinois resident attracted by New Jersey’s pro-plaintiff reputation – chose to sue in New Jersey state court.  Two named defendants, AstraZeneca LP and KBI Sub Inc., were allegedly New Jersey citizens, but the other defendants managed to remove the case before either of those defendants was served with process.

The recurring question on remand (before the Honorable Joel Pisano) was the usual – does the court follow the express language of the removal statute, 28 U.S.C. §1441(b), which predicates the forum defendant loophole on that defendant being “properly joined and served”?  Go with the plain meaning of the statutory text and the removal is proper.  Make up some speculation that the plain text leads to some “absurd” result (why isn’t the forum defendant rule itself “absurd” in the 21st Century?) and a court can find a way to remand.

Poznanovich fortunately was willing to give Congress credit for meaning what it said.  Finding (quite properly) that precedent on this issue was “split” (without any binding appellate authority), slip op. at 3, the court chose to adopt the majority view of the New Jersey federal courts and denied remand.

[T]he Court concludes that the weight of the authority and better reasoning supports denial of Plaintiff’s motion to remand.  The Court finds that the language of the statute is plain, and, thus, adherence to the plain language is required. . . .  Here, Congress expressly used the phrase “properly joined and served,” and this Court should not adopt an interpretation of the statute which renders the “and served” language superfluous.  Under the unambiguous language of the statute, the presence of an unserved forum defendant does not prohibit removal by a non-forum defendant in cases where complete diversity exists.

Slip op. at 8.

The court also disposed of some subsidiary red herring arguments.  The first – whether the forum defendant itself could remove before service – went by the boards because the moving party wasn’t, in fact, a forum defendant.  A partnership’s citizenship is determined solely by the citizenship of that partnership’s members, and is not affected by anyone with whom the partnership may later decide to form other partnerships.  Poznanovich, slip op. at 3-4.  Here, the plaintiff’s overpleading, suing a bunch of unnecessary peripheral entities, came back to bite him, since one of those peripheral entities was able to remove as a non-forum defendant.

Second, the plaintiff argued that removal simply could not occur in the absence of formal service.  The court correctly perceived that argument as garbage.  Need not does not equal must not.  Supreme Court precedent (Murphy Brothers, Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344 (1999)), that defendants need not respond to unserved complaints, does not disable defendants from responding if they so choose:

That decision [Murphy], however, did not hold that formal service is a prerequisite for removal.  Indeed, a party is free to waive service of process. . . .  [C]ourts appear to routinely hold that formal service is not a prerequisite to removal.

Poznanovich, slip op. at 9-10 (citations omitted).

Third, plaintiff’s invoking the unanimity requirement was a smoke screen, because unserved defendants need not consent to removal.  Id. at 10.

Last and least, the subject matter jurisdiction of the court was not dependent upon prior service of process.  Since the state court had jurisdiction over the action from its inception, removal conferred the same jurisdiction on the federal court.  Id. at 10-11.

Anyway, Poznanovich confirms what we already thought – that the “plain meaning” approach has by far the better side of the argument.  The “absurdity” approach is just judicial nullification, pure and simple.  There’s no constitutional issue here, so if Congress thinks the law is being misapplied, it can always change the statute.  As Poznanovich points out, the majority rule commands majority support for good reason.

Congrats to Amy Fisher at Ice Miller for emerging victorious, and further thanks for passing the decision along to us.

Once More With Feeling - Removal Before Service

God only knows how many times we’ve posted on the topic of removal before service, because we can’t count that high.  We did take a look through our “removal” topic tag and figured out that our last post about this subject was back in May.  Well, a reader recently sent us a new decision, so we’ve found an occasion to bring up this old saw again.


Briefly, for you newbies, what’s the big deal with removal before service?  First, “removal” in this context refers to the process for getting cases out of state court (generally thought of – by both sides – as more plaintiff-friendly), and getting them into federal court (conversely considered more defense friendly).

Plaintiffs do all sorts of things to get cases into their preferred state-court forums (fora? fori? foræ?).  One of them is to take advantage of the so-called “forum defendant” exception to federal diversity (that is, the plaintiff and defendant are citizens of different states) jurisdiction.  That exception allows a diverse plaintiff (say, from North Carolina) to sue a defendant (say, a large drug company) in the defendant’s home state.  This trick is employed when the defendant has the misfortune of being located in a state (say, Pennsylvania, New Jersey, or California) that also contains a judicial hellhole favored by the plaintiff’s bar.

Well, the “forum defendant” exception is purely statutory, and the statute, 28 U.S.C. §1441(b), provides that only defendants “properly joined and served” at the time of removal count as forum defendants.  Defendants recently figured out (all right, we admit, we helped a little bit) that if the case could be removed ASAP, before the plaintiff had time to serve the forum defendant – the forum defendant no longer defeated the removal of an otherwise diverse case under the best reading of the statute, because it hadn't been "served" as the statute requires.

In removal before service cases, the opposing arguments are:  On the defense side – even if Congress probably didn’t intend (or even think about) this twist, the plain language of the statute provides that removal before service trumps the forum defendant rule.  On the plaintiff’s side – even though we took advantage of the forum defendant loophole to have a plaintiff from Upper Dogpatch bring suit in the defendant’s home hellhole, it’s too much “gamesmanship” to allow defendants to take advantage of their removal before service loophole to our loophole.

Anyway, we’ve painted the scene.  So here’s what’s just happened.  In Christison v. Biogen Idec, Inc., No. C 11-4382 RS, slip op. (N.D. Cal. Nov. 14, 2011), a plaintiff from Utah (not usually thought of as a judicial hellhole) chose to sue several non-Utah defendants, including Elan, a California corporation in California state court (a full-fledged judicial hellhole).  The defendants (or at least Biogen) got wise to the suit and got it out of Dodge within a week of its being filed – before plaintiff could serve process on Elan.  Id. at 2.

Plaintiff argued gamesmanship.  Defendants argued plain meaning.  The court came down solidly on the side of Congress meaning what it says – and that Congress can change it if they didn’t:

There is no dispute, however, that Elan had not been served with summons and complaint at the time that defendant Biogen Idec, Inc. filed the operative notice of removal.  The plain language of the removal statute permits removal where no defendant who has been “properly joined and served” is a resident of the forum. 28 U.S.C. §1441(b) (emphasis added). . . .  [T]he mere absence of . . . delay here does not warrant adopting a judge-made rule departing from statutory text.  Not only does it remain true that Congress can amend the statute if there in fact is a significant problem with “gamesmanship” . . . plaintiff could have avoided the issue, of which his counsel undoubtedly was aware, by ensuring that he served Elan prior to giving Biogen notice of the filing.

Christison, slip op. at 1-2 (following Carreon v. Alza Corp., 2010 WL 539392 (N.D. Cal. Feb. 9, 2010), which we cited in our last removal before service post) (emphasis original).

Thanks to reader Joe Blute of Mintz Levin for sending along this case.  By the way, as part of this post, we also searched for other good removal before service decisions since our last post in May and found nothing useful.  If you’re out there sitting on something good, please – like Joe Blute – send it along to us.

Generic Reasoning

Have you ever noticed how if you're thinking about something, you start noticing it everywhere? For example, if you are contemplating the purchase of a soul-crushing Scandinavian station wagon, you start seeing them every other block, right?

Lately, we've been thinking about generic pharmaceuticals and preemption. Naturally, we're confronting the issue all over the place. Maybe it's because courts are eagerly embracing Mensing and ridding their dockets of bogus cases. Or maybe plaintiff attorneys are getting creative (and desperate) in devising ways to escape the clutches of Mensing.

We remember seeing generics everywhere in the early 1980s. Most supermarkets had entire aisles filled with those plain white and blue-labeled generics: string beans, chili, corn flakes, orange juice, rutabagas, etc. The 1984 movie Repo Man had a running gag about the proliferation of generics. The characters read a newspaper called "Paper". Guys pick up a six-pack of "Drinks" from a convenience store. Emilio Estevez goes home to find his drug-addled parents planted in front of the television, too stoned to make dinner, but telling him there's food in the refrigerator. Sure enough, sitting on a shelf is a can of "Food".

In the pharmaceutical market, generics are big, big business. They are also now big, big litigation.

You might think that last week's decision in Hughes v Mylan, Inc., 2011 U.S. Dist. LEXIS 123544 (E.D. Pa. Oct. 25, 2011), is no big deal. It merely remands a case that had been removed on Mensing grounds. And the more we think about Hughes, the more we think it should be no big deal. It's the plaintiff lawyers who are trying to tease undue significance out of it.

The problem is that the Hughes opinion is - how do we say this? - far from pellucid.
There are multiple plaintiffs, whose cases were consolidated for the remand motion. Those plaintiffs sued Mylan in Pennsylvania state court, alleging injuries from fentanyl patches. We have the usual collection of claims, including negligence, strict liability, warranty, etc. The theories involve failure to warn and (significantly, as we shall see) design defect.

We said that the plaintiffs sued Mylan. In fact, they sued several Mylan entities, which were citizens of different states. One of those states was Pennsylvania. The presence of Pennsylvania Mylan would seem to block removal ... unless Pennsylvania Mylan was fraudulently joined.

While the plaintiffs' cases were pending, the U.S Supreme Court issued the Mensing decision, which held that failure to warn claims against generic manufacturers were preempted. Once the original deadline for removal has passed, a notice of removal can be filed within 30 days of receipt of "an amended pleading, motion, order or other paper" making the case removable. 28 USC section 1446(b). The Hughes court held that the Mensing decision does not constitute the type of "other paper" permitting removal. But the plaintiffs had amended their complaint to try to escape Mensing, and that amended complaint probably triggers 1446(b), so on to the removal analysis.

As alluded to above, the analysis in Hughes is a bit vague, but we know right away it isn't headed anyplace good. The first line in the opinion is: "A number of people died using Defendants' pain relief product and as a result Plaintiffs sued in the Philadelphia Court of Common Pleas". 2011 U.S. Dist. LEXIS 123544 at 9. Really? Nothing like assuming causation, right? Forgive us if we think that this sentence - which has nothing to do with any removal analysis - sounds like the opening line from a plaintiff's brief. Then we read about a million times in the opinion that there is a presumption in favor of remand. It's amazing how many times a presumption is invoked to supply a fig leaf for an ugly or unclear ruling.

The Hughes opinion also contains a number of snappy lines, though we're seldom sure what they mean:

"The flaw in the Mylan defendants' arguments is their assumption that somehow a 'landmark' Supreme Court ruling lessens the standard to prove fraudulent joinder." 2011 U.S. Dist LEXIS 123544 at 24. . Huh?

Or

"[B]eing able to point to an 'amended pleading' which may serve as a basis for removal does not unlock the doors to the federal courthouse". Id. at 23. Well, it is Halloween, after all, so we guess we ought to be happy to see a straw man.

Or:

"The Mylan Defendants may ultimately win the war, but they are stuck fighting on the turf Plaintiffs selected." Id. at 24. As usual, war imagery offers more heat than light.

Or:

"Mensing merely provides a framework for the state court to adjudicate Plaintiffs' claim; it is not a hook that lands these cases in federal court." Id. at 27.

You get the idea. ... Or do you?

It seems clear that Mensing precludes the plaintiffs' failure to warn claims against Mylan. The Hughes court doesn't ever rule on that issue. It basically says, Tell it to the state court. All we get is, "Plaintiffs have stated a reasonable basis for their claims against Mylan. Thus, this court need not address the ultimate outcome of Plaintiffs' claims following Mensing because a state court is the proper forum for that issue." Id. at 27. We dare you to read the opinion and tell us what the "reasonable basis" is for the failure to warn claims, given that Mensing is the law of the land.

In any event, according to the Hughes court, it doesn't matter, because the plaintiffs also alleged design defect claims against Mylan Pennsylvania. The Hughes court points out that "Negligent design defect claims remain actionable under Pennsylvania law." Id. at 27, citing Lance v. Wyeth, 4 A.3d 160, 165 (Pa Super Ct 2010). True enough - the Superior Court did persist in the curious Pennsylvania sport of always always always treating strict liability claims differently from negligent claims, and bizarrely held that even though there cannot be strict liability design defect claims against FDA-approved pharmaceuticals, there can be negligent design defect claims. We expect the Pennsylvania Supreme Court to overturn that result, and we would have liked to see a federal judge make the prediction that that's exactly what would happen. Moreover, Lance came out before Mensing, and it would be perfectly reasonable to follow the reasoning of Mensing to mean that a bioequivalent generic cannot constitute a design defect. But the Hughes court doesn't go anywhere near that issue. The presumption against remand ends up being a presumption against further thought. The shame of it is that now plaintiffs are running around saying that a federal court has ruled that design defect claims are a way to circumvent Mensing. No, the district court was really straining not to rule on anything.

Why?

It occurred to us that maybe the district court was bothered by the odd procedural posture of the removal and the fraudulent joinder theory. The fact is that if Mensing precludes the claims against Mylan-Pennsylvania, it precludes the claims against all the Mylans. In truth, the removal is really just an argument that the whole case lacks merit, and the district court seems to believe that such arguments can be made just as well to the state court. That is the "common defense" notion used by the Southern District of Illinois to remand cases. We criticized that notion as being weird, because it essentially says that there's removal if the claims against only the nondiverse defendant are specious, but no removal if the claims against all defendants are bogus. The Seventh Circuit in the Walton case eventually spanked the "common defense" theory and put it to bed.

Anyway, the Hughes court didn't go off on that now-retired theory. Rather, it's as if the court didn't want to look at any theory at all, besides the "heavy burden" facing any removing defendant. We get some tough-sounding rhetoric but no real substance. It's even more disappointing than those generic string beans.

Remand Denials in Hip Implant MDL

We've just found out about multiple remand denials from the Depuy hip implant MDL.  Legally, they're all pretty much the same, although there are some factual differences.  They all reject, even under the relaxed fraudulent joinder standard, any possibility that a manufacturer's sales representative can be subject to an independent product liability claim where the rep only delivered product (a prescription medical device) from the manufacturer to the prescribing physician.  Looking at these, we'd have to say that Alabama (and the Eleventh Circuit) have just about the most favorable sales representative precedent of any state in the country.

Anyway, here they are:

Harper v. Depuy Orthopaedics, Inc., slip op., No. 1:11 dp 20522 (N.D. Ohio July 25, 2011).
Patterson v. Depuy Orthopaedics, Inc., slip op., No. 1:11 dp 20521 (N.D. Ohio July 25, 2011).

Slay v. Depuy Orthopaedics, Inc., slip op., No. 1:11 dp 20524 (N.D. Ohio July 25, 2011).

Taylor v. Depuy Orthopaedics, Inc., slip op., No. 1:11 dp 20523 (N.D. Ohio July 25, 2011).

Milner v. Depuy Orthopaedics, Inc., slip op., No. 1:11 dp 20529 (N.D. Ohio July 25, 2011).


Thanks to Joe Babington at Helmsing, Leach for passing these on, and congrats to the folks at Tucker Ellis and Drinker Biddle, whom we gather were also involved in these wins.

Keep those wins coming.

Removal And All That Yaz

Our friends at Sidley have sent along another interesting removal/remand decision out of the Yazmin/Yaz MDL in the Southern District of Illinois.  Since we all get some joy from orders denying remand that come from this district (encompassing some notorious hellholes), they shared it with us, and we’re sharing it with you.  While the order in Taundra Taylor v. Paula Senn Peters, slip op., won’t provide the defense bar with as much mileage as, say Judge Posner’s Walton decision, (this is a rarer situation), it’s still pretty interesting.


To make a long story short, plaintiff Taylor sued defendant Peters in Alabama state court for injuries arising from a car crash.  That case was non-removable since both were citizens of Alabama.  Defendant Peters, represented by the Alabama plaintiffs’ firm Beasley Allen, filed an answer and third-party complaint against Bayer, alleging that Peters’ use of the drug Ocella (we’re hazy on how that ended up in Yazmin/Yaz, but assume there’s good reason) caused her to lose control of her car, and thus collide with Taylor.  We’re only doing removal today, but anyone substantively interested in this sort of theory should read our “Holding the Line on Duty to Warn” post, describing its rejection by Maryland’s highest court.

At this point, removal would still have been tough, particularly since third-party defendants are not generally allowed to remove cases where there’s no diversity between the original parties.  But as the litigation progressed, things got interesting.  The folks at Sidley found out that supposed defendant Peters had settled supposed plaintiff Taylor’s original claim and obtained a release in 2009, before Taylor filed any lawsuit against anybody.  In short, the initial lawsuit was a sham – involving no active case or controversy – and intended solely as a vehicle for keeping the ostensible “third-party” claim against Bayer in state court.

Relying on the release (obtained from supposed defendant Peters’ insurer), Bayer filed an “other paper” (one not based on an initial summons or complaint) removal, and simultaneously requested that the court end the sham by realigning Peters as a plaintiff for purposes of diversity jurisdiction.  Further confirming the sham, Peters, the supposed co-defendant represented by a plaintiffs’ firm, took the lead on opposing transfer to the MDL and in moving for remand.  Tellingly, Peters didn’t raise the settlement as a defense in her answer, never tendered defense of the lawsuit to her insurer, never acknowledged (or denied) the existence of a settlement agreement during the remand proceeding, and argued that Taylor’s claims against her were “viable” in an effort to show that their interests were not aligned.

The court had none of it.

In denying remand, Chief Judge Herndon called out “plaintiff” and “defendant” on their prior settlement agreement and their blatant collusion:

Clearly, in light of these agreements, no actual, substantial controversy existed between Ms. Taylor and Ms. Peters when this suit was commenced (nor does an actual, substantial controversy presently exist).  The Court also notes that Ms. Peters’ conduct – failing to tender this action to her insurer for defense, failing to raise the settlement and release agreements as a defense, and forcefully arguing that the claims against her are viable – indicates that Ms. Peters and Ms. Taylor are colluding in this matter; a factor that further supports the conclusion that no actual, substantial controversy exists.

Slip op. at 9.

Because there was “no actual, substantial controversy” between Ms. Taylor and Ms. Peters, Judge Herndon found it appropriate to realign Ms. Peters as a plaintiff, thereby creating complete diversity.  Thus remand was denied.

In this instance the plaintiffs (both the fake and real ones) were too clever by a half.  Too bad a successful removing defendant can't seek to tax its costs in defeating remand.

Plaintiffs Strike Out Seeking Remand

            We love it when plaintiffs make our job easy – and when plaintiff’s counsel is both clueless and obnoxious – well, that’s cause to celebrate in and of itself.  When the case is also another decision from the Southern District of Illinois denying remand, well we just can’t help sharing our joy. 

It is a well-worn page from plaintiffs’ play book -- to avoid having product liability cases removed to federal court on the basis of diversity jurisdiction, include in the complaint medical malpractice claims against non-diverse treating physicians. In that situation, the removing product manufacturer must convince the federal court to sever (and remand) the malpractice claims, and to retain jurisdiction over the product liability claims.  Not an easy task, but also not insurmountable, as evidenced by the recent decision in In re: Yasmin and Yaz (Drospirenone) Marketing, Sales Practices and Products Liability Litigation (Cooke-Bates), 2011 U.S. Dist. LEXIS 74076 (S.D. Ill. July 10, 2011).

The game started in typical fashion.  First up, plaintiff (a resident of Virginia) sues Bayer (not a Virginia citizen) and her physician (a Virginia resident) in state court.  Bayer comes up to bat and removes the case to federal court based on diversity and argues that the claims against the doctor should be severed under Rule 21 either because of improper joinder or because the doctor was not a necessary and indispensable party. Id. at *3-4.  Not surprisingly, plaintiff’s next play is a motion to remand – and here they go down swinging.   

            It makes us smile when any decision starts off with a reprimand to plaintiff’s counsel about the “combative and discourteous tone” of their briefing.  Id. at *9.  Putting aside the substance of the legal issue for a minute, the court was displeased by plaintiffs’ accusations that defendant made intentional misrepresentations and blatantly disregarded prior orders – especially when those allegations were false and that it was actually plaintiff who made misrepresentations in her filings – including misrepresentations of the court’s own rulings.  Id. at *8-10.   Strike one.

            Now on to the substance.  After having thus completely forfeited any credibility with the court, plaintiff made three arguments in support of remand:  procedural misjoinder is not a proper basis for removal; plaintiff’s physician was properly joined; and severance of a non-diverse defendant is not allowed under Rule 21 absent a finding of fraudulent joinder.  Id. at *3.  Not until oral argument, several months later, did plaintiff argue for the first time that the removal was procedurally defective because the physician had not consented.  Id.  But, as we all know, a procedural defect is waived unless raised within 30 days of removal. See 28 U.S.C.A. § 1447(c).  Strike two.

            Ignoring the procedural defect due to the waiver, the court found that the plaintiff’s doctor was not a necessary party and severed and remanded the claims against him.  In re Yasmin at *6-7.  The case was then transferred to the Yasmin MDL -- after both plaintiff’s request to certify the issue for appeal and petition for writ of mandamus were denied (we’ll call those foul balls) -- where yet again plaintiff again moved to remand the case arguing that the transferor court’s severance of the physician was improper and therefore his citizenship still had to be considered in assessing diversity.  Id. at *7-8. 

Plaintiff tried to distance herself from the transferor court’s decision by styling her new motion as one to remand for lack of subject matter jurisdiction and not for reconsideration and arguing that therefore, the transferor court’s decision was irrelevant. Id. at 15.  But, while plaintiff was looking for low and away, the pitch came in high and tight for Strike three!

The authority of a district judge to reconsider a previous ruling in the same litigation, whether a ruling made by him or by a district judge previously presiding in the case, including (because the case has been transferred) a judge of a different court, is governed by the doctrine of the law of the case.

Id. at *17-18 (citation and quotation marks omitted). 

            Characterized as a motion for reconsideration and applying the law of the case doctrine, plaintiffs would have to have demonstrated a compelling reason for reconsideration “such as a change in, or clarification of, law that makes clear that the earlier ruling was erroneous.”  Id. at *20.  An MDL judge is not free to alter previous rulings of the transferor judge “merely because he has a different view of the law or facts from the first judge.”  Id. (citation and quotation marks omitted).   As we know, courts vary on

(1) whether a physician is a necessary and indispensable party in a product liability action against a drug manufacturer and (2) whether a district court may sever a dispensable non-diverse party to preserve diversity jurisdiction in an action that has been removed.

Id. at *22.  Therefore, at best the transferor court and the MDL court may have had a difference of opinion, but a difference of opinion isn’t enough to warrant reconsideration under the law of the case doctrine.   Without reconsideration, the case pending before the MDL court was completely diverse.   And with that, plaintiff remains in the game but has lost home field advantage.

We’re waiting to see if plaintiff chooses to argue with the ump again.

What’s Up With Removal Before Service?

It was one of our biggest issues in the blog’s first couple of years – whether a defendant’s removal of a case before service on: ( 1) the forum defendant where an out-of-state defendant is sued in its own state’s court, or (2) anybody (including the removing defendant), would result in the unserved forum defendant not counting for removal/remand purposes.  Application of plain statutory language meant that, in products cases where defendants had the bad fortune of residing in a jurisdiction considered pro-plaintiff, out-of-state plaintiffs could not keep sharp-eyed defendants from defeating the forum defendant rule by removing as soon as they learned of an action.

We played a role in popularizing the tactic, blogging about it here, here, here, here, here, here, here, here, here, here, and here. Trying to organize our multiple posts, we put up a comprehensive post that tried to round up every removal-before-service decision we could find (at least the ones taking the position we liked) back in October, 2009.

But since then – over a year and a half – we’ve said nothing about removal before service.  It’s not like we haven’t covered other removal issues….  Heck we discussed two removal issues just this past week, but we hadn’t gone back to the well of pre-service removal.

Well, a reader recently emailed us and asked why.

We didn’t have a good reason, except maybe indolence (or Herrmann retiring).  So we thought we’d take a stroll down Memory Lane and see what, if anything, has happened on that front since our last big post back in late 2009.

What we’ve found is that the dispute still simmers.  Our side says, follow the “plain language” of 28 U.S.C. §1441(b), which states that only defendants “properly joined and served” at the time of removal count as forum defendants.  The other side urges that the statutory language should be ignored in favor or either some version of “intent” or the assertion that removal before service is some sort of high-tech game that the courts don’t have to put up with because it produces an “absurd” result.

There’s law going both ways – the dispute itself certainly hasn’t gone away.  In fact, the most recent case we’ve seen, Hawkins v. Cottrell, Inc., ___ F. Supp.2d ___, 2011 WL 1898867 (N.D. Ga. May 19, 2011), observed that “the federal district courts have been inundated with a flood of cases addressing this issue.”  Id. at *3.  We'd like to think we contributed to that in some small way.

Hawkins, however, came up with a weird (or at least novel) reading of §1441(b) – that somebody had to be properly served before removal, or else the “none of the defendants properly joined and served” language” (the court thought) made sense.  Id. at *6.  It didn't seem to matter that scores, if not hundreds, of other cases had found before service to be proper (or if improper, not on this ground). Rather, the court held that its “reading of the statute necessarily restricts removal to cases where at least one defendant has been served.”  Id. at *5.

The Hawkins court reached its admittedly novel result by splitting hairs.  It relied on a state law (in Georgia) that an action can be “commenced” but not yet “pending” for purposes of removal.  Id. at *7.  How that would apply to states like Pennsylvania (where plaintiffs can start litigation with a bare summons without filing a complaint), or New York (where there’s a 10-day grace period after service before an action is considered filed) is unclear.  Actually, though, Hawkins was just the absurd results rationale masquerading as straight statutory interpretation, since it relies upon the same old “Congress couldn’t have foreseen the technology” argument to reach its result, just moved to another part in the argument:

[T]he Court implicitly assumed that service of process would always occur prior to removal. The only reason removal is even possible prior to service is due to the advent of electronic case filing and waiver of service rules that could not have been foreseen when the current removal statute was enacted.

Id. at *6 (discussing and attempting to analogize to Murphy Brothers, Inc., v. Michetti Pipe Stringing, Inc., 526 U.S. 344 (1999)).  Basically the Hawkins court was dead set against reading §1441(b) as written and determined to remand no matter what.

But yes, Hawkins definitely demonstrates that the controversy remains.  Our Westlaw search – “1441(b)” within the same paragraph as “properly joined” limited to cases after our last comprehensive post – found a bunch of other cases.

We don’t do plaintiffs’ research for them, so they’ll have to find the relatively few “purpose”/”absurdity” cases for themselves, but we’re happy to provide a list of the recent cases (since our last compilation) holding that removal before the forum defendant is served is proper and creates diversity jurisdiction.  Here they are:

California:  Allen v. Eli Lilly & Co., 2010 WL 3489366, at *2 (S.D. Cal. Sept. 2, 2010) (“clear language” of statute allows removal before service of forum defendants); Carreon v. Alza Corp., 2010 WL 539392, at *2 (N.D. Cal. Feb. 9, 2010) (following plain meaning, finding nothing absurd about the result); Timmons v. Linvatec Corp., 2010 WL 2402918, at *1 (C.D. Cal. Jan. 24, 2010) (removal before service allowed forum defendant to be ignored), reconsideration denied, 2010 WL 2402924, at *1 (C.D. Cal. March 9, 2010) (“the plain language of the statute states that it only applies when the local defendants have been ‘properly joined and served’”); Haseko Homes, Inc. v. Underwriters Insurance Co., 2010 WL 358531, at *2 (S.D. Cal. Jan. 22, 2010) (removal proper where forum defendant not served; defendant may remove before being served).

Georgia:  Gibson v. Wal-Mart Stores East, LP, 2010 WL 419393, at *2-4 (M.D. Jan. 28, 2010) (removal before service allowed forum defendant to be ignored; distinguishing cases where diversity is lacking).

Hawai’i:  Watanabe v. Lankford, 684 F. Supp.2d 1210, 1218-19 (D. Haw. 2010) (following plain meaning, finding nothing absurd about the result).

Illinois: In re Yasmin & Yaz (Drospirenone) Marketing, Sales Practices & Relevant Products Liability Litigation, 2010 WL 3937414, at *11 (S.D. Ill. Oct. 4, 2010) (“[T]his action was removed before the forum defendant was served. This fact, standing alone, is a sufficient ground for denying Plaintiff's motion to remand.”).

Louisiana:  Billiot v. Canal Indemnity Co., 2010 WL 4975622, at *2 (W.D. La. Nov. 8, 2010) (removal before service allowed forum defendant to be ignored); Stewart v. Auguillard Construction Co., 2009 WL 5175217, at *3-4 (E.D. La. Dec. 18, 2009) (following plain meaning, finding nothing absurd about the result; forum defendant rule not resurrected by post-removal service).

Maryland:  Robertson v. Iuliano, 2011 WL 476520, at *3 (D. Md. Feb. 4, 2011) (following plain meaning, finding nothing absurd about the result).

Missouri:  Terry v. J.D. Streett & Co., 2010 WL 3829201, at *2 (E.D. Mo. Sept. 23, 2010) (following plain meaning, finding nothing absurd about the result); Wallace v. Tindall, 2009 WL 4432030, at *3-4 (W.D. Mo. Nov. 30, 2009) (improper service allowed forum defendant to be ignored).

Nevada:  Lamy v. United Parcel Service, Inc., 2010 WL 1257931, at *2 (D. Nev. March 27, 2010) (removal before service allowed forum defendant to be ignored).

New Jersey:  Bivins v. Novartis Pharmaceuticals Corp., 2010 WL 1463035, at *1 (D.N.J. April 12, 2010) (forum defendant rule not resurrected by post-removal service).

North Carolina:  Chace v. Bryant, 2010 WL 4496800, at *2 (E.D.N.C. Nov. 1, 2010) (removal before service allowed forum defendant to be ignored).

Texas:  Evans v. Rare Coin Wholesalers, Inc., 2010 WL 595653, at *2 (E.D. Tex. Jan. 28, 2010) (removal before service allowed forum defendant to be ignored).

West Virginia:  Leonard v. Mylan, Inc., 718 F. Supp.2d 741, 743 n.2 (S.D. W.Va. 2010) (recognizing removal before service as proper; plaintiffs did not seek remand)

A few observations.  First, in some of these cases the removing defendant was actually served first, and took advantage of the plaintiff’s delay in serving the would-be forum defendant.  In others the removing defendants learned about the litigation, in one way or another, before anyone had been served.  We don’t think the distinction matters because the statute doesn’t distinguish between the two situations.  Obviously, the Hawkins court (but not much else) does.

Second, we note with some satisfaction that more than half of the cases we’re seeing on removal before service don’t involve drugs and devices.  We’re glad to see other defendants jumping on the bandwagon.  When everybody relies upon removal before service, it gets harder for the other side to characterize it as some sort of procedural gimmick that shouldn’t be allowed.

Third, we also came across a useful law review article on the subject, M. Curry, “Plaintiff's Motion To Remand Denied: Arguing For Pre-Service Removal Under The Plain Language Of The Forum-Defendant Rule,” 58 Clev. St. L. Rev. 907 (2010), which marshals the arguments in favor of pre-service removal, and critiques the arguments against.

We also found a decision that demonstrates how removal before service can have collateral benefits, although a screw-up by the other side is necessary.  In In re Trasylol Products Liability Litigation, 2011 WL 830287 (S.D. Fla. March 8, 2011), the defendant successfully removed some cases before service, and (we assume) won the removal before service argument as remand was denied.  After that, the plaintiffs apparently fell asleep at the switch.  After losing the remand motion, they never bothered to complete service against anybody.  After time passed (enough for the statute of limitations to run), the defendant pounced on this error, and moved to dismiss – again successfully.  Removal before service didn’t in any way prevent these plaintiffs from doing what any competent plaintiff should do, and complete service after removal:

[I]t is undisputed that Plaintiffs have never perfected service. . . .  The issue thus boils down to whether [defendant] has waived the defense of lack of personal jurisdiction by its conduct of this litigation.  I find that [it] has not.  While [the] strategy of removing this case to federal court before service could be perfected certainly rises to the level of “legal gamesmanship,” it does not constitute “overt wrongdoing,” an attempt to “avoid service,” or a general appearance in the case sufficient to forfeit the defense.

2011 WL 830287, at *6.  Dismissal for failure to perfect service is not something one wishes to discuss with ones client.

Thus, in courts that follow the plain meaning of §1441(b) in removal before service cases, smart defendants should be making sure that the plaintiffs in fact do complete service.  Plaintiffs have 120 days to do this under Rule 4(m).  After that, it’s open season for dismissal.  However, even smarter defendants, as in Trasylol, make sure to wait until after the statute of limitations has run.

But we have to say that plaintiffs aren’t the only ones who do dumb things.  Removal before service can only be used to obtain jurisdiction in a truly diverse case – one that could have been brought in federal court in the first instance.  Hair-trigger removal only provides a way around the forum defendant rule (that even diverse cases aren’t removable where the defendant is sued in its home court), but not around a fundamental lack of diversity.  Removal before service of a non-diverse case (where the plaintiff and at least one of the defendants are citizens of the same state) can’t create federal jurisdiction.  E.g., Jennings-Frye v. NYK Logistics Americas Inc., 2011 WL 642653, at *3-4 (C.D. Cal. Feb. 11, 2011) (“case law is clear that a defendant who is a citizen of plaintiff’s state destroys complete diversity, regardless of whether that defendant was properly served prior to removal”); Smith v. Federal Express Corp., 2010 WL 3634347, at *3 (E.D. Mich. Sept. 14, 2010) (“including the unserved defendant, destroys diversity and eliminates this Court’s jurisdiction”); O’Brien v. Cessna Aircraft Co., 2010 WL 4721189, at *15 (D. Neb. July 21, 2010) (“Diversity of citizenship among the parties is determined . . . regardless of whether each party has been served at the time of removal”).

This is pretty basic 1-L civil procedure, so we don’t recommend removing a non-diverse case just because the plaintiff hasn’t gotten around to serving the non-diverse defendant.  For one thing, it could lead to fee-shifting sanctions, and telling a client it has to pay the other side’s lawyers is also something unpleasant.  But more fundamentally, even if the plaintiff is asleep at the switch, it’s not a good idea to remove a non-diverse case.  There’s no subject matter jurisdiction, and subject matter jurisdiction can be challenged at any time.  That means that a defendant removing a non-diverse case for lack of service on a non-diverse defendant could end up spending a lot of time and effort litigating a case to a favorable result, and have everything taken away when the plaintiff finally wakes up (or a court sua sponte raises subject matter jurisdiction).

Overall, we’d have to say based on our review, that removal before service is alive and well, and that the good guys – the “plain meaning” argument – seem to have the upper hand at the moment.  The dispute is likely to continue for some time, because remand orders are not appealable, and removal by definition takes place at the outset of the case.  Even if somebody were inclined to challenge a successful removal on appeal long after the fact, that’s still in the future.

Distributor Held Fraudulently Joined

Yesterday we brought you some welcome news on the pharmacy front in the never-ending struggle against fraudulent joinders.  But outside of certain parts of Illinois, we’ve generally done OK where the fraudulently joined party is a pharmacy.

Today, we feature a rarer bird – a court’s decision that a claim brought against a local distributor also constituted fraudulent joinder. The case is Askew v. DC Medical, LLC, 2011 WL 1811433 (N.D. Ga. May 12, 2011), decided under Georgia law.  That’s important, because the law concerning distributors is not nearly as uniform as the 48-state consensus against pharmacy liability mentioned in yesterday’s Walton case.

Askew is a device case – not surprising because medical device companies tend to have networks of local product distributors more than do pharmaceutical companies.  To support the claim of fraudulent joinder, the defendant submitted a “declaration” by the distributor that:

• It “did not know of any alleged defect in the . . . device before it was distributed for use in Plaintiff's surgery.”
• It “was not involved in the design, manufacture, testing, or regulatory approval of the . . . device.”
• It “was not involved in the promotional, marketing, description, or application materials for the ASR device.”
• That the distributor received the device “already labeled and sealed” and did not disturb it.

2011 WL 1811433, at *1, 6.

The court held that the declaration put the onus on the plaintiff to offer more than bare legal conclusions in response.  Id. at *5.  Under Georgia law, “[a] distributor can be held liable for negligent failure to warn only if, at the time of the sale, it had actual or constructive knowledge that its product created a danger for the consumer.”  Id. at *4 (citation and quotation marks omitted).  Interestingly, the court analogized to TwIqbal pleading standards, even though Rule 12 was not technically applicable to fraudulent joinder:

Although the Court applies the standards governing allegations of fraudulent joinder to this case rather than the Twombly/Iqbal pleading standards, those cases usefully illustrate the inadequacy of Plaintiff's conclusory allegations to rebut uncontroverted affidavit testimony denying [the defendant distributor’s] knowledge of the . . . Device’s alleged defects.

2011 WL 1811433, at *5 n.5. That should be lesson one – use TwIqbal pleading standards by analogy to emphasize that the plaintiffs have nothing to back up their allegations against a fraudulently joined defendant.

A paucity of factual support was exactly what the court found in Askew:

Plaintiff has not produced evidence that [the defendant distributor] had actual or constructive knowledge of alleged defects in the . . . device prior to its distribution for use in Plaintiff's surgery.  While the burden on Defendants to show fraudulent joinder is a heavy one, Plaintiff must point to some evidence that supports her claim against [the distributor] now that the allegations in their Complaint have been controverted.

Id. at 6 (emphasis added).  That’s fraudulent joinder lesson two.  Get specific facts to contradict the plaintiff’s legal conclusions.  Remember, the whole point of the fraudulent joinder doctrine is that parties are being sued for no good reason – if a defendant can’t show that, then it’s highly likely that fraudulent joinder will fail.

There were a few other theories, too, but once negligent failure to warn went by the boards, those followed rather meekly.  There was no warranty claim because there was no privity.  2011 WL 1811433, at *7.  The distributor’s lack of knowledge (or, more precisely, the absence of any facts suggestive of knowledge) also defeated the fraud claim.  Id.  Civil conspiracy isn’t an independent tort and falls with the other claims.  Id.

Askew demonstrates that our side can win fraudulent joinder motions involving distributors.  But it’s hard.  We need both good law (Georgia’s actual or constructive knowledge standard) and good facts (establishing same).  It’s rather reminiscent of Billy Joel’s “new fashion” – “all you need are looks and a whole lot of money” – but fraudulent joinder is a tough standard for our side to win.  Congrats to the winner in Askew.

Seventh Circuit Shoves the S.D.Ill. Back Into Line On Removal

We've remarked before about the odd, detrimental position that the Southern District of Illinois has taken towards removal, fraudulent joinder, and diversity jurisdiction in cases claiming that pharmacies should be liable for prescription drugs just like any other intermediate product seller.  The Illinois Supreme Court, as a substantive matter, has rejected pharmacy liability repeatedly as a consequence of the learned intermediary rule.  See Happel v. Wal-Mart Stores, Inc., 766 N.E.2d 1118, 1127 (Ill. 2002); Frye v. Medicare-Glaser Corp., 605 N.E.2d 557, 559-61 (Ill. 1992); Kirk v. Michael Reese Hospital & Medical Center, 513 N.E.2d 387, 392 (Ill. 1987).  Yet plaintiffs in the South Illinois "hellhole" counties, Madison, St. Clair, etc., kept alleging pharmacy liability, and numerous Southern District of Illinois decisions let them get away with it - remanding the cases based upon a combination of a "presumption" in favor of remand, and something called the "common defense" exception.  Funny, but that didn't stop federal district courts in other parts of the country from finding fraudulent joinder where (as in most states) pharmacy liability was similarly barred under the relevant state's law.

Well, we think that's come to an end.  As we also discussed before, with the Yazmin/Yaz litigation, the S.D. Ill. got its own MDL.  Where a judge stands apparently depends somewhat on where s/he sits, and in that litigation, the court broke ranks and - rather than tolerate a large number of similar state-court suits trenching on the MDL - held that, contrary to a lot of other S.D. Ill. precedent - pharmacy liability claims constituted fraudlent joinder, and denied remand.

MDLs are a little different from individual litigation in other ways, too.  For one thing, plaintiffs lawyers have lots and lots of "clients" and are not adverse to using them as cannon fodder when they want to make a legal point - or at least try to.  That's what happened in Yazmin/Yaz.  Counsel for one of the non-remanded plaintiffs, named Walton, decided to risk tanking the client's claim in order to appeal the failure to remand.  So poor Ms. Walton defaulted on discovery obligations, the MDL court dismissed her case with prejudice as a sanction, and the plaintiff's lawyer challenged the dismissal for lack of federal subject matter litigation.

Yeah, a plaintiff can do that.

But the plaintiff had better be right, because if s/he loses the appeal - no more case.

That's usually a deterrent, except in MDL litigation, where there are plenty of plaintiffs available to be sacrificed, Grindelwald-style, to the "greater good."

Well, we're happy to report that, today, plaintiff Walton lost - big time.  See Walton v. Bayer Corp., slip op. (7th Cir. May 23, 2011).  And in losing, Walton should bring the Southern District of Illinois' removal precedent back into line with the rest of the country's (the S.D. Ill. is bound by 7th Circuit precedent).

Here's what the Seventh Circuit had to say in Walton:

(1) Yeah, dismissal of a case as a sanction is appealable, and can be challenged for lack of subject matter jurisdiction.  Slip op. at 3-4.  The plaintiff (or more to the point, counsel) can "wager[] her entire claim on being proved right about jurisdiction."  Id. at 4.

(2) Don't make us laugh; of course a case about strokes and possible strokes meets the $75,000 jurisdictional minimum for diversity jurisdiction.  Otherwise "her suit [would] not [be] worth the expense of litigating it."  Slip op. at 4-5.

(3) The plaintiff's claim of a technical violation of one of the minor requirements of the rules for removal (not attaching an as-served copy of the summons), was trivial.  The summons were added promptly and there was not even a whiff of prejudice.  Slip op. at 5-6.  "[T]otally inconsequential" defects in removal papers don't deprive federal courts of jurisdiction.  Id. at 6.

After having sacrificed credibility with the court (never a good thing with Judge Posner) by making dumb arguments, the plaintiff went on to her significant argument - and lost that, as well.

(4) In light of the learned intermediary doctrine, as applied to pharmacists by the Illinois Supreme Court, the claims against the pharmacist defendant in Walton were "utterly groundless."  Slip op. at 7-8.

Pharmacies . . . can’t be expected to warn their customers of the possible defects and dangers of the prescription drugs they sell.  It would be senseless, especially given drug regulation by the Food and Drug Administration and the extensive tort liability of drug manufacturers, to make pharmacies liable in tort for the consequences of failing to investigate the safety of thousands of drugs.

Id. at 8-9.  It doesn't matter how Illinois gets to that point, since what's "important is that in 48 states including Illinois" a pharmacy cannot be liable where there are risk warnings directed to physicians.  Id. at 10.

(5) The "common defense" exception to fraudulent joinder doesn't apply to the pharmacy liability claims, because plaintiffs also allege (as all plaintiffs do) that the manufacturer defendants failed to warn/concealed the risk from the medical community.  Since pharmacists are within the group allegedly targeted by the concealment, their position with respect to the learned intermediary rule/warning claims isn't in fact the same as the other defendants.  With the defendants in differing positions, the "common defense" exception doesn't apply.

[A]pplying the common-defense exception to this case is barred by the plaintiff’s allegation that the [manufacturer] defendants concealed the existence of [the drug's side effects. . . .  [The pharmacy] was no doubt one of the entities from which the [manufacturer] defendants (if the charge of concealment against them has any merit) concealed the side effects.

Slip op. at 11.  Plaintiff must be held to her allegations, and would prevented by judicial estoppel from arguing "no, I didn't mean it about concealment" later on.  Id. 12-15.

(6) Bye-bye hellholes; diversity jurisdiction exists.

Walton should kill off the unduly constricted reading of fraudulent joinder that courts in the Southern District of Illinois were using to remand cases where jurisdiction exists.  Might it do more?  Anybody representing of the unfortunates in a case that was remanded to a hellhole improperly should take a look.  Most decisions aren't retroactive, so it seems to us that there's a decent argument that Walton created a new ground for removal by overturning existing Southern District precedent.  That should help if the case is less than a year old, and possibly more (we haven't looked into whether grounds for removal might exist in older cases).

Anyway, thanks, Judge Posner, for shoving the Southern District of Illinois back into line on fraudulent joinder - and Sherry Knutson, of Sidley Austin for tipping us off to the Walton opinion.