Fraudulent Joinder and Erie

            A few weeks ago we blogged about courts that adhere to the Twiqbal pleading standard in deciding whether a defendant has been fraudulently joined and therefore whether a case should remain in federal court or be remanded.  The focus of our post was on whether courts were applying Twiqbal or some lesser federal standard for determining whether the plaintiff had asserted a viable claim against the allegedly fraudulently joined defendant.  However, we did allude to a third option considered by some courts – applying the pleading standards of the state in which the case was originally filed.  We didn’t delve into the Erie aspects of the fraudulent joinder analysis at that time, but a new decision caught our eye and made us go back and take a second look.

            The post noted above was actually a follow-up itself to our post on  Johnson v. DePuy Orthopaedics, Inc., 2012 U.S. Dist. LEXIS 74450 (N.D. Ohio May 30, 2012) – in which the court did apply Twiqbal to a fraudulent joinder analysis and concluded the defendant was fraudulently joined and denied plaintiff’s motion to remand.  In deciding the proper standard to apply, the court rejected plaintiff’s argument that it should apply Kentucky’s pleading standard:

In diversity actions, federal courts apply state substantive law and federal procedural law. Under Fed. R. Civ. P. 81(c)(1), “The[] [federal] rules apply to a civil action after it has been removed from a state court.”  Federal procedural rules also apply pending a resolution of the district court's jurisdiction.

Id. at *6-7 (citations omitted).  The Johnson court also relied on controlling Sixth Circuit law which provides that “when deciding motions to remand that involve allegations of fraudulent joinder. . . . the proper standard for evaluating that evidence remains akin to that of a Rule 12(b)(6) motion to dismiss.”  Walker v. Philip Morris USA, Inc., 2011 WL 5119441 at *7 (6th Cir. 2011) (vacating order denying remand finding that trial court “went beyond the relevant inquiry—whether Plaintiffs have a colorable claim under Kentucky law—and instead inquired whether Plaintiffs had adequate evidentiary support for their claim, the traditional Rule 56 inquiry.”). 

Now, whether it is a full-blown Rule 12(b)(6) Twiqbal analysis or something more like Twiqbal-light (see prior post), it appeared that the rule in the Sixth Circuit was to at least apply a “federal” standard.  So, we were a bit surprised when we happened across Freitas v. McKesson Corp.,  2012 U.S. Dist. LEXIS 91256 (E.D. Ken. Jul. 2, 2012) (part of Darvocet MDL) – a decision by another court in the Sixth Circuit that openly rejects Johnson.  If Freitas had concluded that the Walker decision required use of a Twiqbal-light analysis, we would have shrugged our shoulders and moved on.  But, it didn’t.  Rather, it applies California’s pleadings standard to a motion to remand.

Plaintiff Freitas is one of eleven plaintiffs (6 from California and 5 from Oklahoma) who joined together (we also don’t agree with the court’s decision that the plaintiffs were properly joined) to sue 18 defendants – only one of which, McKesson, was from California.  The lawsuit was filed in California and the non-diverse defendants removed the case to federal court based on the fraudulent joinder of McKesson – a pharmaceutical distributor.  The case was tagged to the Darvocet MDL and therefore transferred to the Eastern District of Kentucky.  Freitas 2012 U.S. Dist. LEXIS at *3-5, *7.  Defendants argued, among other things, that plaintiffs’ claims against McKesson were factually deficient under Twiqbal and therefore were not viable and could not be used as a basis for remand.  Id. at *21-22.  The court rejected defendants’ position in favor of plaintiffs’ contention that California’s more lenient pleading standards should apply:

The test for fraudulent joinder is whether a reasonable basis exists for pre­dicting that the plaintiff’s claims against the non-diverse defendant could succeed under state law.  It makes little sense to measure the state-law viability of such claims, which were originally filed in state court, by federal pleading standards.

Id. at *22 (emphasis in original, citations omitted).  In reaching its conclusion, the Freitas court completely rejected Johnson and its reliance on Rule 81, id. at *23 n.10, finding instead that “Sixth Circuit precedent and common sense dictate the use of state pleading rules to de­termine whether McKesson is fraudulently joined.”  Id. at *23.  And under the “notice pleading” requirements of California, the Freitas court found plaintiffs’ allegations were sufficient to state a claim.  Id. at *23-29. 

Unfortunately, Freitas isn’t the only court to favor state pleading requirements over federal standards in the fraudulent joinder context – this seems to be especially true where the state in question has not adopted Twiqbal but rather still uses notice pleading like California.  In Stillwell v. Allstate Ins. Co., 663 F.3d 1329 (11th Cir. 2011), for instance, the district court found that plaintiff’s allegations against an insurance agent were “conclusory and lacking in factual specificity,” and therefore held the agent had been fraudulently joined.  Id. at 1334.  On appeal, the Eleventh Circuit rejected scrutinizing the complaint under 12(b)(6) standards when determining fraudulent joinder, holding that to determine whether a state would find a cause of action they must apply the pleading standards of that state, in this case -- Georgia  -- another notice pleading state.  Id. at 1334-35.  See also Wong v. Michaels Stores, Inc., 2012 U.S. Dist. LEXIS 28791 (E.D. Cal. March 5, 2012); Edwea, Inc. v. Allstate Ins. Co., 2010 U.S. Dist. LEXIS 129582 (S.D. Tex. Dec. 8, 2010).

So, if legal minds differ as to whether federal courts are bound by Erie and Rule 81 to apply Twiqbal to the fraudulent joinder issue, maybe the question needs to be re-framed – should courts use state court pleadings standards in deciding whether plaintiff has stated a colorable claim to defeat diversity jurisdiction?  Our answer would be no.  Let’s start with jurisdictions that apply the reasonable basis standard for determining fraudulent joinder (1st, 3rd, 5th, 6th, 7th, 8th, and 10th Circuits).  Arriaga v. New England Gas Co., 483 F. Supp. 2d 177, 185 (1st Cir. 2007); Boyer v. Snap-On Tools, Inc., 913 F.2d 108, 111 (3d Cir. 1990); Travis v. Irby, 326 F.3d 644, 647 (5th Cir. 2003); Walker, 2011 WL 5119441 at *4; Schur v. LA Weight Loss Ctr, 577 F.3d 752, 764 (7th Cir. 2009); Filla v. Norfolk & Southern Ry., 336 F.3d 806 (8th Cir. 2003); Neard v. Astrazeneca Pharmaceuticals, Inc., 302 Fed. Appx. 911, 913 (10th Cir. 2006).   The reasonable basis standard asks whether “there is any reasonable possibility that the plaintiff could prevail against the non-diverse defendant.”  See Schur, 577 F.3d at 764.  This sounds familiar.  In Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009), the Supreme Court stated that “a claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct.”   In other words, is there a “reasonable basis” to find plaintiff has stated a claim under state law is the question for both fraudulent joinder and Rule 12. Certainly sounds like Twiqbal should apply in these jurisdictions – which means Freitas should have at least applied something close to the federal standard and not abandoned “reasonable basis” in favor of “general allegations.”   

We acknowledge that, under this reasoning, application of Twiqbal might be a tougher battle in those jurisdictions that use the “no possibility of recovery” standard for fraudulent joinder (2nd, 4th and 11th Circuits).  See Pampillonia v. RJR Nabisco, Inc., 138 F.3d 459, 461 (2d Cir. 1998); Hartley v. CSX Transp., Inc., 187 F.3d 422, 424 (4th Cir. 1999); Crowe v. Coleman, 113 F.3d 1536, 1538 (11th Cir. 1997). Under the no possibility standard, a defendant must show “that there is no possibility, based on the pleadings, that a plaintiff can state a cause of action against the non-diverse defendant in state court.”  See Pampillonia, 138 F.3d at 461.  Applying our similarity test, this sounds more like the federal pleadings standard pre-Twiqbal, under which courts would not dismiss a claim unless “it appear[ed] beyond doubt that the plaintiff [could] prove no set of facts in support of his claim which would entitle him to relief.”  Conley v. Gibson, 355 U.S. 41, 46 (1957).

But, just as the Supreme Court moved on from Conley to embrace Twiqbal for Rule 12, our common sense says that the same should be true for fraudulent joinder.  Under Twiqbal, the Supreme Court has decided that while the pleading standard should be somewhat generous, it should not “unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.”  Iqbal, 556 U.S. at 678–79.   Likewise, a fraudulent joinder standard should not lock the doors of removal to a defendant facing “nothing more than conclusions.” By allowing a plaintiff to destroy diversity simply by stating legal conclusions with no basis in fact, courts side step the general principles of judicial fairness and efficiency on which Twiqbal are premised.  If claims are to be judged under Rule 12 not on law alone, but on whether plaintiff has a reasonable factual basis to support his legal claim – the same should be true in deciding whether a plaintiff has sufficiently plead a claim for purposes of fraudulent joinder.

We haven’t cited every case on this issue, but we hope we’ve given you something to think about (and investigate further) the next time you are faced with a fraudulently joined defendant. 

Groundhog Day in Illinois in June

            Sometimes we feel just like Phil Connors when he said:  “I told you. I wake up every day, right here, right in Punxsutawney, and it's always February 2nd, and there's nothing I can do about it.”   That about sums up our feelings about the Yasmin/Yaz MDL – We wake up, right here in Southern District of Illinois, and it’s always pharmacist liability and fraudulent joinder, and there’s nothing we can do about it.  We thought the Seventh Circuit had put this issue to bed in Walton v. Bayer Corp., 643 F.3d 994 (7^th Cir. 2011).  But, here we are one year later – and plaintiffs continue to file claims against pharmacies/pharmacists in the Yasmin/Yaz MDL in the hopes of beating diversity and having their cases remain in the South Illinois judicial hellholes (St. Clair County in this case).  Like Phil Connors, plaintiffs seem determined to re-live the same issue over and over again.  Like Phil Connors, plaintiffs make small changes to their argument each time in hope that the result will turn out differently.  But, unlike Phil Connors, we don’t see plaintiffs breaking out of this loop – the issue has been decided and it’s time to move on.

            The most recent case on pharmacy/pharmacist liability and fraudulent joinder is Martin v. Moody’s Pharmacy, 2012 U.S. Dist. LEXIS 80863 (S.D. Ill. Jun. 12, 2012).  And, since this is a repeat performance by plaintiffs, it is somewhat of a repeat performance for us as well.  You can see our prior posts on Walton and pharmacy liability in the Yasmin/Yaz MDL here and here.  In fact, it’s only been a few weeks since the last Yasmin/Yaz pharmacy liability/fraudulent joinder decision.  So we’ll dispose of the basic issues quickly.

      Plaintiff’s failure to warn claim is premised on the allegation that defendants failed to warn about the risks of taking YAZ for someone suffering from arteriovenous malformation (AVM) (a vascular condition which includes a heightened risk of hermorrhage).  Id. at *4.  In addition to suing the manufacturer, plaintiff sued her non-diverse pharmacy and pharmacists.  On that claim, plaintiff Martin, like plaintiffs in the prior cases, tried to rely on a narrow 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) See Martin, 2012 U.S. Dist. LEXIS at *18-20 (discussing Happel).  In deciding plaintiff’s motion to remand and the pharmacy defendants’ motion to dismiss, the court found that plaintiff missed the mark on the “actual knowledge” requirement:

the allegations of this most artfully crafted complaint do not specify that [the pharmacy] or The Pharmacist defendants had actual knowledge of the decedent’s AVM condition. There is no allegation that anyone had specifically advised the non-diverse defendants of the decedent’s condition, or that the pharmacy had previously filled prescriptions related to the decedent’s AVM condition, or that the pharmacy had asked about any complicating factors. All that is alleged is that the non-diverse defendants should have known of the risks inherent in YAZ for a person with AVM.

Id. at *10.  And, that’s not enough. 

            But, plaintiff here did try an additional argument that we thought warranted bringing this otherwise been-there, done-that case to our readers' attention.  And it’s about another issue that really sticks in our craw – prohibition of ex-parte, informal defense interviews with treating physicians of plaintiffs in personal injury cases.  Yes, Illinois is one of those states in which defense counsel don’t have equal rights with plaintiffs for informal discussions with treating doctors. 

[W]hen an ex parte communication has taken place between defense counsel and a treating physician, . . . sanctions may be imposed upon the defendant, including reversal of the judgment in favor of  the defendant and the award of a new trial.

Id. at *23-24 (citations and quotation marks omitted) (discussing Petrillo v. Syntex Labs, Inc., 499 N.E.2d 952 (Ill. App. Ct. 1986)).  

We’ve blogged numerous times about the importance of both sides in personal injury litigation – and especially drug/medical device product liability litigation involving the learned intermediary rule – having equal rights to talk to treating/prescribing physicians.  Here is yet another reason – plaintiff’s attempt to extend a ban on informal interviews with treating physicians to pharmacists and thus to prevent defendants from establishing fraudulent joinder.

Plaintiff’s position in Martin is even more absurd given that the pharmacists were themselves defendants, but we’ll get to that in a minute.  First, just a quick reminder of why this issue gets us riled up.  It is not because defendants don’t get to conduct informal interviews of plaintiff’s treating physicians, but rather because we don’t and plaintiffs do.  All we want is for both sides to have to play by the same set of rules.  If that means instituting certain procedural safeguards (like authorizations or notice to opposing counsel) before informal interviews can be conducted – so be it.  As long as those restrictions apply to both plaintiff and defense counsel. This has worked just fine in mass tort litigation in states where defense informal interviews are allowed, like New York and In re Bausch & Lomb Contact Lens Solution Product Liability Litigation, Index No. 766000/2007 (N.Y. Sup.).  See also Arons v. Jutkowitz, 880 N.E.2d 831, 837 (N.Y. 2007) (informal interviews with plaintiffs’ treaters are allowed, subject to notice and filling out some forms).

Unfortunately, a defense ban on informal interviews, such as Illinois’, allows plaintiffs to do whatever they want, while the defendants are stuck having to play solely by the rules of formal discovery.  The type of formal discovery not available at the time of removal -- which takes us off our soapbox and back to Martin. 

In support of the removal petition, the manufacturer-defendant included affidavits from the pharmacist-defendants establishing their lack of knowledge of plaintiff’s medical condition.  Martin, 2012 U.S. Dist. LEXIS 80863 at *25-26.  Plaintiff attempted to exclude the affidavits arguing that they were obtained via improper ex-parte communications with plaintiff’s pharmacists.  Id. at *23.   Plaintiff further argued that because the pharmacy/pharmacists had not entered their appearances in the case, the manufacturer-defendant couldn’t obtain discovery from them.  Like we said, one-sided litigation practices encourage plaintiff trickery.  If the court had favored plaintiff’s argument, plaintiff could put in her own affidavit to support her allegations about conversations with the pharmacists (see discussion of plaintiff affidavit, id. at *27-28) but defendants would be left out in the cold – no formal discovery, no informal discovery, no evidence.

Fortunately, the court readily dismissed plaintiff’s argument on two grounds – the pharmacists were parties to the lawsuit and the ban on communications with treating physicians did not extend to pharmacists:

The Court notes that despite plaintiff's assertion to the contrary, the non-diverse defendants were not required to file an entry of appearance in Illinois courts before consenting to removal in this Court. Nor is there a pharmacist-patient privilege extension of the Petrillo doctrine applicable in this case. To apply plaintiff's logic would be to effectively prohibit defendants joined by a plaintiff to a cause of action from communicating about their defense, a scenario not warranted by Petrillo.

Id. at *24-25.  Moreover, the manufacturer obtained the affidavits through the pharmacists’ counsel, so there was no ex-parte communication.  Id. at *24. 

            If the Yasmin/Yaz MDL is our Groundhog Day, we’re OK watching remand get denied over and over -- at least it’s not February in western Pennsylvania and we aren’t waking up to “I’ve Got You Babe” every morning.

A Fraudulent Joinder Follow Up

            Last week we wrote about Johnson v. DePuy Orthopaedics, Inc., 2012 U.S. Dist. LEXIS 74450 (N.D. Ohio May 30, 2012) and that court’s use of the TwIqbal motion to dismiss standard in deciding the issue of fraudulent joinder.  That made perfect sense to us.  On fraudulent joinder, defendant bears the burden of showing that plaintiffs can’t state a viable cause of action against the allegedly fraudulently joined defendant.  On a motion to dismiss, defendant bears the burden of showing that plaintiffs can’t state a viable cause of action against the defendant.  Seems like the same standard should apply.  So, we decided to see if other courts agreed with us and with Johnson.  What we found is that while courts generally agree that fraudulent joinder walks and talks like a motion to dismiss – it isn’t excatly a motion to dismiss.  If it isn’t excatly a motion to dismiss, then what standard applies?  What we learned is that question is answered in a myriad of different ways – some courts lean more toward a summary judgment standard because you are allowed to look beyond the pleadings, some look to whether there is a reasonable possibility that the plaintiff has asserted a valid claim, some look to state law – and yes, some do indeed look to Rule 12(b)(6).

            First, we’ll quickly acknowledge that there are cases that say the fraudulent joinder standard is something quite different than TwIqbal.   For instance, in Junk ex rel. Junk v. Terminix Int’l Co., 628 F.3d 439 (8th Cir. 2010), plaintiff alleged that a pesticide used by a pest control company in her home during and shortly after her pregnancy caused severe neurological problems for her son.  Plaintiff sued both the company and the non-diverse employee who treated plaintiff’s house.  In deciding plaintiff’s motion to remand, the court stated the “Rule 12(b)(6) standard is more demanding” and that the proper, more lenient, standard is “whether there is arguably a reasonable basis for predicting that the state law might impose liability based upon the facts involved.”  Id. At 445 (court reversed denial of remand and reinstated and remanded claims against employee). 

An even stronger anti-TwIqbal case we found was Stillwell v. Allstate Ins. Co., 663 F.3d 1329 (11th Cir. 2011).  In holding that the district court erroneously applied the federal Rule 12(b)(6) standard to plaintiff’s motion to remand, the court said:

This [fraudulent joinder] standard differs from the standard applicable to a 12(b)(6) motion to dismiss. To survive a 12(b)(6) motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.   This plausibility standard asks for more than a sheer possibility that a defendant has acted unlawfully.  In contrast, all that is required to defeat a fraudulent joinder claim is a possibility of stating a valid cause of action.

Id. at 1333.  The court further explained the distinction:

Nothing in our precedents concerning fraudulent joinder requires anything more than conclusory allegations or a certain level of factual specificity. All that is required are allegations sufficient to establish even a possibility that a state court would find that the complaint states a cause of action against any one of the resident defendants.

Id. at 1334.  Conclusory allegations?  TwIqbal says conclusory allegations don’t get a plaintiff past the pleadings stage.  So, if the claim isn’t going to survive a motion to dismiss, why should it be allowed to stand to defeat diversity?  Granted, in response to a motion to dismiss, plaintiffs are often afforded an opportunity to amend their complaints to allege sufficient facts.  Well, maybe that should apply to motions to remand too.  If the court thinks the claim as pled doesn’t satisfy Rule 12, give plaintiffs one shot to fix it.  If they can’t – the non-diverse defendant will be deemed fraudulently joined and the case proceeds in federal court.  Again, this makes sense to us.  By the way, in Stillwell, the Eleventh Circuit then went on to apply Georgia’s pleading standards instead of the federal standard at all.  This isn’t the only court to come out this way, but we’ll leave that Erie issue for another day.   

            Fortunately, a great many more courts find fraudulent joinder and Rule 12(b)(6) to be more like first cousins.  While most of the decisions we found don’t go as far in embracing TwIqbal as Johnson, the general consensus seems to be that the applicable standard should be something like TwIqbal-light.  For instance, the Sixth Circuit, in a case relied on by the Johnson court, said this:

Thus, when deciding a motion to remand involving fraudulent-joinder allegations, the [court] applies a test similar to, but more lenient than, the analysis applicable to a Rule 12(b)(6) motion to dismiss.

Walker v. Philip Morris USA, Inc., 2011 WL 5119441, *6 (6th Cir. 2011) (emphasis added).  In a case factually similar to Johnson, the court looked to TwIqbal while acknowledging that it was not the controlling standard:

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.

Askew v. DC Medical, LLC, 2011 WL 1811433, at *5 n.5 (N.D. Ga. May 12, 2011).  See, e.g. Little v. Purdue Pharma, L.P., 227 F. Supp. 2d 838, 845-46 (S.D. Ohio 2002) (stating that a fraudulent joinder analysis is “not unlike that related to a [12(b)(6) analysis],” but that “a plaintiff gets more favorable treatment in a fraudulent joinder inquiry than she does in a 12(b)(6) inquiry.”); Travis v. Irby, 326 F.3d 644, 648-49 (5th Cir. 2003) (holding fraudulent joinder and Rule 12(b)(6) standards are similar but the scope of the inquire is different because for fraudulent joinder, the court can “pierce the pleadings”);  Lujan v. Girardi|Keese, 2009 U.S. Dist. LEXIS 120501 at *18 (D. Guam) (“The standard to be applied is something akin to a 12(b)(6) type analysis but not as stringent.”); Hill v. Olin Corp., 2007 U.S. Dist. LEXIS 34955 at *13 (S.D. Ill.) (quoting Riddle v. Merck & Co., 2006 U.S. Dist. LEXIS 22085 at *2 (S.D. Ill.)) (“In evaluating a claim of fraudulent joinder, a court ‘conduct[s] a Rule 12(b)(6)-type analysis,’” but “the inquiry on a claim of fraudulent joinder is even more lenient than the Rule 12(b)(6) inquiry . . . .”)

So, under TwIqbal-light, it appears the burden on defendants is heavier and plaintiffs are afforded greater deference.  But light or not, the standard still has its roots in TwIqbal which should be good for the defense.  The door remains open for defendants to use TwIqbal pleading standards by analogy to emphasize that the plaintiffs have nothing to back up their allegations against a fraudulently joined defendant. 

            Finally, our research did uncover two more cases directly applying the heightened TwIqbal standard in deciding the fraudulent joinder issue.  Because they aren’t drug and device cases, we’ll skip the facts.  Here are the highlights regarding the standard:

Alpha Biomedical and Diagnostic Corp. v. Philips Medical System Netherland BV, 2011 U.S. Dist. LEXIS 135655 (D. Puerto Rico): 

• When considering fraudulent joinder, a court “ordinarily conducts a Rule 12(b)(6)-type analysis, looking initially at the allegations of the complaint to determine whether, under state law, the complaint states a claim against the in-state defendant.”  Id. at *4. 
• “Thus, while some courts in this district have suggested that a defendant alleging fraudulent joinder bears a particularly heavy burden, it seems simplest to treat the inquiry as a modified version of a motion to dismiss, asking whether a state court complaint states a plausible claim.”
• In assessing whether plaintiff’s tortious interference and defamation claims were viable against the non-diverse defendant, the court explicitly applied TwIqbal.  Id. at *9-10.

Pascale Service Corp. v. Int’l Truck & Engine Corp., 2007 U.S. Dist. LEXIS 73339 (D.R.I.)

• First, the court notes that “[s]tandards applied [to fraudulent joinder] run the gamut from a summary judgment standard in which documents outside the pleadings are considered, . . . to a Rule 12(b)(6) standard . . . ”  Id. At *8-9.
• Then, citing Twombly, the court found:  “While acknowledging that the above standard has been established in reference to Rule 12(b)(6) motions to dismiss, it is equally applicable here. Id. at *11-12.
• The court found a “dearth of facts” sufficient to state a claim against the non-diverse defendant.  Id. at *12.

We are sure our research to date has not exhausted this topic, but it has piqued our interest and it will be something we will continue to watch and report on.  So, let us know if you have luck using TwIqbal to defeat remand and we’ll add your case to the list. 

Fraudulent Joinder, TwIqbal & MDLs, Oh My!

            For some reason, when we identify three things in a group, in our heads we hear them to the beat of “lions and tigers and bears, oh my!” from the Wizard of Oz.  It works with lots of things – apples, bananas and pears, oh my; iphones, droids and blackberries, oh my; vanilla, chocolate and strawberry, oh my!  And then that got us thinking about other things that come in threes.  Three strikes and you’re out and three goals in a hat trick.  There were Three Stooges (OK, technically there have been more Stooges, but we won’t go there) and Three Musketeers (again, you can argue with us about  D'Artagnan).    There are three Jonas Brothers and there were three Bee Gees.  Now, we feel like we are on an episode of the $10,000 Pyramid:  Blind mice, men in a tub, sheets to the wind – “things that come in threes.” 

            All that to segue into today’s case which touches on three of our favorite topics – fraudulent joinder, TwIqbal, and MDLs.  The case – Johnson v. DePuy Orthopaedics, Inc., 2012 U.S. Dist. LEXIS 74450 (N.D. Ohio May 30, 2012) is one of eleven essentially identical cases to be decided in the ASR Hip Implant MDL.  And, we are happy to report that the court decided that a claim brought against a local distributor constituted fraudulent joinder.  And, we are even happier to report that in reaching that conclusion, the court applied TwIqbal pleading standards to the motion to remand.

The context is quite familiar in our line of work.  Plaintiff sues diverse manufacturer and non-diverse distributor in state court; manufacturer removes to federal court on grounds of fraudulent joinder; plaintiff moves to remand; case gets transferred to MDL. 

          

            But here is where things get interesting.  To prove fraudulent joinder

the removing party must demonstrate there is no possibility that the plaintiff will be able to establish a cause of action against the nondiverse defendant in state court.

Id. at *4.  A defendant’s burden of proof on fraudulent joinder is “substantial” and all doubts are resolved in favor of the plaintiff.  Id. at *4-5.  Sounds a bit like the standard on a Rule 12(b)(6) motion to dismiss.  So, we applaud the court’s analogy to TwIqbal pleading standards, even though Rule 12 was not technically applicable to fraudulent joinder:

In sum, courts generally agree on the following two rules when deciding motions to remand that involve allegations of fraudulent joinder. First, even if the district court "pierces the pleadings" to consider summary-judgment-type evidence (such as depositions, affidavits, etc.), the proper standard for evaluating that evidence remains akin to that of a Rule 12(b)(6) motion  to dismiss, and is arguably even more deferential. Second, any contested issues of fact must be construed in the plaintiff's favor.

Id. at *5-6 (quoting Walker v. Philip Morris USA, Inc., 2011 WL 5119441, *7 (6th Cir. 2011).  Afterall, if the whole point of the fraudulent joinder doctrine is that parties are being sued for no good reason – then we wholeheartedly agree that on a motion for remand, plaintiff’s “factual allegations must be enough to raise a right to relief above the speculative level.”  Johnson, 2012 U.S. Dist. LEXIS at *13 (quoting Twombly). 

            In the 21-page Johnson complaint, the distributor was only mentioned four times – the distributor is a Kentucky company that distributes/promotes ASR hip implants in Kentucky and distributed/promoted the hip implant implanted in plaintiff.  Id. at *9-10.  The complaint then goes on to allege failure to warn, design defect, manufacturing defect, negligence, breach of warranty and assorted other claims collectively against all defendants.  Id. at *10-11.  Applying the TwIqbal standard to plaintiff’s motion to remand, the court found:

the allegations against [the distributor] . . . fall well below the threshold required to meet the plausibility standard required under Twombly, . . . Plaintiffs' allegations fail to distinguish between the [manufacturer’s] allegedly wrongful acts and those of [the distributor].  Assuming the facts as alleged against [the distributor] to be true, without a modicum of additional facts, Plaintiffs have failed to establish a colorable basis for liability. Additionally, there are no independent claims asserted against [the distributor] nor do Plaintiffs seek specific relief against this Defendant.

Id. at *13-14 (citations omitted).  The court cites several other cases where “global” or “collective” allegations were insufficient to state a cause of action.  Id. at *11-12.  With no factual support to back up his allegations against the distributor, plaintiff failed to state a claim against that non-diverse defendant, who was therefore found fraudulently joined, dismissed and the motion to remand was denied.  Id.  We like the legal analysis and we like the result – we hope more courts follow suit.   

            But we also promised you something about MDLs.  In addition to his motion to remand, plaintiff also filed a motion for reconsideration of Case Management Order No. 5 – an order addressing the Plaintiff Preliminary Disclosure Form applicable to all 4,400+ MDL cases.  Plaintiff argued he could not comply with CMO 5 until the court ruled on the motion to remand.  While the court recognized that threshold issues, such as subject matter jurisdiction, need to be decided before rulings are made on the merits, MDL orders that don’t go to the merits apply to cases despite pending jurisdictional remand motions.  Id. at *14-18.  In other words, because of the “unique challenges posed by complex litigation” – including that new cases enter the MDL throughout the pendency of the litigation – an MDL court has significant discretion in managing its docket.  Deciding all individual remand, jurisdictional or pleadings motions before addressing common issues – such as adoption of a disclosure form – “would undermine the goal of promoting the convenient, just and efficient conduct of the actions.”  Id. at *18-19.  Bottom line, as long as your case is pending in the MDL, you have to abide by the MDL rulings.   And, if TwIqbal is the standard for deciding fraudulent joinder, we hope many more cases stay in MDLs (or at least in federal court).

The Long And Weinstein Road To Fraudulent Joinder

We’d thought, because that’s what we’d seen, that subject-matter jurisdiction/fraudulent joinder issues in would-be diversity cases in federal court are to be decided early in the litigation.  Turns out that’s not necessarily so – at least according to the Second Circuit’s recent decision in a Zyprexa case, Brown v. Eli Lilly & Co., ___ F.3d ___, 2011 WL 3625105, slip op. (2d Cir. Aug. 18, 2011).


Brown was originally filed in Mississippi state court, and the plaintiff purported to bring negligent discharge claims against two local hospitals – along with the usual Zyprexa allegations – in order to destroy diversity and keep the case out of federal court.

The procedural posture (how the case got where it was) can only be described as “convoluted.”

Brown was originally filed in Mississippi state court in October, 2007.  Before removal, both hospitals filed dispositive motions in state court on statutory issues unique to:  (1) malpractice claims, and (2) Mississippi community hospitals.

Brown was removed to federal court in January, 2008.  That's more than 30 days after suit was filed, which is usually a no-no, but apparently the plaintiff didn’t notice, so timeliness of removal was waived.  Fraudulent joinder of the hospitals was alleged, tracking the hospitals’ pending motions.

A couple of months later, in rather leisurely fashion, the plaintiff moved to remand.

Later, in August, 2008, the MDL got involved and the case was transferred to the Zyprexa MDL – with all of the various motions still pending (nobody – plaintiff, defendants, or the court – seemed to have pressed things much during this seven-month period).

The Zyprexa MDL judge, of course, is Hon. Jack Weinberg, who rarely does things the same way as any other judge.  All these preliminaries are recounted at 2011 WL 3625105, *2-3.

In October, 2008, Judge Weinberg acted on the motion for remand.  One hospital was indubitably fraudulently joined, but as to the other the facts were unclear.  2011 WL 3625105, at *3.  Most judges would have granted remand in that situation, holding that there was at least a “plausible” basis for a claim – but not Judge Weinstein.  Instead, he ordered jurisdictional discovery, and ruled:

Upon completion of discovery, [the defendant hospital] may renew its motion for summary judgment and [defendant drug manufacturer] may renew its motion to declare joinder of [defendant hospital] fraudulent for removal purposes.

Id. at *3 (quoting district court order).

That’s quite unusual, but unusual is not the same as error.

Here’s what happened next:

In November, 2008, Judge Weinstein granted summary judgment in favor of the non-community hospital, on grounds of the statute of limitations and failure to comply with expert certification requirements.  2011 WL 3625105, at *4.  That judgment was certified (Rule 54(b)) as a final, appealable order in January, 2009.  Plaintiff appealed, but when the sufficiency of the certification was questioned, withdrew the appeal by stipulation a few months later.  Id.  The stipulation, entered by the Second Circuit clerk, purported to allow a later appeal, once the entire case had been disposed of.  Id.

In that sentence, as will be seen, the operative word is "purported."

Meanwhile, back at the Weinstein ranch, the other hospital completed discovery and renewed its motion to dismiss. The court ruled in April 2009 that the plaintiff didn’t have the right kind of expert required by the relevant Mississippi statute.  2011 WL 3625105, at *5.  In the same order, Judge Weinstein ruled that, in light of its grant of the other hospital’s motion, joinder was fraudulent as to all non-diverse defendants, and the case against the diverse drug manufacturer properly remained in federal court.  Id.

The judgment against this second hospital was also certified as final on May 29, 2011.  Plaintiff appealed that one on August 5, 2009 – more than 30 days later – another no-no.  Id.

In that appeal, Plaintiff ostensibly appealed against both hospitals, but since the order in question involved only the second one, the appeal as to the first hospital was more or less voluntarily dismissed.  Plaintiff had blown the appeal deadline against the second hospital, so that appeal was also dismissed.  All this occurred in December, 2009.  Brown, 2011 WL 3625105, at *5-6.

Meanwhile, back at the Weinstein ranch, Lilly (the pharmaceutical defendant) moved for summary judgment because, once again, the plaintiff blew a deadline – this time for the submission of a case-specific expert.  Judge Weinstein eventually granted that motion, on a date not stated.  Plaintiff appealed again, this time managing to do so in a timely fashion, and “purported to appeal every Order and Judgment entered in favor” of any and all the defendants.  Id. at *7.

Again, the operative word is "purported."

Thus, the Second Circuit was forced to sort out a procedural morass.

First, the appellate court held that the plaintiff's procedural missteps cost him both of his appeals against the hospitals. Those orders had both been certified as final appealable orders.  The appeal as to the second hospital was too late – filed beyond the 30-day window.  That’s open and shut.  Brown, 2011 WL 3625105, at *7.  The earlier appeal as to the first hospital, however, had been withdrawn, pursuant to a stipulation entered by the clerk, supposedly preserving later appellate rights. Oops.  Too bad, the clerk doesn’t have that power:

Apparently assuming that the judgment was a nullity, an incorrect assumption, the parties withdrew the appeal. . . .  Until a panel of this Court determines otherwise, a judgment such as the one subject of the stipulation, reciting that there is no just reason for delay and certifying final judgment pursuant to Rule 54(b), is final for all purposes.  Accordingly, the certified judgment in favor of [the first hospital] . . . stands as a final judgment and, the appeal from it having been voluntarily dismissed, the [current] Notice of Appeal . . . is untimely, and we are without jurisdiction.

Id. at *8.  Ouch.  Even we feel a little sorry for the plaintiff on that one, since the error was as much the clerk's as anyone's.  Subsidiary moral of story:  don’t rely on a court clerk’s say-so in agreeing to dismiss an appeal.  Until the court says a Rule 54(b) judgment is not properly appealable, assume it is.

That left the pharmaceutical defendant, and the far more interesting issue of how fraudulent joinder is to be determined.  Can the trial court order discovery, extensive briefing, and only then decide the question?  The Second Circuit said yes – so if you’ve got a District Judge that’s not a knee-jerk remander, you can litigate the merits of fraudulent joinder in depth.  The jurisdictional “defect” (if that's what it is) is curable.

[I]f a jurisdictional defect exists at some time prior to a district court's entry of judgment, the court's judgment is still valid if the jurisdictional defect is cured before final judgment is entered. . . .  [A] district court’s error in failing to remand an improperly removed case [is] not fatal to the ensuing adjudication where federal jurisdiction existed when judgment was entered.

Brown, 2011 WL 3625105, at 9.

Thus, a District Judge, faced with a knotty and fact-bound issue of fraudulent joinder, can keep the case, order discovery and briefing, and conclude months or years later that the plaintiff’s claim was bogus – thereby curing any initial jurisdictional defect.  Even if “complete diversity [is] lacking,” when “the non-diverse defendant had been dismissed with prejudice from the action before entry of judgment,” then diversity is properly created and the court had jurisdiction to decide the entire case.  Id.

While it is true that the existence of federal subject matter jurisdiction over an action removed from state court to federal court is normally to be determined as of the time of removal, the critical issue is whether there was complete diversity at any time before the entry of judgment.  Although the better practice is to verify jurisdiction in a diversity action early on, especially where complex issues of state law are presented, the elimination of non-diverse defendants prior to judgment saves the action from dismissal for lack of jurisdiction.

Id. at *10 (emphasis added).

Then, in a yawner, Brown affirmed dismissal of the pharmaceutical claims due to the plaintiff’s failure to name an expert.  2011 WL 3625105, at *10-11

We’re sure that, to non-lawyers (any who managed to read this entire post), this whole discussion seems arcane and technical – and we don’t deny it.  To lawyers, and courts, however, rules are important.  Sometimes, as here, they provide their own means of winning cases – particularly when one of the parties is inattentive and/or fails to meet deadlines.

In our product liability/mass tort line of work, we regularly remove cases on grounds of fraudulent joinder.  Thus, to us, and to our fellows in the defense bar, Brown and its jurisdictional rationale are of great interest.  Plaintiffs demanding remand frequently try to stampede district courts to act precipitously and remand at the first suggestion of there being a disputable factual or legal issue.  A lot of judges are only too happy to go along, since remands reduce their caseload.

But not all judges.

If a judge is inclined to give careful thought to a fraudulent joinder removal, and to resolve factual and legal issues, Brown provides the legal framework that allows the court to do so. Just make sure to pick off the non-diverse defendants first, so any inchoate jurisdictional defect is cured before attacking the core, pharmaceutical claims.

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.

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.

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.

West Virginia: No Country for Good Decisions

Last week we were at DRI-Chicago, which had some terrific panels. We especially liked the presentations on the strategies behind the VIOXX litigation and on how to dismantle a plaintiff's omnibus expert. On the flight back we took a gander at the airline magazine, because one can read only so many advance sheets and BNA alerts. There was an article about Ken Jennings's new book. Jennings was the uber-Jeopardy champion, magnificent even when he lost to Watson. Jennings has written a book about geography that contains lots of interesting observations. Among other things, Jennings writes that he always wanted to go to Weirton, West Virginia, because it has the odd distinction of touching two states other than the state it's in. That's a fascinating fact, though not so fascinating as the idea of somebody wanting to go to West Virginia. ("One Big Family -- Really.") We had a college roommate from Weirton who had that really cool, Chuck Yeager accent. Nice guy. We loved the way he drew out the state slogan: "Wwwwwiiiild and wwwwunderful West Virginia."


Since immersing ourselves in defense-oriented litigation, we've discovered West Virginia to be wild and not-so-wonderful. We won't repeat the parade of indignities or the Judicial Hellhole riff. Let's leave it at this: while there are some good state court judges there, they are vastly outnumbered by purveyors of home-cooking and crazy rulings paving the way for verdicts that defy reason and rattle stock prices. So when your client is sued in West Virginia state court, one of the first things to consider is removal.


That's what happened in Hartman v. Caraco Pharmaceutical Laboratories, Ltd., 2011 U.S. Dist LEXIS 46924 (S.D. W. Va. April 29, 2011). The plaintiff filed a complaint in West Virginia state court, alleging that she was injured in a car accident after an episode of sleep-driving. She had taken Zolpidem, a generic substitute for Ambien. The plaintiff was a West Virginia resident. She sued the manufacturer, a Michigan resident. She also sued the pharmacy, a fellow West Virginia resident. She claimed that the pharmacy failed to warn her adequately of the sleep-driving danger. Predictably, the manufacturer removed the case to federal court, arguing that the pharmacy had been fraudulently joined. Just as predictably, the plaintiff filed for remand.


Now we all know that outcomes are often determined by presumptions and burdens. So we also know that things are headed South (or at least to West Virginia, which is worse) when the federal court deciding the remand motion drones on about the "heavy burden" facing a defendant removing a case for fraudulent joinder. The court says that the removing party must show there is "no possibility" that the plaintiff could establish a cause of action against the in-state defendant, that "[a]ny shades of gray are resolved in favor of remand," and that a plaintiff "need only demonstrate a 'glimmer of hope' in order to have his claims remanded." Hartman, 2011 U.S. Dist. LEXIS 46924, *4-5.


Okay, we get it. And we get where this is going. There's a lot of language out there about the presumption in favor of remand, but this judge selected the worst of the worst. It's kind of like that scene in No Country for Old Men, where the victim says to the killer, "You don't have to do this." Javier Bardem smirks and says, "People always say that" and then flips a coin. Some bad things can't be reasoned with.


Here, there were plenty of good reasons to see the claims against the pharmacy as bogus. First, there is a West Virginia statute that sure sounds like pharmacies can't be on the hook for product liability claims. Section 30-5-12(a) provides as follows: “All persons, whether licensed pharmacists or not, shall be responsible for the quality of all drugs, chemicals and medicines they may sell or dispense, with the exception of those sold in or dispensed unchanged from the original retail package of the manufacturer, in which event the manufacturer shall be responsible.” The federal court acknowledged that the majority interpretation of section 30-5-12(a) shields pharmacists from failure-to-warn claims. An earlier federal case -- and not much earlier (July 2010) -- followed that majority approach and deemed a pharmacy fraudulently joined.

But the Hartman federal court looked to the minority approach in older (2003 and 2005) decisions where section 30-5-12(a) was held to protect pharmacies only from claims "based upon the quality of the drug," and not against failure-to-warn claims. Id. at *7-8. Those cases (both federal, by the way) held that because the West Virginia legislature had not expressly mentioned failure-to-warn claims in section 30-5-12(a), such claims were not covered.


Geeze. Maybe the language in the statute was general because it was meant to apply generally and across the board. Maybe there's a reason why this approach is the minority approach, and an old one at that. And yet the federal court in Hartman seized upon such old and unsound law to supply the "glimmer of hope" that compelled remand.


But wait, there's more. Remember how the Hartman court relied on earlier federal cases to narrow the immunity of section 30-5-12(a)? One of those cases still held that the pharmacy had been fraudulently removed because "the learned intermediary doctrine applies to discharge any duty of the pharmacy to warn its customer." Id. at * 9, quoting Ashworth v. Albers Medical, Inc., 395 F. Supp. 2d 395, 407-08 (S.D.W. Va. 2005). Why doesn't that work here? You know the answer, don't you? It's the gruesome Karl case where, according to Hartman, "the supreme court of appeals mentioned and parted company with the substantial majority of other state courts that had addressed the issue as well as with Ashworth and other decisions predicting West Virginia would adopt the learned intermediary doctrine generally." Hartman, 2011 U.S. Dist. LEXIS 46924 at *10. Right. It's all coming back to us now. Like a sandwich with spoiled mayonnaise.


Of course, "the Karl decision did not involve a pharmacy." Id. at * 10. Hartman did. And, of course, the Karl "majority opinion appears to have been influenced heavily by the 'current state of the prescription drug industry and physician-patient relationships' impacted by direct marketing of drugs to consumers through mass media advertising." Id. at *11, quoting Johnson & Johnson Corp. v. Karl, 220 W. Va. 463, 465 (2007). Hartman, as far as we can tell, involved no such advertising. So, we don't have to do this, do we? There's still a chance to be reasonable ... isn't there?


Yes and no. The Hartman court basically interepreted the fraudulent joinder standard to assume that Karl would be extended even to cases where there was no direct-to-consumer advertising. This ruling is parallel to the court's assumption that the older, less sensible interpretation of section 30-5-12(a) would prevail. Does the fraudulent joinder standard really require a federal court to assume that state courts would adopt the dumbest, most plaintiff-friendly approach possible?


Well, we are talking about West Virginia.