IN RE DARVOCET, DARVON AND PROPOXYPHENE PRODUCTS LIABILITY LITIGATION Master File No. 2:11-md-2226-DCR, MDL Docket No. 2226, Civil Action No. 2:12-50-DCR.
IN RE: DARVOCET, DARVON AND PROPOXYPHENE PRODUCTS LIABILITY LITIGATION. Freitas, et al., v. McKesson Corporation, et al.,
United States District Court, E.D. Kentucky, Northern Division, Covington.
July 2, 2012.
Southwood Pharmaceuticals, Inc., Defendant, represented by
Carol Dan Browning, Stites & Harbison PLLC - Lexington.
MEMORANDUM OPINION AND ORDER
DANNY C. REEVES, District Judge.
The plaintiffs' Motion to Remand has been fully briefed and is pending for review. [MDL Record No. 1137] They argue that the Court lacks subject matter jurisdiction to hear their products-liability claims because the parties are not completely diverse. Conversely, the defendants maintain that Defendant McKesson Corporation was fraudulently joined and, therefore, its citizenship does not defeat diversity. For the reasons explained below, the plaintiffs' motion will be granted.
This matter was originally filed in California Superior Court, San Francisco County. [Record No. 1, p. 21]
The plaintiffs generally allege that the defendants "knowingly or negligently marketed, distributed, and sold defectively designed Propoxyphene Products without adequate warnings." [Record No. 1, p. 24 ¶ 2] The Complaint contains the following specific allegations regarding McKesson:
[Id., p. 28] With respect to all defendants, the plaintiffs asserted claims of design defect, failure to warn, strict liability, negligent design, negligence, negligent failure to warn, fraudulent nondisclosure, negligent misrepresentation and concealment, fraudulent misrepresentation, negligence per se, breach of express warranty, breach of implied warranty, deceit by concealment in violation of California law, false advertising in violation of the California Business and Professions Code, violation of the California Consumers Legal Remedies Act, wrongful death, and survival. [Record No. 1-1, pp. 15-43; Record No. 1-2, pp. 1-15]
On December 5, 2011, Xanodyne removed the case to the United States District Court for the Northern District of California. [Record No. 1, pp. 1-11] All defendants who had been served as of that date consented to removal, with the exception of McKesson. [Id., p. 10 ¶¶ 37-38; Record No. 1-3, pp. 21-26] Xanodyne asserted that McKesson's consent was unnecessary because it had been fraudulently joined. [Record No. 1, p. 10 ¶ 39; see id., pp. 7-8] For the same reason, Xanodyne claimed that McKesson's California citizenship did not deprive the federal court of diversity jurisdiction. [See id., pp. 2, 6-8]
The plaintiffs filed a timely motion to remand, arguing that McKesson was properly joined and that the federal court thus lacked diversity jurisdiction.
The plaintiffs maintain that McKesson's California citizenship defeats diversity, thus depriving the Court of subject matter jurisdiction over this action. [See MDL Record No. 1137-1, pp. 2-10] However, the defendants argue that removal was proper because the claims against McKesson have no chance of success. Thus, they contend that McKesson is fraudulently joined, and its citizenship should be disregarded for diversity purposes. [See MDL Record No. 1528, pp. 4-14] In the alternative, the defendants ask the Court to find that the California plaintiffs' claims are fraudulently misjoined or to sever those claims pursuant to Rule 21 of the Federal Rules of Civil Procedure. [See id., pp. 14-17]
A. Fraudulent Joinder
A case filed in state court is removable only if it could have been brought in federal court originally. See 28 U.S.C. § 1441(a) ("[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction may be removed . . . to the district court of the United States for the district and division embracing the place where such action is pending."); Lincoln Prop. Co. v. Roche,
An exception to the complete-diversity requirement arises where a non-diverse defendant has been fraudulently joined. See id. ("[The Sixth Circuit] has recognized that fraudulent joinder of non-diverse defendants will not defeat removal on diversity grounds.").
In deciding whether a defendant has been fraudulently joined, the Court "must resolve all disputed questions of fact and ambiguities in the controlling . . . state law in favor of the nonremoving party," and "[a]ll doubts as to the propriety of removal are resolved in favor of remand." Coyne, 183 F.3d at 493 (omission in original) (internal quotation marks omitted). If a determination cannot be made from the face of the complaint, the Court may "pierce the pleadings to consider summary-judgment-type evidence." Walker v. Philip Morris USA, Inc., 443 F. App'x 946, 953 (6th Cir. 2011) (internal quotation marks omitted). However, the Court must be careful not to "step from the threshold jurisdictional issue [of fraudulent joinder] into a decision on the merits." Boyer v. Snap-On Tools Corp.,
The defendants assert that three grounds support a finding of fraudulent joinder in this case: (1) the claims against McKesson are preempted; (2) the claims against McKesson are not cognizable under California law; and (3) the claims against McKesson are not supported by adequate factual allegations. [MDL Record No. 1528, p. 2] Each argument is addressed below.
The parties primarily dispute whether the claims against McKesson are preempted under PLIVA, Inc. v. Mensing,
According to the defendants, Mensing applies here because McKesson, like a generic manufacturer, had no power to change the labeling on its propoxyphene products without running afoul of the FDCA's sameness requirement. In other words, they argue that a conflict existed between federal law and state law that prevented McKesson from complying with both. [MDL Record No. 1528, pp. 5-8] The plaintiffs maintain that Mensing is inapplicable, pointing out that "Mensing did not involve distributors" and "says nothing about preemption of claims based on defective design or negligent marketing and distributing of an unreasonably dangerous product."
Analysis of the Mensing issue would be inappropriate at this juncture, however. An assertion of fraudulent joinder must "be directed toward the joinder, not to `the merits of the action as an entirety.'" Smallwood v. Ill. Cent. R.R. Co.,
Moreover, if the Court were to deny the plaintiffs' motion for remand, the Mensing preemption defense would be asserted by eleven of the seventeen other defendants in this case. [See Record Nos. 58, 64] As the Third Circuit has explained,
Boyer, 913 F.2d at 113. This rule, known as the common defense rule, is consistent with the rationale for the doctrine of fraudulent joinder: if a plaintiff's claims against diverse and nondiverse defendants suffer from the same alleged flaw, that indicates not fraudulent intent in the non-diverse defendant's joinder, but rather a problem with the plaintiff's case overall. See Smith, 2011 U.S. Dist. LEXIS 75951, at *17-18 (explaining and adopting common defense rule). The Court could not evaluate the latter without impermissibly "step[ping] from the threshold jurisdictional issue into a decision on the merits." Boyer, 913 F.2d at 112; see Collins ex rel. Collins v. Am. Home Prods. Corp.,
2. California Law
The defendants' next contention that the plaintiffs have not stated a cognizable claim fares no better than the first. Notably, the defendants stop short of asserting that California courts do not recognize drug-distributor liability. Instead, they simply declare that "McKesson has been found to be fraudulently joined in similar circumstances." [MDL Record No. 1528, p. 8] They offer a one-page unpublished opinion in which the Central District of California decided, without analysis or citation of authority, that McKesson had been fraudulently joined because "[p]ursuant to comment k of the Restatement (Second) of Torts Section 402A and California law following comment k, a distributor of a prescription drug is not subject to liability." In re Rezulin Litig., No. CV 03-1643-R(RZX), 2003 WL 25598915, at *1 (C.D. Cal. Apr. 28, 2003). The plaintiffs, however, have cited numerous decisions in which courts have refused to find McKesson fraudulently joined on this ground, concluding that California law with respect to drug-distributor liability is at best unsettled. [See MDL Record No. 1644, pp. 6-7 (citing, inter alia, Moorhouse v. Bayer Healthcare Pharm., Inc., No. 08-01831 SBA, 2008 U.S. Dist. LEXIS 48833, at *18 (N.D. Cal. June 18, 2008) ("[I]t is not obvious according to the settled rules of California that distributors of prescription drugs cannot be held liable for a failure to warn."); Maher v. Novartis Pharm. Corp., No. 07CV852 WQH (JMA), 2007 U.S. Dist. LEXIS 58984, at *12 (S.D. Cal. Aug. 10, 2007) ("This Court has been unable to find, nor has either party cited, a case under California law which creates an exception in strict liability for distributors in prescription drug cases."); Black v. Merck & Co., No. CV 03-8730 NM (AJWx), 2004 U.S. Dist. LEXIS 29860, at *11 (C.D. Calif. Mar. 3, 2004) (finding no fraudulent joinder because "state law is unsettled as to whether a distributor of prescription drugs could be strictly liable for failure to warn"))]
The defendants urge the Court to disregard these cases because they were decided before Mensing. [MDL Record No. 1528, p. 8] As explained above, however, Mensing is inapposite here.
3. Sufficiency of Factual Allegations
This leaves the defendants' contention that the claims against McKesson are factually deficient. [See MDL Record No. 1528, pp. 9-14] As an initial matter, the parties disagree regarding whether state or federal pleading standards apply in this context. The defendants argue that the sufficiency of the allegations should be determined according to the familiar Twombly/Iqbal framework. [See id., pp. 9-10] But in the plaintiffs' view, their Complaint should be evaluated under California's pleading requirements which are more lenient. [See MDL Record No. 1644, pp. 9-10]
The Court will apply state pleading rules. 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. Coyne, 183 F.3d at 493. It makes little sense to measure the state-law viability of such claims, which were originally filed in state court, by federal pleading standards. See Murphy v. Broyhill Furniture Indus., No. 3:08-CV-2092-M, 2009 U.S. Dist. LEXIS 46704, at *18 (N.D. Tex. June 2, 2009) ("The question presented to the court in a motion to remand based on improper joinder is not one of sufficiency of the pleadings under federal procedural rules, but rather the plausibility of a plaintiff's claim under applicable state law. . . ."); Kuperstein v. Hoffman-La Roche, Inc.,
176 F.3d at 907. In short, Sixth Circuit precedent and common sense dictate the use of state pleading rules to determine whether McKesson is fraudulently joined. Under those rules, the plaintiffs' Complaint is sufficient.
A civil complaint filed in California must contain "[a] statement of the facts constituting the cause of action, in ordinary and concise language." Cal. Civ. Proc. Code § 425.10(a)(1). California pleading rules "require . . . only general allegations of ultimate fact. The plaintiff need not plead evidentiary facts supporting the allegation of ultimate fact. A pleading is adequate so long as it apprises the defendant of the factual basis for the plaintiff's claim." McKell v. Wash. Mut., Inc.,
In this case, the plaintiffs allege that McKesson and the other defendants "knowingly or negligently marketed, distributed, and sold defectively designed Propoxyphene Products without adequate warnings." [Record No. 1, p. 24 ¶ 2] They further allege that McKesson distributed the propoxyphene products that caused their injuries. [See id., p. 28 ¶ 36] Although this allegation was premised on "information and belief and subject to discovery of information within the exclusive control of Defendants," the plaintiffs did provide some factual support, alleging that McKesson distributed and sold propoxyphene products "nationwide and specifically within the State of California, among other states, where Plaintiffs resided and/or ingested Propoxyphene Products" [id. ¶ 35] and that it "maintain[ed] comprehensive distribution agreements with major retail pharmacies including CVS, Wal-Mart, and Rite-Aid." [Id. ¶ 36] In addition, McKesson is alleged to have distributed propoxyphene products manufactured by the Generic Qualitest Defendants, which, as set forth in the Complaint, produced "the majority of the Propoxyphene Products sold at national retailers." [Id., p. 33 ¶ 75]
The defendants assert that these allegations fall short under any pleading standard. [MDL Record No. 1528, p. 10] In support, they point to two cases in which McKesson was deemed fraudulently joined on the ground that the factual allegations against it were inadequate. [Id., pp. 12-13] Each case is distinguishable.
The defendants rely heavily on the first case, Tucker v. McKesson Corp., No. C 10-2981 SBA, 2011 U.S. Dist. LEXIS 104045 (N.D. Cal. Sept. 14, 2011), but omit an important detail. In Tucker, the court, noting the "overwhelming evidence showing the absence of any possible claim against McKesson," found that the defendants had met their burden in establishing McKesson's fraudulent joinder. Id. at *10. Significantly, however, the Tucker plaintiff admitted that McKesson was not the distributor of the drug he had ingested. In fact, he had already dismissed his claims against McKesson. Id. at *9. Unlike this case, in Tucker it was undisputed that the plaintiff's claims against the non-diverse defendant could not succeed.
In the second case, Aronis v. Merck & Co., No. S-05-0486 WBS DAD, 2005 U.S. Dist. LEXIS 41531 (E.D. Cal. May 3, 2005), the fatal flaw was the plaintiff's failure to "alleg[e] that McKesson ever handled the specific pills that were allegedly the cause of her injuries." Id. at *3. The plaintiff "d[id] not allege that McKesson contributed in any way to her injuries, only that McKesson [was] a distributor" of the drug. Id. at *4. Here, by contrast, the plaintiffs have specifically alleged that McKesson distributed the propoxyphene products they ingested.
The defendants further emphasize that the plaintiffs have presented no evidence to support their allegations that McKesson distributed the propoxyphene products in question. [MDL Record No. 1528, p. 13] With their reply, however, the plaintiffs submitted documents purportedly showing that each of the California plaintiffs who allegedly ingested propoxyphene purchased it from a retailer that had a distribution agreement with McKesson.
This evidence, combined with the allegations in the Complaint, satisfies the Court that McKesson is not fraudulently joined. The plaintiffs have adequately apprised McKesson of the factual basis for their claims: they allege injuries arising from ingestion of propoxyphene products, and they specifically allege that McKesson distributed those products. See McKell, 49 Cal. Rptr. 3d at 238. The documents provided with their reply, while not conclusive, do support those allegations. See Walker, 443 F. App'x at 953 (court may look beyond complaint and consider "summary-judgment-type evidence" as part of fraudulent-joinder inquiry). Moreover, the Court is mindful that any doubts regarding the propriety of removal must be resolved in the plaintiffs' favor. See Coyne, 183 F.3d at 493. In summary, the defendants have failed to show that there is no reasonable basis to predict that the plaintiffs' claims against McKesson could succeed under California law. The Court, therefore, finds that McKesson is not fraudulently joined. See id.
B. Fraudulent Misjoinder
In the event the Court concludes that there is no fraudulent joinder, the defendants contend that it should find that the California plaintiffs' claims are fraudulently misjoined. [See Record No. 1528, pp. 14-16] The doctrine of fraudulent misjoinder emerged in cases in which plaintiffs join unrelated claims against a non-diverse defendant for the purpose of defeating diversity. See 16 Moore's Federal Practice § 107.14[c][iv][A.1] (Matthew Bender 3d ed.). Generally, "mere misjoinder" does not amount to fraudulent misjoinder. Instead, the misjoinder must be "egregious." Asher v. Minn. Mining & Mfg. Co., No. 04-CV-522-KKC, 2005 U.S. Dist. LEXIS 42266, at *31 (E.D. Ky. June 30, 2005) (internal quotation marks omitted). As the defendants acknowledge, courts within this district have adopted, see id. at *37-38, and — more recently — rejected, see Murriel-Don Coal Co. v. Aspen Ins. UK Ltd.,
It does not appear that the plaintiffs are improperly joined in any event. As with fraudulent joinder, the "legal point of reference" in the fraudulent-misjoinder analysis is the joinder law of the state from which the action was removed. In re Avandia, 624 F. Supp. 2d at 413; see id. at 420 ("[T]he joinder law of California must guide any inquiry into the propriety of the joinder herein, as California is where this action was originally filed."); Asher, 2005 U.S. Dist. LEXIS 42266, at *40 n.3 ("[S]ince the focus of the fraudulent misjoinder analysis is on whether the claims were properly joined in the state court complaint, it flows that the procedural rules of the state court in which the action was filed should govern the issue of proper joinder."). While the wording of California's joinder rule is nearly identical to that found in Rule 20 of the Federal Rules of Civil Procedure, the state rule is "`interpreted more liberally'" than Rule 20 "and [is] satisfied by `any factual relationship between the claims joined.'"
The defendants also suggest that the Court should sever the plaintiffs' claims "in order to achieve complete diversity and establish proper jurisdiction." [Record No. 1528, p. 16] Pursuant to Rule 21, they assert, the Court may retain the claims of the Oklahoma plaintiffs (over which it does possess diversity jurisdiction) and sever the California plaintiffs' claims, remanding them to state court. [See id. at 17] The Court declines to do so.
Rule 21 provides: "Misjoinder of parties is not a ground for dismissing an action. On motion or on its own, the court may at any time, on just terms, add or drop a party. The court may also sever any claim against a party." Fed. R. Civ. P. 21. The Supreme Court has recognized that Rule 21 authorizes courts "to allow a dispensable nondiverse party to be dropped at any time" in the litigation. Newman-Green, Inc. v. Alfonzo-Larrain,
The defendants contend that severance is appropriate in this case because "[m]aintaining as many claims as possible in the MDL serves the purposes for which the MDL was established: for the convenience of the parties and witnesses, and in order to promote the just and efficient conduct of the litigation." [MDL Record No. 1528, p. 17] That is the extent of their argument, and it is unconvincing. The Court fails to see how severing and remanding half of the claims would promote efficiency, since the defendants (all of whom are already involved in this MDL) will be forced to litigate in two locations under either outcome. And having found nothing improper in the filing of this action, the Court is not inclined to deprive the plaintiffs of their chosen forum merely because it can.
D. Attorney's Fees
The plaintiffs seek an award of fees and costs under 28 U.S.C. § 1447(c) on the ground that Xanodyne's notice of removal "is merely a litigation strategy designed to cause unnecessary delay and to deplete Plaintiffs' Counsel['s] resources." [MDL Record No. 1137-1, p. 12] They claim that such an award is justified because Xanodyne removed the case despite "overwhelming" precedent indicating that removal was improper. [Id., p. 12] The defendants counter that removal was justified based on Tucker, which had been decided just a few months before in the same district. [MDL Record No. 1528, p. 18]
Attorney's fees should be awarded pursuant to § 1447(c) "only where the removing party lacked an objectively reasonable basis for seeking removal." Martin v. Franklin Capital Corp.,
The defendants have not carried their burden to establish that removal of this action was proper. Accordingly, it is hereby
(1) Plaintiffs' Motion to Remand for Lack of Subject Matter Jurisdiction [MDL Record No. 1137] is
(2) McKesson Corporation's Motion to Dismiss [MDL Record No. 1900] is
(3) This action is
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