This is a guest post, by Jaimee Farrer, an associate at Reed Smith. We’re always looking for new twists that can help in efforts to remove cases to federal court, and the case Jaimee describes does that, relying on an MDL standing severance order to short circuit what might have been lengthy and complex joinder arguments. As always, our guest posters should get full credit (and any blame) for their analyses. With that said, take it away Jaimee.
We’re used to seeing judges split the baby when it comes to ruling on Daubert motions, for example. Courts frequently allow an expert to testify about some of his/her opinions while excluding his/her other opinions, thereby giving both sides a little of what they want. But remand decisions are usually black and white with a clear winner and a clear loser. Either a case gets to remain in federal court and the defendants are the happy victors or the case gets remanded to state court, leaving the defendants to sulk and bemoan their fate. But in today’s opinion, In Re Benicar (Olmesartan) Products Liability Litigation, 2016 WL 4059650 (D.N.J. July 27, 2016), which comes courtesy of the Benicar MDL Court, both scenarios happened simultaneously . . . well at least sort of.
Seventy-nine plaintiffs joined in filing a Complaint in the Circuit Court of the City of St. Louis, Missouri, against five defendants, two Daiichi Sankyo affiliates and three Forest Laboratories affiliates. 2016 WL 4059650 at *1-2. In their Complaint, the plaintiffs alleged generally that they were injured by drugs developed and marketed by the defendants. Id. at *1. The defendants removed the action to the Eastern District of Missouri, claiming diversity jurisdiction. Id. The defendants concurrently moved to stay the case pending MDL transfer, which was granted. Id. Plaintiffs predictably moved to remand, arguing lack of complete diversity. Id. There things stood for several months while MDL transfer occurred. Id. at 2. After the transfer, the stay was lifted, allowing the District of New Jersey to rule on the plaintiffs’ remand motion. Id.
At this point, in a multi-plaintiff case, we usually see arguments about fraudulent joinder, fraudulent misjoinder, or alternatively about personal jurisdiction. See here and here, for examples. Not this time. In ruling on remand, the Court conducted a cursory analysis of the citizenship of the parties and determined that thirty-five of the seventy-nine plaintiffs were citizens of the same state where at least one of the defendants has its principal place of business or is incorporated. Id. at *2. That’s usually bad news for defendants.
At this point, you’re probably wondering why we’re even blogging about this opinion when it seems pretty obvious that the case is headed right back to state court. Stick with us, though, because here’s where things get interesting.
Although it was obvious that complete diversity was lacking with respect to those thirty-five plaintiffs, in a surprising twist, the Court did not remand the entire action back to state court. Rather, the Court granted the plaintiffs’ Motion in part and denied it in part as moot. Why? Well, this MDL had been around for a while. The court had already entered an MDL Case Management Order requiring severance of multi-plaintiff complaints. Id. at *1. CMO #7 states that “multi-plaintiff complaints shall not be filed in [the Benicar] litigation without leave of the Court and for good cause shown.” Id. If such a Complaint is filed, the CMO directs the Clerk of Court “to sever all existing multi-plaintiff complaints.” Id. The Order further states that attorneys representing Plaintiffs who wish to independently pursue their claims “shall serve a separate Complaint and pay a new filing fee for each severed Complaint.” Id. Thus, the judicial knives came out – severance.
As for the thirty-five plaintiffs who lacked complete diversity, the Court granted the Motion and remanded their cases back to state court. Id. at *2. For the remaining forty-four plaintiffs, who were not residents of a state where any of the defendants were incorporated or had their principal place of business (in other words, completely diverse, but for the misjoinder), the Court ruled that the issue of complete diversity was moot as a result of CMO #7, which required the automatic severance of multi-plaintiff complaints, and ordered those plaintiffs to re-file their individual cases within ten days, in effect “splitting the baby.” Id.
So, while it’s true that a little less than half of the plaintiffs’ cases are going back to state court, the other cases should ultimately remain in federal court, barring any hijinks. This result is unconventional, using an MDL case management order to cut the Gordian knot of misjoinder (whether or not fraudulent), and therefore gives the defendants at least some of what they wanted. It could have been better – there is probably lack of personal jurisdiction over non-forum defendants sued by non-forum plaintiffs −but sometimes half a loaf is the most we can hope for. Baby splitting aside, that’s more of a win than a loss in our book.