Last week brought with it a decision on a plaintiffs’ motion for remand that bolsters a seldom used tool to remove state cases to federal court when a plaintiff has named a local doctor to defeat federal diversity jurisdiction. In Mayfield v. London Women’s Care, PLLC, 2015 WL 3440492 (E.D. Ky. May 28, 2015), a vaginal mesh patient who had revision surgery and other complications sued the out-of-state manufacturers, Ethicon and Bard. But she also named the local doctor and his clinic (the “Healthcare Defendants”) as malpractice defendants, which would have defeated diversity jurisdiction and blocked removal to federal court. The defendant manufacturers nonetheless removed the case, and the plaintiffs moved to remand the entire case back to state court. They lost.
Interestingly, the court didn’t rely on fraudulent joinder, the standard for which is often difficult to meet. So how did the defendants win? Well, the court held that the Healthcare Defendants were dispensable parties under FRCP 21, severed the claims against them, and sent only those claims back to state court. The court held that FRCP 21 can be used to sever claims against dispensable, non-diverse parties so that the remainder of the case can then properly remain in federal court:
Rule 21 of the Federal Rules of Civil Procedure states that a court “may at any time, on just terms, add or drop a party. The court may also sever any claim against a party.” It is well-settled that Rule 21 can be used to sever a dispensable, nondiverse party in order to preserve federal jurisdiction. Newman–Green, Inc. v. Alfonzo–Larrain, 490 U.S. 826, 832 (1989) (“Rule 21 invests district courts with authority to allow a dispensable nondiverse party to be dropped at any time, even after judgment has been rendered.”); Soberay Mach. & Equip. Co. v. MRF Ltd., Inc., 181 F.3d 759, 763 (6th Cir.1999) (“Although we agree that a party may not create diversity by dropping a nondiverse and indispensable party, we note that it is appropriate to drop a nondiverse and dispensable party from litigation in order to achieve diversity.”); Safeco Ins. Co. of Am. v. City of White House, Tenn., 36 F.3d 540, 545 (6th Cir.1994) (explaining that Rule 21“permits a district court to retain diversity jurisdiction over a case by dropping a nondiverse party if that party’s presence in the action is not required under Federal Rule of Civil Procedure 19, that is, the party to be dropped must not be a necessary party.”).
Id. at *3.
A key factor in the court’s decision to sever was that plaintiffs’ product liability claims against the manufacturers involved very different legal elements and facts than did plaintiffs’ malpractice claims against the Healthcare Defendants. The court determined that the plaintiffs would be able to obtain complete relief on the claims against the Healthcare Defendants in a separate action in state court:
The medical malpractice claim against Healthcare Defendants is highly distinct from the various claims brought against Ethicon for products liability. Not only is it comprised of unique legal elements, it is based on completely different factual allegations. . . . Just as no one from Ethicon was involved with Mayfield’s surgery, Dr. Mechas had nothing to do with the design, manufacture or sale of a single pelvic mesh implant. . . . Thus, if Healthcare Defendants are severed from this case, they will be equally capable of protecting their interests in state court, and their absence will not expose Ethicon to double or inconsistent obligations in federal court. Assuming Plaintiffs are willing to litigate in both forums, their ability to obtain complete relief will also be unchanged. Based on these reasons, the Court finds that Healthcare Defendants are not necessary parties. See Temple v. Synthes Corp.,498 U.S. 5, 7 (1990) (finding that the doctor who performed an implant surgery was not a necessary party in a products liability action against the manufacturer of the implanted medical device).
Id. at *4.
The court was correct. The big issues in plaintiffs’ product liability claims against the manufacturers are the design of the product, its manufacture, and the warnings that came with it when it was produced and sold. Those issues require fact discovery into areas such as the internal efforts by the manufacturers to develop and sell the device, marketing and sales practices, and the FDA regulatory approval and monitoring process. On the other hand, the malpractice claims against the Healthcare Defendants concern the doctor’s performance and interactions with his patient. Those issues require discovery into such things as the doctor’s risk-benefit discussions with the plaintiff, his surgical training and performance, and his consideration and discussion of potential alternatives. The litigations, while not completely distinct, would be very different. The appropriateness of severance is even more clear when one considers that the malpractice claim involving the local plaintiff and his doctor has no business in federal court, while the plaintiffs’ action against the out-of-state manufacturers is perfectly at home in federal court.
The Court also addressed the concern that severance would create inefficiencies for plaintiffs by forcing them to litigate in two forums. In truth, severance would likely benefit plaintiffs by allowing them to take advantage of, among other things, a federal MDL that comes staffed with liaison counsel experienced in the subject matter and procedural posture of the litigation, an organized discovery effort against the defendant and, ultimately, the type of broad settlement discussions with experienced plaintiffs’ counsel that often comes with mass torts. And, while all of that is proceeding, plaintiff would be free to actively litigate their claims against the Healthcare Defendants unhindered in state court:
Plaintiffs greatly overstate the prejudice that would result from having to try separate cases. Regardless of the potential challenges they cite (via Hagensicker), proceeding against Healthcare Defendants in state court is an adequate legal remedy. See PaineWebber, Inc. v. Cohen, 276 F.3d 197, 204 (6th Cir.2001) (“[M]ultiple proceedings and inconsistent results in state and federal court ... can occur whenever joint tortfeasors are not parties to the same lawsuit. This form of prejudice, however, does not require a finding that joint tortfeasors are necessary or indispensable parties.”) (citing Temple,498 U.S. at 8). Moreover, if the surviving federal claims are transferred to the Ethicon MDL, the prospect of dual litigation has undeniable upside. The cost and burden of litigating against Ethicon would drop considerably, and Plaintiffs’ ability to potentially negotiate a settlement would be greatly enhanced. Also, they could proceed with discovery of the medical malpractice claim immediately, and do so more efficiently, as other attorneys will take the lead in the Ethicon MDL. Therefore, even if Healthcare Defendants were found to be necessary parties, the Court would not have deemed them indispensable to this case.
Sitting alongside all of this sound reasoning is the hard-to-shake concern that the real reason that the Healthcare Defendants were named in the first place was to defeat diversity jurisdiction. That, plus the distinctiveness of the claims against the manufacturers and the Healthcare Defendants, gave the court plenty of reason and incentive to send the malpractice claims back to state court.
The Mayfield decision and its reasoning is a potentially productive tool for removing cases in which fraudulent joinder might be difficult to establish. And the Mayfielddecision doesn’t stand alone. It is backed up by two earlier decisions from the Northern District of Ohio applying the same reasoning and reaching the same conclusion – Joseph v. Baxter Int'l, Inc., No. 1:08HC60053, 2009 U.S. Dist. LEXIS 40504 (N.D. Ohio May 13, 2009) & DeGidio v. Centocor, 2009 WL 1867676 (N.D. Ohio June 29, 2009). We blogged about those two decisions here and here. WithMayfield, this now becomes a solid line of precedent, one that may prove to be quite productive in the future.