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Eastern District of New York gets it right on fraudulent misjoinder
USA August 30 2013
A favorite tactic of plaintiffs’ lawyers is to join together dozens of completely unrelated plaintiffs’ into one complaint. We see it all the time. Counsel lump their clients together in mass complaints that contain general allegations regarding the product, but nary a detail about the individual plaintiffs or their alleged injuries. They also choose fora that more often than not bear no relation to the parties or the controversy and are chosen by counsel for strategic purposes.
We can see why plaintiffs’ attorneys do this, but it does not make it right. By massing plaintiffs together, they give their cases an impression of gravitas, even if few (or none) of the plaintiffs have valid claims. Mass complaints also save them money because they pay one filing fee instead of many, preserving their war chests while simultaneously depriving the courts of funding they need to provide access to justice.
But the most invidious aspect of the mass complaint is the blatant forum manipulation in which plaintiffs’ counsel engage. Where complete diversity exists, it is a non-forum defendant’s statutory right to remove cases to federal court, so long as other requirements for removal jurisdiction are met. But if plaintiffs’ counsel can find just one plaintiff whose citizenship is the same as one defendant, he or she can combine that one plaintiff’s claims with the claims of others into one complaint, purportedly destroying complete diversity and making the complaint appear to be non-removable. Never mind that every other plaintiff’s citizenship is diverse from the defendant’s and that removal jurisdiction can and should exist over all their claims. Also never mind that keeping claims in state court means that they will not be transferred to federal multidistrict litigation. When MDLs exist, they usually have been requested by plaintiffs, and manipulating the forum to avoid MDL transfer is both hypocritical and wasteful of resources that parties and courts invest in those proceedings.
Plaintiffs followed this plan in the Propecia litigation, but the judges presiding over the Propecia MDL saw right through it and provided a very useful application of an underutilized doctrine that addresses just this situation—fraudulent misjoinder. In Keune v. Merck & Co., No. 12-CV-2049-JG-VVP, 2013 U.S. Dist. LEXIS 117375 (E.D.N.Y. May 17, 2013), fifty-four plaintiffs from 24 different jurisdictions sued the New Jersey-based product manufacturer in state court in Missouri (where just one plaintiff resided), and because three of the plaintiffs were from New Jersey, the plaintiffs maintained that there was no complete diversity. Id. at **25-27.
But they were wrong. The manufacturer removed the case to federal court, and the case was transferred to the MDL in the Eastern District of New York, where the court severed and remanded the New Jersey plaintiffs and denied remand for the fifty-one plaintiffs whose citizenship was undisputedly diverse from the manufacturer’s. Id. at **25-27 & *72. (The order was entered June following a magistrate’s Report and Recommendation in May, but Lexis just recently posted it.)
This is exactly the right result, for almost entirely the right reasons. To start with, plaintiffs contested transfer to the MDL, and the ultimate transfer of the case out of the Eighth Circuit probably made a difference, for reasons that we reported here. On the substance, however, the MDL court provided a thorough survey of the law on fraudulent misjoinder—which is different from the more commonly applied doctrine of fraudulent joinder. As the court explained,
in the typical fraudulent joinder situation, a diverse defendant argues that the plaintiff is attempting to join a non-diverse defendant against whom the plaintiff has no real claim solely to defeat federal jurisdiction. . . . In the fraudulent misjoinder situation, by contrast, a diverse defendant argues that a plaintiff has added claims to the complaint—either claims by other non-diverse plaintiffs or claims against other non-diverse defendants—which, although perhaps valid, are nevertheless not properly joined under the applicable permissible joinder rules.
Id. at **34-35.
This correct and precise description of these two doctrines gave us hope for the discussion to follow, and the court did not disappoint. Its survey of the law on fraudulent misjoinder is about as complete as anything in the public record, and it is a must read for those of us who engage in this sort of litigation routinely. Id.at **35-59.
In its analysis, the court recognized not only that fraudulent misjoinder should apply, but that the doctrine is uniquely suitable in multi-plaintiff pharmaceutical litigation. Acknowledging a prior order that arguably went the other way, the court observed that findings of improper joinder of plaintiffs in pharmaceutical actions had increased. Id. at **51-52. The court went on to observe that fraudulent misjoinder should apply especially in multidistrict litigation:
The application of the doctrine in the context of toxic tort litigation consolidated pursuant to the MDL statute . . . is clearer and serves the purpose of that law. The MDL procedure is designed to direct judicial resources and the parties’ pretrial litigation efforts more efficiently to benefit both plaintiffs and defendants. If plaintiffs can escape the MDL by joining multiple, unconnected and non-diverse parties in a state court of their choice, they defeat the purposes of the MDL and deny defendants their right to removal. . . .
In particular in toxic tort cases, it is this very concern that has led several courts that have found misjoinder to sever and remand only the non-diverse plaintiffs.
Id. at **52-53 (emphasis added). Pharmaceutical cases are not "toxic torts," but setting that label aside, this passage cuts to core of the abuse because it recognizes and condemns the forum manipulation that motivates us to write. We understand that plaintiffs get to choose the forum in the first instance, but not without limitations—such as the defendant’s equally compelling right to remove cases where removal jurisdiction exists.
The court’s application of fraudulent misjoinder to the specific facts of the case was also spot on. The court catalogued in some detail how the plaintiffs had virtually nothing in common and were different from one another on such key issues as the alleged product ingested, the dose and frequency, the dates and duration of alleged ingestion, the location of where they purchased and ingested the product, and the alleged injuries. This litany led to the conclusion—which was inescapable—that "there is no basis for joining, in a single action, fifty-four plaintiffs from twenty-four jurisdictions who purchased different products at different times from unidentified sources. The plaintiffs’ attempt to deny the defendants their right to removal in this manner undermines both the purposes of permissive joinder and the benefits of consolidation in multi-district litigation."Id. at *71 (emphasis added).
This is good stuff, and the only quibble we have is that the court applied Missouri’s rules of permissive joinder in coming to its conclusions, rather than Federal Rule of Civil Procedure 20. We do not understand why that should be. Erie tells us that federal procedural rules apply in federal court, including rules on whether unrelated plaintiffs can plead their unrelated claims together in one pleading. The court nonetheless applied state joinder rules, finding that it was "more efficient" and drawing an analogy to the application of state substantive law when determining whether a defendant is fraudulently joined. Id. at *59-*63. But efficiency is not a factor in determining whether laws are procedural or substantive, and the doctrine of fraudulent joinder depends on whether the plaintiff has stated a claim against a non-diverse defendant under substantive state law. Fraudulent joinder therefore requires application of substantive state law in a way that fraudulent misjoinder does not. Rule 20 should have applied, as the manufacturer urged.
In the end, the choice of law did not matter because Missouri’s joinder rule was almost identical to Rule 20, resulting in an order that gives us a very good treatment of a doctrine that should be applied more, and the correct outcome to boot.
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