UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA
January 12, 2010
SUDRIA ANDREWS, PLAINTIFF,
BAYER CORPORATION, BAYER HEALTHCARE PHARMACEUTICALS INC.; BAYER HEALTHCARE, LLC; MCKESSON CORPORATION CORPORATION, DEFENDANTS.
The opinion of the court was delivered by: Dean D. Pregerson United States District Judge
ORDER GRANTING PLAINTIFF'S MOTION TO REMAND AND DENYING AS MOOT DEFENDANTS' MOTION TO STAY
[Motions filed on December 8, 2009 and December 17, 2009]
This matter comes before the Court on (1) a Motion to Stay Proceedings Pending Transfer by the Judicial Panel on Multidistrict Litigation to MDL 2100 filed by the defendants Bayer Corporation, Bayer Healthcare LLC, and Bayer Healthcare Pharmaceuticals, Inc. (the "Bayer Defendants") and (2) a Motion to Remand filed by the plaintiff Sudria Andrews ("Plaintiff"). Having reviewed the papers submitted by the parties, the Court GRANTS the motion to remand, DENIES as moot the motion to stay, and adopts the following Order.
Plaintiff filed suit in Los Angeles Superior Court on October 31, 2007, alleging that she suffered a pulmonary embolism as a proximate result of ingesting Yasmin, an oral contraceptive created and produced for public consumption by the Bayer Defendants and distributed by McKesson Corporation ("McKesson"). (Compl. ¶¶ 4-18.) Plaintiff is a California citizen who resides in Los Angeles County. (Id. ¶ 3.) None of the Bayer Defendants is a citizen of California for purposes of diversity jurisdiction.*fn1 (Notice of Removal ¶ 8.) McKesson is a Delaware corporation with its principal place of business in California. (Id. ¶ 9.) On November 25, 2009, the Bayer Defendants removed to this Court, arguing that McKesson was fraudulently joined in order to defeat removal and that its citizenship should therefore be disregarded for purposes of diversity jurisdiction. (Id. ¶ 16.)
On October 1, 2009, the Judicial Panel on Multidistrict Litigation established MDL No. 2100, In re Yasmin and Yaz (Drospirenone) Marketing, Sales Practices and Products Liability Litigation. The Bayer Defendants identified this action as a potential "tag-along" to MDL No. 2100, and a conditional transfer order was filed on December 17, 2009. Plaintiff filed an opposition to the conditional transfer order on January 4, 2010.
On December 8, 2009, the Bayer Defendants filed a motion to stay all proceedings in this action and to vacate all existing dates and deadlines pending transfer of this action to MDL No. 2100. On December 17, 2009, Plaintiff filed a motion to remand, arguing that there is no diversity jurisdiction because McKesson, a properly joined defendant, is a California corporation.
"[F]ederal courts normally must resolve questions of subject matter jurisdiction before reaching other threshold issues." Potter v. Hughes, 546 F.3d 1051, 1061 (9th Cir. 2008). The Supreme Court has held that "engaging subject-matter jurisdiction at the outset of a case is often the most efficient way of going," and that in removal actions "both expedition and sensitivity to state courts' coequal stature should impel the federal court to dispose of that issue first." Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 587-88 (1999) (internal quotation marks and citation omitted). The Court therefore addresses the motion to remand prior to the motion to stay.*fn2
A. Legal Standard
A defendant who seeks to remove a case from state to federal court has the burden of establishing federal subject matter jurisdiction. Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921). Furthermore, courts "strictly construe the removal statute against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Removal is governed by substantive and procedural requirements. Pursuant to 28 U.S.C. § 1441(a), an action brought in state court may be removed to federal court if the civil action is one "of which the district courts of the United States have original jurisdiction."
Section 1332 provides that district courts have original jurisdiction "of all civil actions where the matter in controversy exceeds the sum of value of $75,000, exclusive of interest and costs and is between citizens of different States." 28 U.S.C. § 1332(a)(1). Complete diversity of citizenship is required, meaning each of the plaintiffs must be a citizen of a different state than each of the defendants. Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996).
Nevertheless, "one exception to the requirement of complete diversity is where a non-diverse defendant has been 'fraudulently joined.'" Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). "Fraudulently joined defendants will not defeat removal on diversity grounds." Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998). "[T]here is a general presumption against fraudulent joinder," Hamilton Materials, Inc. v. Dow Chemical Corp., 494 F.3d 1203, 1206 (9th Cir. 2007), but fraudulent joinder will be found "[i]f the plaintiff fails to state a cause of action against a resident defendant, and the failure is obvious according to settled rules of the state." Ritchey, 139 F.3d at 1318.
The party asserting fraudulent joinder bears the burden of proof, United Computer Systems, Inc. v. AT&T Corp., 298 F.3d 756, 763 (9th Cir. 2002), and remand must be granted unless the defendant establishes that there is no possibility that the plaintiff could prevail on any cause of action it asserted against the non-diverse defendant. See Levine v. Allmerica Financial Life Ins. & Annuity Co., 41 F. Supp. 2d 1077, 1078 (C.D. Cal. 1999).
The Bayer Defendants assert that diversity jurisdiction exists because McKesson, the only non-diverse defendant named in the Complaint, was fraudulently joined. First, the Bayer Defendants argue that Plaintiff's claims against McKesson are not cognizable under California law. Second, they argue that, even if a claim could stand against McKesson, the Complaint fails to plead sufficient facts against McKesson.
1. Cognizable Cause of Action
The Bayer Defendants assert that Plaintiff's claims against McKesson are based on a failure to warn about the purported risks of Yasmin. According to the Bayer Defendants, this claim necessarily fails because California law does not impose a duty to warn on pharmaceutical distributors.
It is a well-settled principle of California law that manufacturers of prescription drugs are strictly liable for a failure to warn. Carlin v. Superior Court, 920 P.2d 1347 (Cal. 1996). The general rule in California is that strict liability for failure to warn runs to distributors as well as manufacturers. Anderson v. Owens-Corning Fiberglas Corp., 810 P.2d 549, 552 (Cal. 1991). Retailers are also strictly liable for a failure to warn. Soule v. Gen. Motors Corp., 882 P.2d 298, 303 (Cal. 1994).
The Bayer Defendants nevertheless argue that the general rule does not apply to distributors when the product at issue is a pharmaceutical product. In support of this argument, they point out that pharmacists are not subject to liability based upon a failure to warn theory. See, e.g., Murphy v. E.R. Sguibb & Sons, Inc., 710 P.2d 247, 252 (Cal. 1985). Although McKesson is not a pharmacist, the Bayer Defendants argue that the rationale for exempting pharmacists from strict liability applies equally to distributors. The Bayer Defendants cite no California authority supporting this position, instead arguing that exempting pharmaceutical distributors from strict liability for failure to warn is good public policy. (See Opp'n to Pl.'s Mot. to Remand 8:11-14 (noting that the same reasoning that applies to pharmacies' exemption from strict liability should apply to distributors because "if McKesson and other distributors that supply pharmacies with FDA-approved medications were strictly liable, they, too, might restrict the availability of such medications").)
However, California's public policy rationale for exempting pharmacists from strict liability is that they provide services. Murphy, 710 P.2d at 251 ("A key factor [justifying the exemption] is that the pharmacist who fills a prescription... is providing a service to the doctor and acting as an extension of the doctor in the same sense as a technician who takes an X-ray or analyzes a blood sample on a doctor's order."). Unlike pharmacists, McKesson does not provide the public with an analogous service. Furthermore, the Bayer Defendants' reliance on public policy is a essentially a concession that such a cause of action is not currently barred under California law.
Because no California court has ever held that distributors of pharmaceuticals are exempt from the general rule of strict liability for failure to warn, the Bayer Defendants have failed to carry their burden of establishing that "the plaintiff fails to state a cause of action against a resident defendant, and the failure is obvious according to settled rules of the state." Ritchey, 139 F.3d at 1318.
2. Pleading Deficiencies
Alternatively, the Bayer Defendants argue that Plaintiff's motion should be denied because the Complaint fails to allege specific facts showing that McKesson is connected to the actual pills Plaintiff ingested. (Opp'n to Pl.'s Mot. to Remand 3:18-20.) They also assert that the Complaint "'lump[s]' McKesson with the Bayer Defendants, making vague allegations against 'Defendants' generally rather than directing the allegations against any specific defendant or defendants in particular." (Id. 5:4-8.)
Under California law, a complaint must contain "[a] statement of the facts constituting the cause of action, in ordinary and concise language." Cal. Code Civ. P. § 425.10(a)(1). This requires "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. Washington Mut., Inc., 49 Cal. Rptr. 3d 227, 238 (Ct. App. 2006) (internal citations omitted). In order to prevail on a strict liability cause of action, the plaintiff must establish that the defendant's failure to warn "was a legal cause of the injury." Torres v. Xomox Corp., 56 Cal. Rptr. 2d 455, 465 (Ct. App. 1996)
The Complaint alleges that "McKesson supplies Defendant's prescription drugs Yasmin and Yaz to health care providers in California" and that "McKesson had supply agreements to distribute the prescription birth control pills Yasmin and Yaz to the health care providers of Plaintiff." (Compl. ¶ 13.) Plaintiff alleges "damages associated with her ingestion" of Yasmin and that she was diagnosed with a pulmonary embolism as a "direct result of her use of Yasmin." (Id. ¶ 19.) Furthermore, the Bayer Defendants acknowledge that "[a]s relevant to the plaintiff's claims in this case, McKesson purchases YAZ, Yasmin, and Ocella from the Bayer Defendants and sells the medications to pharmacies."*fn3 (Opp'n to Pl.'s Mot. to Remand, Yonko Decl. ¶ 5.)
Plaintiff's allegations that McKesson supplied Yasmin to pharmacies in California and that it had a supply agreement with Plaintiff's health care provider are sufficient to "apprise the defendant[s] of the factual basis for the plaintiff's claim." McKell, 49 Cal. Rptr. 3d at 238 (internal citations omitted). Because Plaintiff has properly alleged a viable cause of action against McKesson, the Bayer Defendants have not carried their burden of establishing that the joinder of McKesson was fraudulent.
For the foregoing reasons, the Court GRANTS Plaintiff's motion to remand and DENIES as moot the Bayer Defendants' motion to stay.
IT IS SO ORDERED.