Patrick B. Jones et al v. DePuy Orthopaedics, Inc. et al

Filing 11

MINUTES OF IN CHAMBERS - COURT ORDER by Judge Percy Anderson: Since Defendants have failed to meet their heavy burden of showing that Dr. Schmalzried was fraudulently joined, this action may not be removed because defendant is a citizen of the State in which the action is brought and Plaintiffs are not diverse from all defendants. Neither the "four corners" of the Complaint nor the Notice of Removal contain sufficient allegations concerning Section 1332's requirements. Therefore, Defendants have not met their burden to establish this Court's jurisdiction. Accordingly, the Court remands this action to the Los Angeles County Superior Court, Case No. BC544206, for lack of federal subject matter jurisdiction. ( Case Terminated. Made JS-6 ) Court Reporter: Not Reported. (Attachments: # 1 CV-103 Remand Transmittal Letter) (gk)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 14-5458 PA (VBKx)

Title

Patrick B. Jones, et al. v. DePuy Orthopaedics, Inc., et al.

Present: The Honorable

Date

July 15, 2014

PERCY ANDERSON, UNITED STATES DISTRICT JUDGE

Paul Songco

Not Reported

N/A

Deputy Clerk

Court Reporter

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

None

None

Proceedings:

IN CHAMBERS - COURT ORDER

Before the Court is a Notice of Removal filed by defendants DePuy Orthopaedics, Inc., DePuy
Synthes, Inc. (formerly known and erroneously sued as DePuy, Inc.), Johnson & Johnson Services, Inc.,
and Johnson & Johnson (collectively “Defendants”). Defendants asserts that this Court has jurisdiction
over the action brought against it by plaintiffs Patrick B. Jones and Robin L. Jones (collectively,
“Plaintiffs”) based on the Court’s diversity jurisdiction. See 28 U.S.C. § 1332.
I.

Legal Standard: Removal & Fraudulent Joinder

Federal courts are courts of limited jurisdiction, having subject matter jurisdiction only over
matters authorized by the Constitution and Congress. See, e.g., Kokkonen v. Guardian Life Ins. Co., 511
U.S. 375, 377, 114 S. Ct. 1673, 1675, 128 L. Ed. 2d 391 (1994). A suit filed in state court may be
removed to federal court if the federal court would have had original jurisdiction over the suit. 28
U.S.C. § 1441(a). A removed action must be remanded to state court if the federal court lacks subject
matter jurisdiction. 28 U.S.C. § 1447(c). “The burden of establishing federal jurisdiction is on the party
seeking removal, and the removal statute is strictly construed against removal jurisdiction.” Prize Frize,
Inc. v. Matrix (U.S.) Inc., 167 F.3d 1261, 1265 (9th Cir. 1999). “Federal jurisdiction must be rejected if
there is any doubt as to the right of removal in the first instance.” Gaus v. Miles, Inc., 980 F.2d 564, 566
(9th Cir. 1992).
In attempting to invoke this Court’s diversity jurisdiction, Defendants must prove that there is
complete diversity of citizenship between the parties and that the amount in controversy exceeds
$75,000. 28 U.S.C. § 1332. To establish citizenship for diversity purposes, a natural person must be a
citizen of the United States and be domiciled in a particular state. Kantor v. Wellesley Galleries, Ltd.,
704 F.2d 1088, 1090 (9th Cir. 1983). Persons are domiciled in the places they reside with the intent to
remain or to which they intend to return. See Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th
Cir. 2001). “A person residing in a given state is not necessarily domiciled there, and thus is not
necessarily a citizen of that state.” Id. For the purposes of diversity jurisdiction, a corporation is a
citizen of any state where it is incorporated and of the state where it has its principal place of business.
28 U.S.C. § 1332(c); see also Indus. Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990);
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 14-5458 PA (VBKx)

Date

Title

July 15, 2014

Patrick B. Jones, et al. v. DePuy Orthopaedics, Inc., et al.

“[A] professional corporation is to be treated like other corporations for purposes of determining the
presence or absence of diversity jurisdiction.” Cote v. Wadel, 796 F.2d 981, 983 (7th Cir. 1986).
For purposes of diversity, Plaintiffs are citizens of Nebraska, DePuy Orthopaedics, Inc. is a
citizen of Indiana and DePuy Synthes, Inc. (formerly known and erroneously sued as DePuy, Inc.) is a
citizen of Indiana and Delaware. Johnson & Johnson Services, Inc., and Johnson & Johnson are citizens
of New Jersey. Co-defendants Thomas P. Schmalzried, M.D. and Thomas P. Schmalzried, M.D., a
Professional Corporation (collectively “Dr. Schmalzried”), who did not join in the Notice of Removal,
are citizens of California. (See Compl. ¶¶ 13-14.) At first glance, then, the Notice of Removal is
procedurally defective pursuant to the rule that all defendants in the state court action must join in the
petition for removal. See United Computer Sys., Inc. v. AT&T Corp., 298 F.3d 756, 762 (9th Cir.
2002). Had Dr. Schmalzried joined in the Notice of Removal, removal would be procedurally improper
based on the “local defendant” rule, which provides that removal is not permitted where one of the
defendants is a “citizen of the State in which such action is brought.” 28 U.S.C. § 1441(b). Defendants
argue, however, that Dr. Schmalzried’s presence in this action should be ignored because he has been
fraudulently joined.
If a plaintiff “fails to state a cause of action against a resident defendant, and the failure is
obvious according to the settled rules of the state, the joinder of the resident defendant is fraudulent.”
McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). If the Court finds that the joinder of
a defendant is fraudulent, that defendant’s presence in the lawsuit is ignored for the purposes of
determining diversity and the propriety of removal. See, e.g., Morris v. Princess Cruises, Inc., 236 F.3d
1061, 1067 (9th Cir. 2001).
“There is a presumption against finding fraudulent joinder, and defendants who assert that
plaintiff has fraudulently joined a party carry a heavy burden of persuasion.” Plute v. Roadway Package
Sys., Inc., 141 F. Supp. 2d 1005, 1008 (N.D. Cal. 2001). A claim of fraudulent joinder should be denied
if there is any possibility that the plaintiff may prevail on the cause of action against that defendant. See
id. at 1008, 1012. “The standard is not whether plaintiffs will actually or even probably prevail on the
merits, but whether there is a possibility that they may do so.” Lieberman v. Meshkin, Mazandarani,
1996 WL 732506, at *3 (N.D. Cal. Dec. 11, 1996). “In determining whether a defendant was joined
fraudulently, the court must resolve ‘all disputed questions of fact and all ambiguities in the controlling
state law in favor of the non-removing party.’” Plute, 141 F. Supp. 2d at 1008 (quoting Dodson v.
Spiliada Maritime Corp., 951 F.2d 40, 42-43 (5th Cir. 1992)). A court should remand a case “unless the
defendant shows that the plaintiff would not be afforded leave to amend his complaint to cure [the]
purported deficiency.” Padilla v. AT&T Corp., 697 F. Supp. 2d 1156, 1159 (C.D. Cal. 2009) (citation
omitted).
Having considered the Notice of Removal, the Court finds that Defendants have not carried their
heavy burden to demonstrate that Dr. Schmalzried is fraudulently joined.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 14-5458 PA (VBKx)

Title

Patrick B. Jones, et al. v. DePuy Orthopaedics, Inc., et al.

II.

Date

July 15, 2014

Analysis

Plaintiff Patrick B. Jones is the recipient of a hip implant (the “Pinnacle Hip”) manufactured by
Defendants. He alleges that he has suffered debilitating injury due to defects in the design and
manufacture of the Pinnacle Hip. Plaintiffs’ Complaint brings the following causes of action against
Defendants and Dr. Schmalzried: (1) strict liability - manufacturing defect; (2) strict liability - failure to
warn; (3) negligence - design defect; (4) negligence - failure to recall/retrofit; (5) negligence - failure to
warn; (6) breach of implied warranty; (7) breach of express warranty; (8) negligent misrepresentation;
(9) intentional misrepresentation; (10) constructive fraud; (11) negligent infliction of emotional distress;
and (12) loss of consortium. In their Notice of Removal, Defendants raise a number of arguments as to
why the case against Dr. Schmalzried must fail and removal is therefore proper. After careful review of
Defendants’ Notice of Removal, the Court finds that, at a minimum, Plaintiffs’ negligence claim against
Dr. Schmalzried adequately states a cause of action. Additionally, Defendants have not established that
Plaintiffs would not be afforded an opportunity to amend their Complaint to cure the potential pleading
deficiencies identified by Defendants.
Defendants assert that, under California’s choice-of-law rules, Plaintiffs’ claims are governed by
the laws of Nebraska, where Mr. Jones received his hip implant and allegedly suffered injury as a result.
Contrary to Defendants’ assertion that California’s choice-of-law rules require the application of
Nebraska law, California’s choice-of-law analysis requires a careful weighing of competing state
interests, of which the location where Mr. Jones received his hip implant and suffered his injuries would
be an important, but not necessarily dispositive, consideration. See Paulo v. Bepex Corp., 792 F.2d 894,
896-95 (9th Cir. 1986). Thus, it is far from clear that Nebraska law applies here.
Assuming arguendo that Nebraska law governs this action, Defendants’ Notice of Removal fails
to carry the heavy burden of demonstrating that Dr. Schmalzried was fraudulently joined.
A.

Negligent Failure to Warn

Defendants argue that, under Nebraska law, Plaintiffs’ negligence claim fails because Dr.
Schmalzried, a nonmanufacturer, owes Plaintiffs no duty of care. The Complaint alleges that Dr.
Schmalzried – through his professional corporation, TPS Corp. – “designed the hip implant that is the
subject of this lawsuit.” (Compl. ¶ 14.) Moreover, Dr. Schmalzried allegedly received millions of
dollars in royalty income for his role in helping design and market the Pinnacle Hip. (Id.) Defendants
acknowledges that Dr. Schmalzried was involved in the design of the Pinnacle Hip. Plaintiffs further
allege that Dr. Schmalzried was a “product champion” of the Pinnacle Hip, and that he actively
participated in the aggressive marketing and promotion of the Pinnacle Hip, thereby inducing physicians
to purchase and use the product. Despite knowing of defects in the design of the Pinnacle Hip, the
Complaint alleges, Dr. Schmalzried failed to disclose that knowledge to either Defendants (the
manufacturer), Plaintiffs, or his physician.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 14-5458 PA (VBKx)

Date

Title

July 15, 2014

Patrick B. Jones, et al. v. DePuy Orthopaedics, Inc., et al.

Taking these allegations as a whole and resolving all ambiguities in Plaintiffs’ favor, the
Complaint adequately states a cause of action for negligent failure to warn under Nebraska law.
Nebraska has adopted the definition of negligent failure to warn found in the Restatement (Second) of
Torts § 388 (1965). See Erickson v. U-Haul Int’l, Inc., 274 Neb. 236, 738 N.W.2d 453, 460 (Neb. 2007)
(citing Restatement (Second) of Torts § 388 (1965)).
Defendants submit a declaration from Dr. Schmalzried stating that he was merely one of eight
physicians who acted as consultants in the design process. If true, this might affect whether Dr.
Schmalzried owes any legal duty to Plaintiffs. It is not the role of this Court, however, to resolve factual
disputes of this nature when determining the propriety of removal. It is enough that the Complaint itself
plausibly alleges that Dr. Schmalzried designed the Pinnacle Hip and failed to adequately warn of
defects in that design. Accordingly, Plaintiffs have stated a possible claim for negligence under
Nebraska law. Because the Court concludes that Plaintiffs have alleged at least one viable claim, it need
not address Defendants’ arguments concerning the viability of Plaintiffs’ remaining claims.
B.

Federal Preemption

Defendants also argue that, in any event, Plaintiffs’ claims premised on a failure to warn are
preempted pursuant to PLIVA, Inc. v. Mensing, 131 S. Ct. 2567, 180 L. Ed. 2d 580 (2011). In Mensing,
the U.S. Supreme Court held that because generic manufacturers of pharmaceuticals approved by the
Food and Drug Administration (“FDA”) have no power to effectuate unilaterally a label change – being
instead required by law to use the same label and warnings as those approved by the FDA with respect to
the brand-name version of the drug – the plaintiffs’ state law claims premised on a failure to warn theory
were preempted. Defendants seek to extend the holding of Mensing well beyond generic manufacturers
of pharmaceuticals, to designers of medical products who allegedly played an integral role in the
marketing of the product. The theory of Plaintiffs’ Complaint, fairly read, is that Dr. Schmalzried, as
designer of the Pinnacle Hip, failed to warn users and Defendants of known risks of the design. Unlike
the generic drug manufacturers in Mensing, “taking [Plaintiffs’] allegations as a whole and resolving all
ambiguities in Plaintiffs’ favor, it is possible that Dr. Schmalzried had a substantial ability to influence
the manufacturing or distribution of the Pinnacle Hip.” Shelton v. DePuy Orthopaedics, Inc., 2011 U.S.
Dist. LEXIS 138246, at *9-11 (C.D. Cal. Dec. 1, 2011) (remanding for no fraudulent joinder under
California law). Thus, Dr. Schmalzried’s control over the content of the warnings is qualitatively
different from that of the generic manufacturers in Mensing, who by law were required to duplicate the
warnings already approved by the FDA. No such obligation, however, is placed by law on Dr.
Schmalzried. Thus, Plaintiffs’ claims are not preempted pursuant to Mensing.
Conclusion
Since Defendants have failed to meet their heavy burden of showing that Dr. Schmalzried was
fraudulently joined, this action may not be removed because defendant is a citizen of the State in which
the action is brought and Plaintiffs are not diverse from all defendants. Neither the “four corners” of the
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 14-5458 PA (VBKx)

Date

Title

July 15, 2014

Patrick B. Jones, et al. v. DePuy Orthopaedics, Inc., et al.

Complaint nor the Notice of Removal contain sufficient allegations concerning § 1332’s requirements.
Therefore, Defendants have not met their burden to establish this Court’s jurisdiction. See Harris v.
Bankers Life & Cas. Co., 425 F.3d 689, 694 (9th Cir. 2005). Accordingly, the Court remands this action
to the Los Angeles County Superior Court, Case No. BC544206, for lack of federal subject matter
jurisdiction. See 28 U.S.C. § 1447(c).
IT IS SO ORDERED.

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