Spiers et al v. McKesson Corporation et al

Filing 26

ORDER GRANTING MOTION TO REMAND AND DENYING MOTION TO STAY by Judge William Alsup [granting 12 Motion to Remand; denying 11 Motion to Stay]. (whasec, COURT STAFF) (Filed on 8/23/2013)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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RONALD TRAVIS, et al.,
Plaintiffs,

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For the Northern District of California

United States District Court

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No. C 13-03099 WHA

v.

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MCKESSON CORPORATION, a
California corporation, SMITHKLINE
BEECHAM CORPORATION d/b/a/
GLAXOSMITHKLINE LLC, a
corporation, and DOES 1–100, inclusive,

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Defendants.

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ORDER GRANTING MOTION
TO REMAND AND DENYING
MOTION TO STAY

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INTRODUCTION

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In this pharmaceutical products-liability action, plaintiffs move to remand to state court

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for lack of federal jurisdiction while defendants move to stay all proceedings pending potential

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transfer to an MDL. For the reasons stated below, plaintiffs’ motion to remand is GRANTED

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and defendants’ motion to stay is DENIED.

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STATEMENT
Plaintiffs filed a complaint in the Superior Court of the State of California for the County

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of San Francisco in June 2013 for alleged injuries from the use of Avandia, a prescription

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pharmaceutical used to treat type-2 diabetes. Among other defendants, plaintiffs filed suit

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against McKesson Corporation, a California-based pharmaceutical distributor. Defendant

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GlaxoSmithKline LLC removed the action to federal court on fraudulent joinder grounds and

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moved to stay this action pending transfer to the Avandia MDL in the United States District

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Court for the Eastern District of Pennsylvania. Plaintiffs then filed a motion to remand, arguing

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that this Court should first consider the merits of its motion before entertaining any stay of these

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proceedings.

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This order follows full briefing and oral argument.

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ANALYSIS
Our court of appeals has not yet addressed whether courts must first decide the merits

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of a motion to remand before determining whether to stay the proceedings. Generally speaking,

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a stay is warranted if this would serve judicial economy. See, e.g., In re Iphone Application
Litig., No. 10-5878, 2011 WL 2149102, at *2 (N.D. Cal. May 31, 2011) (Judge Lucy Koh). In

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For the Northern District of California

United States District Court

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similar actions involving Avandia, courts in this district have granted a stay. Those courts found

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that doing so would promote judicial economy because the MDL judge has addressed issues of

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“fraudulent joinder, fraudulent misjoinder of plaintiffs, the forum defendant rule, and questions

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relating to removal by defendants who have not yet been served.” See, e.g., Poff v. McKesson,

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No. 13-3115, 2013 WL 3949207, at *2 (N.D. Cal. July 30, 2013) (Judge Jeffrey White); see

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also Flores v. McKesson, No. 13-3153 (N.D. Cal. Aug. 2, 2013) (Judge Jon Tigar); Alvarez v.

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McKesson, No. 13-3112 (N.D. Cal. July 24, 2013) (Judge Thelton Henderson). Given, however,

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the circumstances of the instant action, namely that the MDL has already remanded similar

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actions because it found that McKesson had not been fraudulently joined, this order finds

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differently.

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The question of whether a motion to stay, pending transfer to an MDL, should be decided

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before a motion to remand occurs frequently. It is best to rule in the way that most furthers

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judicial economy, unless this would unreasonably prejudice one of the parties. Thus, when a

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jurisdictional issue has not yet arisen before the MDL, a motion to stay has been denied and the

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action remanded to state court because burdening the MDL with a new jurisdictional issue would

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not be in the interest of judicial economy. Marble v. Organon, No. 12-2213, 2012 WL 2237271,

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at *3 (N.D. Cal. June 15, 2012). Where, however, other cases pending before the MDL have

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raised the same jurisdictional issue, a stay was granted because it would be in the interest of
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judicial economy to have all these issues decided together. See, e.g., Addison v. Bristol-Meyers

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Squibb Co., No. 13-2166, 2013 WL 3187859, at *1 (N.D. Cal. June 21, 2013).

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Here, the MDL has already ruled on the jurisdictional issue at stake. Defendant GSK

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removed the action to federal court on July 3, 2013. Plaintiffs’ supplemental briefing shows,

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however, that no defendant had been served on that date. The MDL found that “when no

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defendant has been served, but a forum defendant has been named, the citizenship of the

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forum defendant may not be ignored for purposes of Section 1441(b)” and removal is proper.

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In re Avandia, 624 F. Supp. 2d 396, 411 (E.D. Pa. 2009) (Judge Cynthia Rufe). Under these

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circumstances, judicial economy would not be served by a transfer to the MDL only to have the
MDL court remand the action back to state court.

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For the Northern District of California

United States District Court

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GSK concedes that it had not been served with the complaint when it removed the case

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and that upon its information and belief, McKesson had also not been served (Dkt. No. 1 at 4).

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MDL Judge Cynthia Rufe has already found that in this specific fact pattern, a remand is proper:

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“[b]ecause removal occurred before any Defendant was served, the Court will . . . remand the

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action.” In re Avandia, 624 F. Supp. 2d at 422.

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GSK’s removal in violation of the forum defendant rule alone is sufficient basis to grant a

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remand. The forum defendant rule states that “a civil action otherwise removable . . . may not be

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removed if any of the parties in interest properly joined and served as defendants is a citizen of

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the State in which such action is brought.” 28 U.S.C. 1441(b)(2). Removal would only have

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been proper if GSK had been served before McKesson, the forum defendant. In the present

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action, however, GSK removed before any defendant was served. As noted above, MDL

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Judge Cynthia Rufe has already held that this constitutes improper removal and GSK has failed

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to show any likelihood that she may now rule differently.

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GSK nonetheless raises three arguments in support of its motion to stay. It argues that

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McKesson has been fraudulently joined in this action because (1) no viable claim can be stated

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against McKesson and (2) since 2009, no action was allegedly taken against McKesson in the

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proceedings previously remanded by MDL Judge Cynthia Rufe. It also argues that (3) there is

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federal jurisdiction under CAFA. Even assuming, arguendo, that GSK could remove the action

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despite the forum defendant rule, these arguments fail to persuade for the following reasons.

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First, GSK argues that plaintiffs can state no viable claim against McKesson. During

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oral argument, counsel for GSK supported this argument by citing Brown v. Superior Court, 44

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Cal. 3d 1049 (1988). That decision concerned product liability for manufacturers of

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pharmaceuticals. Under California law, however, distributors can also be liable for design

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defects. Vandermark v. Ford Motor Co., 61 Cal. 2d 256, 262–263 (1964). It is thus plausible

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that plaintiffs may have a claim against McKesson. GSK failed to cite any binding authority to

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the contrary.
This conclusion is not altered by the Supreme Court’s decision in PLIVA, Inc. v.

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For the Northern District of California

United States District Court

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Mensing, 131 S. Ct. 2567 (2011). According to GSK, that decision preempts any state-law claim

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plaintiffs may have against McKesson, meaning McKesson was fraudulently joined in this

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action. Not so. A preemption defense goes to the merits of a plaintiff’s case and cannot

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overcome the strong presumption against removal jurisdiction. Hunter v. Philip Morris USA,

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582 F.3d 1039, 1045 (9th Cir. 2009). GSK failed to cite any binding authority that would

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suggest otherwise.

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Second, GSK contends that McKesson was fraudulently joined because in the actions

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previously remanded by MDL Judge Cynthia Rufe, allegedly no action was taken against

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McKesson. The removal took place over four years ago and since then, GSK contends, the

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plaintiffs in those actions have not actively pursued any claims against McKesson. GSK argues

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this shows that McKesson has been fraudulently joined in the present action. This argument,

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too, must be rejected. During oral argument, counsel for plaintiffs disputed GSK’s allegation

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that no action was taken against McKesson in those actions. But even if GSK’s contention were

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true, that does not alter the conclusion for this action. The fact that no action was taken against

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McKesson in separate litigation, involving different plaintiffs and different counsel, cannot lead

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to the conclusion that McKesson, against which plaintiffs may have an otherwise viable claim,

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was fraudulently joined in this action.

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Third, GSK contends that there is removal jurisdiction under CAFA in this action, an

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issue not yet addressed by MDL Judge Cynthia Rufe. But removal of a mass action under

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CAFA requires that the action involves at least 100 plaintiffs. 28 U.S.C. 1332(d)(11)(B)(I).

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That requirement is not met in the present action. Furthermore, Section 1332(d)(11)(c) explicitly

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precludes transfer of mass actions, removed pursuant to CAFA, to an MDL unless a majority of

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the plaintiffs request such transfer. Even if the action were removable under CAFA, GSK’s

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motion to stay would therefore still be denied.

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This order is not persuaded by GSK’s contention that it would suffer prejudice if a stay is

is improper. To the contrary, it would cause undue prejudice to plaintiffs to be forced to file and

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For the Northern District of California

denied when it removed the action from state court despite the MDL’s ruling that such removal

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United States District Court

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argue motions to remand in two different courts before being sent back to square one — state

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court, where this action belongs.

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CONCLUSION
GSK will not be granted a stay since the MDL has already made clear this action should

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be remanded. GSK’s motion to stay is therefore DENIED and plaintiffs’ motion to remand is

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GRANTED. The Clerk shall REMAND this action to the Superior Court for the County of

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San Francisco.

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IT IS SO ORDERED.

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Dated: August 23, 2013.

WILLIAM ALSUP
UNITED STATES DISTRICT JUDGE

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