Leedy v. Bristol-Myers Squibb Company et al

Filing 36

ORDER GRANTING MOTION TO REMAND by Judge Jon S. Tigar granting 18 Motion to Remand. (wsn, COURT STAFF) (Filed on 4/24/2017)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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DONALD MAX LEEDY,
Plaintiff,

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BRISTOL-MYERS SQUIBB COMPANY,
et al.,

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United States District Court
Northern District of California

ORDER GRANTING MOTION TO
REMAND

v.

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Case No. 16-cv-07269-JST

Re: ECF No. 18

Defendants.

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Before the Court is Plaintiff Donald Leedy’s motion to remand this case to the Superior

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Court of the State of California, San Francisco County (“State Court”). ECF No. 18. Defendants

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Bristol-Myers Squibb Co. and AstraZeneca Pharmaceuticals LP oppose the motion. ECF No. 20.

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The Court will grant the motion.

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I.

FACTUAL AND PROCEDURAL BACKGROUND

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Plaintiff initially brought this action in state court alleging that Saxagliptin, a prescription

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drug distributed under the brands Onglyzga and Kombiglyze XR, caused heart failure, congestive

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heart failure, death from heart failure, and other serious conditions to users who suffer from Type

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2 diabetes. ECF No. 1-1 at 89-90. Plaintiff alleges that Defendants, in concert with defendant

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McKesson Corporation (“McKesson”), were involved with many aspects of bringing Saxagliptin

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to the market, including, but not limited to, the manufacturing, marketing, and distribution of the

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prescription drug. Id. at 87. Both the Plaintiff and McKesson are residents of California for

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jurisdictional purposes. Id. at 86-87.

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In October 2016, the state court dismissed several plaintiffs on grounds of forum non

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conveniens. Id. at 230-236. Subsequently, Defendants submitted interrogatories to Plaintiff

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asking where he purchased the drug he ingested and seeking details regarding McKesson’s

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involvement in his claim. ECF No. 2 at 36-40, 45-47. Based on his responses ‒ or the lack of

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information in the same ‒ Defendants removed the action to federal court pursuant to 28 U.S.C.

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§ 1446(b)(3) on the grounds that the Court had subject matter jurisdiction based on diversity of the

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parties. ECF No. 1. Defendants allege that “Plaintiff lacks a factual or legal basis to recover

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against McKesson because Plaintiff cannot identify any facts, witnesses, or documents

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establishing that McKesson distributed the Onglyza he ingested,” and he failed to identify the

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pharmacy where he purchased the drug. Id. at 3. Therefore, McKesson was fraudulently joined to

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destroy complete diversity. Id. Plaintiff denies these contentions, and on January 20, 2017 he
filed a motion to remand the case back to state court. ECF No. 18.

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United States District Court
Northern District of California

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II.

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LEGAL STANDARD
“[A]ny civil action brought in a [s]tate court of which the district courts of the United

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States have original jurisdiction, may be removed by a defendant ... to [a] federal district court.”

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28 U.S.C. § 1441(a). “A defendant may remove an action to federal court based on federal

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question jurisdiction or diversity jurisdiction.” Hunter v. Philip Morris USA, 582 F.3d 1039, 1042

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(9th Cir. 2009) (citing 28 U.S.C. § 1441). “Federal jurisdiction must be rejected if there is any

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doubt as to the right of removal in the first instance.” Gaus v. Miles, 980 F.2d 564, 566 (9th Cir.

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1992). There is a strong presumption against removal. Id. “‘[T]he defendant always has the

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burden of establishing that removal is proper.’” Geographic Expeditions, Inc. v. Estate of Lhotka

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ex rel. Lhotka, 599 F.3d 1102, 1107 (9th Cir. 2010) (quoting Gaus, 980 F.2d at 566).

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Federal court jurisdiction based on 28 U.S.C. § 1332 requires complete diversity of

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citizenship between the parties. Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir.

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2001). Complete diversity exists only when no defendant is a citizen of the same state as any

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plaintiff. Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 (1996). A court should remand a case if a

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defendant is “fraudulently joined.” Morris, 236 F.3d 1067-1068. “Fraudulent joinder is a term of

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art.” McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). “If the plaintiff fails to

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state a cause of action against a resident defendant, and the failure is obvious according to the

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settled rules of the state, the joinder of the resident defendant is fraudulent.” Id. “[A] non-diverse
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defendant is deemed a sham defendant if, after all disputed questions of fact and all ambiguities in

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the controlling state law are resolved in the plaintiff's favor, the plaintiff could not possibly

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recover against the party whose joinder is questioned. Nasrawi v. Buck Consultants, LLC, 776 F.

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Supp. 2d 1166, 1169–70 (E.D. Cal. 2011) (citing Kruso v. Int'l Tel. & Tel. Corp., 972 F.2d 1416,

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1426 (9th Cir.1989)). The party alleging fraudulent joinder carries a “heavy burden” of

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demonstrating by clear and convincing evidence that the non-diverse party has been joined

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fraudulently. Hamilton Materials, Inc. v. Down Chem. Corp., 494 F.3d 1203, 1206 (9th Cir.

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2007). The defendant seeking removal to the federal court is entitled to present facts showing the

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joinder is fraudulent, including facts and depositions beyond the pleadings. Ritchey v. Upjohn
Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998) (citing McCabe v. General Foods Corp., 811 F.2d

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United States District Court
Northern District of California

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1336, 1339 (9th Cir. 1987)).

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III.

DISCUSSION

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The Court may find fraudulent joinder when the failure to state a cause of action is

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“obvious according to the settled rules of the state.” McCabe v. Gen. Foods Corp., 811 F.2d 1336,

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1339 (9th Cir. 1987). Plaintiff argues that McKesson has failed to show that his claim is

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impossible because sufficient discovery has not yet taken place. ECF No. 18-1 at 16-17.

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Defendants argue that the fact that Plaintiff has not identified the pharmacy where he filled

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an Onglyza prescription should preclude him from alleging that McKesson distributed the drugs

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he ingested on information and belief. ECF No. 20 at 7-8. In the prescription drug distribution

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context, courts have held that “[t]he fact that [a plaintiff’s] allegations [are] based on information

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and belief does not make it ‘obvious according to the settled rules of the state’ that the complaint

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fails to state a claim.” D.A. ex. rel. Wilson v. McKesson Corp., No. 1:13-CV-01700-LJO, 2014

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WL 202738, at *5 (E.D. Cal. Jan. 17, 2014) (quoting Oliver v. McNeil–PPC, Inc., No. 1:12-cv-

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01865-AWI-SAB, 2013 WL 459630, at * 6 (E.D. Cal. Feb. 4, 2013), and citing cases).

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The Court need not resolve this argument, because remand is required for another reason:

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Plaintiff’s strict liability action against McKesson does not necessarily require that Plaintiff have

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obtained Onglyza in a distribution chain that included McKesson. ECF No. 1-1 at 15. California

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law remains unsettled on the question of whether a plaintiff may bring a strict liability action
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against a distributor who is not part of the vertical chain of distribution that provided a plaintiff

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with the product that caused him or her harm. See Mendez v. AstraZeneca Pharm. LP, No. 1:12-

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CV-00535-LJO, 2012 WL 1911382, at *2 (E.D. Cal. May 25, 2012) (“California Courts have yet

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to address the liability of distributors and other potential defendants in the commercial chain in

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prescription drug cases.”).
In Buck v. McKesson Corp., No. 13CV2541 JLS (RBB), 2014 WL 12514793, at *3 (S.D.

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Cal. July 29, 2014), the court remanded an action against McKesson where McKesson could not

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have distributed the drug the plaintiff ingested because the defendant “nonetheless failed to show

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that [p]laintiffs’ claims [were] obviously without merit under California law, such that they would
be dismissed without leave to amend.” Id. The court noted that California law extends strict

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United States District Court
Northern District of California

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liability “to non-manufacturing parties outside the vertical chain of distribution of a product that

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play an integral role in the producing and marketing enterprise of a defective product and that

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profit from placing the product into the stream of commerce.” Id. at *2, (citing Bay Summit

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Cmty. Ass'n v. Shell Oil Co., 59 Cal. Rptr. 2d 322, 328 (1996)). Therefore, despite legitimate

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concerns raised by the defendant as to the merits of the plaintiffs’ action, the court remanded

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because the issue was better decided by the state court in the first instance. Id. at *3.
Similarly here, whether McKesson remains liable under Plaintiff’s strict liability theory

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remains a question properly decided by the state court. “‘[T]hat a defendant might be dismissed,

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particularly after a close call in an evolving area of state law, does not mean that the defendant

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was fraudulently joined.’ Rather, these are ‘complex issues of state law’ that should be decided in

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the first instance by state, not federal, courts.” Buck, 2014 WL 12514793, at *3 (quoting W.W. v.

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McKesson Corp., Case No. SACV 13-1649 AG (DFMx), 2014 WL 12577143, at *3 (Jan. 31,

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2014)). This Court concludes that Defendants have “fail[ed] to show that . . . all of [Plaintiff’s]

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claims would be dismissed without leave to amend,” and therefore remands the case to the state

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court. Buck, 2014 WL 12514793, at *2.

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CONCLUSION

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The Court grants Plaintiff’s Motion to Remand and remands the case to the appropriate
state court.
IT IS SO ORDERED.
Dated: April 24, 2017

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______________________________________
JON S. TIGAR
United States District Judge

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United States District Court
Northern District of California

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