PENN et al v. MEDVENTURE TECHNOLOGY CORPORATION
Filing
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ORDER granting in part and denying in part motion to lift stay (multiple cases). For the sake of simplicity, and because the actions are identical but for the plaintiffs named therein, the Court will lift the stay as to one of the above-captioned act ions for the limited purpose of engaging in discovery sufficient to determine the propriety of MedVenture's joinder in the cause and whether the requirements of diversity jurisdiction have been satisfied. See Order for specifics. Signed by Magistrate Judge William G. Hussmann, Jr., on 9/20/2013. (NRN)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
NEW ALBANY DIVISION
JULIE BOCOCK, et al.,
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Plaintiffs,
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v.
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MEDVENTURE TECHNOLOGY
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CORPORATION and BOSTON
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SCIENTIFIC CORPORATION,
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Defendants.
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_______________________________________)
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BARBARA BROWN, et al.,
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Plaintiffs,
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v.
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MEDVENTURE TECHNOLOGY
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CORPORATION and BOSTON
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SCIENTIFIC CORPORATION,
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Defendants.
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_______________________________________)
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ADRIENNE BURTON, et al.,
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Plaintiffs,
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v.
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MEDVENTURE TECHNOLOGY
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CORPORATION and BOSTON
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SCIENTIFIC CORPORATION,
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Defendants.
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4:13-cv-00109-SEB-WGH
4:13-cv-00118-TWP-WGH
4:13-cv-00119-RLY-WGH
DELLA CROSS, et al.,
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Plaintiffs,
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v.
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MEDVENTURE TECHNOLOGY
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CORPORATION and BOSTON
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SCIENTIFIC CORPORATION,
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Defendants.
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_______________________________________)
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TIANA HARDY, et al.,
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Plaintiffs,
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v.
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MEDVENTURE TECHNOLOGY
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CORPORATION and BOSTON
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SCIENTIFIC CORPORATION,
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Defendants.
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_______________________________________)
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ADA HERMANN, et al.,
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Plaintiffs,
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v.
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MEDVENTURE TECHNOLOGY
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CORPORATION and BOSTON
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SCIENTIFIC CORPORATION,
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Defendants.
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2
4:13-cv-00110-RLY-WGH
4:13-cv-00116-SEB-WGH
4:13-cv-00117-TWP-WGH
RITA KWASINIEWSKI, et al.,
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Plaintiffs,
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v.
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MEDVENTURE TECHNOLOGY
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CORPORATION and BOSTON
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SCIENTIFIC CORPORATION,
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Defendants.
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_______________________________________)
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JUDITH PENN and TABITHA
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SMITH, et al.,
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Plaintiffs,
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v.
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MEDVENTURE TECHNOLOGY
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CORPORATION and BOSTON
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SCIENTIFIC CORPORATION,
)
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Defendants.
)
4:13-cv-00112-RLY-WGH
4:13-cv-00108-SEB-WGH
ORDER GRANTING, IN PART, AND DENYING, IN PART, PLAINTIFFS’
MOTIONS TO LIFT STAY ONLY FOR PURPOSES OF DETERMINING
SUBJECT-MATTER JURISDICTION
This matter is before the Court on the Plaintiffs’ motions to lift the stay
on these proceedings pending transfer to MDL 2326. The Court, having
considered the motions, the parties’ filings, and relevant law, and being duly
advised, hereby GRANTS the motion in part and DENIES the motion in part.
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I.
Background
This entry addresses eight separate, but essentially identical, products
liability lawsuits. Although they were filed as eight distinct actions, all that
differentiates them, for our purposes, is the plaintiffs. The defendants,
attorneys, motions, briefs, and issues to be considered are indistinguishable.
Each case originated as a products liability suit filed in Clark County,
Indiana, between July 5 and July 11, 2013. (See Dkt. 16-1 at 1.)1 Each
complaint joins as defendants the Boston Scientific Corporation (“BSC”), which
is incorporated in Delaware and operates its principal place of business in
Massachusetts, and the MedVenture Technology Corporation (“MedVenture”),
which is incorporated in Kentucky and, according to the complaints, operates
its principal place of business in Jeffersonville, Indiana. See id. at ¶¶ 6–7.
Each complaint names as plaintiffs individuals from several states, but at least
one plaintiff in each action is alleged to be an Indiana citizen for jurisdictional
purposes. See id. at ¶¶3–5, App. A. Generally speaking, the Plaintiffs allege
that they (or, in some cases, their spouses) were implanted with defective pelvic
mesh products manufactured and marketed by BSC and MedVenture. See id.
at ¶¶ 3–5.
Between August 2 and August 11, BSC removed each suit to this Court,
claiming that MedVenture could not possibly be liable under the Plaintiffs’
1 Given the large number of cases included in this opinion, and whereas the documents in each
are functionally identical, citations to the record refer to the docket in Bocock v. MedVenture
Technology Corporation, No. 4:13-cv-00109-SEB-WGH, and to the analogous entry in each
other action. (For example, a citation to Dkt. 16, the Bocock Plaintiffs’ brief in support of their
motion to lift the stay, refers also to the Plaintiffs’ brief in support of their motion to lift the stay
in each of the other seven cases, irrespective of how they are enumerated on the docket.)
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complaint and that, without a properly joined Indiana defendant, these matters
may be heard in federal court by way of diversity jurisdiction. (Dkt. 1). On
August 15 and 16, the Court granted BSC’s motions to stay each of the
proceedings pending their transfer to MDL 2326, a multi-district litigation
(“MDL”) action created pursuant to 28 U.S.C. § 1407 and placed before the U.S.
District Court for the Southern District of West Virginia. (Dkt. 11). To date,
MDL 2326 has consolidated nearly 7,000 suits against BSC and involving the
same products that form the basis of the Plaintiffs’ claims. (Dkt. 10 at ¶¶1-2).
As of this entry, a review of the docket in MDL 2326 reveals that MedVenture is
named as a defendant only in these eight actions and five others removed from
Clark County to this District.
The Plaintiffs in each action now move the Court to lift the stay for the
narrow purpose of allowing them to conduct sufficient discovery to support a
conclusion that MedVenture is a properly joined Indiana defendant and to
support a motion to remand these actions to the Clark County courts for lack
of subject matter jurisdiction. (Dkt. 15).
II.
Discussion
The Plaintiffs’ motions raise two issues for the Court’s consideration.
First, the Court must determine whether it can and should lift the stay and
resolve the parties’ jurisdictional dispute in this Court since a Conditional
Transfer Order has already been entered. (Dkt. 12-1). Second, if the Court
should decide to resolve that issue here, it must determine a mechanism for
doing so.
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A. Can—and should—the Court lift the stay and resolve the parties’
dispute over subject matter jurisdiction?
The question of whether a court should lift a stay to determine an issue
of subject matter jurisdiction in a matter pending transfer to an MDL court has
been widely litigated, but it has never been answered by the Supreme Court or
the Court of Appeals for the Seventh Circuit, and the district courts’ answers
have been numerous and far from uniform. The Plaintiffs argue that the Court
must lift the stay and resolve the jurisdictional dispute before transferring the
action to MDL 2326, citing Steel Company v. Citizens for a Better Environment,
523 U.S. 83, 94 (1998) for the proposition that a district court must establish
subject matter jurisdiction before it can take any action other than dismissing
a cause or remanding it to a non-federal tribunal. (Dkt. 16 at 8–9). In
response, BSC contends that a court need only establish subject matter
jurisdiction if it will later issue a judgment on the merits and that this Court
may therefore transfer these cases to MDL 2326 without deciding the
jurisdictional issue. (See Dkt. 17 at 3–4 (citing Sinochem Int’l Co. v. Malaysia
Int’l Shipping Corp., 549 U.S. 422, 431 (2007))).
Neither Steel Company nor Sinochem fully controls the question before
the Court. BSC is correct in suggesting that Sinochem undermines the
Plaintiffs’ absolute assertion that the Court must determine jurisdiction before
transferring these actions to MDL 2326, see Sinochem, 549 U.S. at 431, but
that is the extent of Sinochem’s application to these cases. The Sinochem
opinion reflects that it involved a District Court’s dismissal of an action under
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the doctrine of forum non conveniens on grounds that it would be more
appropriately resolved by ongoing proceedings in a Chinese tribunal. See id. at
425, 426–28 (holding that “a court need not resolve whether it has authority to
adjudicate the cause . . . if it determines that, in any event, a foreign tribunal is
plainly the more suitable arbiter of the merits of the case”). BSC does not, as
in Sinochem, seek to transfer these matters out of the federal courts entirely.
BSC merely seeks to transfer them to a different federal court. Taken together,
Steel Company and Sinochem counsel that, if one federal court transfers an
action to another, one of them must establish federal jurisdiction before either
reaches the merits. See In re: LimitNone, LLC, 551 F.3d 572, 577 (7th Cir.
2008) (noting that the Supreme Court’s holding in Sinochem is “consistent with
its holding in Steel Co.). If MDL 2326 is to reach the merits of these suits, as is
BSC’s goal, one court or the other first must determine that the federal courts
have jurisdiction over the proceedings.
The Plaintiffs next urge the Court to adopt the approach employed in
Meyers v. Bayer, 143 F.Supp.2d 1044, 1048–49 (E.D. Wis. 2001), and endorsed
by a number of other districts. (Dkt. 16 at 10–12). Rooted in a “jurisdictionfirst” mentality and considerations of efficiency, the Meyers approach calls on
district courts to at least “make a preliminary assessment of the jurisdictional
issue” before transferring a case to an MDL court. Id. at 1048 (internal
quotation marks omitted). For reasons of judicial economy and consistency, a
court should transfer the action without first establishing jurisdiction only if
identical or similar jurisdictional issues have been raised in other cases that
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have been or may be transferred to the MDL proceeding. Id. at 1049. Where
the jurisdictional question is unique to the case at bar, the district court
should answer it before transferring the action to the MDL proceeding. Id.
The Court finds that the Meyers approach is most appropriate in these
cases. Although not bound by it, the Court is persuaded by Judge Tinder’s
application of Meyers to a similarly situated matter in our District. See
Kantner v. Merck & Co., No. 1:04-cv-2044-JDT-TAB, 2005 WL 277688 (S.D.
Ind., Jan. 26 2005).
BSC points to a long list of district court decisions—including many
involving pelvic mesh litigation against BSC—taking a different course (Dkt. 17
at 4–5), but the Court is bound by none of them and finds the Meyers approach
more prudent. In addition to valuing consistency within the District, the Court
agrees with Judge Tinder’s assessment that it “makes good sense” to establish
subject matter jurisdiction before transferring a case to another federal court
and that “transfer would be improvident” if the case does not belong in federal
court in the first place. Kantner, No. 1:04-cv-2044-JDT-TAB, 2005 WL 277688,
at *3.
Applying the Meyers analysis to the above-captioned matters, the Court
finds that the jurisdictional question presented here is likely to be unique and
should be resolved before transferring these cases to MDL 2326. Contrary to
BSC’s argument, the “exact same jurisdictional issues” at question in these
actions are not likely to arise in others before the MDL court. (See Dkt. 17 at
6). The sole issue for our consideration is whether the Plaintiffs have properly
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joined MedVenture, and that question can be answered only by fact-specific
inquiry into MedVenture’s relationship to BSC and its interaction with the
pelvic mesh products that are the subject of this litigation. Of the roughly
7,000 cases pending before MDL 2326, none originating outside this District
involve MedVenture as a defendant. The Court therefore finds that other cases
before the MDL court are unlikely to require resolution of this issue and that
consistency can be achieved by the judiciary in our own District.
For the same reasons, the Court is not persuaded that the judiciary (or,
for that matter, BSC) will be forced to expend significantly more resources by
resolving jurisdiction in this District than it would in the Southern District of
West Virginia. (See Dkt. 17 at 5–7). Because jurisdiction must be established,
the resources will be expended all the same; the question is strictly one of
where they will be expended. One court or the other must determine whether
MedVenture has been properly joined in these actions and whether they may
proceed in federal court, and BSC has not articulated any compelling reason it
would be advantageous for the issue to be decided by MDL 2326. For the
reasons stated above, the Court would prefer to decide jurisdiction here before
transferring the matters to the MDL court.
B. How should the Court proceed in resolving the jurisdictional
question?
If this Court must determine whether diversity jurisdiction exists, the
Court must determine an appropriate mechanism for doing so. In its Notice of
Removal, BSC asserts alternative arguments supporting fraudulent joinder
and, therefore, a finding of diversity jurisdiction. First, BSC posits that the
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Biomaterials Access Assurance Act of 1998, 21 U.S.C. §§ 1601–06 (“BAAA”)
forms a complete bar to recovery against MedVenture. (Dkt. 1 at 8–11).
Second, BSC argues that the Plaintiffs have failed to state a colorable claim for
relief against MedVenture. (Id. at 12–16). In either case, says BSC, the
doctrine of fraudulent joinder requires MedVenture’s dismissal from the
proceedings and—because no Plaintiff is from Delaware or Massachusetts—
establishes diversity jurisdiction for the remaining claims against BSC.
The fraudulent joinder doctrine prevents a state court plaintiff from
naming an in-state defendant for the sole purpose of defeating federal diversity
jurisdiction. Schwartz v. State Farm Mut. Auto. Ins. Co., 174 F.3d 875 (7th Cir.
1999). “Fraudulent joinder occurs . . . when there is no possibility that a
plaintiff can state a cause of action against nondiverse defendants in state
court . . . .” Gottlieb v. Westin Hotel Co., 990 F.2d 323, 327 (7th Cir. 1993). To
prevail on a fraudulent joinder claim and establish diversity jurisdiction, the
removing defendant bears the “heavy burden” of showing that “after resolving
all issues of fact and law in favor of the plaintiff, the plaintiff cannot establish a
cause of action against the in-state defendant.” Poulos v. Naas Foods, Inc., 959
F.2d 69, 73 (7th Cir. 1992) (emphasis in original). It is proper for a district
court to consider evidence beyond the pleadings in ruling on a fraudulent
joinder claim. See, e.g., Schwartz, 174 F.3d at 879 (finding no reasonable
possibility of liability based on “the law and the facts before” the court);
LeBlang Motors, Ltd. v. Subaru of America, 148 F.3d 680, 690–91 (7th Cir.
1998) (considering deposition testimony in finding fraudulent joinder).
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As its first argument in favor of fraudulent joinder, BSC contends that
the BAAA precludes any finding of liability against MedVenture. (Dkt. 1 at 8–
11). In short, BSC claims that MedVenture’s interaction with BSC and the
pelvic mesh products in question render it a “biomaterials supplier” immune
from state or federal liability. (Id.). In support of this argument, BSC relies on
affidavit testimony from Kevin Bramer, MedVenture’s President and Chief
Executive Officer. (Id. at ¶¶ 31–33, 35; Dkt. 1-2.)
In the alternative, BSC contends that the Plaintiffs have failed to state
any colorable claim for relief against MedVenture as a matter of Indiana law.
(Dkt. 1 at 12–16). BSC argues that the Plaintiffs’ products liability and breach
of warranty claims are wholly precluded by Indiana’s Product Liability Act, IND.
CODE 34-20-1 et seq. (“IPLA”), and Indiana’s version of the Uniform Commercial
Code, IND. CODE 26-1-1 et seq. (“UCC”). (Dkt. 1 at ¶¶ 40–41). As with its BAAA
argument, BSC supports its IPLA and UCC defenses with Mr. Bramer’s
affidavit. (Id.). As to the Plaintiffs’ remaining claims of fraud, civil conspiracy,
negligent misrepresentation, and loss of consortium, BSC alleges that the
complaints fail to articulate any colorable claim for relief under Indiana law
and allow for no possibility that the Plaintiffs may state a cause of action
against MedVenture. (Id. at ¶¶ 42– 45.).
It is important to note that BSC has submitted to this Court an affidavit
and has therefore gone beyond merely challenging the pleadings entirely on
their face. If this Court is to consider the facts raised by the affidavit, the
Court cannot determine the propriety of MedVenture’s joinder on the facts
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presently in the record. To resolve BSC’s statutory arguments—those rooted in
the BAAA, IPLA, and UCC—the Court cannot rely on facts tendered by one
party without allowing the opposing parties to engage in some discovery to test
those facts. Whether MedVenture is entitled to avail itself of these statutory
protections can be determined only by fact-specific inquiry into MedVenture’s
interaction with the pelvic mesh products and BSC. Indeed, BSC supports
these defenses with Mr. Bramer’s affidavit testimony, and to accept that
testimony at face value without offering the Plaintiffs an opportunity to test
whether the affidavit presents a complete or truthful recitation of facts would
cut against the Court’s notions of basic fairness.
Without granting BSC’s statutory arguments, the Court cannot find
fraudulent joinder on the basis of BSC’s argument that the Plaintiffs’ remaining
claims are not colorable under Indiana law. Simply put, even if BSC is correct
and each of those claims would be dismissed by an Indiana court, that decision
would have no bearing on diversity jurisdiction. As BSC acknowledges in its
Notice of Removal, none of the Plaintiffs’ allegations singles out MedVenture; all
are against “the Defendants,” referring jointly to MedVenture and BSC. (See
Dkt. 1 at ¶ 38 n.5). To find that these claims are not colorable would mean
they should be dismissed as to both BSC and MedVenture, leaving MedVenture
as a party to every remaining claim. BSC argues that MedVenture has not in
fact engaged in any conduct that could expose it to liability on these claims and
that “[a] common sense reading of the allegations against ‘defendants’ show
[sic] that they are actually lodged against the manufacturer of the Products,
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BSC, and not MedVenture.” Id. This may prove true. However, it is a factdependent argument contingent on Mr. Bramer’s affidavit testimony, and the
Court cannot accept it until discovery has been allowed.
III.
Conclusion
For the foregoing reasons, the Court GRANTS the Plaintiffs’ motion to lift
the stay in part and DENIES it in part pursuant to the following orders:
1. For the sake of simplicity, and because the actions are identical but for
the plaintiffs named therein, the Court will lift the stay as to one of the
above-captioned actions for the limited purpose of engaging in discovery
sufficient to determine the propriety of MedVenture’s joinder in the cause
and whether the requirements of diversity jurisdiction have been
satisfied.
2. The Court grants counsel for the parties ten days to reach an agreement
as to which of the eight cases shall be the subject of the lifted stay. If an
agreement is not with the Court after ten days, the Plaintiffs may
designate one case, and the Defendants may designate another. Each
designation shall be accompanied by a brief not greater than three pages
in length addressing why the Court should select that case as the
exemplar.
3. Discovery will be completed no later than 45 days after designation of a
case for discovery. The Plaintiffs must file a motion to remand within 15
days of the close of discovery, and BSC may file a responsive brief
pursuant to the Court’s local rule.
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4. Should the Court subsequently find that the action must be remanded
for lack of subject matter jurisdiction, the Court will lift the stay with
respect to the other seven actions and apply the same order to all eight.
Likewise, if the Court finds that jurisdiction has been established, it will
reinstate the stay as to the designated case and apply the same order to
all eight.
SO ORDERED the 20th day of September, 2013.
__________________________
William G. Hussmann, Jr.
United States Magistrate Judge
Southern District of Indiana
Served electronically on all ECF-registered counsel of record.
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