Hilyard v. Medtronic, Inc. et al

Filing 54

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that plaintiffs motion to remand [Doc. #37] is granted. IT IS FURTHER ORDERED that the Clerk of Court shall remand this action to the Twenty-Second Judicial Circuit Court of Missouri (City of St. Louis) from which it was removed. (copy of order sent to Bureau of Hearings and Appeals) Signed by District Judge Carol E. Jackson on 5/8/2014. (KMS)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
VERONICA HILYARD,
Plaintiff,
vs.
MEDTRONIC, INC., et al.,
Defendants.

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Case No. 4:13-CV-2059 (CEJ)

MEMORANDUM AND ORDER
This matter is before the Court on plaintiff’s motion to remand this action to the
Circuit Court of the City of St. Louis, from which it was removed. Defendants oppose
the motion, and the issues are fully briefed.
I.

Background

Defendants Medtronic, Inc. and Medtronic Sofamor Danek USA, Inc. (collectively
“Medtronic”), design, manufacture, and sell various types of medical devices, including
the InFUSE™ Bone Graft and LT-CAGE™ Lumbar Tapered Fusion Device (Infuse).1
Infuse is a Class III medical device approved by the Food and Drug Administration
(FDA) through the required pre-market approval process. It has been approved for
use during single-level lumbar spinal fusion surgeries, when implanted via an anterior
approach.
On February 27, 2008, plaintiff underwent an L4-L5 transforaminal lumbar
interbody fusion at defendant Barnes-Jewish Hospital (BJH), in which defendant
Timothy Kuklo, M.D. implanted Infuse in an “off-label” manner, i.e., a manner not
approved by the FDA. Plaintiff alleges that after the surgery she experienced severe
and chronic pain. Plaintiff attributes her injuries to the defendants’ improper marketing

1

Defendant Doe 1 is a sales representative and consultant employed by Medtronic .

and promotion of Infuse for off-label uses and fraudulent misrepresentations about the
safety of Infuse.
Plaintiff’s complaint asserts the following state law causes of action: (1)
fraudulent misrepresentation; (2) strict liability - failure to warn; (3) strict liability design defect; (4) negligence; (5) breach of implied warranty; (6) breach of express
warranty; (7) violation of the Missouri Merchandising Practices Act; and (8) negligent
misrepresentation.
Defendants removed this action to federal court on the bases of diversity of
citizenship and federal-question jurisdiction. Plaintiff filed the instant motion to remand
arguing that this Court lacks subject-matter jurisdiction.
II.

Legal Standard

An action is removable to federal court if the claims could have originally been
filed in federal court. 28 U.S.C. § 1441; In re Prempro Products Liability Litigation, 591
F.3d 613, 619 (8th Cir. 2010). The defendant bears the burden of establishing federal
jurisdiction by a preponderance of the evidence. Altimore v. Mount Mercy College, 420
F.3d 763, 768 (8th Cir. 2005). All doubts about federal jurisdiction must be resolved
in favor of remand. In re Bus. Men’s Assurance Co. of Am., 992 F.2d 181, 183 (8th
Cir. 1993). In the event that the federal court determines that it lacks subject-matter
jurisdiction over a removed action, it must remand the action to the state court where
it originated. 28 U.S.C. § 1447(c).
III.

Discussion

Defendants contend that this Court has subject-matter jurisdiction over
plaintiff’s claims under both 28 U.S.C. § 1331 and § 1332. They argue that diversity
jurisdiction exists because Washington University and BJH were fraudulently joined.

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Defendants argue that federal-question jurisdiction also exists because plaintiff’s claims
present substantial federal issues. The Court will address these arguments in turn.
1.

Diversity Jurisdiction

Diversity jurisdiction requires an amount in controversy greater than $75,000,
exclusive of interest and costs, and complete diversity of citizenship among the
litigants.2 28 U.S.C. § 1332(a). “Complete diversity of citizenship exists where no
defendant holds citizenship in the same state where any plaintiff holds citizenship.”
OnePoint Solutions, LLC v. Borchert, 486 F.3d 342, 346 (8th Cir. 2007). However,
“[c]ourts have long recognized fraudulant joinder as an exception to the complete
diversity rule.” In re Prempro, 591 F.3d at 620; Witherspoon v. Bayer Healthcare
Pharmaceuticals Inc., 2013 WL 6069009, *2 (E.D. Mo. Nov. 18, 2013).
“Fraudulent joinder occurs when a plaintiff files a frivolous or illegitimate claim
against a non-diverse defendant solely to prevent removal.” Id. Fraudulent joinder
requires a showing that the claim involving the nondiverse party has “no reasonable
basis in fact and law.” Knudson v. Systs. Painters, Inc., 634 F.3d 968, 980 (8th Cir.
2011). Thus, it must be “clear under governing state law that the complaint does not
state a cause of action against the non-diverse defendant” and there is no “arguably
[] reasonable basis for predicting that the state law might impose liability based upon
the facts involved.” Witherspoon, 2013 WL 6069009, at *2. When a district court
reviews a fraudulent joinder claim, “the court has no responsibility to definitively settle
the ambiguous question of state law.” Filla v. Norfork Southern Ry. Co., 336 F.3d 806,
810 (8th Cir. 2003).

2

The parties agree that the amount in controversy requirement is met in this

case.
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In the instant case, plaintiff, Washington University, and BJH are citizens of
Missouri. Medtronic is a citizen of Minnesota and Tennessee and Dr. Kuklo is a citizen
of Colorado. In the notice of removal, defendants contend that Washington University
and BJH are fraudulently joined. Defendants support this contention by arguing that:
(1) plaintiff’s complaint does not plead any factual allegations against Washington
University or BJH to support a claim against them; and (2) plaintiff’s claims against
Washington University and BJH are barred by Missouri’s two-year statute of limitations
for medical malpractice actions.
In support of her motion to remand, plaintiff argues that she has alleged a
colorable claim against Washington University under Missouri law pursuant to the
doctrine of respondeat superior. Plaintiff argues that Dr. Kuklo, an employee and
agent of Washington University, was acting within the course and scope of his agency
when he concealed material facts about Infuse and when he improperly used Infuse
in an off-label manner. Plaintiff argues that these actions were done while Dr. Kuklo
was engaged in the practice of medicine at Washington University and, thus, he was
acting in furtherance of the university’s business of providing medical care to patients.
“Under the doctrine of respondeat superior, an employer is held responsible for
the misconduct of an employee where that employee is acting within the course and
scope of his employment.” Tuttle v. Muenks, 964 S.W.2d 514, 517 (Mo. App. 1998).
“The course and scope of employment is defined as acts (1) which, even though not
specifically authorized, are done to further the business or interests of the employer
under his general authority and direction and (2) which naturally arise from the
performance of the employer’s work.” Daugherty v. Allee’s Sports Bar & Grill, 260
S.W.3d 869, 872-73 (Mo. App. 2008) (citation omitted).

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Upon consideration of these factors, the Court is satisfied that “there is an
arguably reasonable basis for predicting that the state law might impose liability”
against Washington University in this case. See Witherspoon v. Bayer Healthcare
Pharmaceuticals Inc., 2013 WL 6069009, at *2. Although Washington University may
not have known about or authorized Dr. Kuklo’s promotion and implantation of Infuse,
Dr. Kuklo was acting as a surgeon employed by Washington University when the
alleged fraud was committed. Thus, it would not be unreasonable to assume that a
Missouri state court could find that Dr. Kuklo’s actions were in furtherance of the
interests of his employer and which naturally arose from Dr. Kuklo’s occupation as a
surgeon. However, “the clear precedent in this District is that this determination is a
question better left for review by the state court.” Bock v. Liberty Restaurant Group,
4:13-CV-781-AGF (E.D. Mo. Aug. 23, 2013).
In their notice of removal, defendants additionally assert that Washington
University is fraudulently joined because all claims against it are barred by Missouri’s
two-year statute of limitations for medical malpractice. In support of her motion to
remand, plaintiff argues that a five-year statute of limitations applies because her
complaint asserts a claim of fraud, not medical malpractice.
Missouri’s statute of limitations for medical malpractice actions provides, in
pertinent part, that “[a]ll actions against physicians, hospitals . . . and any other entity
providing health care services . . . for damages for malpractice, negligence, error or
mistake related to healthcare shall be brought within two years from the date of
occurrence of the act of neglect complained of[.]” Mo. Rev. Stat. § 516.105.

In

contrast, fraud actions are governed by a five-year statute of limitations, which begins
to run when the fraud was discoverable by the aggrieved party. Mo. Rev. Stat. §

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516.120(4). “A plaintiff may not circumvent the two-year statute of limitations by
characterizing what is actually a medical malpractice claim as a different type of claim.”
Cleveland v. Hand Therapy of Chesterfield, 2008 U.S. Dist. Lexis. 49774, *6 (E.D. Mo.
June 27, 2008). Missouri courts look at the “gravamen or gist of the action” in order
to determine whether the suit is more appropriately categorized as a medical
malpractice action subject to a two-year limitations period or a fraud action subject to
a five-year limitations period. Id. at *7 (citing Barnhoff v. Aldridge, 38 S.W.2d 1029,
1030 (1931)).
After careful examination of the instant complaint, the Court finds that the
“gravamen or gist” of this action could reasonably be construed as fraud and, thus,
subject to a five year statute of limitations under Missouri state law.

Plaintiff’s

complaint alleges that Dr. Kuklo, while employed as a surgeon at Washington
University, was also a paid consultant or “opinion leader” for Medtronic, in which he
received more than $800,000 over an eight-year period. See Doc. #6, ¶ 183. Plaintiff
alleges that during his tenure as an opinion leader, Dr. Kuklo falsified data in a
published study and misrepresented the seriousness of the adverse effects of Infuse.
Id. at ¶ 185-190. Plaintiff further alleges that Dr. Kuklo intentionally failed to inform
plaintiff that Infuse would be used in her spine in an experimental manner and did not
inform her of any risks specific to this off-label use. Id. at ¶ 254-256. Plaintiff alleges
that she relied on Dr. Kuklo’s intentional concealment of information and
misrepresentations when she consented to the surgery. Id. at ¶ 263-273. Nowhere
in the complaint does plaintiff specifically allege a claim of medical malpractice.
Based on these allegations, it would be reasonable to predict that a state court
would find that the gravamen of this action is fraud, not malpractice. According to

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plaintiff, Dr. Kuklo, as an agent of Washington University, executed a scheme that
convinced patients, such as plaintiff, to undergo a dangerous surgery for his own
financial benefit. Dr. Kuklo’s alleged concealment of material facts was relied upon by
plaintiff and this concealment prevented her from making an informed decision
regarding her medical care, which later caused her injuries.

See State ex. rel.

Sperandio v. Clymer, 273 S.W.3d 1, (Mo. App. Feb. 6, 1978) (court found that the
action was based in fraud, not malpractice, when doctor concealed medical information
from plaintiff).
As previously discussed, fraudulent joinder requires a showing that the claim
involving the nondiverse party has “no reasonable basis in fact and law.” Knudson, 634
F.3d at 980. Because plaintiff’s complaint can arguably be classified as a fraud action,
this Court cannot find that Washington University was fraudulently joined. See Filla,
336 F.3d at 810 (when reviewing a fraudulent joinder claim, a district “court has no
responsibility to definitively settle the ambiguous question of state law.”).
Accordingly, the Court finds that plaintiff has asserted a colorable claim against
Washington University. Thus, the citizenship of Washington University will not be
disregarded for the purposes of diversity jurisdiction.3
2.

Federal-Question Jurisdiction

Defendants next argue that this Court may exercise subject-matter jurisdiction
pursuant to 28 U.S.C. § 1331, because plaintiff’s claims present a substantial federal
question. Although federal-question jurisdiction is generally invoked when a plaintiff
pleads a federal cause of action, on rare occasions “federal-question jurisdiction will

3

In light of this determination, it is unnecessary to analyze defendants’
fraudulent joinder argument as to BJH.
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lie over state-law claims that implicate federal issues.” Grable & Sons Metal Prods.,
Inc. v. Darue Eng’g and Mfg., 545 U.S. 308, 312 (2005) (citation omitted). In order
to be removable, those state-law claims must “necessarily raise a stated federal issue,
actually disputed and substantial, which a federal forum may entertain without
disturbing any congressionally approved balance of federal and state judicial
responsibilities.” Id. at 314; see also Gunn v. Minton, 133 S.Ct. 1059, 1065 (2013)
(“[F]ederal jurisdiction over a state law claim will lie if a federal issue is: (1) necessarily
raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal
court without disrupting the federal-state balance approved by Congress.”). Therefore,
the Court may exercise jurisdiction over plaintiff’s state-law claims if they necessarily
raise a disputed and substantial federal issue, and if such an exercise of jurisdiction
would not disturb “Congress’s intended division of labor between state and federal
courts.” Grable, 545 U.S. at 319.
Defendants argue that plaintiff’s state-law claims raise substantial federal issues,
because, to avoid preemption of those claims, plaintiff must allege specific violations
of federal requirements. The Medical Device Amendments (MDA) to the Federal Food,
Drug and Cosmetic Act (FDCA) contain an express preemption provision, preventing
states from imposing requirements on medical devices “different from, or in addition
to” those imposed by federal law. 21 U.S.C. § 360k(a). However, the MDA “does not
prevent a State from providing a damages remedy for claims premised on a violation
of FDA regulations; the state duties in such a case ‘parallel,’ rather than add to, federal
requirements.” Riegel v. Medtronic, Inc., 552 U.S. 312, 330 (2008) (citing Medtronic,
Inc. v. Lohr, 518 U.S. 470, 495 (1996)). “To properly allege parallel claims, the
complaint must set forth facts pointing to specific [federal] requirements that have

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been violated.” Wolicki-Gables v. Arrow Int’l, Inc., 634 F.3d 1296, 1301 (11th Cir.
2011) (internal quotations and citation omitted).
Plaintiff argues that this Court is without jurisdiction, because the only federal
issue in this case has been raised, not by plaintiff, but by defendants’ federal
preemption defense. The Court agrees. Under the longstanding and firmly established
rule of the “well-pleaded complaint,” “federal jurisdiction exists only when a federal
question is presented on the face of the plaintiff’s properly pleaded complaint.”
Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987) (citing Gully v. First Nat’l Bank,
299 U.S. 109, 112-13 (1936)). A federal court may not exercise jurisdiction on the
basis of a federal defense, including one of preemption, even if that defense is foreseen
by plaintiff and addressed in the complaint. Id. at 393 (citation omitted) (“[I]t is...
settled law that a case may not be removed to federal court on the basis of a federal
defense, including the defense of pre-emption, even if the defense is anticipated in the
plaintiff’s complaint, and even if both parties concede that the federal defense is the
only question truly at issue.”).4 In the instant case, plaintiff claims that defendants
violated state law. Plaintiff alleges parallel violations of federal law in the complaint in
order to avoid preemption. This is not enough to support jurisdiction under 28 U.S.C.
§ 1331.
This conclusion is supported by the Supreme Court’s holding in Merrell Dow
Pharm., Inc. v. Thompson, 478 U.S. 804 (1986), that “a state tort claim incorporating
allegations that the FDCA has been violated does not arise under federal law for
purposes of section 1331.” Goade v. Medtronic, Inc., No. 13-5123-CV-SW-ODS, 2013
WL 6237853, at *4 (W.D. Mo. Dec. 3, 2013) (explaining that Merrell Dow’s specific

4

Complete preemption is an exception to this rule, but does not apply in this case.

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holding with regard to state claims incorporating the FDCA remains good law). It also
aligns with several recent decisions issued by district courts, rejecting Medtronic’s
arguments in support of federal-question jurisdiction over plaintiffs’ state-law claims
arising from the development and marketing of Infuse. See, id. at *5 (remanding for
lack of substantial federal issues); David v. Medtronic, Inc., No. 2:13-cv-4441-DMGCW, [Doc. #47] (C.D. Cal. Aug. 6, 2013) (not reported) (remanding, and holding that
“[t]he fact that Plaintiffs may need to establish a parallel federal requirement to avoid
preemption of some or all of their claims is part of Defendants’ preemption defense it does not, as Defendants argue, transform the state law claims into federal
questions.”); but see Jenkins v. Medtronic, Inc., No. 2:13-cv-2004-JTF, 2013 WL
6172234, at *1 (W.D. Tenn. Nov. 21, 2013) (denying motion to remand, and finding
that plaintiffs’ state-law claims raised a substantial federal issue).
Finally, the Court notes that even if plaintiff’s claims did necessarily raise a
substantial federal issue, it is likely that an exercise of federal jurisdiction in this case
would upset Congress’s intended structural balance between state and federal courts.
Congress specifically declined to create a federal cause of action under the FDCA.
Congress also declined to preempt all state remedies or divest state courts of
jurisdiction. The combination of no federal cause of action and no preemption of all
state remedies, while not dispositive, is “an important clue to Congress’s conception
of the scope of jurisdiction to be exercised under 1331.” Grable, 545 U.S. at 318
(discussing Merrell Dow, 478 U.S. 804 (1986)).
*

*

*

For the reasons discussed above, the Court concludes that defendants have
failed to establish subject-matter jurisdiction.

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Accordingly,
IT IS HEREBY ORDERED that plaintiff’s motion to remand [Doc. #37] is
granted.
IT IS FURTHER ORDERED that the Clerk of Court shall remand this action to
the Twenty-Second Judicial Circuit Court of Missouri (City of St. Louis) from which it
was removed.

___________________________
CAROL E. JACKSON
UNITED STATES DISTRICT JUDGE
Dated this 8th day of May, 2014.

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