JENNIFER L. THURSTON, Magistrate Judge.
Plaintiff A.S., by and through his guardian ad litem Ellen Scusa ("Plaintiff"), seeks remand of the action Kern County Superior Court. (Doc. 7). Plaintiff argues this Court lacks diversity jurisdiction because Defendant McKesson is a citizen of California.
Defendants Pfizer Inc. and Pfizer International LLC (collectively, "Pfizer"), as well as Wyeth Pharmaceuticals Inc., oppose the motion to remand (Doc. 16). Pfizer argues this Court has jurisdiction because Defendant McKesson was fraudulently joined. Moreover, Pfizer requests the Court stay the action pending resolution of a motion before the Judicial Panel on Multidistrict Litigation. (Doc. 12).
For the reasons set forth below, Plaintiff's motion to remand is
Plaintiff initiated this action by filing a complaint on January 13, 2013, in Kern County Super Court, Case No. S-1500-CV-278692-LHB. (Doc. 1 at 2; Doc. 1-1 at 8). Plaintiff alleges his mother was prescribed "venlafaxine," which "is manufactured, promoted, distributed, labeled and marketed...under the trade name Effexor" by Defendants Pfizer; McKesson Corporation, individually and doing business as Northstar RX LLC ("McKesson"); and Wyeth Pharmaceuticals, Inc. (collectively, "Defendants"). (Doc. 1-1 at 10, 13). Effexor "is a member of the class of drugs known as `serotoninnorepinephrine reuptake inhibitors' or `SNRIs,'" and is used to treat anxiety and depressive disorders. Id. at 10-11, ¶24. Plaintiff alleges his mother took the medication while pregnant, which resulted in Plaintiff having a "life-threatening congenital heart defect called pulmonary artery stenosis." Id. at 14, ¶29. Plaintiff claims McKesson distributed the Effexor which his mother took. Id. at 11 ¶ 7.
Plaintiff asserts his heart defect "was a direct result of his mother's ingestion of Effexor during her pregnancy," and that prior to the time she ingested the medication, "Defendants knew through animal studies and post-marketing reports that Effexor was associated with a significant increased risk of cardiac defects in babies whose mothers ingested Effexor during pregnancy." (Doc. 1-1 at 14, ¶¶ 26, 31). In addition, Plaintiff alleges that "the Pfizer Defendants knew or should have known that Effexor was associated with an increased risk of congenital heart defects and other birth defects in babies of mothers who ingest Effexor during pregnancy." Id. at 14, ¶31. Plaintiff contends that despite this knowledge, Defendants aggressively and actively promoted Effexor," and that "[t]he Pfizer Defendants touted Effexor as being a safe alternative for pregnant women." Id., ¶ 27.
Plaintiff alleges that "Defendants failed to warn Ms. Scusa, her health care providers, or the public and the medical community" of the risks involved with Effexor (Doc. 1-1 at 15, ¶36). Plaintiff contends, "[a]s manufacturers and distributors of prescription drug products, specifically Effexor and/or generic venlafaxine, each of the Defendants has a duty to adequately communicate warnings to physicians and the medical community (or to patients who could be expected to take the drug) and to exercise due care to conduct safety surveillance for the drug and otherwise ensure that the warnings they are required to disseminate about the drug are accurate and adequate, and that these warnings are effectively communicated to physicians, pharmacists, and patients using the drug." Id. at 19, ¶62. However, Plaintiff contends, "The Pfizer Defendants have never informed doctors of these serious risks, even though third-party research shows the association between Effexor and cardiac defects and several other types of birth defects." Id. at 14 ¶ 28. Specifically, Plaintiff asserts each of the Defendants breached its duties because they failed to:
(Doc. 1-1 at 19-20, ¶63). Rather, Plaintiff asserts "Defendants falsely and fraudulently represented to Plaintiff's mother, her prescribing physicians and healthcare providers, the medical, scientific, pharmaceutical and healthcare communities, the FDA, and the public in general that Effexor was safe and effective for its indicated use during pregnancy." Id. at 16, ¶43. Notably, however, Plaintiff alleges "Effexor has never been approved by the FDA for use in pregnant women." Id. at 14 ¶ 24.
For the foregoing acts, Plaintiff raises the following causes of action: (1) strict liability- failure to warn; (2) negligence; (3) breach of implied warranty; (4) breach of express warranty; (5) deceit by concealment pursuant to Cal. Civil Code §§ 1709, 1710; (6) negligent misrepresentation; and (7) fraud and fraudulent concealment. (See generally Doc. 1-1 at 9, 22-28).
Plaintiff filed a proof of service on March 21, 2013, indicating McKesson Corporation was served on February 25, 2013.
On April 12, 2013, Pfizer filed a Notice of Removal, thereby initiating the action in this Court. (Doc. 1). Pfizer asserted the action was properly removed pursuant to 28 U.S.C. §§ 1332 and 1441 "because this is a civil action between citizens of different States, in which the amount in controversy exceeds the sum of $75,000, exclusive of costs and interest." Id. at 3. In addition, Pfizer filed a "Statement of Corporate Disclosure" pursuant to Rule 7.1 of the Federal Rules of Civil Procedure in which counsel Daniel Rygorsky certified Wyeth Pharmaceuticals, Inc. is "an indirect wholly-owned subsidiary of Defendant Pfizer Inc." (Doc. 5 at 2). Pfizer filed its answer to the complaint on April 18, 2013. (Doc. 7).
Plaintiff filed the motion to remand the action on April 18, 2013, asserting removal is not proper because there is not complete diversity among the parties. (Doc. 7). Pfizer filed its opposition to the motion on April 8, 2013 (Doc. 16), to which Plaintiff replied on May 18, 2013.
Pfizer filed a motion to stay proceedings in the action pending resolution of a motion before the Judicial Panel on Multidistrict Litigation regarding establishment of a multidistrict litigation proceeding for federal actions in which the plaintiffs alleged birth defects due to Effexor. (Doc. 12). Plaintiff filed his opposition to the motion on May 15, 2013 (Doc. 17), to which Pfizer filed a reply on May 22, 2013. (Doc. 21).
On May 29, 2013, the Court held a hearing Plaintiff's motion to remand the action to Kern County Superior Court and Pfizer's motion to stay the action.
In the Notice of Removal, Pfizer asserted the Court has diversity jurisdiction over the action because "McKesson has been fraudulently joined [and] its citizenship should be disregarded." (Doc. 1 at 4). According to Pfizer, "Plaintiff's claims against McKesson fail as both a matter of law and under the allegations of the Complaint." Id. at 5. On the other hand, Plaintiff contends that "[t]he overwhelming majority of Courts in California have rejected arguments that removal is proper in cases where a California resident has named McKesson Corporation . . . as a defendant and, instead, have determined that remand is appropriate." (Doc.7-1 at 9; see also Doc. 7-1 at 26). Further, Plaintiff asserts the notice of removal "is procedurally defective" "because the Notice fails to demonstrate that McKesson joined or consented to removal." Id. at 10, 27.
Pursuant to 28 U.S.C. § 1441(a), a defendant has the right to remove a matter to federal court where the district court would have original jurisdiction. Caterpillar, Inc. v. Williams, 482 U.S. 286, 392 (1987). Specifically,
28 U.S.C. § 1441(a). District courts have "original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." Id. at § 1331.
A party seeking removal must file a notice of removal of a civil action within thirty days of receipt of a copy of the initial pleading. Id. at § 1446(b). Removal statutes are to be strictly construed, Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992), and the party seeking removal bears the burden of proving its propriety. Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996); Abrego v. Dow Chem.
Co., 443 F.3d 676, 683-85 (9th Cir. 2006); see also Calif. ex. rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 ("the burden of establishing federal jurisdiction falls to the party invoking the statute"). "[A]ny doubt about the right of removal requires resolution in favor of remand." Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009) (citing Gaus, 980 F.2d at 566).
The District Court has original jurisdiction over actions in which there is complete diversity of citizenship. See 28 U.S.C. § 1332(a). Plaintiff alleges he is a California resident; Pfizer, Inc. is a Delaware Corporation with its principal place of business in New York; and Pfizer International LLC is a New York Corporation. (Doc. 1-1 at 11). In addition, Plaintiff asserts McKesson is a Delaware Corporation with its principal place of business in California. Id. Pfizer has established diversity jurisdiction between its companies and Plaintiff, and asserts the requirement of 28 U.S.C. § 1332(a) is satisfied because McKesson is a sham defendant whose presence does not destroy the diversity jurisdiction. As explained by the Ninth Circuit, an exception to the requirement for complete diversity exists when a non-diverse defendant is "fraudulently joined." McCabe v. Gen. Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987).
"Fraudulent joinder is a term of art," and does not require an ill motive by a plaintiff. McCabe, 811 F.2d at 1339. The Court need not find the joinder was for the purpose of preventing removal. Briano v. Conseco Life Ins. Co., 126 F.Supp.2d 1293, 1296 (C.D. Cal. 2000). Rather, joinder is deemed fraudulent if the plaintiff cannot state a cause of action against the non-diverse defendant. Nasrawi v. Buck Consultants, LLC, 776 F.Supp.2d 1166, 1175 (E.D. Cal. 2011). The Court must determine that "the plaintiff could not possibly recover against the party whose joinder is questioned." Id.; see also Briano, 126 F. Supp. 2d at 1296 (explaining a court must find "there is absolutely no possibility that the plaintiff will be able to establish a cause of action against the non-diverse defendant in state court"). When evaluating whether a plaintiff can prevail on the merits of his claim against a defendant who is alleged to have been fraudulently joined, "all disputed questions of fact and all ambiguities in the controlling state law are resolved in the plaintiff's favor." Nasrawi, 776 F. Supp. 2d at 1170 (citing Kruso v. Int'l Tel. & Tel. Corp., 972 F.2d 1416, 1426 (9th Cir. 1989).
The Court may look beyond the pleadings to determine if a defendant has been fraudulently joined, but "`a plaintiff need only have one potentially valid claim against a non-diverse defendant' to survive a fraudulent joinder challenge." Nasrawi, 776 F. Supp. 2d at 1170 (citing Knutson v. Allis-Chalmers Corp., 358 F.Supp.2d 983, 993-95 (D. Nev. 2005); Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998)). The party alleging fraudulent joinder has the "heavy burden" of demonstrating by clear and convincing evidence, the non-diverse party has been joined fraudulently. Hamilton Materials, Inc. v. Down Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007); Padilla v. AT&T Corp., 697 F.Supp.2d 1156, 1159 (C.D. Cal. 2009).
Where the moving party must resort to defenses to the merits of the action to demonstrate the defendant was fraudulently named, it cannot be said that the plaintiff's failure to state a claim against the resident defendant is "obvious according to the settled rules of the state." Hamilton Materials Inc. v. Dow Chem. Corp., 494 F.3d 1203, 1206 (9th Cir. 2007). In this event, the defendant has failed to "overcome the "`strong presumption against removal jurisdiction.'" Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992).
Pfizer contends: "Plaintiff has joined his failure-to-warn claims against Pfizer and Wyeth Pharmaceuticals Inc. —which meet all of the requirements for federal diversity jurisdiction — with claims against a non-diverse distributor, McKesson Corp." (Doc. 16 at 9). According to Pfizer, Plaintiff's claims against McKesson fail because (1) a pharmaceutical medicine distributor cannot be held liable for failure to warn under California law, (2) Plaintiff fails to plead facts that establish a causal nexus between McKesson and his alleged injury. (See id. at 2).
According to Pfizer, "California's learned intermediary doctrine precludes any duty to warn consumers directly," and as such Plaintiff is unable to "establish that McKesson had a duty to warn with respect to the medication." (Doc. 16 at 16). In addition, Pfizer asserts that "the learned intermediary doctrine precludes Plaintiff from establishing the necessary element of causation against McKesson." Id.
Under the learned intermediary doctrine, the duty to warn of risks involved with the use of prescription drugs "runs to the physician, not the patient." Carlin v. Superior Court, 13 Cal.4th 1104, 1116 (1996) (emphasis omitted). The California Court of Appeal explained that the rationale behind the learned intermediary doctrine as follows:
Carmichael v. Reitz, 17 Cal.App.3d 958, 989 (1971) (citation omitted). The doctrine, "where it applies at all, applies only if a manufacturer provided adequate warnings to the intermediary." Stewart v. Union Carbide Corp., 190 Cal.App.4th 23, 29 (2010); see also Love v. Wolf, 226 Cal.App.2d 378, 395 (1964) (explaining that with medication, "if adequate warning of potential dangers of a drug has been given to doctors, there is no duty by the drug manufacturer to insure that the warning reaches the doctor's patient for whom the drug is prescribed").
Notably, "[t]he learned intermediary doctrine is a defense to a cognizable cause of action which courts do not ordinarily consider in determining fraudulent joinder." Martin v. Merck & Co., 2005 WL 1984483, at *4 (E.D. Cal. Aug. 15, 2005) (citing Ritchey v. Upjohn Drug Co., 139 F.3d 1313, 1318-19 (9th Cir. 1998)). In any event, the argument that the learned intermediary doctrine should apply by analogy to McKesson as a distributor—rather than a manufacturer—is a tacit admission that this defense does not "obviously" preclude a cause of action against McKesson. On the other hand, the defense applies only where the warning given was adequate based upon "what was scientifically knowable." Id. Where the warning fails to provide the doctor with known or knowable information which militates against use of the drug by certain patients, the learned intermediary doctrine does not preclude imposition of liability. Id. In California, this includes liability imposed on the distributor. Id.
Here, as stated above, Plaintiff alleges Defendants knew of the risks to pregnant women the drug posed and failed to warn of these risks. Despite this, Plaintiff alleges Defendants "touted Effexor as being a safe alternative for pregnant women" despite that the FDA had never approved the drug for use by pregnant women. (Doc. 1-1 at 14, ¶¶ 24, 26, 27) Thus, based upon these factual allegations, the learned intermediary doctrine would not preclude a cause of action against McKesson.
Pfizer argues, "Regardless of how Plaintiff couches his claims, this is a failure-to-warn action, and all of Plaintiff's claims rely on his allegation that a purported `increased risk of congenital heart defects and other birth defects' was not disclosed." (Doc. 26 at 9). Pfizer asserts, "McKesson had neither a duty to warn patients directly nor a duty or the opportunity to provide warnings to prescribing physicians," and as a result "it cannot be held liable for failure to warn under California law." Id.
According to Pfizer, "the California Supreme Court's adoption of comment k of the Restatement (Second) of Torts Section 402A precludes liability for prescription medicines based on any theory other than manufacturing defect, which has not been alleged here, or failure to warn."
On the other hand, Plaintiff argues "it is well-established under California law that distributors may be held in strict liability for failure to warn." (Doc. 7-1 at 13) (emphasis omitted) (citing Martin v. Merck & Co., Inc., 2005 WL 1984483, *3 (E.D. Cal., Aug. 15, 2005); Maher v. Novartis Pharm. Corp., 2007 WL 2330713 at *4 (S.D. Cal. Aug. 13, 2007); Anderson v. Owens-Corning Fiberglass Corp., 53 Cal.3d 987, 994 (1991); Daly v. General Motors Corp., 20 Cal.3d 725, 739 (1978); Vandermark v. Ford Motor Co., 61 Cal.2d 256, 262-63 (1964); Bostick v. Flex Equipment Co., 147 Cal.App.4th 80, 88 (2007); Moorhouse v. Bayer, 2008 WL 2477389, *5 (N.D. Cal., Jun. 17, 2008); Alaniz v. Merck, 2005 WL 6124308 (C.D. Cal., Jun. 3, 2005)). Plaintiff asserts this Court "confirmed that `strict products liability imposes liability in tort on all participants in the chain of distribution of a defective product." (Doc. 7-1 at 14) (quoting Mendez, 2012 WL 1911382, at *2)). Further, Plaintiff contends "no California court has held that distributors are immune from liability for failure to warn." Id. (citing Maher, 2007 WL 2330713 at *4).
Generally, under California law, "a defendant involved in the marketing/distribution process has been held strictly liable if three factors are present: (1) the defendant received a direct financial benefit from its activities and from the sale of the product; (2) the defendant's role was integral to the business enterprise such that the defendant's conduct was a necessary factor in bringing the product to the initial consumer market; and (3) the defendant had control over, or a substantial ability to influence, the manufacturing or distribution process." Bay Summit Cmty. Ass'n v. Shell Oil Co., 51 Cal.App.4th 762, 773 (1996) (citing Kasel v. Remington Arms Co., 24 Cal.App.3d 711, 724 (1972)). Accordingly, California law provides a distributor may be held strictly liable.
Importantly, in Brown the California Supreme Court did not address the liability of a distributor of prescription drugs, but only the liability of a manufacturer. The court observed:
Brown, 44 Cal. 3d at 1059, n. 4 (emphasis added). The court determined "a manufacturer is not strictly liable for injuries caused by a prescription drug so long as the drug was properly prepared and accompanied by warnings of its dangerous propensities that were either known or reasonably scientifically knowable at the time of distribution." Id. at 1069. Accordingly, Brown does not necessarily preclude Plaintiff's claim for strict liability against McKesson as a distributor of Effexor. Indeed, because Plaintiff claims that the label failed to warn of known or knowable risks to pregnant women, Brown does not preclude liability even for the manufacturer.
After considering Brown, this Court observed previously, "In the prescription drug context, the California Supreme Court has held that manufacturers of prescription drugs can be held strictly liable for a failure to warn of knowable risks. [Citation] The general rule under California law is that all of the participants in the chain of distribution can be strictly liable for injuries caused by a defective product." Mendez, 2012 WL 1911382, at *2 (citing Bostick v. Flex Equip. Co., Inc., 147 Cal.App.4th 80, 88 (2007). California courts have not addressed whether a distributor in prescription drug cases may be held strictly liable. Id. Therefore, in Mendez the Court declined to find the plaintiff's claim for strict liability against McKesson was not viable under California law. Likewise, in Hinds v. Zimmer, the Court concluded Brown has not foreclosed strict liability for distribution of a product. Id., 2009 WL 1517893, at *4 (E.D. Cal. June 1, 2009).
Significantly, this Court's rulings are consistent with other courts within the Ninth Circuit which have examined the issue. See, e.g., Norris v. AstraZeneca Pharmaceuticals LP, 2012 WL 1944760, at *2-3 (S.D. Cal. May 30, 2012) ("the court concludes that the complaint adequately establishes that a distributor of pharmaceuticals may be liable under California law"); Moorhouse v. Bayer Healthcare Pharmaceuticals, Inc., 2008 WL 2477389, at *6 (N.D. Cal. Jun. 18, 2008) ("it is not obvious according to the settled rules of California that distributors of prescription drugs cannot be held liable for a failure to warn"). Further, as Plaintiff notes, the Central District determined, after Skinner was decided that, comment k of the Restatement (Second) of Torts "does not exempt distributors from strict liability." Black v. Merck & Company, Inc., 2004 WL 5392660 at *4 (C.D. Cal., Mar. 3, 2004) (emphasis added). Notably, Black
According to Pfizer, McKesson "had no authority to alter the warnings that accompanied Effexor." (Doc. 16 at 20). Pfizer asserts "any attempt by a distributor to change the label would violate federal law, and therefore, state law requiring them to do so is preempted." Id. at 21 (citing PLIVA v. Mensing, 131 S.Ct. 2567, 2579 (2011)
Importantly, however, the Supreme Court has explained that federal preemption is a defense to a claim. See Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 13-14 (1983). Further, the Ninth Circuit has determined it is inappropriate to examine whether a plaintiff's claims are preempted by federal law on a motion to remand. Hunter v. Philip Morris USA, 582 F.3d 1039, 1045 (2009). The Court explained:
Id. (emphasis added). Consequently, it is inappropriate to determine whether Plaintiff's claims against McKesson are preempted by federal law.
Finally, Pfizer contends Plaintiff's complaint does not establish a causal connection between McKesson and he "has not alleged any fact from which it could be determined that McKesson actually distributed the Effexor allegedly used by his mother during her pregnancy." (Doc. 16 at 25). Pfizer notes this Court determined McKesson was fraudulently joined in an action when the plaintiff "based her claims on the mere fact that `McKesson is a major distributor of the drug.'" Id. at 25-26 (quoting Aronis v. Merck & Co., 2005 WL 5518485, at *1 (E.D. Cal. May 3, 2005)). Pfizer asserts this finding is consistent with other courts that have determined a distributor was fraudulently joined because the plaintiffs failed to allege a causal link between the distributor and the injury alleged. Id. (citing, e.g., In re Rezulin Products Liability Litigation, 133 F.Supp.2d 272, 291 (S.D. N.Y. 2001)).
Here, however, Plaintiff has not only asserted that McKesson is a major distributor of Effexor, but has alleged also that "Plaintiff is informed and believes Defendant McKesson distributed the Effexor that was dispensed to Ms. Scusa. (Doc. 1-1 at 11, ¶ 7) (emphasis added). Such an allegation was absent from the complaint in Aronis. Moreover, this Court has recently explained: "The fact that Plaintiff's allegations based on information and belief does not make it `obvious according to the settled rules of the state' that the complaint fails to state a claim." Oliver v. McNeil-PPC, Inc., 2013 WL 459630, at * 6 (citing McCabe, 811 F.2d at 1339; Mendez v. AstraZeneca Pharmaceuticals LP, 2012 WL 1911382, at *3 (E.D. Cal. May 25, 2012)).
Under California law, a complaint must contain "[a] statement of the facts constituting the cause of action, in ordinary and concise language." Cal. Code Civ. Pro. § 425.10(a)(1). This requires "only general allegations of ultimate fact." McKell v. Washington Mut., Inc., 142 Cal.App.4th 1457, 1469-1470 (2006). The Court of Appeal explained: "The plaintiff need not plead evidentiary facts supporting the allegation of ultimate fact. A pleading is adequate so long as it apprises the defendant of the factual basis for the plaintiff's claim. Id. (internal citations omitted). Consequently, contrary to Pfizer's assertion, Plaintiff is not required to allege facts such as from which pharmacy his mother received the Effexor to support his allegation that McKesson was the distributor of the Effexor that his mother ingested.
Plaintiff alleges that "McKesson was engaged in the business of researching, designing, developing, licensing, compounding, testing, producing, manufacturing, assembling, processing, packaging, inspecting, labeling, supplying, distributing, marketing, promoting, advertising, selling and/or warranting Effexor." (Doc. 1-1 at 11, ¶ 7). In addition, Plaintiff contends the defendants, including McKesson, knew or should have known of the serious health risks associated with the use of Effexor during pregnancy, but "failed to warn Ms. Scusa, her health care providers, or the public and the medical community of said serious risks." (Id. at 15, ¶ 38). According to Plaintiff, "as a direct and proximate result of Effexor's defects and the wrongful conduct, acts, omissions, and fraudulent misrepresentations of Defendants, Plaintiff has suffered significant harm." (Id. at 16, ¶ 41). Thus, Plaintiff has alleged a causal link between McKesson and his injuries.
Plaintiff has articulated a valid theory of liability under California law, and Pfizer has failed to meet the burden of establishing with "clear and convincing evidence" that Defendant McKesson was fraudulently joined in this action. See Hamilton Materials, 494 F.3d at 1206. Consequently, the Court lacks diversity jurisdiction over the matter, and remand of the action is appropriate.
Based upon the foregoing,
The facial appeal of the argument that Mensing should be extended to distributors of generic and name brand drugs, such to invoke federal pre-emption, is not lost on the Court. However, unless and until this rationale is extended, this Court does not conclude that it is obvious that Plaintiff has not stated a claim under California law.
