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holding that removal was proper because the claims against the non-diverse defendant were barred by the applicable statute of limitations
Summary of this case from Simpson v. GGNSC Administrative Services, LLCOpinion
Civil Action No. 03-526.
July 15, 2004
OPINION AND ORDER
This matter is before the Court on the Motion to Stay All Proceedings Pending Transfer of MDL [Record No. 11] filed by the Defendants Wyeth, f/k/a American Home Products Corporation, Wyeth-Ayerst Laboratories Company, a division of American Home Products Corporation, and A.H. Robins Company, Inc. (together, "Wyeth"); the Motion to Remand [Record No. 5] filed by the Plaintiff, June Collett ("Collett"); the unopposed Motion to Dismiss filed by the Defendant Alan Freid ("Freid") [Record No. 2]; and Freid's Request for Hearing [Record No. 4].
For the following reasons, the Court will DENY Wyeth's Motion to Stay; DENY Collett's Motion to Remand; GRANT Freid's Motion to Dismiss; and DENY as Moot Freid's Request for Hearing.
I. FACTS.
Collett filed suit in Bell Circuit Court claiming injuries as a result of her use of the diet drugs, "Pondimin" and "Redux." She named as a defendant, Wyeth, who she alleges manufactured and distributed the diet drugs. Collett asserts that Wyeth was negligent; that it failed to properly warn about the dangers of the diet drugs; and that it made fraudulent misrepresentations about the diet drugs.
Collett also named as a defendant Freid who she alleges prescribed her the diet drugs. Collett alleges that Freid was negligent and fraudulently concealed the dangers of the diet drugs because he failed to advise her to undergo a thorough cardiovascular examination or echocardiogram.
There is no dispute that Collett is a Kentucky citizen for purposes of the Court's diversity jurisdiction. There is no dispute that Wyeth is a foreign corporation with its principal place of business outside of Kentucky. Thus, for purposes of this Court's diversity jurisdiction, Wyeth is not a Kentucky resident. Collett alleges in her Complaint that Freid is a Kentucky citizen.
Wyeth asserts that Freid is an Ohio Citizen. Because the Court has determined that Freid has been fraudulently joined to this action, it will not address the issue of Freid's citizenship.
Wyeth removed the action to this Court. This Court has original jurisdiction of all civil actions where the matter in controversy exceeds $75,000 and is between citizens of different states. 28 U.S.C. § 1332 (a)(1). Though Collett asserts that she and Freid are both Kentucky residents, with its notice of removal, Wyeth argues that this Court has subject matter jurisdiction over these actions because Freid is fraudulently joined. Collett followed with a Motion to Remand the matter to Bell Circuit Court. Wyeth has also filed a Motion to Stay all Proceedings requesting that the Court stay its ruling on the Motion to Remand pending a transfer order from the Judicial Panel on Multidistrict Litigation (the "MDL Panel").
II. ANALYSIS
A. Motion to Stay.
Wyeth moves the Court to stay these proceedings, including ruling on the Motion to Remand, pending a transfer order from the MDL Panel. The Panel entered a conditional order consolidating numerous actions pending in federal courts against Wyeth for pretrial proceedings under 28 U.S.C. § 1407. That conditional order, does not, however, affect this Court's jurisdiction to consider the Motion to Remand. See e.g. Sherwood v. Microsoft, 91 F.Supp.2d 1196, 1199 (M.D. Tenn. 2000). Panel Rule 1.5, 199 F.R.D. 425, 427 (2001) provides:
The pendency of a motion, order to show cause, conditional transfer order or conditional remand order before the Panel concerning transfer or remand of an action pursuant to 28 U.S.C § 1407 does not affect or suspend orders and pretrial proceedings in the district court in which the action is pending and does not in any way limit the pretrial jurisdiction of that court.
The notice from the Panel to this Court specifically stated, "[i]f you have a motion pending before you in the action — particularly a motion to remand to state court . . . you are encouraged to rule on the motion unless you conclude that the motion raises issues likely to arise in other actions in the transferee court, should we order transfer, and would best be decided there."
Here, judicial economy is best served by addressing the remand issue prior to any transfer of this case to MDL as the primary issue on remand is whether a Kentucky resident, under Kentucky state law, had a reasonable possibility of recovery against a Kentucky doctor. Finally, the Court concludes that the threshold issue of whether it, in fact, has jurisdiction over this matter should be determined before it exercises such jurisdiction in the form of an order staying it. See Farkas v. Bridgestone/Firestone, Inc., 113 F.Supp.2d 1107, 1114-15 n. 8 (W.D. Ky. 2000). Accordingly, the Court will deny the Motion to Stay.
B. Fraudulent Joinder.
The federal removal statute, 28 U.S.C. § 1441, grants defendants in civil suits the right to remove cases from state courts to federal district courts when the latter would have had original jurisdiction. Jerome-Duncan, Inc. v. Auto-By-Tel, L.L.C., 176 F.3d 904, 907 (6th Cir. 1999). In order for a defendant to remove a case to federal court based upon diversity jurisdiction, there must be complete diversity of citizenship both at the time the case is commenced and at the time the notice of removal is filed. Id.
"`When a non-diverse party has been joined as a defendant, then in the absence of a substantial federal question the removing defendant may avoid remand only by demonstrating that the non-diverse party was fraudulently joined.'" Id. (quoting Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir. 1992)). It is well established that the burden of proving fraudulent joinder of a non-diverse defendant is on the removing party. Alexander v. Electronic Data Systems Corp., 13 F.3d 940, 948-949 (6th Cir. 1994).
"To prove fraudulent joinder, the removing party must present sufficient evidence that a plaintiff could not have established a cause of action against non-diverse defendants under state law." Coyne v. American Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999). If there is a colorable basis for predicting that a plaintiff may recover against a non-diverse defendant, this Court must remand the action to state court. Id. The test is not whether the defendants were added to defeat removal but "whether there is arguably a reasonable basis for predicting that the state law might impose liability on the facts involved." Alexander, 13 F.3d at 949 (citation and quotations omitted). All disputed questions of fact and all ambiguities in the controlling state law should be resolved in favor of the plaintiff. Id. Wyeth, therefore, bears the burden of showing that there is not even arguably a reasonable basis for predicting that Kentucky law might impose liability on Freid.
Wyeth argues there is no reasonable basis for Collett's claim against Freid because any such claim is barred by the one-year Kentucky statute of limitations for medical malpractice actions. Collett, on the other hand, argues that the case must be remanded because 1) the "common defense" rule requires remand; 2) Wyeth cannot assert the statute of limitations as a grounds for removal because it waived that defense in a prior settlement agreement; 4) under the "discovery rule," Collett's claim against Freid did not accrue until she discovered or should have discovered her injury and Collett did not discover and should not have discovered her injury until she undertook an echocardiogram in September, 2002; and 4) the statute of limitations was tolled because Freid never informed her that she should undergo a cardiovascular exam and echocardiogram and, thereby, fraudulently concealed her injuries.
1) The "Common Defense" Rule is Inapplicable.
Collett asserts that the "common defense" rule requires that the Court remand this case. Under that rule, if the only basis asserted by a defendant for fraudulent joinder is a "common defense" — one that is equally applicable to the diverse and non-diverse defendants — then the case must be remanded to state court. See e.g., McDonald v. Union Nat'l Life Ins. Co., 307 F.Supp.2d 831, 835 (S.D. Miss. 2004). The rationale for the rule is that, when a "common defense" is asserted as the grounds for fraudulent joinder, a federal court is actually being asked to adjudicate the merits of the case as to all the defendants, not simply the non-diverse defendant.
As an initial matter, the Court has been unable to locate any case in which the Sixth Circuit or a district court within the Sixth Circuit has applied the "common defense" rule. A panel of the Fifth Circuit applied the rule in Smallwood v. Illinois Central R.R. Co, 352 F.3d 220 (5th Cir. 2003) citing to 1914 decision by the U.S. Supreme Court in Chesapeake Oh. Ry. Co. v. Cockrell, 232 U.S. 146 (1914). The Smallwood court stated the following:
[W]hen . . . a defendant's showing that there is no possibility of recovery against the local defendant equally discharges the non-resident defendant, there is no fraudulent joinder, only a lawsuit lacking in merit. In such cases, it makes little sense to single out the local defendants as "sham" defendants and call their joinder fraudulent. Smallwood, 352 F.3d at 223.
In December, 2003, however, the Fifth Circuit ordered that Smallwood be reheard by the court en banc. Smallwood v. Illinois Central R.R. Co., 355 F.3d 357 (5th Cir. 2003). No en banc decision has been published. Further, a district court within the Fifth Circuit recently noted that the conflict in the circuit's case law regarding the "common defense" rule and the pending rehearing of Smallwood have left the issue "in a state of total confusion." McDonald, 307 F.Supp.2d at 835-36 (staying case sua sponte pending the en banc rehearing of Smallwood by the Fifth Circuit).
In Cockrell — the case cited by the Smallwood Court as the origin of the "common defense" rule — the plaintiff represented a woman who was struck and killed by a train. Cockrell, 232 U.S. at 150. The plaintiff sued the railway company and the engineer and fireman that were operating the train. The plaintiff and the engineer and fireman were Kentucky citizens and the railway was a Virginia citizen. Id. The plaintiff claimed that the defendants were negligent in that they did not maintain an adequate lookout; did not adequately warn of the approaching train; and continued to run the train forward after it had struck the woman. Id.
The suit was originally brought in a Kentucky state court. Id. The railway sought to remove the case to federal court claiming that each of the charges of negligence against the engineer and fireman were false. Thus, the railway company argued, the case should be removed to federal court because the non-diverse employees were fraudulently joined to the action. The Court determined:
As no negligent act or omission personal to the railway company was charged, and its liability, like that of the two employees, was, in effect, predicated upon the alleged negligence of the latter, the showing manifestly went to the merits of the action as an entirety, and not to the joinder; that is to say, it indicated that the plaintiff's case was ill founded as to all defendants. Plainly, this was not such a showing as to engender or compel the conclusion that the two employees were wrongfully brought into a controversy which did not concern them.Id. at 153.
Thus, in Cockrell, the Court was asked to determine on the removal petition whether the employees were, in fact, negligent. Even without the "common defense" rule, this was not an issue that could be determined on a removal petition. There was no question that the engineer and fireman were operating the train that hit the woman. Thus, whether or not they were negligent would involve the resolution of factual issues that could not be determined by a court on a limited fraudulent joinder analysis. This Court would be inclined to agree with the appellees in Smallwood, who argued that Cockrell "stands only for the proposition that a court may not prematurely try the factual merits of a case in a fraudulent joinder inquiry." Smallwood, 352 F.3d at 223.
Even assuming, however, that the "common defense" rule is viable and should be adopted by this Court, it would not apply to this case. Any judicial determination that Collett's claims against Freid are time-barred will not relieve Wyeth of liability on the same grounds. Instead, the Court would be required to determine separately whether Collett's claims against Wyeth are also time-barred. As Collett herself points out, in an agreement settling a class action against Wyeth (the "Settlement Agreement"), Wyeth agreed that it "shall not assert any defense based on any statute of limitations or repose" against any plaintiff who exercised the "Intermediate Op-Out" right of the diet drug class settlement.
Collett asserts that she exercised her right to an "Intermediate Opt-Out" of the class settlement and that, therefore, pursuant to the Settlement Agreement, Wyeth cannot assert the statute of limitations defense against her. Thus, if Wyeth asserts a statute of limitations defense, the first issue the Court will have to resolve is whether that defense is even available to Wyeth. This is not an issue that the Court must resolve in the case of Freid, who is not a party to the Settlement Agreement and clearly may assert a statute of limitations defense. Because the statute of limitations defense is not equally applicable to Wyeth and Freid, it is not a "common defense." Accordingly, the "common defense" rule does not require that this matter be remanded.
2) The Settlement Agreement Does not Prohibit Wyeth from Asserting that Freid is Fraudulently Joined.
Collett asserts that the Settlement Agreement prohibits Wyeth from basing its fraudulent joinder argument on the statute of limitations. For this argument, Collett cites to the provision of the agreement discussed above in which Wyeth agreed that it "shall not assert any defense based on any statute of limitations or repose." In its opposition to Collett's Motion to Remand, however, Wyeth has raised the statute of limitations not as a defense to its own liability but, as grounds for finding that Freid has been fraudulently joined to this action. If Wyeth should prevail on that argument, it will not be absolved of liability. The resolution of the fraudulent joinder issue will simply determine where the claims against Wyeth will be heard. Wyeth has not yet asserted any defenses to this Court but merely argued that this Court has jurisdiction over this matter because the actions against Freid are time-barred. The portion of the Settlement Agreement cited by Collett does not prevent Wyeth from making this argument.
3) Collett's Claims against Freid are Barred by the Statute of Limitations.
Under Kentucky's statute of limitations for medical malpractice actions, a plaintiff must commence a medical malpractice action within one year from the "time the injury is discovered or in the exercise of reasonable care should have been discovered." KRS § 413.140(1)(e); KRS § 413.140(2). "[T]he knowledge necessary to trigger the statute is two-pronged; one must know: (1) he has been wronged; and (2) by whom the wrong has been committed." Wiseman v. Alliant Hospitals, Inc., 37 S.W.3d 709, 712 (Ky. 2001). "[I]t is the date of the actual or constructive knowledge of the injury which triggers the running of the statute of limitations." Id.
In her Complaint, Collett asserts medical negligence and fraud claims against Freid. A one-year statute of limitations applies to both claims. See KRS. § 413.245 ("[n]othwithstanding any other prescribed limitation of actions . . ., a civil action, whether brought in tort or contract, arising out of any act or omission in rendering, or failing to render, professional services for others shall be brought within one (1) year from the date of the occurrence or from the date when the cause of action was, or reasonably should have been, discovered by the party injured").
Wyeth argues that Collett had constructive knowledge of her claim against Freid from the extensive national and local media coverage that commenced in 1997 and continued through, at least, 1999. Wyeth argues that the extensive and widespread coverage began with Wyeth's withdrawal of the diet drugs from the market in September, 1997. This widespread coverage, as detailed by Wyeth and uncontested by Collett, consisted of a press release issued by Wyeth; fullpage advertisements purchased by Wyeth in national and regional newspapers announcing the decision to withdraw the diet drugs from the market and informing readers of new information concerning abnormal heart valve findings in patients who had taken the drugs; a press release issued by the Food and Drug Administration ("FDA") explaining that the diet drugs were being withdrawn based on echocardiogram findings in diet drug users and advising users to contact their doctors; reports on NBC Nightly News, CBS Evening News, the Today Show, and CBS Morning News; and stories in USA Today and the Washington Post.
In addition, the United States Department of Health and Human Services published health recommendations for former users of the diet drugs, recommending that all former users see their physicians. This publication led to additional stories on NBC Nightly News, CBS Evening News, ABC World News Now and CNN; and stories in the Washington Post. Wyeth also cites to stories by news organizations in the Bell County area regarding the withdrawal of the diet drugs from the market and their association with heart damage. Regional stories also covered the flood of lawsuits following the withdrawal of the diet drugs from the market.
Coverage of the health risks associated with the diet drugs continued into 1998. Another wave of national and local publicity occurred after the Settlement Agreement was reached between Wyeth and users of the diet drugs in 1999. The settlement was highly publicized and Wyeth undertook an elaborate plan to ensure that all those affected by the settlement would receive notice. Notices were delivered by broadcast and cable networks and published in national magazines and by ads on the Internet.
The national and local publicity included information about the dangers associated with the diet drugs, the need to see a physician and the Settlement Agreement by which Wyeth agreed to pay those who alleged injuries as a result of taking the drugs. "A person exercising reasonable diligence" would have discovered her injuries and cause of action by, at least, early 2000. See Blanton v. Cooper Industries, Inc., 99 F.Supp.2d 797, 801-03 (E.D.Ky. 2000). Collett filed her action on September 9, 2003. Under Kentucky state law, Collett's claims against Freid are timebarred and there is no reasonable basis for predicting that a Kentucky court might impose liability on Freid.
4) Freid did not "Fraudulently Conceal" Collett's Injuries.
Collett asserts that the statute of limitations should be tolled because Freid fraudulently concealed her injuries by "neglecting to inform her that she should undergo a cardiovascular exam and echocardiogram." To prevail on this claim, Collett must prove that the alleged concealment was "of a character to prevent inquiry or elude an investigation or otherwise mislead the party having cause of action and such party is under the duty to exercise reasonable care and diligence." Burke v. Blair, 349 S.W.2d 836, 836 (Ky. 1961); Hazel v. General Motors Corp., 863 F.Supp. 435, 439 (W.D.Ky. 1994). Collett has not alleged that Freid took any action at all that would have prevented her from undergoing a cardiovascular exam or electrocardiogram or otherwise inquiring about or investigating the consequences of taking the diet drugs. Accordingly, there is no reasonable basis for predicting that a Kentucky state court might find that Freid "fraudulently concealed" Collett's injuries.
For the foregoing reasons, the Court hereby ORDERS the following:
1) Collett's Motion to Remand is DENIED [Record No. 5];
2) Wyeth's Motion to Stay is DENIED [Record No. 11];
3) Freid's Motion to Dismiss [Record No. 2] is GRANTED and his Request for Hearing [Record No. 4] is, therefore, DENIED as Moot.
4) Freid is hereby DISMISSED as a party to this action.