Opinion
CIVIL ACTION NO. 01-2296, SECTION "K"(5)
May 10, 2002
ORDER AND REASONS
Before this Court is plaintiff's Motion to Dismiss for Lack of Subject Matter Jurisdiction (rec. doc 26). The underlying suit was brought in New Orleans Civil District Court on April 2, 2001 for damages incurred by plaintiffs when they contracted Hepatitis C during their treatment for hemophilia at the Comprehensive Hemophilia Care Program, a clinic owned and operated by Tulane School of Medicine. The named plaintiffs include: Larone Russell ("Russell") and Quentrel Maurice ("Maurice"). Suit was brought on behalf of the named plaintiffs and other similarly situated plaintiffs. Named as defendants are: (1) Baxter Healthcare Corporation, ("Baxter"), Alpha Therapeutic Corporation, ("Alpha"), Armour Pharmaceutical Corporation, ("Armour"), and Bayer Corporation, ("Bayer") (collectively referred to herein as "fractionator defendants") and (2) the Administrators of the Tulane Educational Board, Tulane University School of Medicine and Dr. Cindy Lessinger (referred to herein as "non-diverse defendants"). After reviewing the relevant history, applicable law, memoranda, and oral arguments, the Court GRANTS plaintiffs' motion and REMANDS the matter to the Civil District Court of Orleans Parish.
The complaint for damages includes a petition for class certification at paragraphs 18-21.
Background
Plaintiffs are hemophiliacs who were treated at Tulane Medical Center's Comprehensive Hemophilia Care Program. As a part of their treatment at Tulane, plaintiffs: (1) underwent blood screening, evaluations, and other diagnostic tests and procedures and (2) were provided with Factorate, Factor VIII, Koate, Profilate, Factor IX and other blood clotting agents ("factors") manufactured, marketed, and distributed by the fractionator defendants. In the course of their treatment, plaintiffs allegedly contracted Hepatitis C from a contamination in the factors. According to their medical records, Russell contracted Hepatitis by September 24, 1996, and Maurice contracted the disease by June 27, 1995. However, plaintiffs were not advised that they had contracted Hepatitis C until April 2000.
Opposition to Motion to Dismiss, Exhibit C.
Plaintiff's Complaint, paragraph 8.
Thereafter, plaintiffs filed suit alleging a myriad of complaints against the fractionator and non-diverse defendants. Plaintiffs contended that the fractionator defendants were negligent in: (1) their failure to use due care in designing and manufacturing factors so as to avoid Hepatitis C, (2) failing to accompany factors with proper warnings when they were first manufactured or when they reasonably knew of the possibility of contamination of the factors with Hepatitis C, (3) not conducting pre-clinical, clinical and post-marketing tests to locate the possible contamination and or presence of Hepatitis C, (4) representing to physicians that factors were safe for the control and treatment of hemophilia, and (5) inadequately disseminating information to users of factors when they knew of the possibility of contamination of the drugs with Hepatitis C.
Plaintiffs also alleged that the non-diverse defendants were negligent in failing to: (1) carefully follow the package insert instructions, recommendations, and precautions in prescribing factors to plaintiffs, (2) fully and continually monitor for the contamination of factors with Hepatitis C, (3) accurately and timely diagnose and inform plaintiffs that they had contracted Hepatitis C from the factors, and (4) warn plaintiffs of the potential harms of Hepatitis C or the need for immediate and long term care for the disease.
Procedural History
Plaintiffs filed suit in New Orleans Civil District Court on April 2, 2001 and the fractionator defendants removed the action to federal court on July 26, 2001 pursuant to: (1) 28 U.S.C. § 1332 and § 1367 and (2) 28 U.S.C. § 1442(a)(1). Thereafter, the non-diverse defendants filed a Motion to Dismiss for lack of jurisdiction on August 9, 2001 (rec. doc. 8) urging that they were required to appear before a medical review panel before they could be included in suit in district court. Plaintiffs filed a Motion to Remand (rec. doc. 14) and a Motion to Stay the Proceedings (rec. doc. 15) on August 27, 2001. On October 19, 2001, this Court entered a consent judgment (rec. doc 19) that: (1) dismissed the non-diverse defendants from the proceedings to appear before a medical review panel and (2) denied plaintiff's Motion to Remand as moot. On December 14, 2001, this Court also denied plaintiff's Motion to Stay Proceedings pending resolution by the medical review panel. Plaintiffs subsequently filed the instant Motion to Dismiss pursuant to Federal Rule of Civil Procedure Rule 12(b)(1).
MOTION TO DISMISS
Plaintiff's Motion to Dismiss
In their Motion to Dismiss, plaintiffs argue that this Court lacks subject matter jurisdiction over this case. First, plaintiffs posit that there was no jurisdiction under 28 U.S.C. § 1332 or § 1367 because their complaint named non-diverse defendants who were not fraudulently joined because plaintiffs "intended to pursue and recover a judgment" against them. Plaintiffs also note that jurisprudence in this district has confirmed that joinder of non-diverse defendants before their appearance before the medical review panel is not indicative of fraudulent joinder.
See for example Doe v. Cutter, 774 F. Supp. 1001 (E.D. La 1991), McLinn v. Surgitex, Inc., 1992 WL 67801 E.D. La. 1992), and Carol v. Scimed, 92 F. Supp. 587 (W.D. La 2000) all holding that joinder of a qualified healthcare provider before its appearance before the medical review panel does not constitute fraudulent joinder.
Furthermore, plaintiffs argue that § 1442(a)(1), the federal officer statute, does not confer subject matter jurisdiction on this Court. Removal under § 1442(a)(1) first requires proof that the defendant is a "person" within the meaning of the statute. It also requires the removing party to prove that: (1) he acted under the direction of a federal officer, (2) will raise a colorable federal defense to plaintiffs' claims, and (3) there is a causal nexus between plaintiff's claims and acts it performed under color of federal office. Mesa v. California, 489 U.S. 121 (1989).
All parties agree that corporations are considered "persons" for purposes of § 1442(a)(1). See International Primate Protection League, No. 93-3067, at 2 (5th Cir. May 4, 1994) (unpublished opinion) (noting at vn. 13 that unpublished opinions issued before January 1, 996, are precedent. 5th Cir. L.R. 47.5.3).
Plaintiffs contend in their motion to dismiss that defendants can not satisfy the " Mesa requirements" for removal under § 1442(a)(1). They also urge that defendants can not rely on "mere general auspices" of a federal officer or participation in a regulatory industry. Rather, plaintiffs must prove "strong government intervention" and a "threat that a defendant will be sued in state court on actions taken under federal direction." In the case at bar, plaintiffs argue defendants are attempting to "bootstrap themselves into original federal jurisdiction by claiming that excessive federal regulation renders them a person acting under the color of federal law" without satisfying all requirements of § 1442(a)(1).
Citing Mouton et al v. Flexitallic, Inc., et al., 1999 WL 25438 (E.D. La. 1999), Ryan v. Dow Chemical Company, 781 F. Supp. 934, 946 (E.D.N.Y. 1992) and Funk v. Abex Corporation, 816 F. Supp. 569, 572 (N.D. Ca. 1992).
Finally, plaintiffs contend that they have not waived their right to oppose the Court's subject matter jurisdiction over this matter by consenting to this Court's dismissal of the non-diverse defendants.
Defendants' Opposition
In their opposition to plaintiffs' motion to dismiss, the fractionator defendants contend, much like they did in their notice of removal, that this Court maintains jurisdiction over this matter for several reasons. First, they argue that this Court has jurisdiction under 28 U.S.C. § 1332 and § 1367 because the non-diverse defendants were fraudulently joined in the suit because plaintiffs' allegations against them were prescribed and preempted under La R.S. 9:5628.1. The substance of that statute governs the filing of claims related to "blood products" (such as the factor concentrates) and provides in pertinent part that:
(A) [N]o action for damages against any healthcare provider as defined in this Section, whether based upon negligence, products liability, strict liability, tort, breach of contract, or otherwise, arising out of the use of blood or tissue . . . shall be brought unless filed in a court of competent jurisdiction within one year from the date of the alleged cause of action or within one year from the date that the alleged cause of action or other act, omission, or neglect is discovered or should have been discovered; however, except as provided in Subsection B, even as to actions filed within one year from the date of such discovery, in all events such actions shall be filed at the latest within three years from the date of the act, omission or neglect.
(B) [T]he provisions of this Section are remedial and apply to all causes of action without regard to the date when the alleged cause of action or other act, omission or neglect occurred. However, with respect to any cause of action or other act, omission or neglect occurring prior to July 1, 1997, actions against any healthcare provider as defined in this Section, must, in all events, be filed in a court of competent jurisdiction on or before July 1, 2000. The three-years period of limitation provides in Subsection A is a preemptive period within the meaning of Civil Code Article 4361, and shall not be renounced, interrupted or suspended.
(C) [I]n all actions brought in this state against any healthcare provider as defined in this Section, the prescriptive and preemptive periods shall be governed exclusively by this Section.
(E) The preemptive period provided in Subsection A of the Section shall not apply in cases of intentional or willful concealment.
Interpreting that statute, defendants reason that: (1) plaintiffs' claims are governed by Subsection B because they were infected with Hepatits C before July 1, 1997, (2) Subsection B requires plaintiffs to have filed their complaints by July, 2000, (3) Subsection E's exception for acts of intentional or willful deception by a defendant (which, if proven, may toll the time period for the filing of a claim) only applies to Subsection A, and (4) plaintiffs' claims against the non-diverse defendants are prescribed and perempted under La R.S. 9:5628.1(B) because plaintiff did not file suit until April 2001.
Furthermore, defendants posit that this Court properly exercised subject matter jurisdiction under § 1442(a)(1). First, defendants posit that they acted under the direction of a federal officer for purposes of the statute because:
. . . the processing and distribution of their factor concentrates — including the placements of warnings and labels — are governed by extraordinarily comprehensive and extensive regulatory scheme controlled and enforced by a federal government agency, the FDA. Factor concentrates are not merely approved by the Food and Drug Administration. They are produced pursuant to a license issued by the FDA 42 U.S.C. § 262(a). Moreover, they can only be produced in a facility that has itself been issued a separate license for that specific "establishment."
As to plaintiffs' claims for failure to warn, the FDA specifies, prior to licensing, the content of all labeling for factor concentrates — including warnings. Once licensed by the FDA, the processor of the factor concentrates cannot change the labeling specified in it s license without the FDA's prior consent. There are no exceptions to this rule. A processor that changes its labeling unilaterally cannot only lose its license, it si subject to criminal prosecution. In short, because the [defendants] actions with respect to warning of the risks associated with their factor concentrates are subject to such detailed and substantial federal control and direction, those actions are taken "under color of federal office within the meaning of 28 § 142(a)(1) (citations omitted).
Notice of Removal, ¶¶ 6 and 7.
Defendants likewise contend that there is a causal nexus between plaintiffs' claims and defendants actions taken "under color of federal office." Specifically, defendants explain that:
Plaintiffs allege negligence in failing to warn about the risks of Hepatitis C. These claims directly implicate the FDA licensing scheme that controls such warnings. The fact that the FDA controls what the Fractionator Defendants must say and can not say about the risks associated with factor concentrates, including Hepatitis C, and the fact that the Fractionator defendants cannot deviate from those FDA requirements, gives rise to the causal nexus between the plaintiffs' claims and the Fractionator defendants actions under color of federal office.
Notice of Removal, ¶ 8.
Defendants also explain that the requirement that they assert a "colorable federal defense" is satisfied with their defense of "federal preemption." Specifically, defendants reason that because they are obligated to follow strict and comprehensive FDA requirements in processing and distributing factor concentrates, including the timing and content of warnings for hepatitis, plaintiffs' attempt to hold defendants liable for failure to warn is preempted by federal law. Notice of Removal, ¶ 9.
Finally, defendants posit that plaintiffs voluntarily waived their right to object to this Court's exercise of subject matter jurisdiction when they concurred in the Court's October 19, 2001 order dismissing the non-diverse defendants and declaring plaintiffs' motion to remand moot.
ANALYSIS
The issue presented by plaintiff's Motion to Dismiss is whether this Court had subject matter jurisdiction over the case at bar when defendants filed their Notice of Removal. Because non-diverse defendants are named in plaintiffs' complaint, plaintiffs' Motion to Dismiss for lack of subject matter jurisdiction should be denied if this Court finds that either: (1) the non-diverse defendants were fraudulently joined or (2) there is an independent basis for federal jurisdiction — such as § 1442(a)(1). This Court must also determine whether plaintiffs waived their right to challenge subject matter jurisdiction by consenting to this court's dismissal of the non-diverse defendants.
After reviewing the memoranda, applicable law, and oral presentations, the Court concludes that: (1) the non-diverse defendants were not fraudulently joined in plaintiffs' complaint, (2) defendant's reliance on the federal officer statute, § 1442(a)(1), is improper, and (3) plaintiffs did not waive the right to challenge this court's subject matter jurisdiction. Accordingly, plaintiffs' Motion to Dismiss should be GRANTED and the matter should be REMANDED to the Civil District Court for the reasons included herein.
Fraudulent Joinder Standard and La R.S. 9:5628.1
To establish that a non-diverse defendant has been fraudulently joined, the removing party must show that there is: (1) no possibility that the plaintiff would be able to establish a cause of action against the in-state defendant in state court or (2) outright fraud in the plaintiff's pleadings of jurisdictional facts. See B. Inc. v. Miller Brewing Co., 663 F.2d 545 ( citing Keating v. Shell Chemical Co., 610 F.2d 328, 331-32 (5th Cir. 1980)). In the case at bar, the defendants have alleged that there is no possibility that plaintiff can establish a cause of action against the non-diverse defendants.
The standard employed to determine whether a defendant has been fraudulently joined is well established in the Fifth Circuit. As was previously articulated by this Court:
The burden is on the defendant, as the moving party, to prove that jurisdiction exists for removal purposes. See Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (5th Cir. 1992); B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981). Where there have been allegations of "fraudulent joinder", it is clear that the burden is on the removing party to prove the alleged "fraud". See id. The burden of persuasion placed upon those who "cry fraudulent joinder" is indeed a heavy one. See id.; In re Gas Water Heater Prods. Liability Litigation, No. Civ. A. 96-2484, 1996 WL732525, at *1 (E.D. La. Dec. 12, 1996) (Duval, J.).
In evaluating fraudulent joinder claims, the Fifth Circuit has adopted a summary judgment-like procedure, permitting the Court to "pierce the pleadings" and consider evidence outside the pleadings, such as affidavits and depositions accompanying the notice of removal or the motion to remand, as well as the controlling state law. See Burden v. General Dynamics Corp., 60 F.3d 213, 217 (5th Cir. 1995); Ford, 32 F.3d. at 935; Carriere, 893 F.2d at 100; In re Gas Water Heater Prods. Liability Litigation, 1996 WL 732525, at *1. Furthermore, all disputed questions of fact and all ambiguities in the controlling state law are resolved in favor of the nonmoving party. See id.; Dodson, 951 F.2d at 42. However, "the mere assertion of metaphysical doubt" as to material facts is insufficient to create an issue if there is no basis for those facts; Sullivan v. Gen-Corp., Inc., No. Civ. A. 95-709, 1995 WL 3217432.
In the case at bar, the Court initially notes that joinder of non-diverse defendants before they were called before a medical review panel does not constitute "fraudulent joinder." See for example Doe v. Cutter, 774 F. Supp. 1001 (E.D. La 1991), McLinn v. Surgitex, Inc., 1992 WL 67801 (E.D. La. 1992), and Carol v. Scimed, 92 F. Supp. 587 (W.D. La 2000) all holding that joinder of a qualified healthcare provider before its appearance before the medical review panel does not constitute fraudulent joinder.
Furthermore, this Court holds that defendants have not proved that there is no possibility of recovery against the non-diverse defendants under the provisions of La R.S. 9:5628.1. While defendants' interpretation of La R.S. 9:5628.1, that plaintiffs' claims are prescribed under pursuant to Subsection B, is reasonable, it is not the only possible interpretation. It is also reasonable to interpret the statute so that Subsection B operates merely to cure potential retroactivity problems that the prescription and peremption rules in Subsection A would have caused in a certain subset of cases by when the statute was enacted. Specifically, Subsection B could have been included assure that any cases that would have been prescribed when the statute took effect (because they arose before July 1, 1996) were afforded due process. Reading Subsection B as nothing more than an explanation of the temporal limitations on a subset of claims that would have been prescribed with the passage of the statute, it is reasonable to assume that the drafters intended Subsection E, allowing the time-frame for filing claims to be tolled upon proof of intentional or willful deception, to apply to both Subsections A and B. And, because plaintiffs assert that defendants knew plaintiffs were infected with Hepatitis C and intentionally withheld that information from them, there is a possibility that Subsection E would permit their causes to action to be considered as timely.
As noted above, there is no legislative history or state court jurisprudence addressing the issue presented in this case. In Liner v. Daughters of Charity of St Vincent DePaul 753 So. 336 (La.App. 4 Cir. 2/16/00), the court discussed the effects of La. R.S. 9:5628.1 when applied to a factual scenario distinguishable from the one presented in the case at bar. In Liner the court affirmed the district court's dismissal plaintiff's claims as prescribed when plaintiff: (1) contracted Hepatitis C from a blood transfusion in 1979, (2) was diagnosed with and became aware of her condition in 1997, and (3) filed suit in 1998 — less than one year after her diagnosis with the disease. In its opinion, the Fourth Circuit explained that while plaintiff had filed suit within one year from the date she learned of her infection, it was nineteen years after the "act or omission" that caused it and under the statute was prescribed and perempted. The court further reasoned that in enacting La R.S. 9:5628.1, the legislature intended to create a "maximum prescriptive period for medical malpractice claims . . . and . . . to overrule the fourth exception of the judicially created doctrine of contra non valentem as it applied to actions filed more than three years from the date of the act, omission, or neglect." Citing Chaney v. State Through Department of Health and Human Resources, 432 So.2d 256 (La. 1983).
Liner is distinguishable, however, as in contained no claim of intentional or willful concealment on the part of defendants, plaintiff's healthcare providers, that would have tolled the "prescription time."
The law requires this Court, when considering whether a party has been fraudulently joined to defeat diversity jurisdiction, to resolve all disputed questions of fact and ambiguities in the controlling state law in favor of the non-moving party. Should plaintiffs succeed in proving that defendants intentionally or willfully concealed plaintiffs' infections with Hepatitis C, it is possible that a state court could find that plaintiffs' claims are not prescribed or perempted under Subsection E. Thus, the non-diverse defendants were not fraudulently joined in the instant suit.
Federal Officer Statute
Defendants have also asserted that his Court has proper subject matter jurisdiction under the federal officer statute, 28 U.S.C. § 1442(a)(1), which reads in relevant part:
(a) A civil action . . . . commenced in a state court against any of the following persons may be removed by them to a district court of the United States for the district and division embracing the place wherein it is pending:
(1) Any officer of the United States or any agency thereof, or person acting under him, for any act under color of such office . . .
The purpose of § 1442(a)(1) is to protect federal officers from state interference with the exercise of federal authority. And, as noted above, the Supreme Court has developed a three-pronged inquiry that requires the party attempting to remove a case to demonstrate that: (1) it acted under the direction of a federal officer, (2) it plans to assert a "colorable federal defense" to plaintiffs' claims, and (3) there is a causal link between plaintiffs' claims and acts defendant performed under the color of federal law. Mesa v. Calffornia, 489 U.S.121 (1989). All three Mesa factors must be met for removal to be proper.
In the case at bar, defendants have not established that they acted "under the direct control of a federal official" in the processing and distribution of the factor concentrates. As noted in Pack v. AC and S. Inc., 838 F. Supp. 1099, 1103 (D.Md. 1993),
[D]irect control is established by showing strong government intervention and the possibility that a defendant will be sued in state court as a result fo federal control." Id. (citations omitted). Another court describing the necessary connexity stated:
[The case law] allows private corporations to remove only when the corporation is so intimately involved with government functions, as to occupy essentially the position of an employee of the government. Government employees are the primary protected class of § 1442(a)(1). Willingham v. Morgan, 395 U.S. 402 (1969). Bakalis v. Crossland Sav. Bank, 781 F. Supp. 140, 145 (E.D.N.Y. 1991).
Similarly, another district court has explained that
If the [defendants] establish "only that the relevant acts occurred under the general auspices of" a federal officer, such as being a participant in a regulated industry, they are not entitled to § 1442(a)(1) removal. A majority of courts have held that the federal official must have direct and detailed control over the defendant. Fung v. Abex Co., 816 F. Supp. 569 (N.D. Cal. 1992) (internal citations omitted).
In the instant case, there has been insufficient evidence to prove that defendants were "acting under a federal officer" with respect to the allegedly injurious product. While the FDA licensed and regulated many of defendants' activities with respect to the production, manufacturing, distribution of the factors, the federal involvement was not so invasive that defendants can be characterized as "essentially [in] the position of an employee of the government." Willingham v. Morgan, 395 U.S. 402 (1969). Rather, this Court concludes that defendants functioned as "participants in a regulated industry" and there has been insufficient proof of the detailed direction at the behest of a federal officer necessary to support the removal under § 1442(a)(1).
Waiver of Right to Object to this Court's Jurisdiction
Finally, the Court concludes that plaintiffs' concurrence with this Court's dismissal of the non-diverse defendants to proceed before a medical review panel should not be construed as a waiver to "any objections [they] may have had to the original removal." As noted in McLin v. Surgitex, 1992 WL 67802, 2 (E.D. La 1992), only where a plaintiff, by his voluntary act, definitely and clearly indicates his intention to abandon or discontinue the action against a non-diverse defendant that the action becomes removable. Citing as support Higgins v. Pittsburgh — Des Moines Co., 63 F. Supp. 1182, 1184 (S.D. Tex. 1986) (holding that "a case that is non-removable at the onset may become removable only by the plaintiff's voluntary act, resulting in the `final' dismissal of those defendants whose presence precludes removal.") and Scott v. Communications Serv. Inc., 762 F. Supp. 147, 151 (S.D. Tex. 1991) (noting that a suit against both a non-diverse defendant and a diverse defendant may become removable by the diverse defendant if the plaintiff voluntarily dismisses the action against the non-diverse defendant with prejudice, because there is no risk that diversity will later be destroyed.) In the case at bar, plaintiffs voluntarily dismissed the non-diverse defendants without prejudice and only for the purpose of fulfilling the statutory requirement that the Louisiana healthcare providers first proceed before a medical review panel. Through that dismissal, plaintiffs did not forfeit their right to challenge removal of the action to a federal forum.
To the extent defendants are arguing that plaintiffs waived their right to challenge the lack of subject matter jurisdiction, the Court notes that it is a well-settled principle that subject matter jurisdiction in a federal court can not be created by waiver or consent. See for example Howery v. Allstate Insurance Co., 243 F.3d 912, 919 (5th Cir. 2001) and Elliott v. Tilton, 62 F.3d 725, 727 (5th Cir. 1995).
Accordingly,
IT IS ORDERED THAT this cause of action be REMANDED to the Orleans Civil District Court pursuant to 28 U.S.C. § 1447(c) for further proceedings.