Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-06681/USCOURTS-cand-4_06-cv-06681-0/pdf.json

Nature of Suit Code: 365
Nature of Suit: Personal Injury - Product Liability
Cause of Action: 28:1441 Petition for Removal- Personal Injury

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

KATHRYN SCHULTZ and ROBERT SCHULTZ

individually and as successors in

interest to LOREN SCHULTZ, decedent;

and DOES 1 through 10, inclusive,

Plaintiffs,

v.

ASTRAZENECA PHARMACEUTICALS, L.P.;

ASTRAZENECA, L.P.; JOHNSON & JOHNSON

AND JANSSEN L.P. FKA JANSSEN

PHARMACEUTICA PRODUCTS, L.P.; JANSSEN

PHARMACEUTICA, INC.; RONALD HAYMAN,

M.D.; and DOES 11 through 50,

Defendants.

 /

No. C 06-6681 CW

ORDER DENYING

DEFENDANTS' MOTION TO

STAY ACTION AND

GRANTING PLAINTIFFS'

MOTION TO REMAND

Defendants AstraZeneca Pharmaceuticals L.P. and AstraZeneca

L.P. (together, AstraZeneca) have filed a motion to stay

proceedings in this action pending its transfer to the Judicial

Panel on Multidistrict Litigation (MDL). Plaintiffs Kathryn and

Robert Schultz oppose this motion and move separately to remand

this action to state court. Defendants AstraZeneca, joined by

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Defendants Johnson & Johnson and Janssen L.P. (formerly known as

Janssen Pharmaceutica Products L.P.), Janssen Pharmaceutica, Inc.

(together, Janssen), and Ronald Hayman, M.D., oppose Plaintiffs'

motion. Having considered all of the papers filed by the parties,

the Court DENIES Defendants' motion to stay and GRANTS Plaintiffs'

motion to remand.

BACKGROUND

For the purposes of this motion only, all the facts alleged in

Plaintiffs' first amended complaint (FAC) are assumed to be true.

Defendants AstraZeneca manufacture and market the atypical

antipsychotic drug Seroquel. FAC at ¶ 1. Seroquel was approved by

the FDA in 1997 for the treatment of schizophrenia and in 2004 for

the treatment of bipolar disorder. FAC at ¶¶ 34, 35. Defendants

Janssen manufacture and market the atypical antipsychotic drug

Risperdal. FAC at ¶ 1. Risperdal was approved by the FDA in 1997

for the treatment of schizophrenia and in 1999 for the treatment of

mania associated with bipolar disorder. FAC at ¶¶ 48, 49. 

In advertising these medications, both companies promoted them

for uses "beyond [their] indications," including "off-label" uses

not approved by the FDA, and offered "incentives" to doctors who

would prescribe them. FAC at ¶¶ 37, 51. The use of both drugs has

been associated with an increased risk of, among other things,

developing hyperglycemia, diabetes, and pancreatitis. FAC at ¶¶

42, 55. The warnings accompanying both drugs were inadequate

regarding the nature, scope, and severity of the risks associated

with them and both companies withheld important safety information

from physicians while promoting these drugs as safer and more

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effective than other available treatments. FAC at ¶¶ 39-41, 43,

52-54, 56. 

Dr. Ronald Hayman, M.D., prescribed both Seroquel and

Risperdal to minor Loren Schultz for the treatment of Tourette's

Syndrome and obsessive compulsive disorder. FAC at ¶ 125. Neither

drug is approved for treatment of these conditions or "for use in

children." Id. Plaintiffs allege that Dr. Hayman "held [himself]

out to be knowledgeable in the safety, efficacy, and use of

Seroquel and Risperdal" and did not warn decedent or his parents of

the risks associated with the drugs, including hyperglycemia,

diabetes, and pancreatitis. FAC at ¶¶ 125, 127. They also claim

Dr. Hayman failed to conduct baseline testing of the drugs or to

continue to monitor the decedent's reaction to the drugs in the

course of providing medical treatment. FAC at ¶ 125. On July 12,

2005, nineteen year-old Loren Schultz died from acute pancreatitis. 

On June 30, 2006, Kathryn and Robert Schultz filed a complaint

in the San Francisco County Superior Court against Defendants,

seeking civil damages resulting from the alleged wrongful death of

their son. On July 6, 2006, the MDL Panel issued a transfer order

establishing MDL proceeding No. 1789, In re Seroquel Products

Liability Litigation, coordinating in the Middle District of

Florida the pre-trial proceedings of eighty-seven Seroquel actions. 

On October 10, 2006, Plaintiffs filed their FAC in superior court. 

After removing this case to district court on October 27, 2006,

Defendants AstraZeneca filed this motion to stay the action pending

a decision by the MDL Panel as to whether this case will join other

Seroquel actions transferred to the Middle District of Florida. 

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Plaintiffs then filed this motion to remand the case to state court

on the grounds that this Court lacks jurisdiction. Plaintiffs

originally asked for attorneys' fees and costs in their motion to

remand, but have since withdrawn that request.

LEGAL STANDARD

A defendant may remove a civil action filed in state court to

federal district court so long as the district court could have

exercised original jurisdiction over the matter. 28 U.S.C. 

§ 1441(a). If at any time before judgment it appears that the

district court lacks subject matter jurisdiction over a case

previously removed from state court, the case must be remanded. 28

U.S.C. § 1447(c). On a motion to remand, the scope of the removal

statute must be strictly construed. Gaus v. Miles, 980 F.2d 564,

566 (9th Cir. 1992). "The 'strong presumption' against removal

jurisdiction means that the defendant always has the burden of

establishing that removal is proper." Id. Courts should resolve

doubts as to removability in favor of remanding the case to state

court. Id. 

District courts have original jurisdiction over all civil

actions "where the matter in controversy exceeds the sum or value

of $75,000, exclusive of interest and costs, and is between . . . 

citizens of different States." 28 U.S.C. § 1332(a). When federal

subject matter jurisdiction is predicated on diversity of

citizenship, complete diversity must exist between the opposing

parties. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373-

74 (1978). An exception to the complete diversity requirement

exists where a defendant removes a case with a non-diverse

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defendant and persuades the district court that this defendant was

fraudulently joined. McCabe v. Gen. Foods Corp., 811 F.2d 1336,

1339 (9th Cir. 1987). Joinder of the resident defendant is

fraudulent "[i]f the plaintiff fails to state a cause of action

against a resident defendant, and the failure is obvious according

to the settled rules of the state." Id. The burden is on the

defendant to demonstrate that there is no possibility that the

plaintiff will be able to establish a cause of action in state

court against the alleged sham defendant. Id.; see also Ritchey v.

Upjohn Drug Co., 139 F.3d 1313, 1318 (9th Cir. 1998).

DISCUSSION

AstraZeneca removed this case on the grounds that Dr. Hayman,

the only non-diverse defendant joined in the action, is a sham

defendant because Plaintiffs cannot state a cause of action against

him for professional negligence. The Court disagrees. 

To determine its jurisdiction, the Court need not decide

whether Plaintiffs can prove a legally cognizable claim of

professional negligence against Dr. Hayman, but only that they have

plead one under state law. Briggs v. Lawrence, 230 Cal. App. 3d

605, 610 (1991). Under California law, the elements of a cause of

action for professional negligence are (1) the duty of the

professional to use such skill, prudence, and diligence as other

members of his or her profession commonly possess and exercise; (2)

breach of that duty; (3) proximate causal connection between the

negligent conduct and the resulting injury; and (4) actual loss or

damage resulting from such negligence. Bucquet v. Livingston, 57

Cal. App. 3d 914, 920-21 (1976). A failure to plead any of these

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elements would be fatal to Plaintiffs' claim against Dr. Hayman. 

It is Defendants' burden to demonstrate that there is no

possibility that Plaintiffs will be able to establish a cause of

action against Dr. Hayman in state court. On a demurrer, a

California court will liberally construe all of the complaint's

properly plead material allegations as true and "give the complaint

a reasonable interpretation by reading it as a whole and all its

parts in their context" to "ensure the pleading . . . apprises the

adversary of the factual basis for the claim." People ex rel.

Lungren v. Superior Court, 14 Cal. 4th 294, 300 (1996); Lim v.

The.TV Corp. Int'l, 99 Cal. App. 4th 684, 690 (2002); see also Cal.

Civ. Proc. Code § 452 (West 2006). Moreover, "[i]n testing the

legal sufficiency of a pleading against a general demurrer, all

properly pleaded allegations, including those that arise by

reasonable inference, are deemed admitted regardless of the

possible difficulty of proof at trial." Saxer v. Philip Morris,

Inc, 54 Cal. App. 3d 7, 18 (1975). However, "[a]n allegation that

an act is wrongful and unlawful is a mere conclusion" and

"conclusions of law are not admitted by demurrer." Metzenbaum v.

Metzenbaum, 86 Cal. App. 2d 750, 754 (1948); Vilardo v. Sacramento

County, 54 Cal. App. 2d 413, 418-419 (1942). 

The FAC is not "devoid" of factual allegations as Defendants

have argued. Plaintiffs allege that Dr. Hayman is a medical

professional who rendered medical services to Loren Schultz, and

thus had an implied duty to exercise care for his patient as other

members of his profession would. FAC at ¶ 124. They also allege

that Dr. Hayman prescribed Seroquel and Risperdal to the decedent

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for uses unapproved by the FDA and failed to monitor the results

this action would have on him. FAC at ¶ 125. Plaintiffs further

allege that Dr. Hayman failed to warn of any of the adverse effects

Seroquel and Risperdal may have caused while holding himself out to

be knowledgeable about the safety of these medications. FAC at ¶¶

125, 127. The effects Dr. Hayman allegedly failed to disclose

include not only the pancreatitis that caused the decedent's death

at the age of nineteen, but other potential risks that Dr. Hayman

may have or should have known about. These allegations apprise Dr.

Hayman "of the nature, source and extent" of the cause of action

against him sufficiently to state a claim for professional

negligence in California state court. Metzenbaum, 86 Cal. App. 2d

at 753.

In their notice of removal, Defendants argued that Plaintiffs'

allegation that Dr. Hayman prescribed Seroquel and Risperdal for

non-approved uses is insufficient to sustain a claim of

professional negligence. Although the cases cited by both parties

indicate that a mere allegation of "off-label" use with nothing

more would not be sufficient to state a claim for professional

negligence, the allegations that Dr. Hayman prescribed both drugs

for unapproved uses, failed to monitor his patient's reaction to

the treatment and failed to warn his patient of any potentially

serious adverse effects do state a colorable claim of professional

negligence. Whether or not Plaintiffs can ultimately prove Dr.

Hayman's liability in state court is not for this Court to decide. 

Defendants also argue that the facts Plaintiffs plead in the

FAC make a cause of action against Dr. Hayman "factually

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impossible" because Plaintiffs allege that AstraZeneca and Janssen

purposely concealed information about adverse effects from

everyone, including doctors. Defendants rely on Baisden v. Bayer

Corp., 275 F. Supp. 2d 759, 763 (S.D. W.Va. 2003), in which the

court ruled that where "the gravamen of the malpractice case"

against a doctor was "his failure to know what allegedly was

deliberately hidden" by the defendant pharmaceutical company, it

was insufficient under Federal Rule of Civil Procedure 8(a) to

allege nothing more than that the doctor lacked knowledge of a

medication's adverse side effects. 

Defendants' reliance on Baisden here is misplaced; it is

distinguishable on the facts and does not address California state

pleading requirements or professional negligence law. A complaint

may plead inconsistent causes of action in California “if there are

no contradictory or antagonistic facts." Berman v. Bromberg, 56

Cal. App. 4th 936, 944-945 (1997) (citing Steiner v. Rowley, 35

Cal.2d 713, 718-719 (1950)). Thus, “unless the alternate pleadings

contain antagonistic statements, the statement of facts sufficient

to constitute a cause of action in one count is not a bar to the

maintenance of a separately stated count in the same pleading based

upon inconsistent allegations." Id. The facts plead in this case

are not inconsistent. Plaintiffs do not claim that AstraZeneca and

Janssen concealed all information on the adverse effects of

Seroquel and Risperdal from doctors, but rather that the warnings

regarding these risks were inadequate in relation to their

severity. FAC at ¶¶ 39-41, 43, 52-54, 56. Nor do Plaintiffs

simply contend that Dr. Hayman should have known what AstraZeneca

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and Janssen allegedly kept from him, but that he prescribed

Seroquel and Risperdal for unapproved uses, failed to give any

warnings about them even though he held himself out to be competent

in their use, and failed to monitor the decedent's reaction to

them. FAC at ¶¶ 125, 127. The FAC also alleges that AstraZeneca

and Janssen encouraged "off-label use" and offered doctors

"incentives" to over-prescribe their drugs. FAC at ¶¶ 37, 51. Far

from making claims against individual doctors "factually

impossible," these allegations indicate a concerted effort on

behalf of both companies to encourage doctors to ignore their own

professional judgment.

For these reasons, the allegations against Dr. Hayman are

sufficient to state a claim for professional negligence. 

Defendants have failed to show that there is no possibility that

Plaintiffs will be able to establish liability against Dr. Hayman

in state court and thus have not met their burden to show that Dr.

Hayman is fraudulently joined. Therefore, the Court remands this

case to state court for lack of jurisdiction. 

CONCLUSION

For the forgoing reasons, Defendants' motion to stay is DENIED

(Docket No. 5) and Plaintiffs' motion to remand (Docket No. 7) is

GRANTED.

IT IS SO ORDERED.

Dated: 12/22/06 

CLAUDIA WILKEN

United States District Judge

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