Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-00750/USCOURTS-caed-2_05-cv-00750-0/pdf.json

Nature of Suit Code: 365
Nature of Suit: Personal Injury - Product Liability
Cause of Action: 28:1332 Diversity-Petition for Removal

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

JOHN MARTIN,

NO. CIV. S-05-750 LKK/PAN

Plaintiff,

v. O R D E R

MERCK & COMPANY, INC.; and

McKESSON CORPORATION,

Defendants.

 /

On April 1, 2005, plaintiff John Martin (“plaintiff”) filed

an action against defendants Merck & Co., Inc. (“Merck”) and

McKesson Corporation (“McKesson”) alleging injuries from his use

of the prescription drug Vioxx. Plaintiff brings numerous state

causes of action including a strict liability claim based on a

failure to warn and claims for breach of both express and implied

warranties. 

On April 15, 2005, Merck removed the action to this court

based on diversity jurisdiction. Plaintiff now moves to

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remand, asserting that removal was improper and that this court

lacks jurisdiction. Defendant Merck, on the other hand, moves to

stay pending a decision by the judicial panel on multidistrict

litigation (“MDL Panel”) regarding whether to transfer this action.

I decide the motions based on the papers and pleadings filed herein

and after oral argument.

I.

BACKGROUND

Plaintiff is a California resident. Defendant Merck, the

manufacturer of Vioxx, is incorporated and has its principal

place of business in New Jersey. Defendant McKesson is a

promoter and distributor of Vioxx, is incorporated in Delaware,

and has its principal place of business in California. 

On February 16, 2005, pursuant to 28 U.S.C. § 1407, the MDL

Panel issued a transfer order establishing MDL proceeding No.

1657, In re Vioxx Products Liability Litigation. That order

centralized 148 cases that the MDL panel found had overlapping

questions of fact. The Panel also held that nearly 300

potentially-related actions then pending in multiple federal

districts will be treated as potential tag-along actions. 

Merck’s moving papers indicate that the company “intends to

provide notice to (the MDL Panel) of the pendency of this ‘tagalong.’”

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II.

ANALYSIS

Merck contends that "the policies of justice and

efficiency" compel this court to address its motion to stay

before addressing plaintiff's motion to remand. Plaintiff, on

the other hand, insists that the proper procedure requires the

court to first address the jurisdictional issue. I address

these contentions below. 

A. STANDARD FOR COMPETING MOTIONS TO STAY AND TO REMAND

While judicial economy will normally favor deciding a

remand motion prior to a stay pending transfer, Quincy Cmty

Servs Dist. v. Atlantic Richfield, No. CIV. S-03-2582 at *7

(E.D. Cal. 2004)(Karlton, J.), existing legal authority does not

provide concrete guidance on how a district court should address

these competing motions. This court has, however, previously

addressed this question and has adopted a three step methodology

set forth in Meyers v. Bayer AG, 143 F.Supp.2d 1044 (E.D. Wis.

2001). Id. That test provides that:

[A] court should first give preliminary scrutiny to

the merits of the motion to remand. If this

preliminary assessment suggests that removal was

improper, the court should promptly complete its

consideration and remand the case to state court.

If, on the other hand, the jurisdictional issue

appears factually or legally difficult, the court's

second step should be to determine whether identical

or similar jurisdictional issues have been raised in

any other cases that have been or may be transferred

to the MDL proceeding.

Only if the jurisdictional issue is both difficult and

similar or identical to those in cases transferred or

likely to be transferred should the court proceed to

the third step and consider the motion to stay. 

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Quincy Cmty Servs Dist., No. CIV S-03-2582 (quoting Meyers, 143

F.Supp.2d at 1049). 

B. PRELIMINARY ASSESSMENT OF THE JURISDICTIONAL ISSUE

I first make a preliminary assessment of the jurisdictional

issue. A preliminary review of plaintiff’s motion to remand

suggests that removal of this action from state court was

improper because the presence of defendant McKesson defeats

complete diversity of citizenship. 28 U.S.C. § 1332(a). 

Furthermore, as I explain below, Merck’s position that McKesson

was fraudulently joined appears to be without merit. 

Accordingly, the Court will complete its assessment of the

motion to remand.

C. MOTION TO REMAND

1. Fraudulent Joinder Standard

Civil actions not involving a federal question are

removable to a federal district court only if there is diversity

of citizenship between the parties. 28 U.S.C. § 1332(a)(1). 

Section 1332 requires that there be complete diversity; that is,

each plaintiff's citizenship must be diverse as to each

defendant's citizenship. Id. A defendant may remove a civil

action that alleges claims against a non-diverse defendant when

the plaintiff has no basis for suing that defendant, or in other

words, when that defendant has been fraudulently joined. McCabe

v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir.1987). 

"[F]raudulent joinder is a term of art. If the plaintiff

fails to state a cause of action against a resident defendant,

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and the failure is obvious according to the settled rules of the

state, the joinder of the resident defendant is fraudulent."

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

(quoting McCabe, 811 F.2d at 1339) (citations omitted)). Where

a non-diverse defendant has been "fraudulently joined" to an

otherwise completely diverse case, that defendant is disregarded

for diversity jurisdiction purposes. See, e.g., Calero v. Unisys

Corp., 271 F.Supp.2d 1172, 1176 (N.D. Cal. 2003). 

On a motion to remand, the removing defendant faces a

strong presumption against removal, and bears the burden of

establishing that removal was proper by a preponderance of

evidence. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398,

403-404 (9th Cir. 1996); Gaus v. Miles, Inc., 980 F.2d 564, 567

(9th Cir. 1992). Thus, the defendant carries a high burden of

establishing that the non-diverse party was fraudulently joined. 

See Gaus, 980 F.2d at 564. 28 U.S.C. § 1447(c) provides that a

case removed from state court should be remanded if it appears

that the case was removed improvidently or without jurisdiction. 

Federal jurisdiction must be rejected if there is any doubt as

to the right of removal. Gaus, 980 F.2d at 566. 

In determining whether a non-diverse defendant has been

improperly joined, courts may look beyond the pleadings and

examine the factual record. McCabe, 811 F.2d at 1339. 

2. Analysis

Merck asserts that diversity jurisdiction exists in this

action because the only non-diverse defendant named in the

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complaint, McKesson, was fraudulently joined. It first asserts

that plaintiff has not asserted a viable claim against McKesson. 

Second, it argues that, even if a claim could stand against

McKesson, plaintiff’s complaint fails to plead sufficient facts

against McKesson and any general allegations do not support a

properly pleaded claim. 

a. Viable Cause of Action

I first address Merck’s contention that plaintiff has

failed to state a viable claim against McKesson as a

distributor. Merck asserts that plaintiff’s claims against

McKesson are based on a failure to warn about the purported

risks of Vioxx. According to Merck, however, this claim

necessarily fails because California law does not impose such a

duty to warn on distributors. 

While it is well-known that manufacturers of prescription

drugs in California can be held strictly liable for a failure to

warn, Carlin v. Superior Court, 13 Cal.4th 1104, 1110 (1996),

the court must determine whether distributors of such drugs can

be similarly liable. The answer is readily at hand. The

general rule is that strict liability for failure to provide

adequate warnings runs to distributors as well as manufacturers. 

Arderson v. Owens-Corning Fiberglas Corp., 53 Cal.3d 987, 994

(1991). Such liability may also extend to retailers. Soule v.

Gen. Motors Corp., 8 Cal.4th 548, 560 (1994). 

Merck argues that the general rule does not apply to

distributors when the product at issue is a pharmaceutical

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product. To support its position, Merck directs the court to

California law providing that pharmacists are not subject to

liability based on a failure to warn theory. See, e.g. Murphy v.

E.R. Squibb & Sons, Inc., 13 Cal.4th 1104, 1117 (1996). While

the state courts have carved out an exception for pharmacists,

however, they have not addressed whether prescription drug

distributors are similarly exempt from strict liability for

failure to warn.

It is undisputed that McKesson is not a pharmacist. Still,

Merck insists that the rationale for exempting pharmacists from

strict liability applies equally to distributors. It does not

cite to any authority to support its position, however, and

instead argues that such an outcome is good public policy. This

argument necessarily fails. First, California’s public policy

justification for exempting pharmacists from strict liability is

that pharmacists provide services. Murphy, 40 Cal.3d at 679 (“a

key factor” in exempting pharmacies from liability is “that the

pharmacist who fills a prescription is in a different position

from the ordinary retailer because he cannot offer a

prescription for sale except by order of the doctor . . . . He

is providing a service to the doctor.”). McKesson, unlike

pharmacists, does not provide the public with an analogous

service. More importantly however, by relying primarily on

public policy arguments, Merck effectively concedes that such a

cause of action is not presently precluded under California law. 

Therefore, Merck fails to meet its heavy burden to show to “a

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near certainty” that McKesson’s joinder was fraudulent. Lewis v.

Time, Inc., 83 F.R.D. 455, 466 (E.D. Cal. 1979), aff’d, 710 F.2d

549 (9th Cir. 1983). 

Merck also argues that Martin’s claim against McKesson

cannot stand because pharmaceutical drug distributors are exempt

from liability under the learned intermediary doctrine. 

McKesson points out that physicians are “learned intermediaries”

whose advice consumers follow when deciding what medications to

take. According to Merck, this means that the duty to warn runs

from the manufacturer to the physician, and from the physician

to the ultimate consumer. I cannot agree.

First, the learned intermediary doctrine is a defense to a

cognizable cause of action which courts do not ordinarily

consider in determining fraudulent joinder. See Ritchey v.

Upjohn Drug Co., 139 F.3d 1313, 1318-19 (9th Cir. 1998). 

However, even if the court considered the defense, it would not

necessarily bar recovery. California law exempts from liability

those in the chain of prescription drug distribution when

adequate warning has been given to physicians about the

potential dangers of the medication. Carlin, 13 Cal.4th at

1118. Where, as plaintiff alleges here, the dangers of the drug

were scientifically knowable to the manufacturer, but the doctor

was not warned, liability may still extend to the manufacturer.

Id.

As a last ditch effort, Merck argues that attaching

liability to McKesson for failure to warn is problematic

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because, by providing additional warnings on Vioxx containers,

the distributor would violate federal law prohibiting alteration

of Federal Drug Administration (“FDA”) approved labels. The

California Supreme Court has rejected this argument and

explained that strict liability for failure to warn is not

necessarily inconsistent with FDA policy. Carlin, 13 Cal.4th at

1113 (“as numerous courts have concluded, Congress evinced no

intention of preempting state tort liability for injuries from

prescription drugs.”). Accordingly, Merck cannot show that

plaintiff’s cause of action against a prescription drug

distributors is precluded under state law.

Again, the established general rule in California is that

drug distributors may be strictly liable under a failure to warn

theory. Anderson, 53 Cal.3d at 994. Because California courts

have not specifically addressed the issue, at the very least, it

is an unsettled question of law. Therefore, Merck cannot meet

its heavy burden so as to defeat plaintiff’s motion to remand. 

See Gaus, 980 F.2d at 566. 

b. Properly Pleaded Complaint

Alternatively, Merck argues that plaintiff’s motion to

remand should be denied because his general allegations against

the defendants cannot substitute properly pleaded claims against

McKesson specifically. In other words, Merck objects to the

propriety of the claims against McKesson on the grounds that the

complaint lumps McKesson with Merck together, making it

difficult for McKesson to determine the allegations upon which

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plaintiff seeks to hold it liable. According to Merck,

plaintiff’s failure to distinguish the specific factual

allegations against McKesson amounts to an “admission” of

fraudulent joinder. Below, I examine whether plaintiff has

alleged sufficient facts to support his cause of action against

McKesson. 

A strict liability cause of action requires a plaintiff to

prove injury. Carlin, 12 Cal.4th at 1110. Plaintiff avers in

his complaint that: 

[He] took the prescription medication Vioxx

and Vioxx was the legal and proximate cause

of his coronary disease/ bypass. The

coronary disease/bypass has led to the

aforementioned damages. Vioxx is . . . is

distributed by McKesson Corporation. 

Compl. at 4. While plaintiff has clearly alleged an injury,

Merck insists that, by failing to allege that McKesson

distributed the Vioxx that Martin actually ingested, he does not

allege facts to establish causation. 

Martin presents pharmacy records to show that he filled his

prescription for Vioxx at a Safeway store during the time in

which McKesson was that store’s “primary supplier of branded,

generic and repackaged pharmaceutical products” in all 733

Safeway locations in the United States. Cain Decl. at ¶ 7, Ex.

4. Merck objects that the Court cannot consider Martin’s

purported evidence of causation because it is not contained in

Martin’s complaint. It is well-known, however, that in

determining whether a non-diverse defendant has been improperly

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1 Merck cites a recent Eastern District of California Vioxx

decision, Aronis v. Merck & Co., No. CIV S-05-0486 (E.D. Cal., May

3, 2005; Shubb, J.), which concluded that defendant McKesson was

fraudulently joined. In Aronis, the court found the complaint to

be deficient, noting that “plaintiff [did] not allege that McKesson

contributed in any way to her injuries, only that McKesson is a

distributor.” Id. (emphasis in the original). That case is

distinguishable from the instant matter, in that Martin’s

allegations do establish a sufficient causal link between the

medication distributed by McKesson and ingested by Martin, since

plaintiff presents evidence showing that McKesson was the primary

distributor of prescription medications at the pharmacy where

Martin obtained the Vioxx. 

2 The Meyers test indicates that the court should consider the

motion to stay “only if the jurisdictional issue is both difficult

and similar or identical to those in cases transferred (to a MDL

venue).” Meyers, 143 F.Supp.2d at 1049. This is not the case

here. Although Merck argues that the jurisdictional issue is both

factually and legally complex, it does not state why this is so.

Consideration of plaintiff’s motion to remand actually suggests

that the jurisdictional issue is simple and that this case belongs

in state court. While Merck argues that the MDL judge will review

jurisdictional questions, it offers no evidence that such questions

will be similar or identical to the one before the court here. 

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joined, courts may look beyond the pleadings and examine the

factual record. McCabe, 811 F.2d at 1339. Accordingly,

plaintiffs allegations, if true, are sufficient to establish

causation.1

Because plaintiff has properly alleged a viable state law

cause of action against McKesson, the court cannot find

fraudulent joinder.2

D. AUXILIARY CONSIDERATION OF THE MOTION TO STAY

As noted, the court is not obligated to consider Merck’s

motion to stay. However, since it insists that it will be

heavily prejudiced if the court ignores its motion, the court

briefly addresses this contention below.

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The power to stay proceedings is within the court’s

discretion and is incidental to the “power inherent in every

court to manage the schedule of cases on its docket to ensure

fair and efficient adjudication.” Quincy Cmty. Servs. Dist., No.

CIV. S-03-2582, *6 (quoting Landis v. North America Co., 299

U.S. 248, 254-55 (1936)). 

In considering a motion to stay pending a possible MDL

Panel transfer order, the district court considers three

factors: (1) “potential prejudice to the non-moving party; (2)

hardship and inequity to the moving party if the action is not

stayed and (3) the judicial resources that would be saved by

avoiding duplicative litigation if cases are in fact

consolidated.” Id. at *6. 

 As plaintiff points out, defendant cannot be prejudiced by

the remand of this action because a coordinated Vioxx proceeding

is pending in the Los Angeles Superior Court, where this matter

will ultimately be resolved. Therefore, because Merck is

already involved in and must defend such matters in California,

its contentions regarding prejudice are unfounded. 

E. ATTORNEY’S FEES

Martin requests an award of attorney’s fees incurred in

bringing its remand motion. 28 U.S.C. § 1447(c) provides that

“an order remanding the case may require payment of just costs

and any actual expenses, including attorney fees, incurred as a

result of the removal.” Id. Costs may be awarded for an

improper removal even absent a finding of bad faith. Moore v.

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Permanente Med. Group. Inc., 981 F.2d 443, 446 (9th Cir. 1992). 

The award of fees is within the jurisdiction of the district

court. Id.

An award of attorney’s fees and costs is not warranted in

the instant matter. Although ultimately unconvincing, Merck’s

contentions are not frivolous, and there is nothing showing that

removal was motivated by bad faith. Moreover, defendant’s

removal does not appear to have resulted in unreasonable delay

or prejudice. 

III.

CONCLUSION

1. Plaintiff’s motion to remand is GRANTED.

2. Defendant Merck’s motion to stay is DENIED as

moot.

3. Plaintiff’s motion for attorney’s fees is DENIED.

IT IS SO ORDERED.

DATED: August 15, 2005.

/s/Lawrence K. Karlton 

LAWRENCE K. KARLTON

SENIOR JUDGE

UNITED STATES DISTRICT COURT

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