Opinion
(MDL No. 1348) 00 Civ. 2843 (LAK), (Motion to Remand — Lane), This Document Relates to: 02 Civ. 6813 (LAK)
June 17, 2003
PRETRIAL ORDER NO. 156
This action was brought in a Mississippi state court. Initially, there were two plaintiffs (one described as deceased), both Mississippi residents, and eight named defendants — two out-of-state manufacturer defendants, a Mississippi pharmacy, two Mississippi physicians, a Mississippi medical clinic, and two representatives of the manufacturers, at least one a Mississippi resident and the other a Virginia resident. The third amended complaint was filed on behalf of twenty-six plaintiffs, at least nineteen of whom are Mississippi citizens and one a citizen of North Carolina. It names the out-of-state manufacturer defendants and — in an obvious effort to prevent removal — (a) eight Mississippi and two North Carolina physicians, (b) four Mississippi and North Carolina medical clinics, (c) two manufacturer representatives who are said to be Mississippi residents, and (d) a local Mississippi pharmacy. The manufacturer defendants removed the action to the Southern District of Mississippi whence it was transferred to this Court by the Multidistrict Panel. Plaintiffs then moved to remand. In addition, the two North Carolina physicians and two North Carolina medical clinics moved to dismiss for lack of personal jurisdiction.
In a thorough report and recommendation, dated May 21, 2003, Magistrate Judge Katz concluded that the manufacturer representatives and the local pharmacy had been joined fraudulently. He found that seven of the plaintiffs failed to allege that any of the physician defendants ever treated them and that two others had submitted affidavits stating that they never intended to sue their physicians and did not wish to press the claims against them that the lawyers filed on their behalves. These nine plaintiffs therefore were misjoined insofar as the claims against the physicians were concerned. He concluded also that the remaining physician-defendants were improperly joined because all of the relevant allegations against them were entirely conclusory.
Judge Katz noted that the physician-defendants are named not only in a malpractice count, but also in other counts of the complaint asserting against undifferentiated "defendants" claims such as strict products liability. He disregarded those allegations in light of the fact that plaintiffs did not rely on those claims in resisting remand, thus tacitly admitting that the physician and clinic defendants were not intended defendants on those counts.
Finally, he recommended that the Court grant the motion of the North Carolina defendants to dismiss for lack of personal jurisdiction.
Certain of the plaintiffs object to some aspects of the report and recommendation. They argue that the third amended complaint adequately alleges (1) medical malpractice claims against the Mississippi physicians, and (2) claims against the Mississippi pharmacy and the manufacturer representatives.
Plaintiffs do not object to the dismissal of the North Carolina defendants. Nor do they object to the denial of the motion to remand with respect to nine of the plaintiffs insofar as the motion was based on the presence of non-diverse physician plaintiffs. Pl. Obj. 3 n. 1.
The references in the report and recommendation to the "complaint" appear to relate to the third amended complaint, which is the operative pleading.
Non-Diverse Physician and Clinic Defendants
Judge Katz concluded that the claims against the physician defendants were insufficient because plaintiffs "do not allege facts with respect to a breach of any duty . . ."
Report and recommendation, at 8 (emphasis added).
The legal standard he applied clearly was correct. As Judge Katz held, and as plaintiffs agree, the elements of medical malpractice under Mississippi law are (1) a doctor-patient relationship and any attendant duty; (2) the requisite standard of care; (3) a breach by the defendant; (4) causing plaintiff's injury; and (5) damages. See Robinson v. Hawkins, 541 So.2d 1048, 1050-51 (Miss. 1989). Moreover, "bald assertions and conclusions of law are insufficient." Cooper v. Parsky, 140 F.3d 433, 440 (2d Cir. 1998). A plaintiff must allege facts which, alone or with the benefit of reasonable inferences therefrom, make out each element of his or her claim for relief. In other words, "the complaint must allege facts which, assumed to be true, confer a judicially cognizable right of action." York v. Ass'n of the Bar of the City of New York, 286 F.3d 122, 125 (2d Cir.), cert. denied, 123 S.Ct. 702 (2002) (emphasis added); accord, Carl Sandburg Vill. Condo. Ass'n No. 1 v. First Condo. Dev. Co., 758 F.2d 203, 207 (7th Cir. 1985) ("a complaint must state either direct or inferential allegations concerning all of the material elements necessary for recovery under the relevant legal theory"). Thus, the question is whether the plaintiffs allege facts which, assumed to be true, make out all of the elements of medical malpractice under Mississippi law.
The allegations upon which plaintiffs rely as to the disputed elements of their claim are found entirely in paragraphs 105 through 109 of the third amended complaint. They assert that these defendants informed plaintiffs and/or their decedents that Rezulin was safe when they knew or should have known that substantial questions as to safety existed. They then go on to allege that the physicians owed plaintiffs various duties (e.g., the exercise of care and sound professional judgment and to keep themselves fully informed) and, in the most conclusory of terms, that they "breached the duties owed to plaintiffs and/or their decedents, which proximately caused the plaintiffs' and/or their decedents' damages." The only specific allegations on this score are that they told the plaintiffs that the drug was safe when they knew or should have known that questions existed on this score and breached duties "[t]o timely recognize the adverse drug reactions the plaintiffs and/or their decedents suffered. . . ."
The allegation that the physicians misrepresented the safety of Rezulin, whatever the characterization in the pleading, sounds in fraud. It patently fails to satisfy the requirements of Fed.R.Civ.P. 9(b), as it does not allege the time and place of the alleged misrepresentations nor set forth facts giving rise to a strong inference of scienter. Indeed, plaintiffs' objections do not rely on this assertion in seeking to justify remand, doubtless recognizing the insufficiency of the claim.
Fed.R.Civ.P. 9(b) is identical to Miss. R.Civ.P. 9(b).
This conclusion applies regardless of whether the theory is that the physicians actually knew of questions as to safety or that, as physicians, they should have known. Under Mississippi law, a false statement is fraudulent when made with knowledge of its falsity or "when in fact the defendant was without knowledge upon the subject, or when, by reason of his position, he should have known the truth or falsity of the representation made." Vincent v. Corbitt, 47 So. 641, 643 (Miss. 1908) (citation and internal quotation marks omitted). Accord, Jackson v. Sam Finley, Inc., 366 F.2d 148, 153 (5th Cir. 1966) (Mississippi law); Evans v. Malone, 250 Miss. 214, 220-22, 164 So.2d 794, 797-98 (1964); Mayfield Motor Co. v. Parker, 222 Miss. 152, 159, 75 So.2d 435, 437 (1954); H.D. Sojourner Co. v. Joseph, 186 Miss. 755, 191 So. 418, 421 (1939); J. C. Penney Co. v. Scarborough, 184 Miss. 310, 186 So. 316, 317 (1939).
The second allegation comes closer to the mark in that it suggests that the physicians in fact did not recognize adverse reactions to the drug. But nowhere do plaintiffs allege the standard of care, how the physicians allegedly failed to comply with that standard, and that they would have recognized the alleged adverse reactions had they done so.
There is little doubt that this second charge would have been insufficient prior to Mississippi's adoption of rules of procedure similar to the Federal Rules. See Robinson v. Hawkins, 541 So.2d 1048, 1050 (Miss. 1989) (sustaining declaration alleging respects in which physician was negligent); Satcher v. Wiser, 483 So.2d 694, 696 (Miss. 1986) (affirming dismissal where declaration failed to allege in non-conclusory terms acts or omissions constituting breach of duty and injury as proximate consequence). The new rules are somewhat less stringent. Satcher, 483 So.2d at 696-97. Nevertheless, there is no basis for supposing that they eliminate the requirement that the pleading allege facts which, if true, would establish each of the elements of plaintiff's claim for relief, which regularly is applied under the comparable federal rules. York, 286 F.3d at 125; Carl Sandburg Vill. Condo. Ass'n No. 1, 758 F.2d at 207. In consequence, if the sufficiency of the pleading is measured by the standards of Fed.R.Civ.P. 8(a) and 12(b)(6), it fails. If it is measured by the pleading standards that would have governed in the Mississippi state courts absent removal, the test, in the absence of controlling state authority, is "whether there is a reasonable possibility that [Mississippi's] highest court would rule in favor of the plaintiff[s] were the issue presented to it." In re Rezulin Prods. Liab. Litig., 133 F. Supp.2d 272, 280 (S.D.N.Y. 2001). Given the pre-Mississippi Rules and the federal cases cited above, this Court is persuaded that there is not — the Mississippi Supreme Court, in this Court's view, would be extremely unlikely to uphold the medical malpractice claims in this case given the paucity of factual allegations. The Mississippi physicians therefore were joined improperly.
The Pharmacy Defendant
Judge Katz concluded that the joinder of the pharmacy defendant was improper on two alternative grounds: the conclusory nature of the pleading and the failure to allege that this defendant sold Rezulin to any of the plaintiffs. Plaintiffs object on the ground that their pleading does allege sales by the pharmacy defendant and that this is sufficient.
Contrary to plaintiffs' contention, it is far from clear that the amended complaint alleges that the pharmacy defendant sold Rezulin to any of the plaintiffs. It alleges that "defendants," the term being used without differentiation, "sold" Rezulin. Third Am. Cpt. ¶¶ 71c, 74a. It alleges also that "defendants . . . sold . . . Rezulin and knew of the use for which the aforesaid drug was being used by plaintiffs. . . ." Id. ¶ 77. These paragraphs, however, do not allege that the pharmacy defendant sold Rezulin to the plaintiffs which, plaintiffs tacitly concede, is an essential element of their claims against the pharmacy. And while paragraph 97 does allege that "[d]efendants, again without differentiation, "knew or should have known that the Rezulin they assisted in marketing, dispensing, and selling to plaintiffs . . . was defective and unreasonably dangerous," it is not plain that assisting in the marketing and sale of the drug would be sufficient to satisfy that element of plaintiffs' burden. But it is unnecessary to decide that issue here, as there is another basis for disposing of the issues concerning the pharmacy.
The pharmacy is named on the first six causes of action, which purport to state claims for strict liability; negligent manufacture and distribution of an unsafe product and a negligent failure to warn, breach of warranties of fitness and merchantability, negligent misrepresentation and fraud.
The negligent misrepresentation claim (count four), despite its title, alleges that "defendants knew, or should have known, that dangerous risks were associated with the use of their products, [but] proceeded with the . . . sale of their drugs . . . and sold without adequate warnings of the serious side effects and dangerous risks. . . ." Third Am. Cpt. ¶ 82. As noted above, this allegation in fact states a claim for actual fraud under Mississippi law. In consequence, Rule 9(b) applies to this claim as well as to the fraud claim. For the reasons discussed previously, it is not satisfied here. Hence, both the fraud and so-called negligent misrepresentation claims are manifestly insufficient.
The sixth count contains somewhat different language, the gravamen of which nevertheless is that defendants made unspecified representations in breach of a duty to report truthfully or in the absence of using "reasonable means and efforts to ascertain the truth of the[ir] representations." Third Am. Cpt. ¶ 98. There is no substantial difference between these allegations and paragraph 82 for present purposes.
That leaves the strict liability, negligent failure to warn and breach of warranty claims. This Court already has held that Mississippi's learned intermediary doctrine does not permit recovery against pharmacists dispensing prescription drugs on these theories in circumstances like those at bar. In re Rezulin Prods. Liab. Litig., 133 F. Supp.2d at 288-90; accord, id. 168 F. Supp.2d 136, 141-42 n. 19 (S.D.N.Y. 2002); Pretrial Order No. 70 (denying remand in this action on the ground that no material possibility of recovery against non-diverse pharmacy defendant); Pretrial Order No. 90 (granting motion to dismiss by another non-diverse Mississippi pharmacy defendant). Accordingly, the pharmacy defendant was joined improperly and its will be disregarded for jurisdictional purposes.
The Manufacturer Representatives
The claim against the manufacturer representatives is for fraud — they are alleged to have made false representations to the plaintiffs, knowing that they were false and that plaintiffs would rely on them. Third Am. Cpt. ¶ 47. There is a suggestion also that they advised physicians but no specific suggestion that they advised any of the physicians who prescribed Rezulin to any of the plaintiffs. The complaint is silent as to what representations were made to which plaintiffs or physicians, when, where or by whom they were made, and what was false about them. It alleges no facts giving rise to a strong inference of scienter. Judge Katz concluded that this was insufficient under Rule 9(b).
Plaintiffs object to the report and recommendation. They tacitly acknowledge that their claims are patently insufficient insofar as they depend upon alleged misrepresentations to the plaintiffs. They contend, however, that their claims based on alleged misrepresentations to the physicians should stand because the facts are outside their present control.
Rule 9(b) does make allowance for situations in which a plaintiff may be unable to allege the precise circumstances of an alleged fraud with particularity because the details lie in the exclusive possession of the defendant. Even in such cases, however, the complaint must allege facts demonstrating the basis for the suggestion that a fraud occurred. See, e.g., Schlick v. Penn-Dixie Cement Corp., 507 F.2d 374, 379 (2d Cir. 1974); Segal v. Gordon, 467 F.2d 602, 608 (2d Cir. 1972); Am. Buying Ins. Servs., Inc. v. S. Kornreich Sons, Inc., 944 F. Supp. 240, 248-49 (S.D.N.Y. 1996); Spira v. Nick, 876 F. Supp. 553, 557 (S.D.N.Y. 1995); Devaney v. Chester, 709 F. Supp. 1255, 1260 (S.D.N.Y. 1989). The third amended complaint fails to allege such facts.
Conclusion
None of plaintiffs' claims against the non-diverse defendants — the physicians and health clinics, the pharmacy and the manufacturer representatives — offers any material chance of success. All therefore were fraudulently joined and their presence is immaterial for diversity purposes. The motion to remand is denied.
Further, the motion of defendants John D. Reed, Mark Warren, Eastern Nephrology Associates and Physicians East to dismiss for lack of personal jurisdiction is granted for the reasons set forth in the report and recommendation. Plaintiffs' request for certification under 28 U.S.C. § 1292(b) is denied.
SO ORDERED.