Sunday, November 21, 2010

Fraudulent Joinder of Minor Characters

As defense lawyers at trial, we usually hit the theme of how a corporation is made up of people -- folks who live in the neighborhood, who work hard for a living, and who try to do the right thing and make good products. We usually make sure that a corporate representative sits in the front row for at least part of the festivities. And nothing is better jury-bait than a company witness who can take the witness stand and come across as caring and competent.

There is another side to all that, of course. In some plaintiff lawyer playbooks, the case commences by hauling corporate representatives into court and turning them into document-delivery devices. The plaintiff lawyer keeps slinging bad paper at the company witness, forcing them either to agree with unfortunate statements (bad), or renounce them (that can also be bad). Maybe we can get the judge to impose reasonable limits on this charming bit of theater. Maybe not.

But it's an entirely different kettle of fish when plaintiffs actually name corporate employees as defendants.

Mind you, we're not talking about criminal prosecutions of corporate officers, the Park doctrine and all that incredibly scary stuff. Heck, the government is now even going after company lawyers. It strikes us (and some of us at one time worked in the government, obtained indictments, and persuaded judges to sentence at the high-end of the guidelines) as heavy-handed, but that's a post for another day. Nor are we talking about civil plaintiffs who genuinely seek to hold corporate employees liable. That's exceedingly rare, because it's a hard case to make out, it creates individual issues that should militate against any sort of aggregation, and it potentially spoils some of the David vs. Goliath myth-making at trial.

Rather, plaintiff lawyers are more likely to drop a corporate employee into the caption to avoid federal diversity jurisdiction. Some prior posts discussed this issue, usually in the context of fraudulent joinder of sales representatives. Most courts have held that sales representatives cannot be liable "in the absence of evidence that [a sales representative] either knew or should have known of [the drug's] allegedly dangerous effects." Legg v. Wyeth, 428 F.3d 1317, 1325 (11th Cir. 2005) (applying Alabama law). Courts have also found lack of a duty because sales representatives are neither "manufacturers" nor "sellers" for purposes of products liability litigation. See In re Diet Drugs MDL, 2004 WL 2203712 at *2 (E.D. Pa. Sept. 28, 2004) (applying Missouri law). The fraudulent joinder "no colorable ground" standard can be a toughie, but application of TwIqbal, along with submission of a declaration by the employee (along the lines of either 'I never heard that the medicine causes X' or 'I never actually sold X') more often than not lets the court see through the sham, and the inevitable effort to remand the case to some state court hellhole jurisdiction is thwarted.

Puricelli v. Genentech, Inc., No. 4:10CV1793-JCH (E.D. Mo. November 15, 2010), is a little bit different, and is certainly a helpful fraudulent joinder precedent for defendants. The plaintiffs in Puricelli brought their suit in the Circuit Court of the City of St. Louis -- not a place in the top ten list of anyone on the right side of the "v." The plaintiffs alleged strict liability, negligence, and negligent misrepresentation against all of the defendants arising from use of Rituxan. The plaintiffs also alleged that the defendants acted so badly that punitive damages were warranted. While two of the defendants were the companies that co-developed Rituxan, one was a Genentech employee. But she wasn't a sales representative. Instead, she was the Senior Oncology Clinical Coordinator.

The plaintiffs claimed that this employee had "marketed Rituxan as a safe and effective treatment for various diseases, including those for which its uses would be 'off-label'; that she knew or should have known that the use of Rituxan presented a risk of extremely serious injury or death; and that, despite this knowledge, she failed adequately to warn of the increased risk...." Slip Op. at 3. But in truth the most important thing about the employee is that her presence in the case defeated diversity.

The plot thickened in the way it usually thickens. The defendants removed the case to federal court and the plaintiff moved to remand. The employee submitted a declaration that she had never sold, marketed, promoted, or tested Rituxan, that she never worked with the relevant treating doctors, and that she never spoke or met with the plaintiff. Slip Op. at 4. In other words, the employee was hardly a major player in this drama.

And now for an indefensible digression. This week's book review sections spilled a lot of ink about the importance of minor characters in books. Salmon Rushdie thinks that The Lord of the Rings endures because Tolkien provided so much background texture, creating endless backstories and fascinating minor characters -- none more fascinating than Gollum. That character reminds us of some of our more pertinacious opponents. Meanwhile, Stieg Larsson, author of the Millennium Trilogy -- The Girl With the Dragon Tattoo, etc. -- wrote e-mails to his editor making plain that he thought his minor characters were the key to creating a realistic universe in the novels. Maybe so, but we find it hard to relate to people who treat sex so casually and coffee so seriously. And speaking of cultural events over the weekend, would Harry Potter be so wildly popular without the likes of Hagrid, Dobby (RIP, friend), Trelawney, or Aunt Marge?

Well, Senior Oncology Clinical Coordinator is an impressive title, but the declaration made it pretty clear that she had no business being a party in the case. What's the plaintiff's response? The plaintiff asserted that, based on Genentech's website, "it is hard to believe as the Senior Oncology Coordinator that [the employee] is not involved in the marketing, administration, and sale of a drug prescribed by oncologists." Slip op. at 4 (emphasis in original). That's pretty weak. That's hardly the stuff of Tolkien, Larsson, or Rowling. What it is, dear readers, is a blatant instance of fraudulent joinder. The court found "no colorable claim against the employee," held that "her citizenship must be ignored for purposes of determining jurisdiction," and denied the remand motion. Slip op. at 4-5. We love happy endings.

Oh, by the way, just in case your sense of self-preservation prompted you to wonder, there is some good law to the effect that attorneys advising manufacturers about product labeling should not be liable to consumers for negligence. See Talton v. Arnall Golden Gregory, LLP, 622 S.E. 2d 589, 591-595 (Ga. App. 2005), cert. denied, (Ga. Feb. 27, 2006).

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