Thursday, November 28, 2013

Making Forum-Shopping Pay

Happy thanksgiving to all.  We all have plenty of things to be thankful for.  We also have some things we're not thankful for.  This post discusses one of those.

The recent opinion in Rowland v. Novartis Pharmaceuticals Corp., ___ F. Supp.2d ___, 2013 WL 6145119 (W.D. Pa. Nov 22, 2013), has us shaking our heads.  That’s not so much because of the legal issue being fought over, but rather because of the machinations that led to a most peculiar result.

Basically, forum-shopping paid off.

Rowland involved three plaintiffs, Rowland, Machin, and Orr, all of whom are (or were) Pennsylvania residents.  Rowland, 2013 WL 6145119, at *1.  However, none of them filed suit in Pennsylvania.  Rowland and Machin brought suit in D.C. and Orr in New York.  Id. at *2.

Rowland is yet another Aredia/Zometa case.  We’ve discussed the underlying issue − whether availability of punitive damages should be determined under:  (1) the law of a corporate defendant’s principal place of business, or (2) the law of the place of the plaintiff’s injury – before.  See here and here.

Our position on that issue has evolved into one of studied agnosticism. With the threat of class actions (and punitive damages being viewed as some sort of “common issue” – as we discussed here) having receded in product liability cases generally, where we stand depends on the needs of our clients.   We’re lawyers.   We’re paid to zealously represent our clients’ interests.   Choice of law is one of those ostensibly neutral areas of the law where we (or more properly, our clients) could find ourselves supporting either result, depending on the relevant substantive law of the respective states.   If, for example, the punitive damages law of a client’s principal place of business is favorable (as with New Jersey), then we would construct the best argument we could supporting the application of that state’s law.   If the reverse were true, and the lex of the plaintiff’s loci promises a better result for our side, then we would argue to the best of our ability for that result.
 
Legal ethics aside, we do know what the only Pennsylvania appellate decision on this issue has to say:
 
Because the conduct forming the basis for the assessment of punitive damages occurred in Pennsylvania, Pennsylvania choice of law rules require the application of Pennsylvania punitive damages law.  Here we find persuasive [the] conclu[sion] that in a choice of law analysis on the availability of punitive damages, the most critical contacts include the place where the alleged punitive conduct occurred and, if dealing with a corporate defendant, the state of incorporation and its principal place of business. . . .  [T]he evidence is uncontradicted that all of the relevant conduct, including the development activity, design, testing, and decision-making relating to the allegedly-defective [product], took place at [defendant’s] headquarters.

Daniel v. Wyeth Pharmaceuticals, Inc., 15 A.3d 909, 935 n.17 (Pa. Super. 2011).

That’s not the rule that the court in Rowland applied to the three Pennsylvania plaintiffs, however.  Indeed, the opinion didn’t even discuss Daniel or apply the choice of law rules of those plaintiffs’ domicile.   Instead, Rowland applied the choice of law rules of D.C. and New York, 2013 WL 6145119, at *7-13, which led to the opposite result – application of Pennsylvania substantive punitive damages law to a case in which a Pennsylvania court would not have done so.   We probably should add “ostensibly,” at least with respect to D.C., since the Rowland opinion cited many more Pennsylvania and Third Circuit opinions than anything out of D.C.   In that respect, we find it odd that, of the “numerous district courts within our own circuit” cited in Rowland, id. at *10, not one of them was decided after (and thus had a chance to consider) the Pennsylvania rule as stated in Daniels.   Our readers know that we’re sticklers for conservatism in Erie predictions of state law.  To the extent that Rowland allowed the result to be influenced by Pennsylvania law, it really should have followed, or at least discussed, Daniel, since that is the only appellate precedent on point.
 

Why did Rowland do this?
 

So plaintiffs could take advantage of their forum shopping.  As we complained recently (in another litigation tourism case from D.C.), with transfers between federal courts, “the forum shopping effect lingers.”
 

Even though the three Pennsylvania plaintiffs were pure litigation tourists – with no evident relationship to either D.C. or New York − the mere fact that they filed there was held dispositive of choice of law. These cases had originally been transferred to the A/Z multidistrict litigation proceeding under 28 U.S.C. §1407, and that was that:

[B]ecause [plaintiffs] originally filed suit in the federal court [they selected], and the case was transferred pursuant to 28 U.S.C. §1407(a), [that state’s] choice of law rules apply to [the] punitive damages claim.  When a case is transferred pursuant to 28 U.S.C. §1407(a) by the Panel on Multi-District Litigation, the transferee court must apply the choice of law rules of the states where the transferor courts sit.
Rowland, 2013 WL 6145119, at *4 (citations and quotation marks omitted). Where, as in Rowland, the plaintiff is a pure litigation tourist, this strikes us as an absurd result.   These three Pennsylvania plaintiffs, merely because they were rousted to an MDL via §1407, received the advantage of the different choice of law rules for states to which they had no connection, rather than being bound by the choice-of-law rules of their actual domiciliary state.
 

Some courts seem to follow “plain language” rules only when they disadvantage defendants.  We’ve put up a lot of posts on this blog – for example, here − about the “removal before service” stratagem to avoid the forum defendant rule in diversity cases.  Removal before service is allowed by the express terms of 28 U.S.C. §1441(b).  It defeats another type of plaintiff-side forum-shopping, filing suit in the home district of a defendant, often a minor one, to prevent removal even where diversity exists.   But because plaintiffs lose under the plain language of §1446, we find all too many courts finding “absurd” results and ignoring what the statute says.
 

That’s something we’re not agnostic about. Statutes say what they say.

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