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In re Avandia Marketing

June 17, 2009

IN RE: AVANDIA MARKETING, SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION
THIS DOCUMENT RELATES TO: WILLIAM B. BROWN
v.
SMITHKLINE BEECHAM CORP. D/B/AGLAXOSMITHKLINE
CORNELIO MARTINEZ, ET AL.
v.
SMITHKLINE BEECHAM CORP. D/B/AGLAXOSMITHKLINE, ET AL.



The opinion of the court was delivered by: Rufe, J.

MEMORANDUM AND ORDER

Presently before the Court are Motions to remand the two above-captioned individual actions to the state courts in which they were originally filed.*fn1 These cases have been transferred to a multidistrict litigation ("MDL") docket organized in this Court that was established*fn2 to permit coordinated pretrial proceedings in federal cases that "arise from allegations that certain diabetes drugs manufactured by [Defendant SmithKlineBeecham Corp. ("GSK")] - Avandia and/or two sister drugs containing Avandia (Avandamet and Avandaryl)*fn3 - cause an increased risk of heart attack and other physical injury, and that GSK failed to provide adequate warnings concerning that risk."*fn4

I. BACKGROUND

Plaintiffs in the instant cases bring strictly state law claims against GSK and, in the case of Cornelio Martinez, et al. v. SmithKline Beecham Corp. d/b/a GlaxoSmithKline and Carmen Hoss, No. 2:08-cv-05847 ("Martinez"), against GSK sales representative Carmen Hoss ("Hoss") as well. Each action was filed in state court, removed to federal court on an assertion of diversity and federal question jurisdiction, and then transferred to this MDL. Prior to transfer, a motion to remand was filed in each action in the transferor federal district court. After transfer, each Motion was re-filed or re-noticed here. Once briefing was completed, the Court heard oral argument on the Motions on April 17, 2009. The Motions are now ripe for disposition.

The Court begins with a brief recitation of the factual and procedural background of each case, followed by a review of the applicable law, before ruling on the Motions at hand.

A. Martinez, et al., 2:08-cv-05847 (New Mexico)

This action was originally filed in the First Judicial District Court for the State of New Mexico, Rio Arriba County. Plaintiffs Cornelio Martinez, David Padilla and Mary Ponce (collectively, "Plaintiffs") are citizens of New Mexico. Each brings identical state law claims against named defendants GSK and Carmen Hoss ("Hoss") (defendants collectively, "Defendants"). The causes of action asserted are: Negligence; Negligent Failure to Adequately Warn; Negligence Per Se; Negligent Misrepresentation; Breach of Express Warranty; Breach of Implied Warranty; Strict Products Liability -- Defective Design; Strict Products Liability -- Manufacturing and Design Defect; Strict Products Liability -- Failure to Adequately Warn; Fraudulent Misrepresentation; Deceit by Concealment and Other Unfair Practices in violation of §§ 57-12-1 -- 22, New Mexico Statutes Annotated; Unjust Enrichment; and Loss of Consortium.

GSK is a pharmaceutical corporation incorporated under Pennsylvania law with its principal place of business in Pennsylvania.*fn5 GSK designed and developed Avandia, and currently makes and markets the drug. According to the Martinez Complaint, Hoss is a citizen of New Mexico who at all material times "worked for GSK as a detailer and was engaged in the business of promoting, marketing, distributing, and/or selling Avandia in New Mexico."*fn6 After GSK and Hoss accepted service of process, GSK removed the action with Hoss's consent to the United States District Court for the District of New Mexico on July 21, 2008, asserting both diversity and federal question jurisdiction. The action was transferred from that court to this MDL on December 17, 2008.

In their Motion, Plaintiffs argue the case must be remanded pursuant to 28 U.S.C. § 1447(c) for lack of subject matter jurisdiction. In particular, they argue that their claims do not implicate sufficiently substantial questions of federal law to support federal question jurisdiction and that there is not complete diversity of citizenship between the parties because Plaintiffs and Hoss are citizens of New Mexico.*fn7

As to the former contention, GSK originally responded that federal question jurisdiction exists over this action because Plaintiffs' exclusively state law claims raise substantial questions of federal law. In particular, GSK asserted that federal question jurisdiction exists because "Plaintiffs' Second Cause of Action, 'Negligence -- Failure to Warn,' requires construction and application of the Federal Food, Drug and Cosmetic Act ("FDCA")*fn8 and implementing federal regulations, which govern approval of prescription drugs and regulate prescription drug manufacturers' public and promotional statements, including all aspects of warnings and labeling."*fn9 In a Memorandum and Order dated February 25, 2009, the Court ruled on seventeen remand Motions filed in this MDL that were contested by GSK, and in which GSK forwarded essentially the same theory regarding federal question jurisdiction as that presented here.*fn10 In that Memorandum, the Court considered and rejected GSK's theory, deciding that while some of the relevant plaintiffs' state law claims referred to or implicated the FDCA, they did not do so to such an extent or in such a fashion as would give rise to federal question jurisdiction.*fn11 In its briefing in the instant matter, GSK has acknowledged that the reasoning of the Court's prior Memorandum governs and disposes of the issue of federal question jurisdiction initially raised herein.*fn12 The Court accordingly deems GSK's argument as to the existence of federal question jurisdiction in this matter to be withdrawn.

With respect to diversity jurisdiction, GSK notes that Plaintiffs and Defendant Hoss are New Mexico citizens, but contends that the citizenship of Hoss must be ignored in the diversity analysis because she was fraudulently joined as a party. According to GSK, under New Mexico law drug company "detailers," or sales representatives, may not face liability for the torts asserted by Plaintiffs. GSK argues Plaintiffs named Hoss not to pursue a judgment against her but as a sham designed to thwart federal jurisdiction. If Hoss's New Mexico citizenship is ignored, the parties are completely diverse, and no other bar to federal jurisdiction exists.

B. Brown, 2:09-cv-00809 (North Carolina)

Plaintiff, a citizen of North Carolina, filed this action in the Superior Court of Durham County, North Carolina, on November 10, 2008. Plaintiff's Complaint asserts state law claims against GSK. On December 8, 2008, GSK removed the action to the United States District Court for the Middle District of North Carolina on the basis of both federal question and diversity jurisdiction. The case was subsequently transferred to this MDL on January 9, 2009.

Plaintiff moves for remand for lack of subject matter jurisdiction. For reasons noted above, the Court focuses on whether diversity jurisdiction exists over this action. Plaintiff claims the parties are non-diverse, asserting that, for purposes of the diversity analysis, GSK is a citizen of both Pennsylvania and North Carolina. GSK counters that it is a citizen of Pennsylvania only, ...


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