Wednesday, December 18, 2013

Subject Matter Jurisdiction Questioned by the U.S. District Court for the District of Maryland

In Larson v. Abbot Laboratories, et. al., Judge Hollander of the United States District Court for the District of Maryland remanded the case to the Circuit Court of Baltimore City.  The court’s decision was predicated on the fact that the case lacked subject matter jurisdiction despite the defendants’ arguments that federal question jurisdiction and diversity jurisdiction existed.

The controversy arose in January 2010 when Kraig Larson (“Mr. Larson”) was prescribed HUMIRA despite the fact that he was HIV positive, a fact that was known by his doctors.  Three months later, Mr. Larson became critically ill, suffered permanent brain damage, and now requires 24-hour living assistance.

In October 2011, Karen Larson (“Ms. Larson”), acting as guardian for her brother, filed suit for negligence, malpractice, and lack of informed consent in the Circuit Court of Baltimore City against her brother’s doctors and health care providers (collectively “the Medical Defendants”).  In November 2012, the parties filed a joint stipulation without dismissal.  Ms. Larson subsequently refiled the suit in January 2013 against the Medical Defendants, and added HUMIRA’s manufacturer, Abbot Laboratories, Inc. (“Abbot”), and the agency that marketed HUMIRA, Harrison & Star (“H&S”).  In her claims against Abbot and H&S (collectively, the “Pharmaceutical Defendants”), Ms. Larson alleged strict liability failure to warn, negligent failure to warn, breach of implied warranties, common law misrepresentation, and violations of Maryland's Consumer Protection Act.  Thereafter, Abbot filed a Notice of Removal to the United States District Court of Maryland, claiming that subject matter jurisdiction existed on the basis of federal question jurisdiction and diversity jurisdiction.

The court first evaluated whether federal question jurisdiction existed.  The court noted that federal jurisdiction over state claims may exist when a federal issue is necessarily raised, actually disputed, substantial, and capable of resolution in federal court without disrupting federal-state balance.  The Pharmaceutical Defendants claimed that determining whether its labels were inadequate raised a substantial federal issue because clinical testing and drug labeling are heavily regulated by federal law.  To the contrary, Mr. Larson opined that her complaint did not allege any violations of federal law, or require proof of any federal element. 

The court agreed with Ms. Larson, finding that the complaint did not raise any question regarding compliance with federal regulations, challenge any federal regulations, allege that the Pharmaceutical Defendants’ clinical testing was contrary to federal law, or allege that the information disseminated by the Pharmaceutical Defendants violated federal drug labeling requirements.  The court further stated that, even if Ms. Larson’s claims necessarily raised an issue of federal law, the Pharmaceutical Defendants could not show that the issue was actually disputed.  As such, the court held that federal question jurisdiction did not exist for purposes of satisfying federal subject matter jurisdiction.

The court then analyzed whether subject matter jurisdiction could be satisfied on the basis of diversity of citizenship, which requires complete diversity between the plaintiff and each defendant.  Although diversity existed between Ms. Larson and the Pharmaceutical Defendants, Ms. Larson and most of the Medical Defendants were Maryland residents.  The Pharmaceutical Defendants argued, therefore, that they were fraudulently misjoined (i.e. that Ms. Larson filed meritorious claims against defendants for the sole purpose of defeating diversity and removal).  The court stated that fraudulent misjoinder was inapplicable to this case because the original suit was against the non-diverse Medical Defendants, and that joining the diverse Pharmaceutical Defendants could not be seen as an attempt to avoid a federal forum when it actually created that possibility in the first place.  The court also denied the Pharmaceutical Defendants’ request to sever the Medical Defendants, finding that all parties had been properly joined and that doing so would undermine the purpose of the liberal joinder rules.  The court, therefore, found that diversity of citizenship did not exist.

After finding the no basis for the Pharmaceutical Defendants to assert subject matter jurisdiction, the court, accordingly, remanded the case to the Circuit Court for Baltimore City.

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