Rubel v. Pfizer Inc., 03-3488.

• Decision Date: 24 March 2004
• Docket Number: No. 03-3488.,03-3488.
• Citation: 361 F.3d 1016
• Parties: Janet RUBEL, Plaintiff-Appellee, v. PFIZER INC. and Warner-Lambert Company, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

361 F.3d 1016

Janet RUBEL, Plaintiff-Appellee, v. PFIZER INC. and Warner-Lambert Company, Defendants-Appellants.

No. 03-3488.

United States Court of Appeals, Seventh Circuit.

Argued February 23, 2004.

Decided March 24, 2004.

Kristi L. Browne, argued, Walner & Associates, Chicago, IL, for Plaintiff-Appellee.

Robert B. Ellis, argued, Kirkland & Ellis, Chicago, IL, for Defendants-Appellants.

Before BAUER, EASTERBROOK, and KANNE, Circuit Judges.

EASTERBROOK, Circuit Judge.

Janet Rubel filed in state court a complaint alleging that Pfizer and Warner-Lambert had improperly promoted the prescription drug Neurontin for off-label uses (i.e., medical conditions not covered by the Food and Drug Administration's finding that the drug is safe and effective). She sought restitution of the amounts she had paid for the drug, an injunction forbidding future promotion for off-label uses, disgorgement of all profits Pfizer had made from these sales, and punitive damages. Rubel also sought to represent a national class including everyone who had purchased Neurontin for off-label uses. Consistent with Illinois practice, the complaint did not attempt to estimate the amount in controversy.

Defendants removed the case to federal court under 28 U.S.C. § 1441(a), alleging that the district court would have had original jurisdiction under 28 U.S.C. § 1332(a)(1). The parties are of diverse citizenship (Rubel is a citizen of Illinois; the defendants are incorporated in Delaware and have their principal places of business in New York), and the notice of removal asserted that the amount in controversy exceeds $75,000. That is a plausible position, quite apart from any doubt about the potential for disgorgement and punitive damages, given this circuit's rule that the cost to the defendant of complying with an injunction counts toward the jurisdictional minimum. See In re Brand Name Prescription Drugs Antitrust Litigation, 123 F.3d 599, 609 (7th Cir.1997). Sales of Neurontin exceed $1 billion annually, and an injunction curtailing the size of the market could be quite costly to the defendants (though the record does not show what portion of all prescriptions are for off-label uses). But the defendants did not attempt to quantify the losses to which disgorgement or an injunction would expose them. Nor did they comply with the Northern District of Illinois's Local Rule 81.2(a), which provides:

Where one or more defendants seek to remove an action from an Illinois state court based upon diversity of citizenship, and where the complaint does not contain an express ad damnum, as to at least one claim asserted by at least one plaintiff, in an amount exceeding the jurisdictional amount in controversy, exclusive of interest and costs, specified in 28 U.S.C § 1332 (the "jurisdictional amount") that is based on express allegations in that claim in conformity with that ad damnum, the notice of removal shall include in addition to any other matters required by law:

(1) a statement by each of the defendants previously served in the state court action that it is his, her or its good faith belief that the amount in controversy exceeds the jurisdictional amount; and

(2) with respect to at least one plaintiff in the Illinois action, either —

(A) a response by such plaintiff to an interrogatory or interrogatories (see Ill.S.Ct. Rule 213) as to the amount in controversy, either (i) stating that the damages actually sought by that plaintiff exceed the jurisdictional amounts or (ii) declining to agree that the damage award to that plaintiff will in no event exceed the jurisdictional amount; or

(B) an admission by such plaintiff in response to a request for admissions (see Ill.S.Ct. Rule 216(a)), or a showing as to the deemed admission by such plaintiff by reason of plaintiff's failure to serve a timely denial to such a request (see Ill.S.Ct. Rule 216(c)), in either event conforming to the statement or declination to agree described in subparagraph (2)(A) of this rule.

Receipt by the removing defendant or defendants of the response by a plaintiff referred to in subparagraph (2)(A) or of the admission by a plaintiff referred to in paragraph (2)(B), or the occurrence of the event giving rise to a deemed admission by a plaintiff referred to in subparagraph (2)(B) shall constitute the receipt of a "paper from which it may first be ascertained that the case is one which is or has become removable" within the meaning of 28 U.S.C. § 1446(b). Where the defendant or defendants do not include the statement required by paragraph (1) of this rule, or do not comply with one of the alternatives described in paragraph (2) of this rule, the action will be subject to remand to the state court for failure to establish a basis of federal jurisdiction.

Although this rule initially requires removing parties to submit not only the defendants' statement (subsection (1)) but also at least one plaintiff's acknowledgment (subsection (2)), the final sentence of the trailing unnumbered paragraph implies that either will suffice. Thus even if no plaintiff will concede that the stakes exceed $75,000 or refuse to accept a cap on recovery — neither option is helpful when removal is based on the cost to the defendant of an injunction or other equitable relief — a defendant can satisfy the rule by supplying "a statement by each of the defendants ... that it is his, her or its good faith belief that the amount in controversy exceeds the jurisdictional amount". Because neither Pfizer nor Warner-Lambert has made such a representation — and did not offer any other evidence about the stakes, such as an affidavit estimating the cost of an injunction against off-label uses — the district court found that subject-matter jurisdiction had not been established and remanded the proceeding to state court. 276 F.Supp.2d 904, 907-09 (N.D.Ill.2003).

Pfizer and Warner-Lambert have appealed. Their immediate problem is 28 U.S.C. § 1447(d), which provides: "An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise". The Supreme Court has been unwilling to take this language literally. A series of cases beginning with Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976), and culminating in Things Remembered, Inc. v. Petrarca, 516 U.S. 124, 116 S.Ct. 494, 133 L.Ed.2d 461 (1995), had produced this conclusion:

§ 1447(d) must be read in pari materia with § 1447(c), so that only remands based on grounds specified in § 1447(c) are immune from review under § 1447(d). As long as a district court's remand is based on a timely raised defect in removal procedure or on lack of subject-matter jurisdiction — the grounds for remand recognized by § 1447(c) — a court of appeals lacks jurisdiction to entertain an appeal of the remand order under § 1447(d).

516 U.S. at 127-28, 116 S.Ct. 940 (citation omitted). Pfizer and Warner-Lambert observe that Local Rule 81.2(a) is not among the grounds specified in § 1447(c) and contend that we therefore may entertain an appeal that questions the rule's validity and application.

The problem with this position is that the district court did not remand the proceeding as a sanction for failure to comply with a local rule. Judge Gettleman, no less than the defendants, knows that § 1447(c) does not mention local rules. Local Rule 81.2(a) itself says that the remand is "for failure to establish a basis of federal jurisdiction." The rule is designed to elicit information that will enable the district court to determine whether the amount in controversy exceeds the jurisdictional minimum. If the removing party does not supply vital information, then a remand follows — because it is the defendant, as the proponent of federal jurisdiction, who bears the risk of nonpersuasion. When the papers filed in the district court do not establish subject-matter jurisdiction, remand is obligatory; and appellate review of a remand based on the lack of federal jurisdiction is securely blocked by § 1447(d). See, e.g., Gravitt v. Southwestern Bell Telephone Co., 430 U.S. 723, 97 S.Ct. 1439, 52 L.Ed.2d 1 (1977), in addition to the language we have quoted from Things Remembered. See also Adkins v. Illinois Central R.R., 326 F.3d...