Sullivan v. Novartis Pharmaceuticals Corp.

• Citation: 602 F.Supp.2d 527
• Decision Date: 06 March 2009
• Docket Number: Civil Action No. 09-94 (JEI).
• Parties: Joseph M. SULLIVAN, Plaintiff, v. NOVARTIS PHARMACEUTICALS CORPORATION et al., Defendants.
• Court: U.S. District Court — District of New Jersey

602 F.Supp.2d 527

Joseph M. SULLIVAN, Plaintiff, v. NOVARTIS PHARMACEUTICALS CORPORATION et al., Defendants.

Civil Action No. 09-94 (JEI).

United States District Court, D. New Jersey.

March 6, 2009.

Seeger Weiss, LLP, by Christopher A. Seeger, Esq., New York, NY, for Plaintiff.

Sills, Cummis, Epstein & Gross, PC, by Beth S. Rose, Esq., Newark, NJ, for Defendant Novartis Pharmaceuticals Corporation.

OPINION

IRENAS, Senior District Judge:

Presently before the Court is the Notice of Removal ("Notice") filed by Defendant Novartis Pharmaceuticals Corporation ("Defendant").¹ The Notice asserts that this action is removable because Plaintiff's New Jersey state law claims "require resolution of issues premised on the application of federal law and regulations." This Court, sua sponte, issued an Order to Show Cause why the case should not be remanded for lack of subject matter jurisdiction.² After considering Defendant's brief in opposition to remand, and having heard oral argument, the Court concludes that the case must be remanded for lack of jurisdiction.

I.

Plaintiff Joseph M. Sullivan filed the instant action on December 8, 2008, in the Superior Court of New Jersey, Law Division, seeking damages for bodily injuries allegedly caused by using Defendants' "Elidel" product to treat his eczema. According to Plaintiff's Complaint, Defendants' conduct in connection with the design, manufacture, distribution, and marketing of Elidel violated the New Jersey Products Liability Act ("NJPLA"), N.J.S.A. § 2A:58C-1, et seq., and common law. The Complaint includes five counts, captioned as follows: (1) NJPLA—Failure to Warn; (2) NJPLA—Defective Design; (3) Breach of Express Warranty; (4) NJPLA—Breach of Implied Warranty; and (5) Punitive Damages Under Common Law and the NJPLA.

On January 8, 2009, Defendant removed the case to this Court, asserting in its Notice that the case arises under federal law, pursuant to 28 U.S.C. § 1331, because the resolution of Plaintiff's NJPLA failure to warn and NJPLA punitive damages claims require the resolution of substantial federal issues. Upon receipt of the Notice, this Court questioned its subject matter jurisdiction, sua sponte, and issued an Order to Show Cause why the case should not be remanded.

II.

A.

Pursuant to 28 U.S.C. § 1441(a), "[e]xcept as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." Liberty Mut. Ins. Co. v. Ward Trucking Corp., 48 F.3d 742, 745 (3d Cir.1995) (quoting 28 U.S.C. § 1441(a)). In cases involving non-diverse parties, "removal is appropriate only if the case falls within the district court's original `federal question' jurisdiction: `all civil actions arising under the Constitution, laws, or treaties of the United States.'" U.S. Express Lines, Ltd. v. Higgins, 281 F.3d 383, 389 (3d Cir.2002) (citing 28 U.S.C. §§ 1331, 1441(b); Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for S. Cal., 463 U.S. 1, 8, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983)). Under Third Circuit authority, "the party asserting federal jurisdiction in a removal case bears the burden of showing, at all stages of the litigation, that the case is properly before the federal court." Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir.2007) (citing Samuel-Bassett v. KIA Motors Am., Inc., 357 F.3d 392, 396 (3d Cir.2004)).

B.

The content of the plaintiff's "well-pleaded complaint" determines whether an action arises under federal law. U.S. Express Lines, 281 F.3d at 389 (citing Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986)). Thus, "a case may not be removed to federal court on the basis of a federal defense, including the defense of preemption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue." Briones v. Bon Secours Health Sys., 69 Fed.Appx. 530, 534 (3d Cir.2002) (quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 393, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987)).³

Most typically, federal-question jurisdiction "is invoked ... by plaintiffs pleading a cause of action created by federal law[.]" Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 312, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005). However, federal "arising under" jurisdiction has long been found over a limited class of state law claims that implicate significant federal issues.⁴ Id. (citing Hopkins v. Walker, 244 U.S. 486, 490-91, 37 S.Ct. 711, 61 L.Ed. 1270 (1917)). Thus, in Smith v. Kansas City Title & Trust Co., 255 U.S. 180, 41 S.Ct. 243, 65 L.Ed. 577 (1921) federal courts had jurisdiction over a shareholder's state law action against a corporation, when the dispositive issue was the constitutionality of a federal statute. Smith, 255 U.S. at 201, 41 S.Ct. 243. In a recent application of this principle, the Supreme Court held, in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, that arising under jurisdiction extended to a plaintiff's quiet title action under state law that hinged on the interpretation of a federal statute. 545 U.S. 308, 310, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005).⁵

Grable involved an Internal Revenue Service ("IRS") seizure of real property in satisfaction of a corporation's federal tax delinquency. Id. at 310, 125 S.Ct. 2363. Pursuant to 26 U.S.C. § 6335, the IRS was required to give notice of the seizure, and it did so via certified mail. Id. The corporation did not exercise its statutory right to redeem the seized property, and a buyer purchased the property from the IRS. Id. at 310-11, 125 S.Ct. 2363. Five years later, the corporation brought a quiet title action in state court, alleging that the buyer's record title was invalid because 26 U.S.C. § 6335 required the IRS to give notice of the seizure via personal service, not certified mail. Id. at 311, 125 S.Ct. 2363. The buyer removed to federal court, asserting federal-question jurisdiction, because the status of the title turned on whether the IRS effected proper service under the applicable federal statute. Id. The Supreme Court granted certiorari solely on the question of whether the corporation's state law claim was one arising under federal law within the meaning of 28 U.S.C. § 1331. Id.

The Court's decision in Grable articulated a two-step process to determine whether a state law claim "arises under" federal law under § 1331. See id. at 314, 125 S.Ct. 2363. First, the state law claim must "necessarily raise a stated federal issue, actually disputed and substantial[.]" Id. Second, the federal courts must be able to entertain the state law claim "without disturbing any congressionally approved balance of federal and state judicial responsibilities." Id.

Applying that standard, the Court determined that whether the IRS provided the required notice of the seizure to the corporation was a disputed, essential, and seemingly dispositive element of the quiet title claim. Id. at 315, 125 S.Ct. 2363. As the Court explained, "[t]he meaning of the federal tax provision is an important issue of federal law that sensibly belongs in a federal court." Id. In addition, the case presented the "rare state title case that raises a contested matter of federal law[,]" hence exercising federal jurisdiction would have "only a microscopic effect on the federal-state division of labor." Id. Thus, the corporation's quiet title claim was correctly removed as one arising under federal law. Id. at 316, 125 S.Ct. 2363.

Just one year after Grable was decided, the Supreme Court had occasion to explore the considerations underlying that decision. See Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699-701, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006). Empire Healthchoice involved an action initiated by a health insurance plan administrator to recover a share of the proceeds from a state court tort suit settlement. Id. at 687, 126 S.Ct. 2121. The insurer had contracted with the federal government to offer health insurance to federal employees. Id. at 682, 126 S.Ct. 2121. The contractual arrangement between the federal government and the insurance provider was authorized by the Federal Employees Health Benefits Act of 1959 ("FEHBA"), 5 U.S.C. § 8901, et seq. Empire Healthchoice, 547 U.S. at 682, 126 S.Ct. 2121.

In the case, an insured was injured in an accident, and the insurer expended $157,309 for his care. Id. at 687, 126 S.Ct. 2121. After the insured's death, his estate received a financial settlement in excess of three million dollars from the parties alleged to have caused his injuries. Id. The insurance plan administrator filed suit in federal court seeking reimbursement of the $157,309 spent for the insured's care. Id. at 687-88, 126 S.Ct. 2121. The estate moved to dismiss on grounds including lack of subject matter jurisdiction. Id. at 688, 126 S.Ct. 2121. Among other arguments, the insurer contended that federal jurisdiction was proper, under § 1331 and Grable, because federal law was an element of its action against the estate. Id. at 699, 126 S.Ct. 2121.

The Court found federal jurisdiction was lacking; the case did not fit within "the slim category Grable exemplifies." Id. at 701, 126 S.Ct. 2121. Factors supporting federal jurisdiction in Grable included that the case: "centered on the action of a federal agency (IRS) and its compatibility with a federal statute, the question qualified as `substantial,' and its resolution was both dispositive of the case and would be controlling in numerous other cases." Id. at 700, 126 S.Ct. 2121 (citing Grable, 545 U.S. at 313, 125 S.Ct. 2363). Empire Healthchoice was "poles apart from Grable" because (1) the reimbursement claim...