Law

This MDL is currently pending in the District of Massachusetts.  Just after the new year the Fresenius MDL (that’s all the designation really needed) made some news with a quartet of decisions.  We’ll describe them for you briefly.

First Decision

In In re Fresenius Granuflo/Naturalyte Dialysate Products Liability Litigation, ___ F. Supp.3d ___, 2015 WL 44589, at *1 (D. Mass. Jan. 2, 2015), the court denied remand to a batch of California plaintiffs.  As is so often the case in removal/remand, there was a lot of gamesmanship going on.  The defendant proved, to the court’s satisfaction, that the principal place of business of the target defendant, Fresenius, USA, had been its Massachusetts for almost a decade, since a merger.  Id. at *2.  It satisfied the relevant “nerve center” test (see here for more on that) for personal jurisdiction.

Ignoring these facts, plaintiffs argued some sort of estoppel, because on some occasions, in courts other than the MDL, Fresenius USA had given its principal place of business as California (which had been true before the 1996 merger).  Id. at *3.  This argument failed for two reasons:  (1) most of the statements occurred before the United States Supreme Court adopted the “nerve center” definition for principal place of business, and (2) plaintiffs couldn’t prove that the defendant had gained any advantage from the (now corrected) misstatements.  Id. at *4-5 (“[i]f I were to grant the requested estoppel, it would effectively bind Fresenius USA − and the courts − to a mistaken, counter-factual and disavowed statement from which Fresenius has derived no benefit”).  In other words, plaintiffs were being picky about trivial errors.  What else is new?

As another ploy to defeat diversity, plaintiffs also sued individuals, allegedly corporate officers.  As to one of them, the plaintiffs misrepresented his domicile.  Id. at *5-6.  As to the other there was fraudulent joinder.  He was never an officer of the targeted corporation, but only of European affiliates.  Id. at *9.  He neither knew of or participated in any of the alleged tortious conduct.  Id. at *11.  This lack of a “participatory connection” made both “responsible corporate officer” doctrine and “stream of commerce” product liability inapplicable.  Id. at *11-12.  The court wasn't sure if the responsible corporate officer doctrine was properly invoked, but did not have to reach that question (which would have made for an interesting post in and of itself).  Id. at *11 n.15.

Second Decision

In re Fresenius Granuflo/NaturaLyte Dialysate Products Liability Litigation, ___ F. Supp.3d ___, 2015 WL 44587 (D. Mass. Jan. 2, 2014), held that a Missouri medical malpractice reform statute applied to a defendant that was also a dialysis clinic.  The plaintiff filed a boilerplate product liability complaint, which did not distinguish between defendants who manufactured and sold products, and those who provided medical services.  Id. at *3.  No way, said the court:

There’s a little more.  The Missouri Supreme Court has interpreted this statute as barring all actions against healthcare providers that seek to impose strict liability.  Budding v. SSM Healthcare Systems, 19 S.W.3d 678, 681-82 (Mo. 2000).  The MDL court held that not only claims labeled “strict liability,” but also breach of warranty claims must be dismissed with prejudice under Budding.  2015 WL 44587, at *8.  The warranty issue was an unresolved Missouri law issue, so the defendants won one there.

There were also some pleading issues, but they’re not conclusive of anything.

Third Decision

In In re Fresenius Granuflo/Naturalyte Dialysate Products Liability Litigation, ___ F. Supp.3d ___, 2015 WL 44528, at *1 (D. Mass. Jan. 2, 2015), the court remanded an action brought by the Mississippi state attorney general.  No big surprise to us, since the United States Supreme Court held Mississippi ex rel. Hood v. AU Optronics Corp., 134 S.Ct. 736 (2014), that AG actions couldn’t be removed under CAFA.  They had never been removable before, since it’s been “well-settled” for over a century that states are not “citizens” of states for diversity purposes, and their presence destroys otherwise-existing diversity.  2015 WL 44528, at *3-4.

Fourth Decision

The fourth case involves Mississippi again, this time the statute of limitations.  It wouldn’t merit mention except that:  (1) well over 100 cases were implicated, and (2) the decision is more about choice of law than the actual limitations.  In re Fresenius Granuflo/Naturalyte Dialysate Products Liability Litigation, 2015 WL 44588, at *1 (D. Mass. Jan. 2, 2015).  Mississippi has a three-year statute, which isn’t short.  That’s attorney solicitation at work, dredging up stale cases that otherwise never would have been brought.

The intricacies of MDL practice (if you thought MDLs actually simplified things, think again) required a dizzying choice of law analysis.  Nothing is simple, like applying Mississippi law to all the plaintiffs who alleged they used the product in that state.  Only Mississippi filers in the Mississippi forum were that easy.   Remarkably, some combination of Mississippi resident filers in Massachusetts, selecting (more gamesmanship) to direct file in Massachusetts as the “home forum” were able to get Massachusetts choice of law principles applied.  Id. at *3-5.  If you enjoy seeing choice of law tied into knots, this is an opinion for you.  We don’t, particularly.

The moral of the story for defendants is that, if you want the law of the plaintiff’s domicile to prevail for choice of law purposes, never agree to allow plaintiffs to direct file into an MDL.  Plaintiffs will renege on any agreement when faced with dismissal (especially given possible collateral consequences of a statute of limitations dismissal) and since the MDL choice of law rules for direct filing are as clear as mud, courts can often be persuaded to cut them a break, as happened in this Fresenius decision.  Id. at *6.  Here’s the bottom line:

As a result, two categories of Massachusetts-designated “home forum” plaintiffs snuck into Massachusetts choice of law principles, even though they were Mississippi residents injured in Mississippi.  Id. at *8.  Why does that matter?  Because Mississippi is a “lex loci” (place of injury) state and Massachusetts is not.  Plaintiffs predictably argued that Massachusetts should always apply, simply because the defendant has a Massachusetts principal place of business.  Id. at *9.  Plaintiffs got away with it, too, at least on a motion to dismiss:

As to the Mississippi choice of law cases, Mississippi law controlled.  Id. at *11.

The statute of limitations rulings themselves were anti-climactic.  Massachusetts’ discovery rules “require an individualized fact-intensive inquiry,” so the plaintiffs skated on the pleadings.  Id. at *12.  Mississippi’s “austere” discovery rule focused on when the injury, not its cause, was discovered.  Id. at *15 (“[d]iscovery of . . . death, does not depend on whether plaintiffs had discovered what caused [it]”).  Nor was there fraudulent concealment.  Id. at *15-16.  Plaintiffs tried everything, even claiming that “death” was not the relevant injury in a wrongful death case, id. at *14-15 (hard to keep a straight face on that one), but for Mississippi the date of death would control.

The Fresenius MDL was created on March 29, 2013.  See In re: Fresenius Granuflo/Naturalyte Dialysate Products Liability Litigation, 935 F. Supp. 2d 1362 (J.P.M.D.L. 2013).  This quartet are the first rulings (at least that have made it onto Westlaw).  So what do defendants have to show for almost 20 months of litigation?  A couple of good rulings on peripheral defendants from California and Missouri.  A predictable loss on an AG action.  Finally, a bunch of time-barred Mississippi plaintiffs were thrown out, but some managed to find a way to weasel their way into Massachusetts law and survive.  One cheer (if that) for MDL practice.