This article originally appeared in Goldberg Segalla’s Product Liability Playbook. Read the issue here.
Recently, Johnson & Johnson (J&J)—one of the most-recognizable companies in the world—has found itself the target of numerous product liability actions across the nation, defending itself against claims by plaintiffs alleging that J&J products caused them to develop cancer. Overwhelmingly, the cases have been brought by women who have developed ovarian cancer, but there also is a spate of cases that claim J&J’s products caused the plaintiff to develop mesothelioma. As of its most recent SEC filing, J&J is reporting that 11,700 talc cases have been commenced against the company, seeking some measure of compensatory and punitive damages.
Thousands of cases involving ovarian cancer claims have been consolidated as a Multi-District Litigation (MDL) proceeding under the direction of Judge Freda Wolfson and Judge Lois Goodman in the District Court of New Jersey. In addition, there are approximately 2,400 cases—some involving ovarian cancer and others involving mesothelioma—that have been commenced in various state courts across the nation.
In February 2019, J&J’s primary outside talc supplier, Imerys, filed for Chapter 11 Bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware. Citing talc litigation as the impetus for their filing, Imerys sought the protection of the bankruptcy court to manage the burden caused by this litigation. As a result of this filing, all talc-related claims commenced against Imerys were stayed.
Following this filing by Imerys, J&J began filing Notices of Removal in April 2019 in state courts across the nation, seeking to have nearly all state-court talc-related cases removed to federal court. J&J argued that all talc cases were “related to” the Imerys bankruptcy, making federal court the proper jurisdiction for all the pending cases.
Jurisdiction of U.S. district courts is governed by Title 28, Section IV, Chapter 85 of the U.S. Code. Section 1334 specifically addresses in what court bankruptcy proceedings may be held. U.S. district courts have “original and exclusive jurisdiction” over all cases brought under title 11. District courts may also have “original, but not exclusive jurisdiction” over civil cases that arise under title 11, or that are related to cases proceeding under title 11. Essentially, district courts have jurisdiction over bankruptcy proceedings, and they may elect to have jurisdiction over civil actions, if those actions are in some way related to the bankruptcy.
In its removal papers, J&J indicated that it maintained shared insurance with Imerys, and that an indemnification agreement and contractual provisions relating to liability sharing existed between the parties. Using the shared insurance and contractual provisions as the basis, J&J argued that the plaintiffs’ claims in the talc cases were “related” to the Imerys bankruptcy, and thus that the various state-court cases should be removed to federal court.
After beginning the process of removing all state court to federal court, J&J also filed a motion in April 2019 to fix venue in the U.S. District Court for the District of Delaware. With that filing, J&J sought leave to have all state and federal court civil actions involving talc claims be transferred to the District Court in Delaware for resolution. At the end of April 2019, J&J further filed an emergency motion for provisional transfer, seeking to have all personal injury and wrongful death talc actions pending against J&J provisionally transferred to the District Court of Delaware while a decision on the motion to fix venue remained outstanding.
Following these filings, district court judges across the country who found these J&J talc cases on their respective dockets began evaluating the merits of J&J’s removal gambit. In one of the first judicial determinations, Judge Colleen McMahon of the Southern District of New York, and with the permission of the other Southern District judges to whom a J&J talc case had been assigned, issued an order “in the interest of justice” staying all 26 actions removed to the Southern District of New York. Shortly thereafter, she instructed all parties affected by the transfer that applications to remand the actions need not be filed until after the District of Delaware ruled on J&J’s motion to fix venue.
On May 9, 2019, Judge Maryellen Norieka, the presiding judge in the District of Delaware, denied J&J’s application seeking a provisional transfer of all cases. Judge Norieka determined that J&J had not satisfied the burden necessary to support removal. Specifically, Judge Norieka found that J&J had not made a showing that it would be irreparably harmed absent the requested relief, was not a debtor in the bankruptcy, and had not established its own fiscal distress. Additionally, Judge Norieka concluded that no “emergency” existed for which the drastic relief sought by J&J needed to be granted. He explained that 28 USC 157(b) allows the court overseeing the bankruptcy to fix venue despite any decision reached by other state and federal courts, so no emergency existed that required imminent action by the District of Delaware. Judge Norieka further determined that J&J’s purported emergency came about by J&J’s own actions, as it controlled the number and timing of the removal motions filed.
Following this decision by Judge Norieka, Judge McMahon lifted the stay on the 26 cases removed to the Southern District of New York, and set an expedited briefing schedule to allow the parties to address J&J’s removal applications via motion to remand. As 28 USC 1452(b) governs motions to remand, Judge McMahon turned to the 1991 case Drexel Burnham Lambert Grp., Inc., v. Vigilant Ins. Co. to review the factors used to determine whether to remand a case. Judge McMahon concluded that three factors cited within the Drexel case—the application of state law to the subject talc cases, a recognition of comity and the prejudice that would flow to the plaintiffs—strongly favored that the cases be remanded to the courts of original jurisdiction.
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