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ARLENE SWANSON, Individually and as Executrix of the estate of DAVID SWANSON, deceased
vs.
McNEIL, PPC, INC., ANTHONY TEMPLE, M.D. and WARNER-LAMBERT CO.
 
Case:
NO. 96-CV-0375
 
Location:
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
 
Date:
April 17, 1996, Decided
 
Attorneys:
For ARLENE SWANSON, INDIVIDUALLY AND AS EXECUTRIX OF THE ESTATE OF DAVID SWANSON, DECEASED, PLAINTIFF: THOMAS R. HURD, [COR LD NTC], MONTEVERDE & HEMPHILL, PHILA, PA. PATRICK MALONE, [COR LD NTC], STEIN, MITCHELL AND MEZINES, WASHINGTON, DC.
For MCNEIL-PPC, INC., ANTHONY TEMPLE, M.D., DEFENDANTS: JAMES M. SWEET, [COR LD NTC], DRINKER BIDDLE & REATH, PHILADELPHIA NATIONAL BANK BLDG., PHILADELPHIA, PA. For WARNER-LAMBERT COMPANY, DEFENDANT: GERALD B. SULLIVAN, [COR LD NTC], PEPPER, HAMILTON & SCHEETZ, PHILA, PA. MURRAY S. LEVIN, [COR LD NTC], PEPER, HAMILTON & SCHEETZ, PHILA, PA.
 
Court:
JUDGE THOMAS N. O'NEILL, JR.
 
Author:
The Hon. Justice Thomas N. O'Neill, Jr.
 

Plaintiff has moved to remand this case to the Philadelphia County Court of Common Pleas on the grounds that it was improperly removed. I must determine whether either Dr. Anthony Temple or McNeil-PPC is both a properly joined defendant and a resident of Pennsylvania. *fn1 If so, removal is improper under 28 U.S.C. SEC. 1441(b), which permits removal of diversity cases "only if none of the parties . . . properly joined and served as defendants is a citizen of the State in which [the] action is brought."

As the party seeking to invoke federal jurisdiction, defendant bears the burden of proving removability. Dukes v. U.S. Healthcare, Inc., 57 F.3d 350 (3d.Cir.), cert. denied, 133 L. Ed. 2d 489, 116 S. Ct.564 (1995); Quaker State Dyeing & Finish Co. v. ITT Terryphone Corp., 461 F.2d 1140, 1143 (3d Cir.1972); Delgado v. Shell Oil Co., 890 F. Supp.1324 (S.D. Tex. 1995); Pan Atlantic Group, Inc. v. Republic Ins. Co., 878 F. Supp.630 (S.D.N.Y. 1995); Capone v. Harris Corp., 694 F. Supp.111 (E.D. Pa. 1988). Removal statutes are to be "strictly construed against removal and all doubts should be resolved in favor of remand." Steel Valley Auth. v. Union Switch & Signal Div., 809 F.2d 1006, 1010 (3d Cir.1987), cert. dismissed sub nom. American Standard, Inc. v. Steel Valley Auth.,484 U.S. 1021, 98 L. Ed. 2d 756, 108 S. Ct.739 (1988); see also Roe v. O'Donohue,38 F.3d 298 (7th Cir.1994); Landman v. Borough of Bristol, 896 F. Supp.406 (E.D. Pa. 1995); Orndorff v. Allstate Ins. Co., 896 F. Supp.173 (M.D. Pa. 1995).

I. Dr. Temple

Defendants do not dispute that Dr. Temple is a citizen of Pennsylvania, but assert that because "there is no reasonable basis in fact or colorable ground supporting the claim against [him]" his jointer as a defendant was fraudulent. Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir.1990), cert. denied, 498 U.S. 1085, 112 L. Ed. 2d 1046, 111 S. Ct.959 (1991). I must decide whether plaintiff's claim against Dr. Temple is colorable, rendering joinder proper and precluding removal, or whether it is legally or factually groundless, rendering joinder fraudulent and permitting removal. A claim may be colorable even if it would not survive a motion to dismiss. See Batoff v. State Farm Ins. Co., 977 F.2d 848, 852 (3d Cir.1992). If there is "'even a possibility that a state court would find that the complaint states a cause of action against any one of the resident defendants, the federal court must find that joinder was proper and remand the case to state court.'" Batoff,977 F.2d at 851 (quoting Coker v. Amoco Oil Co., 709 F.2d 1433, 1440-41 (11th Cir.1983)). The party seeking removal bears a "heavy burden" of showing fraudulent joinder. Id. At 851; Steel Valley Auth.,809 F.2d at 1012 n.6. Plaintiff's allegations must be accepted as true, uncertainties of law must be resolved in plaintiff's favor, and plaintiff's intent in joining the defendant is irrelevant. Batoff,977 F.2d at 851-52; Boyer,913 F.2d at 111. In light of these principles, I find plaintiff's claim "colorable" under either party's choice of law. *fn2

The color ability of the claim against Dr. Temple turns on whether the law will recognize a duty on the part of a corporate agent to the consumers of the corporation. Pennsylvania *fn3 and Idaho law, *fn4 as well as other authorities *fn5 hold corporate agents liable for tortious conduct in which they personally participate. Under these authorities, "an agent is subject to liability if, by his acts, he creates an unreasonable risk of harm to the interests of others protected against negligent invasion." Restatement (Second) of Agency SEC. 350. This principle extends to:

"employees who manufacture or take part in manufacturing defective or dangerous chattels. They are subject to liability for doing so to persons injured by the use of such chattels under principles stated in the Restatement of Torts. To the extent that they aid in producing something which they should realize is likely to harm others, [they] are normally subject to liability together with other responsible persons as joint tortfeasors. . .

Restatement (Second) of Agency SEC. 350, comment c. Dr. Temple can thus be held liable for tortious conduct in which he allegedly participated as "a primary decision-maker responsible" for the inadequate product warnings.

Dr. Temple's conduct is tortious, however, only if he owed and breached a duty to plaintiff. Though defendants argue that a drug manufacturer's Executive Director of Medical Affairs owes a duty only to the corporation and not to the consumer, plaintiff cites authorities supporting recognition of a legal duty to the consumer.

A. Common Law Duty

A common law duty arises from a relationship between plaintiff and defendant wherein "the plaintiff's interests are entitled to protection against the defendant's conduct" based on numerous "considerations of policy." W. Page Keeton et al., Prosser & Keeton on the Law of Torts SEC. 53, at 357, 358 (5th ed. 1984). Its existence is "ultimately a question of fairness" that turns on whether "right reason and essential justice enjoins the protection" of a party "against what the law . . . deems an unreasonable risk of harm, such as is reasonably foreseeable." Cruet v. Certain-Teed Corp., 432 Pa. Super. 554, 639 A.2d 478, 479 (Pa. Super. 1994), appeal denied, 663 A.2d 691 (Pa. 1995); see also Gibson v. Hardy, 109 Idaho 247, 706 P.2d 1358, 1361 (Idaho 1985); Hicks v. Metropolitan Edison Co., 665 A.2d 529, 532 (Pa. Commw.1995); Benson v. Pennsylvania Cent. Transp. Co., 463 Pa. 37, 342 A.2d 393, 397 (Pa. 1975). In the instant case, where the corporation already owes a duty, the inquiry would focus on the marginal utility of imposing a duty on responsible individuals within the corporation.

Though an employee does not assume a duty to third parties merely by assuming responsibilities to the employer, the law recognizes such a duty in some circumstances. A duty to a third person arises if there is "some reason why [the employee] should be called upon to act and thus use proper care to prevent injury to the third person, some relationship between the parties calling that duty into existence." 53 Am. Jur.2d Master and Servant SEC. 449 at 470 (1970); see also 30 C.J.S. Employer-Employee SEC. 225 at 317. The requisite relationship ordinarily arises when the employee "assumes the duty of the employer to see that no harm results to . . . others." 53 Am. Jur.2d Master & Servant SEC. 449 at 470 n.5.

Dr. Temple's alleged executive responsibility for drug testing and product warnings, measures which clearly implicate consumer safety, arguably constitutes an assumption of McNeil's duty not to endanger consumers unreasonably with its pharmaceutical products. Dr. Temple's assumption of these safety-related responsibilities could support imposition of a duty to the consumer, the naturally foreseeable party injured by the negligent performance of these functions. See Kordel v. United States, 335 U.S. 345, 349, 93 L. Ed. 52, 69 S. Ct.106 (1948) (purpose of drug labeling is to "protect consumers who . . . are largely unable to protect themselves in this field"); In re Silicone Gel Breast Implants, 887 F. Supp.1455, 1461 (N.D. Ala. 1995) (noting reasonable foreseeability of harm to consumers from negligent biomedical testing and disclosure); Burrichter v. Chicago, M. & St. P. Ry. Co., 10 F.2d 165 (D. Minn. 1925) (employee liable for negligent performance of warning duties).

The Idaho Supreme Court has rejected the notion that an employee owes a duty only to the employer. Reversing the holding below that an architect owed a duty only to the contractor and not to the tenant, it cautioned lower courts not to confuse an employee's "contractual duty with his duty of reasonable care" and concluded that the architect also owed a duty to occupants of the building to "exercise the ordinary skill of his profession in the inspection he made of the apartments." Stephens v. Stearns,106 Idaho 249, 678 P.2d 41, 47 (Idaho 1984). I find that this analysis supports a colorable argument that Dr. Temple's duty extended beyond McNeil to third parties who would fore see ably be harmed by his failure to use due care in performing safety-related functions.

Defendants cite cases declining to impose duties to third parties on employees. See, e.g., Knight v. Atlantic Coast Line R. Co., 73 F.2d 76 (5th Cir.1934); Booty v. Shoney's, Inc., 872 F. Supp.1524 (E.D. La. 1995); Jacks v. Torrington,256 F. Supp.282 (D.S.C. 1966). Even if these cases squarely refused to recognize such a duty, *fn6 they would not negate the color ability of plaintiff's claim as long as any basis in law and fact remained to support it. I find that a sufficient basis in law and fact does remain despite the presence of contrary authorities. Given the numerous fairness concerns and policy considerations germane to the duty analysis, I find that there is at least a "possibility" that a state court could recognize a duty in this case, which renders the claim colorable and joinder proper. Batoff,977 F.2d at 851. *fn7

B. Restatement (Second) of Torts SEC. 324A

Section 324A imposes a duty of care on those who undertake another party's duty to protect the safety of third persons. *fn8 Plaintiff asserts that Dr. Temple undertook to render services for McNeil-PPC which he should recognize were for the protection of the consumer, and that his negligent performance thereof increased the risk of harm to consumers like plaintiff's decedent. Pennsylvania law recognizes claims under SEC. 324A. *fn9 Though SEC. 324A has not been applied to agents undertaking a principal's duties, a claim remains colorable as long as there is a "possibility" that a state court would recognize it. Batoff, 977 F.2d at 851. I find that this possibility exists.

The status of Sec. 324A is less certain in Idaho. In Bowling v. Jack B. Parson Co., 117 Idaho 1030, 793 P.2d 703 (1990), the Idaho Supreme Court criticized the lower court's reliance on SEC. 324A but found insufficient facts to meet Sec. 324A's requirement of an "undertaking." It thus did not squarely decide the status of SEC. 324A. This questioning of the status of SEC. 324A diminishes the likelihood that a claim under that section could survive a motion to dismiss, but does not foreclose the possibility of the theory being recognized. It thus does not negate the color ability of the claim. See Batoff,977 F.2d at 851-52. Indeed, even the complete unavailability of SEC. 324A would not deprive plaintiff of a colorable claim against Dr. Temple, as the more general duty analysis provides colorable grounds for such a claim. *fn10 The existence of this colorable claim against a resident of the forum state precludes removal under SEC. 1441(b) and requires remand.

II. McNeil-PPC

Because Dr. Temple's status as a properly joined resident defendant requires me to remand the case I need not decide whether McNeil-PPC maintains its principal place of business in Pennsylvania, but I note that evidence before me suggests that it does. The principal place of business is the "headquarters of day-to-day corporate activity and management." Kelly v. United States Steel Corp., 284 F.2d 850, 854 (3d Cir.1960). *fn11 The test emphasizes "activities or operations" such as "buying, selling, manufacturing, hiring, firing, [and] entering contracts" rather than "policy-making or executive decision making" because the former are more indicative of where the corporation "is part of the community . . . than the situs of the board of directors or other meetings setting broad corporate policy." 1 J. Moore, Moore's Federal Practice 0.77[3-4] at 800.116-.117 (1995 ed.). Principal place of business thus depends more on realities such as employees, assets, productive capacity, and managers who actually "conduct[] the business of the corporation" than on formalities such as shareholder, director, and executive committee meetings or financial transactions. Kelly, 284 F.2d at 854.

Though McNeil's corporate formalities and important executive functions are based in New Jersey, a greater portion of aggregate activities and operations appears to occur in Pennsylvania: *fn12 864 full-time managerial employees work in Pennsylvania, compared to 394 in New Jersey and 201 in all other jurisdictions. *fn13 Similarly, recent data indicate that the Pennsylvania division generated 77% of net sales while the other divisions together generated only 23%. *fn14 Defendants do not refute these statistics, which suggest that Pennsylvania activities and operations exceed those occurring elsewhere.

Defendants assert that the New-Jersey based committee to which McNeil reports is the locus of over 95% of "day-to-day corporate activity." *fn15 I find this statement unpersuasive as it is unsupported by data or explanation. Defendants' only analysis of where actual activity occurs treats the divisions separately, emphasizes numbers of facilities rather than their relative magnitude, and fails to compare aggregate Pennsylvania activity to aggregate activity elsewhere. *fn16 Absent evidence that a dominant portion of actual "activities and operations" occurs outside Pennsylvania, defendants cannot rest their principal-place-of-business analysis on the New Jersey location of corporate records, directors' and officers' staff and offices, or other corporate formalities. See 1 Moore's Federal Practice SEC. 0.77[3-4] at 800.116-.117; Kelly, 284 F.2d at 854. *fn17

III. Consequences of Removal Defects

Defendants contend that even if removal is improper I can transfer the case to the Idaho district court. I disagree. Defendants cite Korea Exchange Bank v. Trackwise Sales Corp., 66 F.3d 46 (3d Cir.1995), which reversed a district court's sua sponte remand, months after removal, of a case with non-jurisdictional *fn18 removal defects. The holding that non-jurisdictional removal defects are waivable when the non-removing party fails to raise a timely objection is not grounds to deny a timely motion to remand.

Defendants also cite cases requiring district courts to transfer rather than remand cases removed to the wrong district. S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 493 & n.3 (5th Cir.1996); Kreimerman v. Casa Veerkamp, S.A., 22 F.3d 634, 644-45 (5th.Cir.), cert. denied, 130 L. Ed. 2d 492, 115 S. Ct.577 (1994); Mortensen v. Wheel Horse Prod., Inc., 772 F. Supp.85 (N.D.N.Y. 1991). These cases are distinguishable, however, because each of them was transferred to a district to which it could have been properly removed. In the instant case the only district "embracing the place where [the] action is pending" sits in Pennsylvania. SEC. 1441(a). Because at least one of the defendants is a citizen of that state, there is no district to which the case can be removed in conformity with SEC. 1441.

AND NOW this 17 day of April, 1996, upon consideration of plaintiff's motion to remand, defendants' motion for a change of venue and the parties' filings related thereto it is hereby ORDERED that:

1) Plaintiff's motion to remand is GRANTED and the case REMANDED to Court of Common Pleas of Philadelphia County;

2) Defendant's motion to transfer venue is DENIED.

THOMAS N. O'NEILL, JR., J.

 
Notes:

*fn1 Plaintiff has sued McNeil-PPC, the maker of Tylenol, and Dr. Anthony Temple, Executive Director of Medical Affairs, for fatal injuries her decedent sustained allegedly because defendants failed to warn consumers of Tylenol's serious risks to those who regularly consume alcohol.

*fn2 Plaintiff asserts that: (1) her claim rests on general black letter law and raises no real conflict; but (2) if a conflict exists, Pennsylvania law governs liability of corporate agents employed there because Pennsylvania has the strongest interests in and most significant contacts with the issue, and the same law need not govern each issue in a case. Lewis v. Chemetron Corp., 448 F. Supp.211, 214 (W.D. Pa. 1978); Madrin v. Wareham,344 F. Supp.166, 169 (W.D. Pa. 1972). Defendants agree that the law of the forum with the strongest interests and most significant contacts controls but argue that this forum is Idaho where the injury occurred. I find plaintiff's claim "colorable" under either Pennsylvania or Idaho law and need not decide which law applies. I note, though, that doubts as to choice of law are resolved in plaintiff's favor if its suggestion is even colorable. Moorco Int'l, Inc. v. Elsag Bailey Process Automation, N.V.,881 F. Supp.1000, 1003 (E.D. Pa. 1995).

*fn3 See Donsco, Inc. v. Casper Corp., 587 F.2d 602, 606 (3d Cir.1978); Martin v. Wood, 400 F.2d 310, 314 (3d Cir.1968); Wicks v. Milzoco Builders, Inc., 503 Pa. 614, 470 A.2d 86, 89-90 (Pa. 1983); Moy v. Schreiber Deed Sec. Co., 535 A.2d 1168, 1170-71 (Pa. Super. 1988).

*fn4 See L.B. Indus., Inc. v. Smith, 817 F.2d 69, 71 (9th Cir.1987); Eliopulos v. Knox,123 Idaho 400, 848 P.2d 984 (Idaho 1993); Smith v. Great Basin Grain Co., 98 Idaho 266, 561 P.2d 1299, 1311 (Idaho 1977); McAlvain v. General Ins. Co. of America, 97 Idaho 777, 554 P.2d 955, 959 (Idaho 1976); Crown v. Hawkins Co., Ltd., 910 P.2d 786, 792 (Idaho App. 1996); Judd v. Oregon, 4 F. Supp.657, 658 (S.D. Idaho 1933); Wallace v. Hartford Fire Ins. Co., 31 Idaho 481, 174 P. 1009 (Idaho 1918) (master and servant jointly and severally liable for servant's negligence in scope of duty).

*fn5 See, e.g., 18B Am. Jur.2d Corporations SEC. 1877 at 724.

*fn6 Booty, recognizing that an employee who assumes an employer's duty toward a third person can owe a "personal duty towards the injured plaintiff," held that without "evidence or allegation" that the employee knew of the "non-performance or mal-performance" he lacked the personal fault necessary to trigger agent liability under state law. 872 F. Supp. at 1530. Jacks held that allegations of an agent's "failure to promptly pass on certain information . . .concerning damages which had already occurred" did not amount to "allegations setting forth violation of any legal duty." 256 F. Supp. at 286-87. Knight's holding that the "allegations of fact do not show that [the agent] had any duty . . . except such as was imposed by his contract of employment" can likewise be read as a holding on the facts rather than a legal conclusion that agents owe no duty to third parties. 73 F.2d at 77.

*fn7 I reject defendant's assertion that plaintiff has failed to state a colorable claim of causation. Even if McNeil-PPC knew the risk Tylenol posed to consumers, its causal role would supersede Dr. Temple's only if its conduct was "unforeseen, unanticipated, and not the probable consequence of the original negligence." Stephens,678 P.2d at 48.

*fn8 Section 324A provides that: One who undertakes, gratuitously or for consideration, to render services to another which he should recognize as necessary for the protection of a third person . . . is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to [perform] his undertaking, if (a) his failure to exercise reasonable care increases the risk of such harm, or (b) he has undertaken to perform a duty owed by the other to the third person, or (c) the harm is suffered because of reliance of the other or the third person on the undertaking.

*fn9 See Santillo v. Chambersburg Eng'g Co., 603 F. Supp.211 (E.D. Pa. 1985), aff'd,802 F.2d 448 (3d Cir.1986); Blalock v. Syracuse Stamping Co., 584 F. Supp.454, 455 (E.D. Pa. 1984); Klein v. Council of Chem. Ass'ns,587 F. Supp.213, 224 (E.D. Pa. 1984); Cantwell v. Allegheny County, 506 Pa. 35, 483 A.2d 1350 (Pa. 1984).

*fn10 I find plaintiff's claim colorable regardless of whether a duty of care can be inferred from the Food, Drug and Cosmetic Act, 21 U.S.C. SEC. 331 and conclude that the FDCA does not affect the color ability of plaintiff's claim. The FDCA does not provide a private right of action, Michael v. Shiley, Inc., 46 F.3d 1316, 1329 (3d.Cir.), cert. denied, 133 L. Ed. 2d 29, 116 S. Ct.67 (1995); Gile v. Optical Radiation Corp., 22 F.3d 540 (3d Cir.1994), cert. denied, 130 L. Ed. 2d 342, 115 S. Ct.429 (1995); however, the presence of a statute that is not privately enforceable does not foreclose state law negligence actions. See Ellis v. Chase Communications, Inc., 63 F.3d 473, 478 (6th Cir.1995); Hawkins v. Upjohn Co., 890 F. Supp.609 (E.D. Tex. 1994); but see Rodriguez v. American Cyanamid Co., 858 F. Supp.127 (D. Ariz. 1994) (rejecting negligence per se claim based on statute that with no private right of action). Even under the preemption clause of the FDCA's Medical Device Amendments the extent to which the FDCA preempts common law tort claims is unclear. See Strong v. Telectronics Pacing Sys. Inc., 78 F.3d 256, 259 (6th Cir.1996); Michael, 46 F.3d at 1329; Mendes v. Medtronic, Inc. 18 F.3d 13 (1st Cir.1994).

*fn11 The activity occurring there need not constitute a majority of the corporation's activity but must exceed that occurring in any other state. Id.

*fn12.McNeil consists of four un incorporated divisions. Personal Products, Specialty Products and Absorbent Products & Material Research are based in New Jersey while the maker of Tylenol, McNeil Consumer Products, is based in Pennsylvania. The divisions all report to committees of the New Jersey parent company Johnson & Johnson. Since the principal place of business depends on the place of "the company's principal activity as a whole," Mears v. McNeil-PPC, 1995 U.S. Dist.14368, 1995 WL 581869 (E.D. Pa. Oct. 3, 1995), I focus on where a predominant portion of McNeil's aggregate activities and operations occurs without regard to the artifact of the number of divisions. In Mears, Court Green placed McNeil's principal place of business in New Jersey. I concur with his statement of the law but note that evidence of a greater portion of aggregate operations occurring in Pennsylvania may outweigh the fact that directors, officers, management committees, corporate records and three divisions are based in New Jersey.

*fn13 Defendants do not refute these data but instead assert that "for each division other than McNeil Consumer a significant percentage of management-level employees work in New Jersey and no management-level employees are based in Pennsylvania." This statement, by focusing on the non-Pennsylvania divisions, fails to compare the magnitude of operations occurring in these divisions to the magnitude of operations in Pennsylvania and thus fails to address the ultimate issue of where the predominant portion of aggregate activities and operations is based.

*fn14 Of the three New Jersey divisions only Personal Products produced any significant sales.

*fn15 Evidence that McNeil Consumer's managerial decision making occurs in Pennsylvania refutes defendants' assertion that control is centralized in New Jersey.

*fn16 For instance, defendants assert that: (1) McNeil Consumer has two manufacturing facilities in New Jersey as well as five other states and Puerto Rico; (2) Tylenol is manufactured at twelve facilities in six states and Puerto Rico; and (3) McNeil Personal Products has two facilities in New Jersey and none in Pennsylvania. These facts are inconclusive as to whether a greater portion of aggregate activity occurs in Pennsylvania or in New Jersey.

*fn17 These factors further diminish in importance in light of evidence that neither the directors nor the officers play an actual role in corporate affairs and that records centralized in New Jersey are mere corporate formalities while records of managerial substance remain in each division.

*fn18 Jurisdictional defects, such as the lack of complete diversity, preclude original filing in federal court, whereas non-jurisdictional defects violate the requirements of the removal statute but would not preclude original filing in federal court.