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Federal Civil Procedure

U.S. District Court rules that Federal law and FDA Regulation Pre-empt State Law Claims
In Beatrice Grinage v. Mylan Pharmaceuticals, Inc., Civil No. CCB 11-1436 (D.Md. Dec. 30, 2011), the U.S. District Court for the District of Maryland dismissed plaintiff's lawsuit on the basis that federal law and FDA regulations pre-empted the plaintiff's state law claims for negligence, strict products liability, fraud and breach of implied warranty under Pliva, Inc., v. Mensing, 564 U.S. -----, 131 S. Ct. 2567 (2011), and that to the extent any such claims survived, plaintiff failed to state a claim under Iqbal or Twombly.

Ms. Grinage filed suit against Mylan Pharmaceuticals on behalf of her deceased husband, Aaron Grinage, in Maryland state court. Mylan removed the matter to the US District Court on the basis of diversity jurisdiction and then moved to dismiss pursuant to Mensing.

Mr. Grinage had been prescribed Allopurinol, which was manufactured by Mylan, in January 2008 to treat gout. After taking Allopurinol for approximately one month, he was diagnosed with Steven-Johnson Syndrome, a skin disease, and then Toxic Epidermal Necrolysis, a more severe skin reaction. In March 2008, Mr. Grinage suffered multi-system organ failure and died.

Allopurinol is a generic version of Zyloprim, a brand-name drug the FDA approved in 1966. Mylan argued that Allopurinol's warning label was identical to that of Zyloprim and clearly stated that the "most frequent adverse reaction to [the drug] is skin rash" and that "[s]kin reactions can be severe and sometimes fatal." Both labels report that the skin reactions of Steven-Johnson Syndrome and Toxic Epidermal Necrolysis are "probably causally related" to the ingestion of the drug. Grinage argued that Mylan knew or should have known that the risks of Steven-Johnson Syndrome and Toxic Epidermal Necrolysis were greater than the 1 percent referenced in the label and that Mylan was negligent in failing to report published articles and other evidence to the FDA, the brand-name manufacturer, health care providers and patients, such that Mr. Grinage's consumption of the product "caused unreasonably dangerous risks" and was "not safe or fit for its intended purpose."

Relying on Mensing, the Court noted that the statutory language and regulations related to the Drug Price Competition and Patent Term Restoration Act and the FDA's interpretation of these rules "require that the warning labels of a brand-name drug and its generic copy must always be the same." Mensing, 131 S. Ct. at 2574-75. Thus, "even if a generic manufacturer had new information about side effects, it could not change its label unless the brand-name manufacturer did so first, or unless the FDA instructed all manufacturers to do so. As a result, pursuant to the impossibility of pre-emption doctrine, federal law pre-empts any state law tort action that creates liability for generic manufacturers who fail to take independent action to change their labels." Id., 131 S. Ct. at 2577-81.

Plaintiff argued that Mensing's holding was narrowly tailored to specific failure to warn claims and that her claims survived pre-emption. However, the Court held otherwise and stated that plaintiff's complaint was insufficient under the pleadings standards of Iqbal and Twombly to state a claim not otherwise pre-empted. The Court also acknowledged that Plaintiff's claim might not have been dismissed if the prescription had been for Zyloprim instead of the generic Allopurinol, but that in this instance that Court was constrained by precedent and the FDA's regulations, unless and until Congress amended the governing statutes.

Posted by Robert D. Anderson on 01/23/2012 at 07:11 PM
Federal Civil ProcedurePermalink

Minimum contacts analysis for personal jurisdiction over foreign components manufacturer
In Robert Windsor, Jr., et al., v. Spinner Industry Co., Ltd., et al., Civil No. JKB 10-114 (D.Md. Dec. 15, 2011), the U.S. District Court for the District of Maryland analyzed the appropriate standard by which to determine whether a foreign corporation has sufficient minimum contacts in order to assert personal jurisdiction over the defendant under the U.S. Supreme Court's holdings in Asahi Metal Indus, co., v. Superior Court of California, 480 U.S. 102 (2987) and J. McIntyre Machinery, Ltd., v. Nicastro, 131 S.Ct. 2780 (2011).

Plaintiffs brought suit against defendants after the front wheel of Robert Windsor?s bicycle dislodged, causing him and his toddler son, to be thrown to the ground. Plaintiffs alleged that defendants were involved in the design, manufacture, or assembly of the bicycle or its components, the defects of which were the proximate cause of the accident. Defendant, Joy Industrial Company ("Joy"), a Taiwanese company who manufactured the "quick release skewer" mechanism which secures the wheels to the bicycle, moved to dismiss all claims against it on the grounds that it was not subject to personal jurisdiction in Maryland.

Since plaintiffs bear the burden of establishing personal jurisdiction, plaintiffs argued that, even though Joy had no direct contact with Maryland, the nationwide marketing of Joy's products by intermediaries created sufficient minimum contacts to establish personal jurisdiction. Specifically, Joy sold its products to distributors, manufacturers, and trading companies in the U.S., which then market or sell the product in Maryland. Thus, it was foreseeable that Joy's product would be sold in Maryland and Joy availed itself to the forum jurisdiction.

In analyzing whether the Court had specific jurisdiction over a non-resident manufacturer whose only connection to the forum was that its products were sold there by a third-party distributor the Court looked to the U.S. Supreme Court's opinions in Asahi and McIntyre. Unfortunately, neither Asahi nor McIntyre were majority opinions causing ambiguity as to what standard actually applied to determine jurisdiction is these cases.

Without a majority opinion, the District Court sought to find consensus between the plurality and concurring opinions "on the narrowest grounds" to fashion an appropriate standard. In so doing, the Court found that, contrary to the plaintiffs' position, "McIntyre clearly rejects foreseeability as the standard for personal jurisdiction" and instead "specific jurisdiction must arise from a defendant's deliberate connection with the forum state." "Beyond this, however, McIntyre merely affirms that status quo." Consequently, the District Court relied upon the Fourth Circuit Court's precedent on the issue which largely adopted Justice O'Connor's plurality position in Asahi, i.e., a restrictive view that requires a defendant take some deliberate and overt action to target the markets of the forum State. The Fourth Circuit analyzed minimum contacts on the basis of "whether a defendant has created a substantial connection to the forum state by action purposefully directed toward the forum state or otherwise invoking the benefits and protections of the laws of the state," and specifically rejected the notion that a state could assert personal jurisdiction over a defendant merely because the company expected its product would ultimately be sold in the state.

Applied here, the Court found that the facts were insufficient to demonstrate jurisdiction over Joy based solely upon the motions and that the plaintiffs had failed to offer any details regarding the particular chain of distribution that brought the allegedly defective product to Maryland, or that Joy had any "additional contact" evincing intent to serve the Maryland bicycle market in particular. However, there was still a question of whether jurisdiction was proper since the manufacturers and distributors to whom Joy sells its products, not only market their products in Maryland, but maintain established channels of distribution there, suggesting a regular course of sales. Accordingly, the Court held Joy's Motion to Dismiss for lack of personal jurisdiction in abeyance in order to conduct a hearing to determine the extent of Joy's contacts with Maryland.

Posted by Robert D. Anderson on 01/23/2012 at 06:47 PM
Federal Civil ProcedureMarylandPersonal JurisdictionPermalink

Federal jurisdiction and venue: New Legislation Takes Effect
On December 7, 2011, the President signed into law the Federal Courts Jurisdiction and Venue Clarification Act. 112 P.L. 63. The Act is applicable to all actions filed on or after January 6, 2012. This new law makes small but important changes to the procedure for removal to federal court and clarifies the scope of diversity jurisdiction. It also expands federal courts' authority to grant a transfer of venue for the convenience of parties and witnesses.

With respect to removal, the Act clarifies a confusing issue that arises when a plaintiff sues multiple defendants, and different defendants are served with the complaint at different times. Under the new statute, each defendant has thirty days after being served with the complaint to file a notice of removal. 28 USCS sec. 1446(b)(2)(B)-(C). Previously, however, the federal Circuits were split. Some Circuits adopted the rule that is now mandated by the Act. See Bailey v. Janssen Pharmaceutica, Inc., 536 F.3d 1202 (11th Cir. 2008). Others, including the 4th Circuit and the D.C. Circuit, held that a notice of removal cannot be filed more than thirty days after the first defendant is served with the complaint. Barbour v. Int'l Union, 594 F.3d 315 (4th Cir. 2010); Princeton Running Co. v. Williams, 2006 U.S. Dist. LEXIS 62622 (D.D.C. 2006); Phillips v. Corr. Corp. of Am., 407 F. Supp. 2d 18 (D.D.C. 2005). Thus, in cases where the second defendant was served more than thirty days after the first defendant, the second defendant would have no opportunity to remove the case to federal court. Recognizing the unfairness of this approach, the new law gives each defendant the same amount of time for removal.

In addition, the Act curtails removal jurisdiction in cases involving both state and federal claims. The statute now provides that when the claims under state law are unrelated to the federal claims - that is, when they do not arise from a common nucleus of operative fact - the court must sever the state law claims and remand them to state court. 28 USCS sec. 1441(c)(2). The previous version of the statute gave federal courts discretion to either decide the state law claims in federal court or to remand. However, the constitutionality of this rule had been called into question. See Salei v. Boardwalk Regency Corp., 913 F. Supp. 993 (E.D. Mich. 1996).

The new law also makes several changes to removal jurisdiction in diversity cases. The Act provides that the amount in controversy is legislatively deemed to be the amount demanded in the complaint. 28 USCS sec. 1446(c)(2). If the amount in controversy is not clear from the face of the complaint, then the defendant seeking removal must prove by a preponderance of the evidence that the amount in controversy exceeds $75,000. The same rule applies if the complaint demands less than $75,000, but state law permits recovery in excess of the amount demanded.

If the plaintiff's discovery responses indicate that the amount in controversy requirement has been met, the deadline for filing a notice of removal is extended until thirty days after receipt of the discovery responses. Sec. 1446(c)(3). However, the extended deadline cannot be more than one year after the complaint is filed, unless the plaintiff deliberately failed to disclose the amount in controversy in order to prevent removal or otherwise acted in bad faith.

Additionally, the Act addresses the status of resident aliens and foreign corporations for diversity jurisdiction purposes. Id., sec. 1332(a)(2), (c). These provisions are designed to limit the ability of foreign citizens and corporations to invoke diversity jurisdiction in order to sue each other in federal court.

Finally, the new law contains a number of provisions relating to federal court venue. The Act permits federal courts to grant a change of venue to almost any federal district or division if all parties consent. Id., sec. 1404(a). The previous version of the statute would not permit a case to be transferred to a venue in which it could not have originally been brought. The Act also eliminates the distinction between diversity and federal question jurisdiction for venue purposes. Id., sec. 1391(b).

The changes mandated by the Act are technical but highly significant. One commentator has called them "the most far-reaching package of revisions to the Judicial Code since the Judicial Improvements Act of 1990." Although they are plainly an attempt to clarify the complex rules governing federal jurisdiction and venue, they will almost certainly raise their own complexities, requiring further revisions of the Judicial Code. And while none of these provisions have been tested or interpreted by the courts, they will be the rules of the road for the foreseeable future.

Posted by Raphael J. Cohen on 12/16/2011 at 05:44 PM
Federal Civil ProcedurePermalink

Twombly Motion Resolves Civil Rights Claim Arising From Suspicion of Shoplifting

Shoplifting can cause retailers to incur costs far greater than simply the value of the items stolen. Even when the store and its employees act in the utmost good faith, someone accused of shoplifting can turn around and sue the store. These suits sometimes include claims of racial discrimination. Until recently, it was difficult to get these suits dismissed. As a result, retailers could become embroiled in litigation involving an intrusive discovery process and significant defense costs that could last years and unfairly tarnish their reputation. Fortunately, two recent Supreme Court cases have made it much easier to have such cases dismissed with a relatively small amount of time, energy, and cost.

Jordan Coyne & Savits, L.L.P. recently defended a national clothing retailer sued in the U.S. District Court for the District of Maryland by a person who was ejected on suspicion of shoplifting. According to the plaintiff's complaint, he opened his shopping bag near some jeans on display to ascertain whether they matched the shoes in his bag. A store clerk notified the Mall's security guards that the plaintiff was a "suspicious person" who was "likely stealing." The security guards confronted the plaintiff and escorted him from the Mall. He brought a civil rights claim under 42 U.S.C. sec. 1981 against the retailer, the owner of the Mall, and the security guards, asserting that the incident was motivated by racial discrimination, seeking attorney's fees and damages for intentional infliction of emotional distress and invasion of privacy.

Jordan Coyne answered with a Rule 12 motion to dismiss the Complaint for failure to state a claim for relief. Relying on the Supreme Court's recent decisions in Twombly and Iqbal, we argued that the case should be dismissed because the plaintiff had not pled any facts tending to show that the acts were motivated by any intent to discriminate against plaintiff.

The Court agreed and dismissed the case without prejudice. Applying Twombly, the Court ruled that the Complaint did not allege facts sufficient to "state a claim to relief that is plausible on its face." The Court noted that "plaintiff has not alleged facts showing a causal link between his race and his removal, or that any of the defendants intended to discriminate against him because of his race." While the Complaint alleged that the "removal from the Mall was made solely for the reason that the plaintiff was an African-American and was made with malicious and discriminatory intent," this was deemed to be a "mere conclusory statement of the kind that Iqbal rejected." If anything, the plaintiff's factual allegations showed that the merchant's actions were the result of a legitimate belief that the plaintiff was shoplifting. The Court concluded that Plaintiff had "utterly failed to buttress his conclusory allegations with any facts that would support an inference of racial animus" on the part of any of the defendants.

Plaintiff never bothered filing an amended complaint. Consequently, the motion to dismiss resolved the case in months, not years. Moreover, the client did not have to participate in the time-consuming and intrusive discovery process or pay even a token amount in settlement. Perhaps most importantly, the client was able to protect its good reputation by having the Court recognize that, even if the plaintiff's factual allegations were assumed to be true, the removal of the plaintiff from the store was not motivated by racial animus, but rather, was "prompted by the belief that plaintiff's actions were consistent with attempted shoplifting."

Of course, all matters are decided on their own particular facts or merits, and, because each case is different and litigation is inherently unpredictable, the past record is no assurance of reaching a favorable result in any future case. For further information or to discuss the defense of a similar matter, call Steve Schwinn, Esq., at 703-246-0900.

Posted by D. Stephenson Schwinn on 10/31/2011 at 02:42 PM
Federal Civil ProcedureJordan Coyne LLP newsMarylandPermalink