Rubel, Janet v. Pfizer, Incorporated ( 2004 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-3488
JANET RUBEL,
Plaintiff-Appellee,
v.
PFIZER INC and WARNER-LAMBERT COMPANY,
Defendants-Appellants.
____________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 03 C 2674—Robert W. Gettleman, Judge.
____________
ARGUED FEBRUARY 23, 2004—DECIDED MARCH 24, 2004
____________
Before BAUER, EASTERBROOK, and KANNE, Circuit Judges.
EASTERBROOK, Circuit Judge. Janet Rubel filed in
state court a complaint alleging that Pfizer and Warner-
Lambert had improperly promoted the prescription drug
Neurontin for off-label uses (i.e., medical conditions not
covered by the Food and Drug Administration’s finding that
the drug is safe and effective). She sought restitution of the
amounts she had paid for the drug, an injunction forbidding
future promotion for off-label uses, disgorgement of all
profits Pfizer had made from these sales, and punitive
damages. Rubel also sought to represent a national class
2 No. 03-3488
including everyone who had purchased Neurontin for
off-label uses. Consistent with Illinois practice, the com-
plaint did not attempt to estimate the amount in contro-
versy.
Defendants removed the case to federal court under 28
U.S.C. §1441(a), alleging that the district court would have
had original jurisdiction under 28 U.S.C. §1332(a)(1). The
parties are of diverse citizenship (Rubel is a citizen of
Illinois; the defendants are incorporated in Delaware and
have their principal places of business in New York), and
the notice of removal asserted that the amount in con-
troversy exceeds $75,000. That is a plausible position, quite
apart from any doubt about the potential for disgorgement
and punitive damages, given this circuit’s rule that the cost
to the defendant of complying with an injunction counts
toward the jurisdictional minimum. See In re Brand Name
Prescription Drugs Antitrust Litigation, 123 F.3d 599, 609
(7th Cir. 1997). Sales of Neurontin exceed $1 billion
annually, and an injunction curtailing the size of the
market could be quite costly to the defendants (though the
record does not show what portion of all prescriptions are
for off-label uses). But the defendants did not attempt to
quantify the losses to which disgorgement or an injunction
would expose them. Nor did they comply with the Northern
District of Illinois’s Local Rule 81.2(a), which provides:
Where one or more defendants seek to remove an
action from an Illinois state court based upon di-
versity of citizenship, and where the complaint does
not contain an express ad damnum, as to at least
one claim asserted by at least one plaintiff, in an
amount exceeding the jurisdictional amount in
controversy, exclusive of interest and costs, spe-
cified in 28 U.S.C §1332 (the “jurisdictional
amount”) that is based on express allegations in
that claim in conformity with that ad damnum, the
No. 03-3488 3
notice of removal shall include in addition to any
other matters required by law:
(1) a statement by each of the defendants pre-
viously served in the state court action that it is
his, her or its good faith belief that the amount
in controversy exceeds the jurisdictional
amount; and
(2) with respect to at least one plaintiff in the
Illinois action, either—
(A) a response by such plaintiff to an inter-
rogatory or interrogatories (see Ill.S.Ct. Rule
213) as to the amount in controversy, either (i)
stating that the damages actually sought by
that plaintiff exceed the jurisdictional amounts
or (ii) declining to agree that the damage award
to that plaintiff will in no event exceed the
jurisdictional amount; or
(B) an admission by such plaintiff in response
to a request for admissions (see Ill.S.Ct. Rule
216(a)), or a showing as to the deemed admis-
sion by such plaintiff by reason of plaintiff’s
failure to serve a timely denial to such a re-
quest (see Ill.S.Ct. Rule 216(c)), in either event
conforming to the statement or declination to
agree described in subparagraph (2)(A) of this
rule.
Receipt by the removing defendant or defendants of
the response by a plaintiff referred to in subpara-
graph (2)(A) or of the admission by a plaintiff
referred to in paragraph (2)(B), or the occurrence of
the event giving rise to a deemed admission by a
plaintiff referred to in subparagraph (2)(B) shall
constitute the receipt of a “paper from which it may
first be ascertained that the case is one which is or
has become removable” within the meaning of 28
4 No. 03-3488
U.S.C. §1446(b). Where the defendant or defendants
do not include the statement required by paragraph
(1) of this rule, or do not comply with one of the
alternatives described in paragraph (2) of this rule,
the action will be subject to remand to the state
court for failure to establish a basis of federal
jurisdiction.
Although this rule initially requires removing parties to
submit not only the defendants’ statement (subsection (1))
but also at least one plaintiff’s acknowledgment (subsection
(2)), the final sentence of the trailing unnumbered para-
graph implies that either will suffice. Thus even if no
plaintiff will concede that the stakes exceed $75,000 or
refuse to accept a cap on recovery—neither option is helpful
when removal is based on the cost to the defendant of an
injunction or other equitable relief—a defendant can satisfy
the rule by supplying “a statement by each of the defen-
dants . . . that it is his, her or its good faith belief that the
amount in controversy exceeds the jurisdictional amount”.
Because neither Pfizer nor Warner-Lambert has made such
a representation—and did not offer any other evidence
about the stakes, such as an affidavit estimating the cost of
an injunction against off-label uses—the district court found
that subject-matter jurisdiction had not been established
and remanded the proceeding to state court. 276 F. Supp.
2d 904, 907-09 (N.D. Ill. 2003).
Pfizer and Warner-Lambert have appealed. Their im-
mediate problem is 28 U.S.C. §1447(d), which provides: “An
order remanding a case to the State court from which it was
removed is not reviewable on appeal or otherwise”. The
Supreme Court has been unwilling to take this language
literally. A series of cases beginning with Thermtron
Products, Inc. v. Hermansdorfer, 423 U.S. 336 (1976), and
culminating in Things Remembered, Inc. v. Petrarca, 516
U.S. 124 (1995), had produced this conclusion:
No. 03-3488 5
§1447(d) must be read in pari materia with
§1447(c), so that only remands based on grounds
specified in §1447(c) are immune from review under
§1447(d). As long as a district court’s remand is
based on a timely raised defect in removal pro-
cedure or on lack of subject-matter jurisdiction—
the grounds for remand recognized by §1447(c)—a
court of appeals lacks jurisdiction to entertain an
appeal of the remand order under §1447(d).
516 U.S. at 127-28 (citation omitted). Pfizer and
Warner-Lambert observe that Local Rule 81.2(a) is not
among the grounds specified in §1447(c) and contend that
we therefore may entertain an appeal that questions the
rule’s validity and application.
The problem with this position is that the district court
did not remand the proceeding as a sanction for failure to
comply with a local rule. Judge Gettleman, no less than the
defendants, knows that §1447(c) does not mention local
rules. Local Rule 81.2(a) itself says that the remand is
“for failure to establish a basis of federal jurisdiction.” The
rule is designed to elicit information that will enable the
district court to determine whether the amount in contro-
versy exceeds the jurisdictional minimum. If the removing
party does not supply vital information, then a remand fol-
lows—because it is the defendant, as the proponent of
federal jurisdiction, who bears the risk of nonpersuasion.
When the papers filed in the district court do not establish
subject-matter jurisdiction, remand is obligatory; and
appellate review of a remand based on the lack of federal
jurisdiction is securely blocked by §1447(d). See, e.g.,
Gravitt v. Southwestern Bell Telephone Co., 430 U.S. 723
(1977), in addition to the language we have quoted from
Things Remembered. See also Adkins v. Illinois Central
R.R., 326 F.3d 828 (7th Cir. 2003).
What appellants want us to do is look past the ultimate
ground (lack of jurisdiction) to the reasoning behind it. They
contend that if the line of reasoning is not itself mentioned
6 No. 03-3488
in §1447(c), then §1447(d) may be disregarded. That
contention is one we have entertained, and spurned, before.
See Phoenix Container, L.P. v. Sokoloff, 235 F.3d 352 (7th
Cir. 2000). As we observed there, no part of the Judicial
Code is self-contained. All depend for their operation on
assumptions about how the legal system works. A statute
saying “remand when jurisdiction does not exist” presumes
that the court has a means to determine jurisdictional facts.
Local Rule 81.2(a) is one such mechanism; Fed. R. Civ. P.
12(b)(1) is another, and no more mentioned in §1447 than
is Local Rule 81.2. If we could look past the conclusion (no
jurisdiction) to the procedures behind it, the norm of
§1447(d) would evaporate. If, for example, the district judge
had held a hearing under Rule 12(b)(1), accepted eviden-
tiary submissions of all kinds (not just those listed in Local
Rule 81.2), found that the stakes are less than $75,000, and
remanded for lack of jurisdiction, by appellants’ reasoning
an appeal would lie from that decision. They would say
something like: “We are not contesting the judge’s under-
standing of federal jurisdiction but instead we seek review
of clearly erroneous finding of fact.” That sort of reasoning
would nullify §1447(d). We rejected it in Phoenix Container
and reject it again today. Appellate courts review judg-
ments, not opinions. If the judgment is one remanding for
lack of jurisdiction, the reasoning in the opinion is not
independently reviewable. (Appellants do not contend that
the ostensible ground is other than the real one; instead
they challenge the reasoning behind the actual ground. We
need not decide whether appellate review would be avail-
able if a judge dissembled about the reason, slapping a “no
jurisdiction” label on a remand based on, say, a belief that
federal judges ought not hear tort suits.)
If a district judge were to construe Local Rule 81.2(a) in a
way that conditioned removal on plaintiff’s acknowledg-
ment that the stakes exceed $75,000—i.e., if the court were
to understand the rule to require defendants to satisfy both
No. 03-3488 7
subsection (1) and subsection (2)—that would call its
validity into serious question. Removal is proper if the
defendant’s estimate of the stakes is plausible; plaintiffs
can’t prevent removal by refusing to concede that the
controversy exceeds the jurisdictional minimum or by
insisting that injunctions do not count toward the amount
in controversy. See The Barbers, Hairstyling for Men &
Women, Inc. v. Bishop, 132 F.3d 1203 (7th Cir. 1997); Shaw
v. Dow Brands, Inc., 994 F.2d 364 (7th Cir. 1993). Because
all local rules must be consistent with federal statutes, see
28 U.S.C. §2071(a), Fed. R. Civ. P. 83(a)(1), a rule blocking
the defendants from making an independent estimate of the
amount in controversy, or from relying on the costs of
equitable relief, could not be enforced. But the district court
did not use Local Rule 81.2(a) in that fashion—and, even if
it had done so, appeal would not be a remedy given
§1447(d). Pfizer and Warner-Lambert can ask the Supreme
Court of the United States for review if they are ultimately
unsuccessful in state court. In the meantime, the validity of
Local Rule 81.2 may come before this court in some other
case in which the judge declines to remand and enters
judgment on the merits adverse to plaintiff, who argues on
appeal that the case should have been litigated in state
court. The validity of Local Rule 81.2 also could be consid-
ered by the Judicial Council of this circuit. See 28 U.S.C.
§2071(c)(1). Although the Northern District of Illinois
promulgated Local Rule 81.2 in 1997, it did not then comply
with §2071(d) by presenting the new rule to the Council for
review. It did include Local Rule 81.2 in a package of rules
submitted to the Council in September 1999. Although the
Circuit Executive asked the Northern District for further
information on May 15, 2000, that court never responded,
so the validity of this rule has yet to be evaluated by the
Judicial Council. None of these considerations affects
appellate jurisdiction, however, so although some questions
about Local Rule 81.2 remain unanswered, this appeal is
DISMISSED FOR WANT OF JURISDICTION.
8 No. 03-3488
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—3-24-04