Case Notes

First Circuit: Notice of Removal Filed More Than 30 Days After Service of a Complaint Was Timely

In Romulus v. CVS Pharm., Inc., 770 F.3d 67 (1st Cir. 2014), the defendant pharmacy chain maintained a policy requiring its shift supervisors to remain on premises during rest or meal breaks when there were no other managerial employees on duty. A group of shift supervisors at the defendant's Massachusetts stores filed a putative class action in Massachusetts Superior Court, alleging that the defendant's refusal to pay them for their break time was a violation of Mass. Gen. Laws ch. 149, ' 148, the Massachusetts Wage Act, and Mass. Gen. Laws ch. 151, ” 1A and 1B, the Massachusetts Overtime Statute. In their complaint, the plaintiffs sought unpaid wages and costs for the breaks, beginning in July 2008, but did not provide any information regarding the number of breaks at issue or the total amount of damages claimed.

During preliminary discovery, the defendant produced electronic time and attendance data for all its Massachusetts shift supervisors. Using these data, plaintiffs' counsel calculated the total number of meal breaks when no other shift supervisors were on duty during a subset of the period from July 2008 to commencement of the action, and reported the number to the defendant's counsel by e-mail on Jan. 18, 2013. On Feb. 15, 2013, the defendant filed a notice of removal, arguing that the number of meal breaks reported in the e-mail, if extrapolated over the entire period from July 2008 to commencement of the action, created a reasonable probability that the amount in controversy exceeded $5 million as required for federal jurisdiction under 28 U.S.C. ' 1332(d), part of the Class Action Fairness Act of 2005 (CAFA). The defendant further argued that its removal was timely under 28 U.S.C. ' 1446(b)(3), which provides that “if the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.”

The district court granted the plaintiffs' motion to remand the case to state court, holding that the defendant had not demonstrated either that its removal was timely or that the amount in controversy exceeded $5 million. The court made no findings on the latter issue, but held that the plaintiffs' e-mail did not qualify as an “other paper” under ' 1446(b)(3) because it was based entirely on information that had been in the defendant's possession since the start of the case.

The United States Circuit Court of Appeals for the First Circuit reversed, holding that the removal deadline under '1446(b)(3) only starts to run when removability can first be ascertained from the plaintiff's own papers, i.e., when those papers either provide a clear statement of damages or set forth sufficient facts to allow damages to be deduced through simple calculation. The defendant has no duty to investigate facts beyond those provided by the plaintiff. Moreover, relying on decisions of two other courts of appeals and the Senate report accompanying CAFA's passage, the court held the term “other paper” must be read expansively and can include informal papers such as counsel's e-mail in this case. As to the amount in controversy, the court gave no deference to the district court's conclusion, which was not supported by any actual factual findings, and held that the defendant's simple multiplication and extrapolation resulted in a damages estimate of approximately $5.5 million, sufficient to show a reasonable probability that more than $5 million was at issue.

First Circuit: State Law Claims Against Drug Manufacturer Were Preempted by the FDCA

In In re: Celexa and Lexapro Marketing and Sales Practices Litigation, 2015 U.S. App. LEXIS 2632 (1st Cir. Feb. 20, 2015), the plaintiffs purchased a prescription antidepressant drug to treat their adolescent son's major depressive disorder, but did not obtain the results they hoped for. Alleging that information in the drug's label had misled both their son's physician and them as to the drug's effectiveness, the plaintiffs sued the manufacturer in the United States District Court for the Central District of California on behalf of themselves and all other Californians who purchased the drug for an adolescent from March 2009 to the present.

The plaintiffs claimed that the defendant omitted material information about the drug's efficacy from the label in violation of California consumer protection laws, causing the plaintiffs to spend money on a drug that was no more effective than a placebo. The plaintiffs sought an injunction ordering the defendant to cease selling the drug under its current label, and to seek approval from the United States Food and Drug Administration (FDA) for a new, accurate label. The Judicial Panel on Multidistrict Litigation transferred the case to the United States District Court for the District of Massachusetts as part of an ongoing multidistrict litigation, and the defendant moved to dismiss on the grounds that the plaintiffs' claims failed under a safe-harbor provision in the California consumer protection laws, and were preempted by the Food, Drug, and Cosmetic Act (FDCA). The district court allowed the motion under California law without reaching the preemption issue.

On the plaintiffs' appeal, the First Circuit affirmed, but on preemption grounds and without reaching the California law issues. The court first described the lengthy process, under the FDCA and applicable regulations, by which a manufacturer must obtain FDA approval before selling a prescription drug. The manufacturer must submit a new drug application that includes, among other things, full reports of all clinical investigations that show whether the drug is effective in use, and the proposed labeling. The FDA may approve the drug only if it determines there is “substantial evidence that the drug will have the effect it purports or is represented to have,” and the proposed label is not “false or misleading in any particular.” Following approval, the manufacturer cannot change the label without prior FDA approval except under 21 C.F.R. ' 314.70(c)(6)(iii), the “changes being effected” or “CBE” regulation, which permits such unilateral changes only if they reflect newly acquired information and are intended to delete false or misleading information about indications for use or effectiveness, or to add or strengthen warnings about the drug's potential uses. Such newly acquired information may consist of data, studies or analyses not previously submitted to the FDA if the information reveals “risks of a different type or greater severity or frequency than previously included in submissions to FDA.”

Here, the defendant had obtained FDA approval to sell the drug for treatment of major depressive disorder in adolescents based on the results of four clinical studies, two of which showed no efficacy and two of which found efficacy that was statistically significant, but only barely. In approving the drug, the FDA made a specific finding that the drug's label, which described the results of the four studies, was not false or misleading. The plaintiffs' complaint took issue with the FDA's allegedly low standards for approving antidepressants generally, as well as the agency's conclusion that the drug was effective for major depression in adolescents. Under the plaintiffs' claim, the only way for the defendant to avoid liability would be to change the drug's label, which was prohibited by the FDCA ' hence rendering the claims preempted ' unless permitted by the CBE regulation. However, the only post-FDA approval information pleaded in the plaintiffs' complaint was from two academic articles which, respectively:

• Evaluated the efficacy of anti-depressant drugs generally, and
• Criticized the FDA's approval of the defendant's drug.

The first article did not specifically address antidepressant efficacy for major depression in adolescents, while the second, much like the plaintiffs' complaint, looked at the same information the FDA had at the time of approval and merely offered a different conclusion from that which the agency had reached. Accordingly, neither article disclosed risks of a different type or greater severity or frequency than that which was previously known to FDA, and defendant could not have used the CBE procedure to unilaterally change its label. Indeed, the plaintiffs seemingly conceded as much by explicitly asking for an order directing defendant to seek FDA approval of a new label. David Geiger ' Foley Hoag

'

First Circuit: Notice of Removal Filed More Than 30 Days After Service of a Complaint Was Timely

In Romulus v. CVS Pharm., Inc. , 770 F.3d 67 (1st Cir. 2014), the defendant pharmacy chain maintained a policy requiring its shift supervisors to remain on premises during rest or meal breaks when there were no other managerial employees on duty. A group of shift supervisors at the defendant's Massachusetts stores filed a putative class action in Massachusetts Superior Court, alleging that the defendant's refusal to pay them for their break time was a violation of Mass. Gen. Laws ch. 149, ' 148, the Massachusetts Wage Act, and Mass. Gen. Laws ch. 151, ” 1A and 1B, the Massachusetts Overtime Statute. In their complaint, the plaintiffs sought unpaid wages and costs for the breaks, beginning in July 2008, but did not provide any information regarding the number of breaks at issue or the total amount of damages claimed.

During preliminary discovery, the defendant produced electronic time and attendance data for all its Massachusetts shift supervisors. Using these data, plaintiffs' counsel calculated the total number of meal breaks when no other shift supervisors were on duty during a subset of the period from July 2008 to commencement of the action, and reported the number to the defendant's counsel by e-mail on Jan. 18, 2013. On Feb. 15, 2013, the defendant filed a notice of removal, arguing that the number of meal breaks reported in the e-mail, if extrapolated over the entire period from July 2008 to commencement of the action, created a reasonable probability that the amount in controversy exceeded $5 million as required for federal jurisdiction under 28 U.S.C. ' 1332(d), part of the Class Action Fairness Act of 2005 (CAFA). The defendant further argued that its removal was timely under 28 U.S.C. ' 1446(b)(3), which provides that “if the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.”

The district court granted the plaintiffs' motion to remand the case to state court, holding that the defendant had not demonstrated either that its removal was timely or that the amount in controversy exceeded $5 million. The court made no findings on the latter issue, but held that the plaintiffs' e-mail did not qualify as an “other paper” under ' 1446(b)(3) because it was based entirely on information that had been in the defendant's possession since the start of the case.

The United States Circuit Court of Appeals for the First Circuit reversed, holding that the removal deadline under '1446(b)(3) only starts to run when removability can first be ascertained from the plaintiff's own papers, i.e., when those papers either provide a clear statement of damages or set forth sufficient facts to allow damages to be deduced through simple calculation. The defendant has no duty to investigate facts beyond those provided by the plaintiff. Moreover, relying on decisions of two other courts of appeals and the Senate report accompanying CAFA's passage, the court held the term “other paper” must be read expansively and can include informal papers such as counsel's e-mail in this case. As to the amount in controversy, the court gave no deference to the district court's conclusion, which was not supported by any actual factual findings, and held that the defendant's simple multiplication and extrapolation resulted in a damages estimate of approximately $5.5 million, sufficient to show a reasonable probability that more than $5 million was at issue.

First Circuit: State Law Claims Against Drug Manufacturer Were Preempted by the FDCA

In In re: Celexa and Lexapro Marketing and Sales Practices Litigation, 2015 U.S. App. LEXIS 2632 (1st Cir. Feb. 20, 2015), the plaintiffs purchased a prescription antidepressant drug to treat their adolescent son's major depressive disorder, but did not obtain the results they hoped for. Alleging that information in the drug's label had misled both their son's physician and them as to the drug's effectiveness, the plaintiffs sued the manufacturer in the United States District Court for the Central District of California on behalf of themselves and all other Californians who purchased the drug for an adolescent from March 2009 to the present.

The plaintiffs claimed that the defendant omitted material information about the drug's efficacy from the label in violation of California consumer protection laws, causing the plaintiffs to spend money on a drug that was no more effective than a placebo. The plaintiffs sought an injunction ordering the defendant to cease selling the drug under its current label, and to seek approval from the United States Food and Drug Administration (FDA) for a new, accurate label. The Judicial Panel on Multidistrict Litigation transferred the case to the United States District Court for the District of Massachusetts as part of an ongoing multidistrict litigation, and the defendant moved to dismiss on the grounds that the plaintiffs' claims failed under a safe-harbor provision in the California consumer protection laws, and were preempted by the Food, Drug, and Cosmetic Act (FDCA). The district court allowed the motion under California law without reaching the preemption issue.

On the plaintiffs' appeal, the First Circuit affirmed, but on preemption grounds and without reaching the California law issues. The court first described the lengthy process, under the FDCA and applicable regulations, by which a manufacturer must obtain FDA approval before selling a prescription drug. The manufacturer must submit a new drug application that includes, among other things, full reports of all clinical investigations that show whether the drug is effective in use, and the proposed labeling. The FDA may approve the drug only if it determines there is “substantial evidence that the drug will have the effect it purports or is represented to have,” and the proposed label is not “false or misleading in any particular.” Following approval, the manufacturer cannot change the label without prior FDA approval except under 21 C.F.R. ' 314.70(c)(6)(iii), the “changes being effected” or “CBE” regulation, which permits such unilateral changes only if they reflect newly acquired information and are intended to delete false or misleading information about indications for use or effectiveness, or to add or strengthen warnings about the drug's potential uses. Such newly acquired information may consist of data, studies or analyses not previously submitted to the FDA if the information reveals “risks of a different type or greater severity or frequency than previously included in submissions to FDA.”

Here, the defendant had obtained FDA approval to sell the drug for treatment of major depressive disorder in adolescents based on the results of four clinical studies, two of which showed no efficacy and two of which found efficacy that was statistically significant, but only barely. In approving the drug, the FDA made a specific finding that the drug's label, which described the results of the four studies, was not false or misleading. The plaintiffs' complaint took issue with the FDA's allegedly low standards for approving antidepressants generally, as well as the agency's conclusion that the drug was effective for major depression in adolescents. Under the plaintiffs' claim, the only way for the defendant to avoid liability would be to change the drug's label, which was prohibited by the FDCA ' hence rendering the claims preempted ' unless permitted by the CBE regulation. However, the only post-FDA approval information pleaded in the plaintiffs' complaint was from two academic articles which, respectively:

• Evaluated the efficacy of anti-depressant drugs generally, and
• Criticized the FDA's approval of the defendant's drug.

The first article did not specifically address antidepressant efficacy for major depression in adolescents, while the second, much like the plaintiffs' complaint, looked at the same information the FDA had at the time of approval and merely offered a different conclusion from that which the agency had reached. Accordingly, neither article disclosed risks of a different type or greater severity or frequency than that which was previously known to FDA, and defendant could not have used the CBE procedure to unilaterally change its label. Indeed, the plaintiffs seemingly conceded as much by explicitly asking for an order directing defendant to seek FDA approval of a new label. David Geiger ' Foley Hoag

'