# Petition for Writ of Certiorari — Ritchey v. Upjohn Drug Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_1487%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1998 - **Citation:** 525 U.S. 963 ## Text ~ Soprems Court, 0°8. : iy ) FILED 98 336 aus 25 Wwe In The Supreme Court of the United States October Term, 1997 * JOE B. RITCHEY, Petitioner, UPJOHN COMPANY and WILLIAM DEMENT, Respondents. ¢ On Petition For Writ Of Certiorari To The United States Court Of Appeals For The Ninth Circuit ¢ PETITION FOR WRIT OF CERTIORARI + MicHaAet D. MosHER Rosert S. Catz Counsel of Record 50 North Main Street Paris, Texas 75460-4250 (903) 785-4721 Counsel for Petitioner COCKLE LAW BRIEF PRINTING CO., (800) 225-6964 OR CALL COLLECT (402) 342-2831 QUESTIONS PRESENTED FOR REVIEW 1. Does the one year limitation on diversity removal under the 1988 amendments to 28 U.S.C. § 1446(b) abso- lutely preclude removal in all diversity cases after the limitation period expires, and if not, does the one year limitation period on removal only begin to run from the date when the action stated by the initial pleading setting forth the claim for relief filed in state court was served on the diverse state court defendant, who then filed notice of removal more than two years beyond the filing of the original action in state court? 2. Does removal of a case by a diverse defendant under 28 U.S.C. § 1446(b) on grounds of fraudulent join- der based on the bald and frivolous claim that plaintiff could not possibly prevail in state court under state law against non-diverse defendants, unconstitutionally vest the judicial power in the United States courts beyond Article III, Section 2 of the United States Constitution when any alleged pleading deficiences could have been readily cured by amendment to the original state court complaint which had not even once yet been amended in state court? 3. Is a diversity case removable under 28 U.S.C. § 1446(b) on grounds of alleged fraudulent joinder of nondiverse parties where the district court found, in the absence of any discovery and in the face of comprehen- sive and detailed countervailing declaration, that the pro se plaintiff could not possibly prevail against a statute of limitations and res judicata defense for state law common law fraudulent concealment, deceit and conspiracy by a ii QUESTIONS PRESENTED FOR REVIEW - Continued pharmaceutical manufacturer and its so-called indepen- dent FDA advisors who allegedly, for payments from Upjohn of more than $2,000,000 per year, concealed research from and misled the Food and Drug Administra- tion to prevent the timely discovery of the cause of injury and causes of action by the petitioner — even though the offered new and independent State resident actions tolled the statutes of limitations under California law and the state law conspiracy was only discovered by the plaintiff less than 6 months before the filing of this action in state court. EO” Um” iil THE PARTIES TO THE PROCEEDINGS Petitioner is Joe B. Ritchey, a pro s¢ plaintiff in the United States District Court for the Northern District of California, and a pro se appellant in the United States Court of Appeals for the Ninth Circuit. Defendants and Respondents are The Upjohn Drug Company (“Upjohn”), Dr. William Dement (“Dement”) a California state resi- dent and another state resident served as John Doe defen- dant, the Sleep Disorders Clinic. iv TABLE OF CONTENTS Ce I a ge 1 | Re es a a eee 1 . CONSTITUTIONAL AND STATUTORY PROVI- ee a Be peer eee a i UPAR IIR 0s 55h a brea ke Ch aS Laka one eee aes 4 fd OE We AAA ea at Rae eas site eg SE eT re eee re Oe rere 4 ES tie EO oe i a 6 ee ee ee oe a perameeueteens th Treereet Court. 6s. 65 iso eve ce tees 9 REASONS FOR GRANTING CERTIORARI ......... 9 1. The Court Should Grant Review In This Case To Resolve The Uncertainty Regarding The Inter- pretation Of The One-Year Limitation On Diver- sity Removal Under The 1988 Amendments to 28 188 2ee es Bere epee rer ery eee erp 9 2. Review By This Court Is Necessary To Decide An Important Question Of Federal Jurisdiction Given The Circuits And District Courts’ Lack Of A Clear And Unambiguous Position Regarding The Nature And Extent Of the Power Of The Federal Courts Under Article III, Section 2 Of The Consti- tution And The 1988 Amendments to 28 U.S.C. § 1446(b) To Examine The Merits Of Claims Aris- ing Solely Under State Law Brought In State . Court Against Non-Diverse State Court Defen- GUN Gao heh os wks 5 a aa ea eekana es (ueoee eS Ue nae eee 13 Pe ee ee ee, ee Te Ne ee eo oe — — ait smmanapiees —-" Vv TABLE OF AUTHORITIES Page (PRO FORMA) CASES AIDS Counseling and Testing Centers v. Group W Television, Inc., 903 F.2d 1000 (10th Cir. 1990)....-- 18 Allied Equipment Corp. v. Litton Saudi Arabia Corp., 7 Cal. 4th 503 (1994) .......2ccceeercceserscecrers 13 Angel v. Bullington, 330 U.S. 183 (1947).....--+---+e: 15 B., Inc. v. Miller Brewing Co., 663 F.2d 545 (5th Cir. NT oc iis wn nn whe 8 te en On Senet at 17 Batoff v. State Farm Insurance Company, 977 F.2d 848 (3d Cit, 1992) ..--. een ees esecesccenecnes LUTE TTS 17 Beisel v. Aid Ass’n for Lutherans, 843 F. Supp. 616 (OD Cal. TING o.oo oe sere Cones st aaren nesses sane 10 Boyer v. Snap-on Tools Corp., 913 F.2d 108 (3rd Cir. ee BY COOL DEES POPE LAER DSL AG haete a a7, 25 Bristol-Meyers Squibb Co. v. Superior Court (1995), rv ok Oh, MPR aS Pie eB ble tice tts 20 Carlin v. Superior Court of Sutter County, 13 Cal. 4th 1104, 920 P.2d 1347 (1996), 56 Cal. Rptr. 2d 162.....; 20 Caterpillar, Inc. v. Lewis, 519 U.S. 61, 117 S.Ct. 467 ee OEE Rr Ee Ee ratte al thin 5, 11, 12 Chesapeake & O. R. Co. 2. Cockrell, 232 U.S. 146 AMERY i ean cans gb hss Fash ena asa oR ESE ENS eet eS 16, 21 Chicago, R. I. & P. R. Co. ¥. Dowell, 229 U.S. 102 ROWED oboe idannt ative sa radeon ss Mensa reer erent © 16 Dodson v. Spiliada Maritime Corp., 951 F.2d 40 (5th pay 8 ee REL TOT REDRESS Lett leita i ad sleet 17 vi TABLE OF AUTHORITIES —- Continued Page Green Point Sav. Bank v. Cortez, 104 F.3d 351 (Table), 1996 WL 549729 (2nd Cir. 1996)........... 12 Green Point Savings Bank v. Hidalgo, 910 F. Supp. 89 LEAD PO re REP ETA A GLC sé Wek bus O44 Rag Ktan es nema eeS 12 Hackethall v. National Casualty Company, 189 Cal. ADD. Se RE AESOP kas AGC be eed Re sd hewebhes ead 13 Hom. v. Service Merchandise Co., Inc., 727 F. Supp. SOOO El She. ROME s 8b aos oa 4s Oa Se LARS A 11 Illinois Cent. R. Co. of State of Illinois v. Sheegog, 215 aN CE. AUPE Feed as Ana D ERK hn ton daeus chee Rowe 16 In re Uniroyal Goodrich Tire Co., 104 F.3d 322 (11th i ORE c.g PRESTR AR caphee, Seals cane yt eran Hra ta emer ae paperep nay 11 Kinabrew v. Emco-Wheaton, Inc., 936 F. Supp. 351 (Neb he RE RE Paar grr a een ate Pee a eure See 10 Lobato v. Pay Less Drug Store, Inc., 261 F.2d 406 CRT GRR As bh a baa cave bene ee eae eN Oh sees be 18 Lucas v County of Los Angeles, 47 C.A. 4th 277 (July BOD 5.6 a estos is baa ad Aye ea ak eta ees 3 21 Molko v. Holy Spirit Association, 46 Cal. 3d 1092 CR WRES TN iS aes RONG EE HTD OAKES Pe BCE Deke Abeer bee 14 Neitzke v. Williams, 490 U.S. 319 (1989) .............. 17 Newman v. Brent, 1998 Dist. Lexis 10476 (D.D.C. PUR Bh, TO iin 60s 5 08/9 BAAN RS a ECON Se aOR we ¥h New York Life Ins. Co. v. Deshotel, 142 F.3d 873 (5th Shs SEMOE eh Coho nS CHL e CEN SHE RELEA CEO EAE VAC EET AES 10 Norgart v. Upjohn Co., 64 Cal. App. 4th 192 (1998), Fe RRs MY OR OT ond Ck cvs uneres aunedasweekeaa 20 Vii TABLE OF AUTHORITIES - Continued O’Brien v. Powerforce, Inc., 939 F. Supp. 774 (D. eis SIE 2 Cah sah epee es ae Pam sense Os Pampillonia v. RJR Nabisco, Inc., 138 F.3d 459 (2d ek NN esac ci ii he ss owey red ene ssn ee tes Perez v. General Packer, Inc., 790 F. Supp. 1464 (C.D. ‘ag Fe , , 5 DCE PIE EE ER Oe ROO tah, ciate Powers v. Chesapeake & O. Ry. Co., 169 U.S. 92 FR onc uacdv es es ee ee swan ys Suess sets a ces Pullman Co. v. Jenkins, 305 U.S. 534 (1939)......+.-; Rashid v. Scenck Construction Co., 843 F. Supp. 1081 (IGE). W.Va. 1993). 0-525 es ce csesne ees enceteeese Rezendes v. Dow Corning Corp., 717 F. Supp. 1435 TED, Cal. 1909)... <5 2+ seen sniteensanenss srs Ritchey v. Upjohn Drug Co., 139 F.3d 1313 (9th Cir. | er eee en Rees, 1, 4, 13, 19, Ritchey v. Upjohn Drug Co., No. 94-15171 (9th Cir. 1995) (unpublished disposition) ....---+-+++--+: Singh v. Daimler-Benz AG, 9 F.3d 303 (3d Cir. 1993) ..-. Smoot v. Chicago, Rock Island & Pac. R.R. Co., 378 F.2d 879 (10th Cir. 1967)....----+-seerererrtees Stevens v. Superior Court, 180 Cal. App. 3d 605 CSUIMA cia has advag= Chem ae es ee ssomenbet es shtas REDE is ink Sin pea eRe ot Chea a te Sern Wyatt v. Union Mortgage Co., 24 Cal. 3d 773 (1979) ..-- Page Vili TABLE OF AUTHORITIES - Continued Page CONSTITUTIONAL PROVISIONS United States Constitution, Article II], Section 2...... 1 STATUTES rE Oe gS Nera SE Ieer Pe ear Peer 1 BAe es We BOUNS o o o b obo v ins Deke aeasawses pS Ble os Be GPa oO PUES Fg 8 oes Fe os CV 0b ss oe dak bik aneeedaEs 2 Se RRs Oe STAD oo oo io tiv iw habx sawn ed wde eek dos 2,9 Be Wr cs IR 5a bw pend Sv kb ene ab aaWhen bonnets 2 SP Shs ee SEE 6 coin ccea cuss csusebeeesenpenes passim vo ASF use ge See Rnpaibeaee capepe eget rasan, emma Le nage AE: 3 ee a SN RED 9.63 6X CULAR ut eee week Ore eae 12 Be Was Se RRs Dak aes Kae ke cis Oeek es eee 18 California Civil Code § 430.10(f).................... 19 RULES Rea: R. Civ. Proc. 12006)... . 6... eee a Av; BOs aes Oe Pants, Be Pre. Des os oss ee Ss AAS 18 MIscELLANEOUS Archibald, Reintroducing “Fraud” to the Doctrine of Fraudulent Joinder, 78 Va. L. Rev. 1377 (1992)...... 14 Catz & Guyer, Federal In Forma Pauperis Litigation: In Search of Judicial Standards, 31 Rutgers L. Rev. GOD RUPE ie feeb io eek ese eh CANS Cea eee aweb ta 18 Eee rrr ix TABLE OF AUTHORITIES - Continued Page ision of Section 1446 in Commentary on 1988 Rev Annotated (West, 1997) ..-- 11 the United States Code H.R. Rep. No. 889, 100th Cong., 2d Sess., at 71-73 (1988) reprinted in 1988 U.S.C.C.A.N 5982, PPS RES REE IEE Tey tae cin ral roe tian 11 . 4 % § ; ‘ 3 : ¥ f OPINIONS BELOW The District Court entered its Order Granting Defen- dants’ Motions to Dismiss and its Order Denying Plain- tiff’s Motion to Remand on September 9, 1996. (App. 25). The opinion of the Ninth Circuit affirming these orders is reported as Ritchey v. Upjohn Drug Co., 139 F.3d 1313 (9th Cir. 1998) (App. 1). JURISDICTION The final judgment of the Court of Appeals for the Ninth Circuit was entered on April 3, 1998. On May 27, 1998, that court denied Petitioner’s timely petition for rehearing with suggestion for rehearing en banc. (App. 36). The jurisdiction of this Court is invoked under 28 U.S.C. § 1254(1). This timely petition was filed within 90 days of the denial of rehearing with suggestion for rehearing en banc. ® CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED 1. United States Constitution, Article III, Section 2 pro- vides in relevant part: The judicial power shall extend to. . . . Controversies between Citizens of Different States 2. 28 U.S.C. § 1332 (a) The district courts shall have original jurisdic- tion of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States. 3. 28 U.S.C. § 1441 (a) Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have origi- nal jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending. For purposes of removal under this chapter, the citizenship of defendants sued under ficti- tious names shall be disregarded. 4. 28 U.S.C. § 1446 (a) A defendant or defendants desiring to remove any civil action or criminal prosecution from a State court shall file in the district court of the United States for the district and division within which such action is pending a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or defendants in such action. (b) The notice of removal of a civil action or pro- ceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defen- dant if such initial pleading has then been filed in court 3 a nama. ene sity Cie LEG oe BPN BBN A AEE ab Se ee DAE SORT gt Ba te see ays Rrvoet srbdlsaecie& ead Ret ated tik dey te wid BEN Sige it a and is not required to be served on the defendant, which- ever period is shorter. If the case stated by the initial pleading is not remov- able, a notice of removal may be filed within thirty days after receipt by the defendant, through service or other- wise, 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, except that a case may not be removed on the basis of jurisdic- tion conferred by section 1332 of this title more than 1 year after commencement of the action. 5. 28 U.S.C. § 1447 A motion to remand the case on the basis of any defect other than subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal. A certified copy of the order of remand shall be mailed by the clerk to the clerk of the State court. The State court may thereupon proceed with such case. STATEMENT Procedural History On January 3, 1994 petitioner Joe B. Ritchey brought this pro se action against the Upjohn Company, Dr. Wil- liam Dement, Sleep Disorders Center and other Doe defendants in the California Superior Court for Santa Cruz County. Process was served on Upjohn by their agents, co-conspirators and co-defendants on Wednesday, December 27, 1995. On Monday, January 29, 1996, more than two years after the action was filed in state court and more than 33 days after receipt by agents of Upjohn of the copy of the initial pleading setting forth the claim for relief under 28 U.S.C. § 1446(b)(1), Upjohn, a non- California corporation, removed the case to the United States District Court for the Northern District of Califor- nia although the other co-defendants were California res- idents.! Upjohn claimed there was complete diversity of 1 The statute provides that “notice of removal shall be filed within thirty days.” (Emphasis added). Curiously, the court of appeals held that petitioner “waived that issue when he failed to raise it within 30 days after removal” in the district court, and “did not raise the issue before us until his reply brief.” 139 F.3d 1313, 1315 fn.3 (9th Cir. 1998). Upjohn’s inexplicable failure to file a timely notice of removal within 30 days is jurisdictional, cannot be waived by the parties, and can be raised by a party at any time including a reply brief on appeal and in this petition for writ of certiorari. Petitioner now asserts before this Court that the order of the district court granting removal and awarding summary judgment to the respondents is void for want of subject matter jurisdiction. Accordingly, this Court should grant certiorari and vacate the district court’s final judgment on the merits with directions that Upjohn’s untimely notice of removal be dismissed for want of subject matter dacs sen er eee ne ee citizenship, asserting that Dement, Sleep Disorders Cen- ter and the other state Doe defendants were sham defen- dants because they could rely upon the state law defenses of the statute of limitations and res judicata. Pro se plaintiff moved to remand, pointing out that the California defendants destroyed complete diversity, and that Upjohn’s notice of removal came more than two years after the action was filed in state court for acts of fraud and conspiracy that were not discovered by peti- tioner until six months before this state court action was filed on January 3, 1994. The district court denied the motion to remand, and granted the Fed. R. 12(b)(6) motions as to all the defendants on grounds of the state statute of limitations and res judicata. On May 3, 1996 at a hearing on defendants’ motion to dismiss and plaintiff’s motion to remand the following insiructive remarks were made in open court by the district judge. The Court: Basically, I think this case presents one issue that’s difficult, and that is what the last clause in 1446(b) means, and obviously there are cases going both ways with the majority of the cases in favor of Mr. Ritchey’s position. However, I jurisdiction, with the case remanded back to the Superior Court in and for the County of Santa Cruz, California. Caterpillar, Inc. v. Lewis, 519 U.S. 61, 117 S.Ct. 467, 472 (1996). (Failure by state court plaintiff to file motion to remand within 30 days is mandatory, but defects that go to subject matter jurisdiction can be raised at any time). Upjohn’s notice of removal which shall be filed in thirty days is untimely and any subsequent action taken by the district court other than an order of remand is void for want of subject matter jurisdiction. must say that I find the reasoning of the Zogbi case, and I recognize that there’s even a case in that district later than Zogbi that goes the other way, more persuasive because it seems to me that reading it the way that a number of cases have done, including a couple from this district, really is just nonsensical. Frankly, and I might as well be totally up front with you Mr. Ritchey, I just, while this case goes forward in state court, I just don’t think there's a chance that it’s going to go forward here. The statute of limitations was deter- mined against you and went up on appeal and you lost. (Emphasis added). (App. 65) The Ninth Circuit affirmed, ruling that the one-year time period within which removal must be effected under § 1446(b) did not apply, and mistakenly concluded with no support in the district court record that the California defendants were fraudulently joined because the limita- tions period had run before Petitioner filed his complaint. Thus, according to the Ninth Circuit, diversity was com- plete simply by claiming without more that the California defendants, like Upjohn, could assert that under Califor- nia law no cause of action was stated against them. Neither the District Court nor the Ninth Circuit would consider Petitioner’s opposing declarations, detailed offered evidence in opposition and amendments that would have cured any pleading defects. Statement of Facts In 1983 and thereafter, Petitioner was taking a now banned dosage of Halcion, a drug manufactured by Upjohn, which caused him to suffer a number of side effects. The side effects caused numerous serious dam- ages, including Petitioner’s conviction on criminal offenses which in 1991 State Bar Proceedings, the Califor- nia Supreme Court unanimously agreed had been solely caused by Upjohn’s product. In the First Cause of Action in his Complaint in this matter, Petitioner alleged that Upjohn, Dement, various of its employees, agents and directors and “independent researchers and clinicians” . . . joined . . . to defraud and deceive the Food and Drug Admin- istration and the consuming public, by submit- ting incomplete, misleading, and false data in violation of the Federal Food, Drug and Cos- metic Act.” App. 37. In his Second Cause of Action, Petitioner further alleged: Defendants, the Upjohn Company, William Dement and Does 1 through 10, composing employees, agents, consultants, investigators, and attorneys, commenced a conspiracy and concert of action wherein each said party acted as a conspirator and/or co-conspirator within the course and scope of said conspiracy. App. 48. The Second Cause of Action also alleged the object of the conspiracy was to “misrepresent the true nature, dan- gers, hazards, and risks associated with the drug Hal- cion. ... ” and that defendants acted “in concert” in furtherance of the conspiracy “to hinder the submission of full, complete and unbiased information to the FDA, to misreport protocol results, to select biased and favorable investigators, to suppress the dissemination of informa- tion reasonably disclosing the risks, hazards, and conse- quences of the usage of Halcion. .. . ” App. 48. The Complaint also alleges as to both Causes of Action that Defendants “have striven to conceal their civil and criminal liability and illegal acts under various federal statutes and promulgated regulations and Plain- tiff has just discovered a portion of them within the last 18 months ... ” (App. 39). In March of 1990, Petitioner had previously sued Upjohn alone, alleging in California State Judicial Council form complaint that Upjohn’s product Halcion was defec- tive, and that he had taken it with resulting injuries (Ritchey I). In October of 1993, the United States District Court granted summary judgment against Petitioner in that case, on the sole ground that California’s one-year statute of limitations for personal injury actions had run before he sued. The dismissal was affirmed by the Ninth Circuit on June 6, 1995. See Ritchey v. Upjohn Drug Co., No. 94-15171 (9th Cir. 1995) (unpublished disposition). (App. 53). In Ritchey I, the Ninth Circuit held that Petitioner’s suit for personal injuries was barred by California’s one- year statute of limitations, because he had ” ‘notice or information of circumstances to put a reasonable person on inquiry’ over one year before filing” that action; i.e., as early as August of 1988 and no later than March of 1989. (App. 55). However, neither Dement, Sleep Disorder Cen- ter nor other subsequently discovered defendants named in this case filed on January 3, 1994 in the California superior court were known to the plaintiff nor named in * I 3 = ¢ “ 2 2 2 L & > % 7 Ritchey I, nor had there been any ruling on Petitioner’s newly pled facts which would under state law toll the statute of limitations, that those newly discovered defen- dants had engaged in a conspiracy with Upjohn to con- ceal the truth about Halcion in order to defraud Petitioner, the public and the FDA. See Omnibus Declara- tion and offered facts of Joe Ritchey in Support of Petition for Remand. (App. 68 & 74). Jurisdiction in District Court If the district court had jurisdiction, it was pursuant to 28 U.S.C. § 1332(a) on the theory that this was a diversity action, which was removed pursuant to 28 U.S.C. § 1441(a). However, it was and is Petitioner’s position that because the other served defendants were newly discovered and identified California domiciliaries, complete diversity is defeated and the federal court lacks subject matter jurisdiction. This petition for writ of certiorari squarely presents core and fundamental questions regarding subject matter jurisdiction and the scope of diversity removal. + REASONS FOR GRANTING CERTIORARI 1. The Court Should Grant Review In This Case To Resolve The Uncertainty Regarding The Interpreta- tion Of The One-Year Limitation On Diversity Removal Under The 1988 Amendments to 28 U.S.C. § 1446(b) Petitioner’s motion to remand was based in part on 28 U.S.C. § 1446(b), which provides: 10 If the case stated by the initial pleading is | not removable, a notice of removal may be filed within thirty days after receipt by the defen- dant, 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, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action. It was, and is, Petitioner’s view that the Section 1332 diversity removal of this action was absolutely precluded by § 1446(b), because the action had been pending in state court for more than one year at the time the removal notice was filed. However, the Ninth Circuit ruled that the one-year time limit applies only “to the antecedent clause to which it is attached, and not to other para- graphs or sentences in the statute.” (App. 7). And because the action was removable, if at all, at the time it was originally filed, the circuit court held that the one-year time limit did not apply. Id. This approach is similar to that adopted by the Fifth Circuit in New York Life Ins. Co. v. Deshotel, 142 F.3d 873 (5th Cir. 1998). However, as the Ninth Circuit acknowl- edged, a number of district courts have disagreed with this view, holding that the last clause of § 1446(b) must be construed strictly to mean exactly what it says. See Kina- brew v. Emco-Wheaton, Inc., 936 F. Supp. 351, 353 (M.D. La. 1996); O’Brien v. Powerforce, Inc., 939 F. Supp. 774, 778 & nn.1 & 2 (D. Haw. 1996); Beisel v. Aid Ass'n for Lutherans, 843 F. Supp. 616, 618-19 (C.D. Cal. 1994); Rashid v. Scenck Construction Co., 843 F. Supp. 1081, 1086-87 n.6 (S.D. W. ial ial 11 Va. 1993); Perez v. General Packer, Inc., 790 F. Supp. 1464, 1468 (C.D. Cal. 1992); Hom. v. Service Merchandise Co., Inc., 727 F. Supp. 1343, 1345 (N.D. Cal. 1990); Rezendes v. Dow Corning Corp., 717 F. Supp. 1435, 1437-38 (E.D. Cal. 1989); the latest case to so hold offers an extensive review of the history and purpose of 1446(b) amendments in Newman v. Brent, 1998 Dist. Lexis 10476 (D.D.C. July 8, 1998). And of course this Court noted last term that “no case, however, may be removed from state to federal court based on diversity of citizenship ‘more than 1 year after com- mencement of the action.’ ” Caterpillar, Inc. v. Lewis, 117 S.Ct. 467, 473 (1996). Petitioner construes the Court’s meaning of that statement in Caterpillar that no case means no case. The Ninth Circuit viewed a portion of the 1988 amendment to § 1446(b) as supporting its conclusion, noting that the House Report on the proposed amend- ment expressed the thought that what Congress was attempting to do by enacting the 1 year limitation to diversity removal was preclude removal “late in the pro- ceedings” at a time when it is likely that “substantial progress has been made in state court.” H.R. Rep. No. 889, 100th Cong., 2d Sess., at 71-73 (1988) reprinted in 1988 U.S.C.C.A.N. 5982, 6031-34. As the circuit court acknowledged, this is hardly a ringing endorsement of its views. App. 8. Numerous other cases have assumed without decid- ing that the one-year limitation on removal is absolute. See Caterpiller, Inc. v. Lewis, 519 U.S. 61, 117 S.Ct. 467, 473 (1996); Singh v. Daimler-Benz AG, 9 F.3d 303, 309 (3d Cir. 1993); In re Uniroyal Goodrich Tire Co., 104 F.3d 322, 323 (11th Cir. 1997). The Commentary on 1988 Revision of 12 Section 1446 in the United States Code Annotated (West, 1997) makes the same assumption and specifically states it was intended to apply to all diversity removal based upon claims of fraudulent joinder. See Anno. at pp. 316-318. Moreover, at least one district court has held that the one-year limitation of § 1446(b) is jurisdictional. See Green Point Savings Bank v. Hidalgo, 910 F. Supp. 89 (E.D.N.Y. 1995) (granting motion to remand). Certiorari should be granted to resolve the uncer- tainty surrounding the proper construction of § 1446(b), and to determine whether its one-year diversity removal limitation is jurisdictional. Both circuits to reach the issue have ruled in favor of expansive federal jurisdiction, which is inconsistent with the limited nature of federal diversity jurisdiction and Article III, Section 2 of the Constitution. Caterpillar, 117 S.Ct. at 472-73.2 It is partic- ularly important to have a definitive statement from this Court on this issue, because the inconsistent results in the resolution of removal petitions leads to uncertainty and unfairness. This particularly important as those cases in which motions to remand have been granted, § 1447(d) precludes direct appeal of the remand order. See, e.g., Green Point Sav. Bank v. Cortez, 104 F.3d 351 (Table), 1996 WL 549729 (2nd Cir. 1996). As a result, circuit court cases do not adequately reflect the true range of factual 2 The Judicial Conference of the United States, in it’s 1995 “Long Range Plan for the Federal Courts”, called for diversity jurisdiction to be severely restricted, noting that diversity jurisdiction then accounted for “about one of every two civil trials” and “a massive diversion of federal judge power away from their principal function” (p. 31) 13 situations and judicial analysis of this issue, and district judges are left without a definitive statement on the con- struction of § 1446(b). 2. Review By This Court Is Necessary To Decide An Important Question Of Federal Jurisdiction Given The Circuits And District Courts’ Lack Of A Clear And Unambiguous Position Regarding The Nature And Extent Of the Power Of The Federal Courts Under Article III, Section 2 Of The Constitution And The 1988 Amendments to 28 U.S.C. § 1446(b) To Examine The Merits Of Claims Arising Solely Under State Law Brought In State Court Against Non-Diverse State Court Defendants. The circuit court in this case determined that the non- diverse defendants were fraudulently joined because as to them, “the statute of limitations had long since run, regardless of whether Ritchey’s new cause of action is characterized as a personal injury cause of action or a fraud cause of action.” 139 F.3d at 1320. This curious result was done without regard to California substantive law on state conspiracies that toll the statute of limita- tions which is binding on a federal court sitting in diver- sity. See, Allied Equipment Corp. v. Litton Saudi Arabia Corp., 7 Cal. 4th 503, 510 (1994) (discusses elements of civil conspiracy); Hackethall v. National Casualty Company, 189 Cal. App. 3d 1102, 1111 (1987) (elements of deceit and fraud); Wyatt v. Union Mortgage Co., 24 Cal. 3d 773 (1979) and Stevens v. Superior Court, 180 Cal. App. 3d 605 (1986) (elements of fraudulent and intentional concealment with facts strikingly similar to the facts alleged in petitioner’s 14 complaint. Molko v. Holy Spirit Association, 46 Cal. 3d 1092 (1988) (independent claim of conspiracy serves as com- plete bar to statute of limitations defense). See compre- hensive countervailing Declarations of Joe Ritchey in Support of Petition for Remand. (App. 68 & 74.) In order to reach this result, the circuit court did two things which are inconsistent with the jurisprudence of this Court, and upon which there is disagreement among the circuit courts in determining an issue of fraudulent joinder. See, Archibald, Reintroducing “Fraud” to the Doc- trine of Fraudulent Joinder, 78 Va. L. Rev. 1377, 1392-1396 (1992). First, instead of considering whether the Plaintiff had, in good faith, sought to impose joint liability upon all the defendants in his complaint, the circuit court instead looked outside the pleadings in favor of the defendants only, and purported to determine that no cause of action was well pled in the state court complaint against either the non-diverse defendants or the diverse defendant. Second, instead of placing a heavy burden of persuasion on the removing defendant to establish fraud- ulent joinder, the circuit court instead applied a stringent analysis of the complaint and the surrounding facts, nar- rowly construing the causes of action arising under Cali- fornia law, which were asserted or which could have been more specifically asserted against the non-diverse defen- dants by Petitioner’s offered amendment of the complaint and as factually specifically detailed in Petitioners responsive pleadings to the claims of fraudulent joinder. 15 By refusing to consider Petitioner’s offered Amend- ments to the complaint that would have been allowed as a matter of right in State Court under California’s liberal amendment and pleading rules, the Federal Court granted Upjohn and the California defendants procedural privileges they would not have received in state court. At the hearing on Petitioner’s motion to remand, the district court judge recognized this anomaly, admitting that had the case been returned to state court it would have gone forward. (See remarks of the district judge at the May 3, 1996 remand hearing at supra pages 5-6) Thus, the approach taken by the circuit court in this case improp- erly rewards forum shopping defendants who remove in order to present their defenses in a more favorable fed- eral forum. See Angel v. Bullington, 330 U.S. 183, 192 (1947).$ As early as Powers v. Chesapeake & O. Ry. Co., 169 U.S. 92 (1898), this Court acknowledged that fraudulently joining a domiciliary of the forum state as a party defen- dant would not defeat diversity jurisdiction. And in Wilson v. Republic Iron & Steel Co., 257 U.S. 92 (1921), this Court affirmed the assertion of jurisdiction upon removal of a case from Alabama state court, holding that diversity existed because the “joinder [of an Alabama citizen] was a sham and fraudulent - that is, without any reasonable basis in fact and without any purpose to prosecute the 3 “A federal court in North Carolina, when invoked on grounds of diversity of citizenship, cannot give that which North Carolina has withheld. Availability of diversity jurisdiction which was put into the constitution so as to prevent discrimination against outsiders is not to affect discrimination against the great body of local citizens.” (330 U.S. at 192) 16 cause in good faith against [the Alabama citizen].” Id. at 98. In subsequent cases, this Court has affirmed that the purpose for the doctrine of fraudulent joinder was to prevent plaintiffs from defeating federal diversity juris- diction by joining resident defendants whom the plaintiff did not intend to pursue, and against whom joint liability could not be established. See Pullman Co. v. Jenkins, 305 U.S. 534, 541 (1939) (diverse defendant may show that the non-diverse defendant has not been joined in good faith, and thus should nct be considered in determining the right to remove); Chicago, R. I. & P. R. Co. v. Dowell, 229 U.S. 102, 113 (1913) (where plaintiff had a cause of action which was joint, and had elected to sue both tort feasors in one action, his motive in doing so is of no importance); Illinois Cent. R. Co. of State of Illinois v. Sheegog, 215 U.S. 308, 316 (1909) (joinder cannot be fraudulent where the legal effect of the complaint was to allege joint liability as against both diverse and non-diverse defendants); Chesa- peake & O. R. Co. v. Cockrell, 232 U.S. 146 (1914) (fraudu- lent joinder was not established by a petition which attacked the merits of the complaint). In Cockrell, the Court held that diversity could not be established by a petition which “manifestly went to the merits of the action as an entirety, and not to the joinder; that is to say, it indicated that the plaintiff's case was ill founded as to all the defendants.” Id. at 153. Despite the guidance of this long-settled body of law, some circuit courts, such as the Ninth Circuit in the instant case, have engrafted a summary judgment-like procedure upon the determination of motions to remand where the diverse defendant claims fraudulent joinder. 17 See Dodson v. Spiliada Maritime Corp., 951 F.2d 40, 42 (Sth Cir. 1992); B., Inc. v. Miller Brewing Co., 663 F.2d 545, 549 (5th Cir. 1981). This approach frequently leads federal circuit courts beyond the existence vel non of fraudulent joinder into the underlying merits of the case, as occurred here. Moreover, the other circuit courts which have addressed this issue have applied differing principles and have come to inconsistent results. The Third Circuit rejects the view of fraudulent join- der found in Fifth and Ninth Circuit cases, instead hold- ing that “summary judgment type inquiry made by the district court” is wrong in a fraudulent joinder analysis. Boyer v. Snap-on Tools Corp., 913 F.2d 108, 112 (3rd Cir. 1990), cert. denied, 498 U.S. 1085 (1991). In contrast to the approach taken by the Fifth and Ninth Circuits, the Third Circuit held that even if some piercing of the pleadings is appropriate to decide whether “plaintiffs have asserted a ‘colorable’ ground supporting the claim against the joined defendant, that inquiry is far different from a summary judgment type inquiry.” Id. The Third Circuit further explained its view of the limited extent of a district court’s review of the merits on a remand petition in Batoff v. State Farm Insurance Com- pany, 977 F.2d 848 (3d Cir. 1992). There, the court held that “the inquiry into the validity of a complaint trig- gered by a motion to dismiss under Rule 12(b)(6) is more searching than that permissible when a party makes a claim of fraudulent joinder.” Therefore, said the court, a party cannot be fraudulently joined, even if “the claim against that party ultimately is dismissed for failure to state a claim upon which relief may be granted.” Id. at 853. The Third Circuit’s holding is consistent with Neitzke 18 v. Williams, 490 U.S. 319 (1989), in which this Court held that a complaint which fails to state a claim sufficient to withstand a Rule 12(b)(6) motion is not automatically frivolous within 28 U.S.C. § 1915(d), so as to be subject to dismissal when brought in forma pauperis. See, Catz & Guyer, Federal In Forma Pauperis Litigation: In Search of Judicial Standards, 31 Rutgers L. Rev. 655, 665 (1978). Numerous cases have recognized that some limited piercing of the allegations to discover fraudulent joinder may be appropriate in some circumstances, but there is a lack of consistency in the approach and outcome. For example, in Smoot v. Chicago, Rock Island & Pac. R.R. Co., 378 F.2d 879 (10th Cir. 1967), diversity jurisdiction was upheld where the non-diverse employee of defendant railroad had uncontestedly discontinued his employment with the railroad 15 months before the accident in ques- tion. See also Lobato v. Pay Less Drug Store, Inc., 261 F.2d 406 (10th Cir. 1958) (absence of allegations that individual non-diverse defendants participated in tortious acts alleged). These cases do not adopt the approach used by the Ninth Circuit and the Fifth Circuit, both of which go well beyond the threshold inquiry of jurisdiction, and delve into the merits of the allegations of the complaint in Fed. R. Civ. Proc. 56(c) fashion. Instead, the Tenth Circuit approach appears to agree with that of the Third Circuit. In AIDS Counseling & Testing Centers v. Group W Television, Inc., 903 F.2d 1000 (10th Cir. 1990), for example, the court pointed out that the purpose behind the fraudulent joinder analysis is to determine if “there [is] no real intention to get a joint judgment, and . . . there [is] no colorable ground for so claiming.” Id. at 1003. 19 For its part, the Second Circuit has stated, In order to show that naming a non-diverse defendant is a “fraudulent joinder” effected to defeat diversity, the defendant must demin- strate, by clear and convincing evidence, eit!-er that there has been outright fraud committed in the plaintiff's pleadings, or that there is no pos- sibility, based on the pleadings, that a plaintiff can state a cause of action against the non- diverse defendant in state court. The defendant seeking removal bears a heavy burden of pro- ving fraudulent joinder, and all factual and legal issues must be resolved in favor of the plaintiff. Pampillonia v. RJR Nabisco, 138 F.3d 459, 460-61 (2d Cir. 1998). However, it appears that the Second Circuit did examine the underlying merits of the Complaint in decid- ing that the non-diverse defendant had been joined fraudulently in that case. See id. at 461-62. In the instant case, the approach taken by the Ninth Circuit led into a morass of state court procedure and substantive law, illustrating yet another reason why this expansion of federal court jurisdiction should be exam- ined by this Court. In order to reach its determination that the non-diverse defendants were fraudulently joined, the circuit court in this case first held that California’s procedural rules, specifically its “general demurrer” rules, California Civil Code § 430.10(f), would permit the California defendants to raise a statute of limitations defense to Plaintiff's admittedly sufficient causes of action when originally filed in state court. 139 F.3d at 20 1318. The Ninth Circuit inexplicably refused to even dis- cuss that in state court Petitioner would have been allowed to file opposing papers, declarations and to even have filed a first amended complaint as a matter of right in state court. Next, still applying California procedure and sub- stantive law, the circuit court purported to find that the personal injury statute of limitations summary judgment ruling in favor of Upjohn in Ritchey I would absolutely preclude Petitioner from asserting in state court the fraud and conspiracy causes of action he alleged against Upjohn, Dement and the other California state residents in the 1994 state court action, and simply assumed with- out discussion the Plaintiff would not be able to plead a state law exception to the application of the statute of limitations or a state law exception to the bar of res judicata, a bar solely based on the earlier summary judg- ment founded on the statute of limitations. Id.4 In so ruling, the circuit court ignored the effect of settled California law, which holds that a summary * In California State courts Upjohn has lost every published case on Halcion. The California Supreme Court ruled against them in a case dealing with pleading of actions. Carlin v. Superior Court of Sutter County, 13 Cal. 4th 1104; 920 P.2d 1347, 1996; 56 Cal. Rptr. 2d 162 and the Court of Appeals most recently (June of 1998) ruled against them in a case dealing with the statute of limitations and summary judgment. Norgart v. Upjohn Co., 64 Cal. App. 4th 192 (1998), 74 Cal. Rptr. 2d 807. Further, the case relied upon by all defendants in District Court in the Ritchey I] case for the proposition that the Statute of Limitations had run, and, indeed, the one cited and relied upon below by the District Court (Bristol-Meyers Squibb Co. v. Superior Court (1995), 32 C.A. 4th 959), was extensively criticized as bad law by the Norgart Court, and the court refused to follow it. 21 judgment based on the statute of limitations regarding a cause of action in one suit is not res judicata in a second suit, even when the cause of action pleads the same core of underlying facts but alleges newly discovered evidence indicating that the bar of the statute of limitations does not apply. CCP 597 and Lucas v. County of Los Angeles, 47 C.A. 4th 277 (July 1996). Significantly, neither the district court nor the circuit court suggested that the California defendants were improperly joined in violation of Cali- fornia procedural rules, and Petitioner’s allegations of joint liability against all the defendants, diverse and non- diverse alike, were unquestionably made in good faith under California substantive and procedural rules of law. In taking this approach, the Ninth Circuit strayed far from its obligation to make a determination whether the Petitioner had actually joined the California citizens as defendants fraudulently and without an intent to proceed against them in state court. Instead, as a perusal of the district court’s Orders in this matter illustrates, the court applied the same Fed. R. Civ. Proc. 12(b)(6) analysis to all of the defendants, diverse and non-diverse, and deter- mined that Petitioner had failed to state a claim against any of them. App. 18. But as the Third Circuit pointed out when it rejected this approach, the Ninth Circuit thus “stepped from the threshold jurisdictional issue into a decision on the merits.” Boyer, 913 F.2d at 112. This a federal court sitting in diversity may not do under Article Ill, Section 2. See Chesapeake & Ohio Ry. v. Cockrell, 232 U.S. 146, 34 S.Ct. 278, 58 L.Ed. 544 (1914). The effect of the circuit court’s holding in this case is to usurp the power and the right of California’s courts to determine whether one California citizen’s claim against 22 other California citizens is truly barred by California’s statute of limitations and California’s rules of res judi- cata, all in the name of protecting a non-Californian’s statutory purported right of access to federal court. While the Fifth Circuit evidently agrees with the Ninth Circuit's approach in such matters, this Court’s prior rulings as well as holdings in the Second, Third and Tenth Circuits would produce a contrary result. Certiorari should be granted to resolve this conflict in views taken by the circuits on fraudulent joinder as a basis for asserting diversity jurisdiction, for presently the Fifth and Ninth Circuits have adopted rules which improperly expand federal subject matter jurisdiction beyond its statutory limits and Article III of the Constitu- tion, diminish States’ rights and deprive plaintiffs of their right to pursue their state law claims in a state court of general jurisdiction, a court better suited to apply state procedural and substantive law. In sum if Petitioner truly had no valid state cause of action against the non-diverse defendants, all defendants could have filed motions in state court and the matter there just as quickly, or even more so, disposed of than in Federal Court. Also, of course, the non-diverse defen- dants could have sought summary judgment, claiming res judicata and/or the bar of the statute of limitations, in state court and then Upjohn could have then removed based upon diversity, and, if granted, then sought in federal court the below requested summary judgment, or in the alternative, 12(b)(6) relief. Petitioner contends the federal court should not have and did not need to decide the numerous state law issues 23 and claims. If all the Defendants named in Ritchey II had filed motions in state court seeking orders terminating the action, no federal court expenditure of resources would have been necessary and the issue would not have been wrongly decided. The federal court would not have interfered in state law matters, Article III of the United States Constitution would have been better respected, and with limited federal judicial resources better pre- served. It is also Petitioner’s contention that by specifically stating in the second paragraph of 28 U.S.C. § 1446(b) “ _.. except that a case may not be removed on the basis of jurisdiction conferred by Section 1332 of this title more than one year after commencement of the action”, Con- gress intended no “Section 1332” removal occur “more than one year after commencement of the action.” This of course would apply to all diversity removal, probably the most unnecessary and perhaps the largest expenditure of limited federal judicial time and resources. Congress and the Judicial Conference of the United States would not have been unhappy with such a savings to the federal judicial system, and others would be pleased with the resulting respect for the rights of the states to administer their own laws, especially when their own citizens are involved. 24 CONCLUSION The petition for writ of certiorari should be granted so these important statutory and constitutional questions on the proper role of federal courts in deciding state factual issues and state law questions of procedural and substantive law as applied to state domiciled defendants. Respectfully submitted, Micnuaet D. MosHER Rosert S. Catz Counsel of Record 50 North Main Street Paris, Texas 75460-4721 (903) 785-4721 Counsel for Petitioner August 25, 1998 APPENDIX INDEX Page Opinion in Ritchey v. Upjohn Drug Co., et al., No. PONE POU CAE, ONIN ce oes penn as eaas es App. Order Granting Defendants’ Motions to Dismiss, No. C-96-20067 RMW (N.D. Cal. Sep. 9, PE ian FOUN -hdth oO MOA NESE CORO RE RO EOS App. Order Denying Plaintiff's Motion to Remand, No. C-96-20067 RMW (N.D. Cal. Sep. 9, 1996)....App. Order Denying The Petition for Rehearing and the Suggestion for Rehearing En Banc, No. 96-17014 (Sth Cir. May 27, 1998)... ..0ccccwceeenseeeee App. Complaint for Damages, No. 12837, Superior Court, State of California, County of Santa Crete, Fath. FD, FFOR oases cece svessccccasusees App. Memorandum Opinion, Ritchey v. Upjohn Drug Co., et al., No. 94-15171 (9th Cir. 1995) ...... App. Complaint, No. 113198, State of California, County of Santa Cruz, Mar. 12, 1990......... App. Notice of Intent to File Petition for Remand, Notice that Consent to Remand was Requested and Refused, and Notice of Request for Sanc- CUE scr kavacnscaensevsctearverheoneenagens App. Declaration of Joe Ritchey in Support of Petition ge re Sor ee ee ee er ee ee ee eee App. 18 25 36 37 53 56 68 74 App. 1 APPENDIX FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 96-17014 Joe B. Ritcuey, . . Plaintiff-Appellant, D.C. No v. CV-96-20067-RMW UpjoHN Druc Company; WiiuiAM Dement, OPINION Defendants-Appellees. Ne ee eee ee ee ee Appeal from the United States District Court for the Northern District of California Ronald M. Whyte, District Judge, Presiding Argued and Submitted February 13, 1998 - San Francisco, California Filed April 3, 1998 Before: Procter Hug, Jr., Chief Judge, and Ferdinand F. Fernandez and Sidney R. Thomas, Circuit Judges. Opinion by Judge Fernandez COUNSEL Joe B. Ritchey, Santa Cruz, California, for the plaintiff- appellant. Michael F. Healy, Sedgwick, Detert, Moran & Arnold, San Francisco, California, for the defendant-appellee; Charles App. 2 Preuss, Preuss Walker, and Shanagher, San Francisco, Cal- ifornia, for the defendants-appellees. OPINION FERNANDEZ, Circuit Judge: Joe B. Ritchey brought this action against the Upjohn Company, Dr. William Dement, and Stanford Health Ser- vices! in the California Superior Court for Santa Cruz County. Upjohn removed the case to the United States District Court pursuant to 28 U.S.C. § 1441(a). That was based upon Upjohn’s assertions that there was complete diversity of citizenship between it and Ritchey, and that the other purported defendants were shams because they could rely upon the defenses of the statute of limitations and res judicata. Ritchey moved to remand on the basis that there was a lack of complete diversity. The district court denied the remand and ultimately awarded sum- mary judgment to all of the defendants. Ritchey appeals. We affirm. BACKGROUND The gravamen of Ritchey’s action is that in 1983 and thereafter he was taking Halcion, a drug manufactured by Upjohn, which caused him to suffer a number of side effects. Those ultimately led to his conviction of criminal offenses, and other serious damages. He claims that 1 Whether service was ever properly made upon Stanford Health Services is disputed by the parties. At any rate, a voluntary appearance was made and we will hereafter refer to the appealing party as Stanford. App. 3 Upjohn was responsible because it suppressed informa- tion about the side effects, and that Dr. Dement and Stanford conspired with Upjohn to conceal the negative information they all had about Halcion. This action was filed in state court in 1994, but it was not the first time Ritchey had sued Upjohn over Halcion. In fact, he had brought an action in March of 1990 based on the same ingestions of the drug and the same resulting injuries. In October of 1993, the United States District Court had granted summary judgment against him on the grounds that at its core the action was one for personal injuries and California’s one-year statute of limitations - for personal injury actions had run before he sued. We affirmed that dismissal on June 6, 1995. See Ritchey v. Upjohn Drug Co., No. 94-15171 (9th Cir. 1995) (unpublished disposition).? In Ritchey I we held that he was clearly on notice about Upjohn’s wrongdoing, which hurt him, as early as August of 1988 and no later than March of 1989. However, on January 3, 1994, which was after the district court ruled but before we affirmed, Ritchey had filed this action in state court. It was based upon the same underlying facts as Ritchey I, but he also alleged that Stanford, Dr. Dement, and Upjohn had engaged in a conspiracy. He gave no notice of this action to the defen- dants until sometime in December of 1995.9 On January 2 We will refer to this first course of action as Ritchey I. 3 Ritchey now suggests that the case was not removed within the required 30 day period. See 28 U.S.C. § 1446(b). He waived that issue when he failed to raise it within 30 days after removal. See 28 U.S.C. § 1447(c); Northern California Dist. Council App. 4 29, 1996, Upjohn removed this action to the United States District Court, even though it is clear that Dr. Dement and Stanford are not diverse. They and Ritchey are citi- zens of the State of California. Upjohn, however, asserted that Dr. Dement and Stanford were sham defendants, who were fraudulently joined for the purpose of defeat- ing diversity. It claimed that because, it said, the defenses of res judicata and the statute of limitations, which arose out of Ritchey I, barred any action against them. The district court agreed and denied Ritchey’s motion to remand. Ultimately, it also dismissed this action as against Upjohn, Dr. Dement and Stanford on the ground that it was barred by the determinations in Ritchey I. This appeal followed. STANDARDS OF REVIEW We review the district court’s interpretation of a stat- ute de novo. See Allen v. Shalala, 48 F.3d 456, 457 (9th Cir. 1995). We also review issues of subject matter jurisdiction and denials of motions to remand removed cases de novo. See Attorneys Trust v. Videotape Computer Prods., Inc., 93 F.3d 593, 594 (9th Cir. 1996) (jurisdiction); Duncan v. Stuetzle, 76 F.3d 1480, 1484 n.4 (9th Cir. 1996) (remand denial). Finally, we review dismissals on the ground of res judicata de novo. See United Parcel Serv., Inc. v. Califor- nia Pub. Utils. Comm'n, 77 F.3d 1178, 1182 (9th Cir. 1996). of Laborers v. Pittsburg-Des Moines Steel Co., 69 F.3d 1034, 1038 (9th Cir. 1995). Moreover, he did not raise the issue before us until his reply brief. That he cannot do. See Eberle v. City of Anaheim, 901 F.2d 814, 818 (9th Cir. 1990). App. 5 JURISDICTION We have jurisdiction pursuant to 28 U.S.C. § 1291. If the district court had jurisdiction, it was pursuant to 28 U.S.C. § 1332(a) on the theory that this was a diversity action, which was properly removed pursuant to 28 U.S.C. § 1441(a). That, however, raises the primary issues in this case. We must first ask whether the action was removable on any basis, and then ask whether it could be removed on the basis that Dr. Dement and Stanford were fraudulently joined defendants. That requires us to con- strue 28 U.S.C. § 1446(b) and the law of fraudulent join- der. A. Section 1446(b) Ritchey first argues that the removal of this action was absolutely precluded by the provisions of 28 U.S.C. § 1446(b). We do not agree, but the explanation takes some telling. We start, as we must, with the words of § 1446(b) itself: The notice of removal of a civil action or pro- ceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading set- ting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter. If the case stated by the initial pleading is not removable, a notice of removal may be filed App. 6 within thirty days after receipt by the defen- dant, 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, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action. Id. While at first glance the statute appears rather clear, Ritchey and others contend that a difficulty lurks within it. Plainly enough the statute provides in its first para- graph that a defendant can remove within 30 days of service of the initial pleading upon him. The second paragraph, however, explains that “[i]f the case stated by the initial pleading is not removable,” the defendant can remove at a time later than the 30-day period provided for in the first paragraph. Id. However, the second para- graph goes on to provide a broadly phrased exception when it declares that “a case may not be removed on the basis of jurisdiction conferred by § 1332 of this title [diversity jurisdiction] more than 1 year after commence- ment of the action.” Id. If that exception applies only to the type of removal referred to in the second paragraph, it does not preclude removal in this case unless the case was not removable at its inception. If, as Ritchey argues, the limitation in the second paragraph applies to both that paragraph and the first paragraph, it does, on its face, preclude removal of this case, regardless of the condition of the original pleading. In other words, removal would be precluded because considerably more than 1 year had passed from the date of commencement of this action to the date that Upjohn attempted to App. 7 remove, even though neither it nor any other defendant had been served between January 3, 1994, and December of 1995. As an initial matter, we must construe this statute by looking at its plain language, which includes its sentence structure. We recognize that “[rjemoval jurisdiction is statutory and strictly construed.” Gould v. Mutual Life Ins. Co. of New York, 790 F.2d 769, 773 (9th Cir. 1986). How- ever, we see no reason to twist ordinary language usage and rules of grammar in order to preclude removal. In that regard, the most sound reading of a sentence will refer its limiting clause back to the antecedent clause to which it is attached, and not to other paragraphs or sentences in the statute. See Pacificorp v. Bonneville Power Admin., 856 F.2d 94, 97 (9th Cir. 1988). (“The date limitation . . . refers directly back to the antecedent phrase. .. . ”); Zogbi v. Federated Dep't Store, 767 F. Supp. 1037, 1029 (C.D. Cal. 1991) (“The general rule is that a qualifying phrase or clause only modifies that which immediately precedes it.”) We see no reason to deviate from that mode of read- ing here. The first paragraph of § 1446(b) addresses a defendant's right to promptly remove when he is served. The second paragraph addresses a defendant's right to remove beyond the initial period of 30 days, if the case only becomes removable sometime after the initial com- mencement of the action. Only the latter type of removal is barred by the one-year exception. Because we are satisfied that this reading is plain on the face of the statute, there should be little reason to consider legislative history. See Oregon Natural Resources App. 8 Council, Inc. v. Kantor, 99 F.3d 334, 339 (9th Cir. 1996) (if the language of a statute is clear, we look no further in determining its meaning, unless the apparent plain mean- ing leads to an absurd or impracticable result); United States v. Neville, 985 F.2d 992, 995 (9th Cir. 1993) (if the statute is clear and unambiguous there is no need to turn to legislative history); Coalition for Clean Air v. Southern Cal. Edison Co., 971 F.2d 219, 227 (9th Cir. 1992) (“there is no need to refer to the legislative history of a statute when the language of the statute is clear”). Nevertheless, as we will further discuss below, other courts have dis- agreed with our reading. Thus, we have looked to the legislative history. We find it rather unhelpful, but to the extent that it helps at all it lends support to our reading. The House Report expressed the thought that what Con- gress was attempting to do was preclude removal “late in the proceedings” at a time when “substantial progress has been made in state court.” H.R. Rep. No. 889, 100th Cong., 2d Sess., at 71-73 (1988) reprinted in 1988 U.S.C.C.A.N 5982, 6031-34. That supports the placement of the exception in the second paragraph because ho substantial progress could ordinarily be expected if the case were immediately removable at the time of the initial pleading. Generally speaking, the case would either be removed promptly or not at all in that event. While we are satisfied that the statute must be inter- preted in this way, we acknowledge that the authorities are not uniform on the issue. Two other courts of appeals have touched on the subject, but have not resolved it. See Burns v. Windsor Ins. Co., 31 F.3d 1092, 1097 n.12 (11th Cir. 1994) (suggesting that if there were no true non-diverse party, the second paragraph would not apply); Singh v. App. 9 Daimler-Benz AG, 9 F.3d 303, 309 (3d Cir. 1993) (mention- ing the provision, but not deciding the question before us). The district courts have been more active. In Zogbi, 767 F. Supp. at 1039-40, the district court pointed to the statutory structure we have already dis- cussed and went on to note that if Congress had intended the except clause to apply to both paragraphs of § 1446(b), it could easily have accomplished that result without requiring readers of the statute to rely on exotic grammatical usage. See also, Greer v. Skilcraft, 704 F. Supp. 1570, 1582 (N.D. Ala. 1989); Kite v. Richard Wolf Med. Instruments Corp., 761 F. Supp. 597, 600-01 (S.D. Ind. 1989); cf. Coman v. International Playtex, Inc., 713 F. Supp. 1324, 1326 (N.D. Cal. 1989). Other district courts have determined that the limita- tion applies to both paragraphs because, in effect, removal statutes must be strictly construed and comity between state and federal courts will be preserved by that construction. See O’Brien v. Powerforce, Inc., 939 F. Supp. 774, 778 & nn.1, 2 (D. Haw. 1996); Kinabrew v. Emco- Wheaton, Inc., 936 F. Supp. 351, 353 (M.D. La. 1996); Beisel v. Aid Ass'n for Lutherans, 843 F. Supp. 616, 618-19 (C.D. Cal. 1994); Rashid v. Schenck Constr. Co., 843 F. Supp. 1081, 1086-87 n.6 (S.D. W. Va. 1993); Perez v. General Packer, Inc., 790 F. Supp. 1464, 1468 (C.D. Cal. 1992); Hom v. Service Merchandise Co., Inc., 727 F. Supp. 1343, 1345 (N.D. Cal. 1990); Rezendes v. Dow Corning Corp., 717 F. Supp. 1435, 1437-38 (E.D. Cal. 1989). With all due respect, we do not see how strict construction or other considerations can change the fact that the except clause is dependent on the non-removablilty [sic] of the case stated in the initial pleading. In saying all of this, we are not overlooking the App. 10 Supreme Court’s comment that “[n]o case, however, may be removed from state to federal court based on diversity of citizenship ‘more than 1 year after commencement of the action.’ ” Caterpillar Inc. v. Lewis, __ U.S. __, __, 117 S. Ct. 467, 473, 136 L. Ed. 2d 437 (1996) (citation omitted). However, in that case the Court was speaking of actions not originally removable. Id. at __, 117 S. Ct. at 472-73. Finally, some courts have applied equitable estoppel. doctrines to permit removal once they have decided that the except clause basically applies to defendants first served after one year has passed. In that way, they have attempted to ameliorate the fact that on their construction of § 1446(b), a plaintiff need only file an action in state court and then wait one year before service, if he wishes to deprive the defendant of the ability to remove under any circumstances. See e.g., Kinabrew, 936 F. Supp. at 353; Saunders v. Wire Rope Corp., 777 F. Supp. 1281, 1283-85 (E.D. Va. 1991); cf., Kite 761 F. Supp. at 600-01; Coman, 713 F. Supp. at 1327-28; Greer, 704 F. Supp. at 1582-83. For the purposes of this case we need not decide whether courts should use that kind of sortilege to contract the except clause with an exception-to-the-exception overlay, which was not adopted by Congress. Suffice it to say that for now our reading of the statute simply leaves it, and the clause, where Congress put them. B. Sham Defendants Once we blow away the interpretive miasma and see § 1446(b) clearly, we must still consider whether this action was removable under the first paragraph of § 1446(b), or to put it another way, whether there was App. 11 diversity jurisdiction based upon the initial pleading, or whether there is diversity jurisdiction at this time for that matter. See 28 U.S.C. § 1332(a). The existence of diversity jurisdiction certainly does not appear on the face of Ritchey’s complaint. Moreover, there can be little doubt that non-diverse defendants — Dr. Dement and Stanford - have been joined in the action. Thus, at first blush it must be said that there was no diversity. But, says Upjohn, it is diverse and Dr. Dement and Stanford were fraudulently joined or sham defen- dants. In the posture of this case, we agree with that conclusion. It is a commonplace that fraudulently joined defen- dants will not defeat removal on diversity grounds. See Emrich v. Touche Ross & Co., 846 F.2d 1190, 1193 & n.1 (9th Cir. 1988); McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). But, “[f]raudulent joinder is a term of art. If the plaintiff fails to state a cause of action against a resident defendant, and the failure is obvious according to the settled rules of the state, the joinder of the resident defendant is fraudulent.” McCabe, 811 F.2d at 1339. In deciding whether a cause of action is stated we have declared that we will “look only to a plaintiff's pleadings to determine removability.” Gould, 790 F.2d at 773. And, we have commented that we will determine the “exis- tence of federal jurisdiction . . . solely by an examination of the plaintiff’s case, without recourse to the defendant's pleadings.” Self v. General Motors Corp., 588 F.2d 655, 657 (9th Cir. 1978). At least that is true when there has not been a fraudulent joinder. Id. at 659. Where fraudulent joinder is an issue, we will go somewhat further. “The defendant seeking removal to the federal court is entitled App. 12 to present the facts showing the joinder to be fraudulent.” McCabe, 811 F.2d at 1339; see also Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97-99, 42 S. Ct. 35, 37-38, 66 L. Ed. 144 (1921); Chesapeake & Ohio Ry. Co. v. Cockrell, 232 U.S. 146, 153-54, 34 S. Ct. 278, 280-81, 58 L. Ed. 544 (1914); Alabama Great S. Ry. Co. v. Thompson, 200 U.S. 206, 218-19, 26 S. Ct. 161, 165, 50 L. Ed. 441 (1906); cf. Smith v. Southern Pac. Co., 187 F.2d 397, 400-01 (9th Cir. 1951). That approach is reasonable and necessary. For exam- ple, a defendant must have the opportunity to show that the individuals joined in the action cannot be liable on any theory. Thus, in McCabe we looked to the complaint alone to determine that no wrongful discharge cause of action could be stated against the managers of a company for firing an employee of that company. See 811 F.2d at 1339. If we had been required to look at facts outside of the complaint to decide that issue, we would have done so. Similarly, the Supreme Court has pointed out that a removing defendant could submit facts showing that a resident defendant had “no real connection with the con- troversy.” Wilson, 257 U.S. at 97, 42 S. Ct. at 37. But it is noteworthy that these cases looked to whether the plain- tiff truly had a cause of action against the alleged sham defendants. The cases did not key on an inquiry as to whether those defendants could propound defenses to an otherwise valid cause of action. There is a distinction between those two concepts. The Supreme Court touched on the distinction in Chesapeake & Ohio Ry., 232 U.S. at 153, 34 S. Ct. at 280, where it declared that the assertion made by the removing defendant “went to the merits of the action as an entirety, and not to the joinder; that is to say, it indicated that the plaintiff’s case was ill founded as App. 13 to all the defendants.” Similarly, in Alabama Great S. Ry., 200 U.S. at 218-19, 26 S. Ct. at 165, the Court refused to find fraudulent joinder where a misjoinder of parties was claimed by the defendant that was trying to remove the action. The Court commented that, ultimately, the state court might decide the joinder was not proper. In fact, if it had jurisdiction the Court might have done so itself. “But,” it said, “this does not change the character of the action which the plaintiff has seen fit to bring, nor change an alleged joint cause of action into a separable contro- versy for the purpose of removal.” Id.; see also McCabe, 811 F.2d at 1339 (failure to state a cause of action); Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1426-27 (9th Cir. 1989) (joinder fraudulent where no cause of action could be stated); Gasnik v. State Farm Ins. Co., 825 F. Supp. 245, 247 (E.D. Cal. 1992) (joinder fraudulent where no cause of action could be stated); cf. Sessions v. Chrysler Corp., 517 F.2d 759, 760-61 (9th Cir. 1975) (joinder not fraudulent if case can withstand a 12(b)(6) motion directed to sufficiency of the cause of action, however labeled). Similar distinctions have been drawn in the rules governing federal question removal. Even when the area involved is one where complete preemption is the norm, if the complaint relies on claims outside of the preempted area and does not present a federal claim on its face, the defendant must raise its preemption defense in state court. See Caterpillar Inc. v. Williams, 482 U.S. 386, 392-96, 107 S. Ct. 2425, 2430-31 96 L. Ed. 2d 318 (1987). The fact that preemption might ultimately be proved does not allow removal. Id. at 397-98, 107 S.Ct. at 2432; see also Rivet v. Regions Bank, ___ U.S. __L 118 S. Ct. 921, 926, ___ App. 14 L. Ed. 2d ___ (1998); Westinghouse Elec. Corp. v. Newman & Holtzinger, P.C., 992 F.2d 932, 934-36 (9th Cir. 1993). In other words, when the defense is exogenous to the cause of action itself, it will not turn a state action into a federal one. While the above would tend to suggest that an exog- enous defense could not turn a true defendant into a sham defendant, we need not resolve that issue. No doubt the statute of limitations is a defense, and a rather unique one at that. It is one that does not truly go to the merits of the plaintiff’s claim in any sense. It does not assert some excuse or justification for what the defendant is alleged to have done, nor does it assert any release or waiver of any right of action against the defendant. It does not even deny the wrong or claim contributory fault or set off. Rather, it virtually admits the validity of the cause of action and the plaintiff’s right to collect upon it, but asserts that the plaintiff waited too long to pursue the cause of action. California has emphasized the fact that the statute of limitations is a kind of procedural bar, and not one which relates to the merits of the case. See Hop- kins v. Andaya, 958 F.2d 881, 888 (9th Cir. 1992); Piazza Properties v. State Dept. of Motor Vehicles, 71 Cal. App. 3d 622, 628, 138 Cal. Rptr. 357, 360 (1977); O’Neil v. Spillane, 45 Cal. App. 3d 147, 156, 119 Cal. Rptr. 245, 252 (1975). In fact, California has pointed out that a judgment based on the statute of limitations regarding a cause of action in one suit is not necessarily res judicata in a second suit, which pleads a different cause of action based on the same core of underlying facts. See Koch v. Rodlin Enters., Inc., 223 Cal. App. 3d 1591, 1596-97, 273 Cal. Rptr. 438, 441-42 (1990). App. 15 However, even though California takes that position, it also takes the position that a defendant may file a demurrer to a complaint on the theory that the complaint “does not state facts sufficient to constitute a cause of action.” Cal. Civ. Proc. Code § 43.10(f). It has long been the law that this principle applies to statute of limitations defenses, even though, technically, a defense is not part of the cause of action itself. See Bank of America Nat'l Trust & Sav. Ass'n v. Ames, 18 Cal. App. 2d 311, 314-15, 63 P.2d 1208, 1209-10 (1936). The defendant may file the demur- rer when the defect appears on the face of the complaint or in any material “of which the court is required to or may take judicial notice.” Cal. Civ. Proc. Code § 430.30(a). Moreover, it is clear that “[ijn ruling on a demurrer essentially founded on res judicata,” a court may “take judicial notice of a prior judgment in a different case even though such judgment or its content is not pleaded in the complaint. ... ” Flores v. Arroyo, 56 Cal. 2d 492, 496, 364 P.2d 263, 265, 15 Cal. Rptr. 87, 89 (1961). In this case, when the strobe of judicial notice is played upon Ritchey’s pleading, it appears perfectly clear that the statute of limitations is a defense, which Califor- nia would apply through the medium of a demurrer. The action against Dr. Dement and Stanford is barred by the statute of limitations. The harm was well knowr to Ritchey several years before he brought his action, and he also knew what wrongdoing had caused that harm. See Ritchey I. Ultimately, it was Upjohn’s own alleged wrong- doing in concealing information about Halcion which caused the harm, as Ritchey previously alleged. See Ritchey I. Ritchey has now attempted to cobble together a claim that Dr. Dement and Stanford helped Upjohn to App. 16 perpetrate that harm by helping it misrepresent data. That, however, is outside the point. It is pellucid that by the time the complaint in question was filed, January 3, 1994, the statute of limitations had long since run, regard- less of whether Ritchey’s new cause of action is charac- terized as a personal injury cause of action or a fraud cause of action. Our decision in Ritchey I makes it clear that the statute of limitations started to run in March of 1989 at the latest. Thus, as we held in Ritchey I, the one year statute of limitations had clearly run. Moreover, in California the statute of limitations for fraud is three years. See Cal. Civ. Proc. Code § 338. Again, that three year period had clearly run long before the current com- plaint was filed. We recognize that if Dr. Dement and Stanford had not asserted the statute of limitations, Ritchey’s cause of action against them might well be viable. That, again, is the slight anomaly in speaking of the statute of limita- tions as a ground for dismissing a complaint on the theory that it does not state of cause of action. At any rate, the statute of limitations was asserted in this case. Therefore, under California law no cause of action was stated. We recognize that it is, perhaps, slightly peculiar to speak of Dr. Dement and Stanford as sham defendants because the statute of limitations bars a claim against them, when that would seem to lead to an argument that Upjohn itself is a sham defendant because the statute of limitations has also run against it. Nevertheless, the fact is that Ritchey did not state a cause of action against anyone, and his failure to state that cause of action against Dr. Dement and Stanford demonstrates beyond App. 17 peradventure that they were sham defendants for pur- poses of removal. Id. CONCLUSION Upjohn faced Ritchey once before in the federal courts and won the day. It now finds itself sued, along with others, in an action that appears to be the same essential claim as the one it faced before. Having pre- vailed in the first agon in federal court, it understandably does not wish to struggle with Ritchey in another forum, even if the struggle turns out to be a short one. It is true that in his second action Ritchey also joined non-diverse parties, Dr. Dement and Stanford, but he has not spelled out a cause of action against them under California law. That being so, we hold that they were fraudulently joined for diversity and removal purposes. As a result, this case was properly removed. Upjohn and its co-defendants need not answer Ritchey’s chamade to meet him in the California Superior Court for Santa Cruz County. AFFIRMED. App. 18 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA NO. C-96-20067 RMW ORDER GRANTING DEFENDANTS’ MOTIONS TO DISMISS (Filed Sep. 9, 1996) JOE B. RITCHEY, Plaintiff, v. THE UPJOHN DRUG COMPANY, WILLIAM DEMENT, and DOES 1 through 10, Defendants. i Defendants The Upjohn Drug Company (“Upjohn”), Stanford Health Services (“Stanford”) and William Dement (“Dement”) filed motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). The court has read the papers submitted in connection with the motions and heard the argument of counsel. For the reasons set forth below, the court grants defendants’ motions to dis- miss. I. BACKGROUND Plaintiff filed a complaint on March 12, 1990 in the Santa Cruz Superior Court alleging injuries caused by the ingestion of Halcion, a prescription sleeping medication manufactured by Upjohn (“Ritchey I”). The action was removed to this court based on diversity jurisdiction. On October 26, 1993, this court entered an order granting summary judgment in favor of Upjohn. Ritchey v. Upjohn, D.C. No Civ. 92-20208 RMW (N.D. 1993) aff’d App. 19 No. 94-15171 (9th Cir. 1995). This court concluded that the one year statute of limitations applied to plaintiff's claims. The evidence submitted by Upjohn demonstrated that plaintiff was aware that Halcion may have been the cause of his problems more than one year before filing the complaint in March 1990. Therefore, this court con- cluded that the statute of limitations barred plaintiff’s claims against Upjohn. Plaintiff filed two motions for reconsideration of the judgment with this court, both of which were denied. Plaintiff appealed the prior unfavorable judgment to the United States Court of Appeals, Ninth Circuit. The Court of Appeals affirmed this court’s grant of summary judgment on June 8, 1995. Plaintiff petitioned for a rehearing and a suggestion for a rehearing en banc, both of which were denied on September 28, 1995. On January 3, 1994, which was after the court granted summary judgment in the prior action, plaintiff filed this current action (“Ritchey II”) in Santa Cruz Supe- rior Court. Ritchey II seeks recovery for the same alleged injuries arising from plaintiff's use of Halcion. Upjohn, Stanford and Dement are named defendants in Ritchey II, which attempts to state causes of action for “fraud and intentional misrepresentation” and “common law civil conspiracy” to commit fraud. The defendants seek to dismiss the complaint on the grounds, among others, of res judicata and the bar of the statute of limitations. ll. LEGAL STANDARD The court may dismiss a complaint as a matter of law for either of two reasons: (1) lack of a cognizable legal App. 20 theory, or (2) the pleading of insufficient facts under a cognizable legal theory. Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533 (9th Cir. 1984) (citations omitted). in ruling on a motion to dismiss, district courts must accept all material allegations of fact alleged in the com- plaint as true and resolve all doubts in favor of the plaintiff. Blake v. Dierdorff, 856 F.2d 1365, 1368 (9th Cir. 1988). The court, however, need not accept legal conclu- sions asserted in the complaint even if pled as “facts.” Papasan v. Allain, 478 U.S. 265, 286 (1986). The court is to grant the motion to dismiss if it appears that plaintiffs can prove no set of facts which would entitle plaintiffs to relief. Sun Savings & Loan Assoc. v. Dierdorff, 825 F.2d 187, 191 (9th Cir. 1987). Ill. DISCUSSION Defendant Upjohn contends that the complaint in Ritchey II states no claim upon which relief may be granted because all causes of action have already been determined to be barred by the statute of limitations. Essentially, the doctrine of res judicata bars all grounds for recovery which either were or could have been asserted in prior litigation. Clark v. Bear Stearns & Co., Inc., 966 F.2d 1318, 1320 (9th Cir. 1992). Pursuant to 28 U.S.C. section 1738, federal courts apply the res judi- cata principles of the jurisdiction rendering the prior judgment whose preclusive effect is asserted. Therefore, the preclusive effect of a federal judgment in a diversity case is governed by federal law. In re Energy Cooperative, 814 F.2d 1226, 1230 (7th Cir. 1987), cert. denied, 484 U.S. 928 (1987). App. 21 There can be no question that final judgment was rendered by this court on the plaintiff's claims. Disposi- tion by summary judgment is as final and conclusive as judgment after trial, and it should be deemed final judg- ment for res judicata purposes. The factual and legal issues regarding the bar of the statute of limitations were before this court repeatedly for over a year in Ritchey I. This court determined that all causes of action alleged in Ritchey I arose from the alleged violation of plaintiff's right to be free from personal injury and were governed by the one year limitations period. The court further concluded that plaintiff's complaint was time-barred because plaintiff suspected or should have suspected that his alleged injuries were caused by Halcion more than one year prior to filing his initial complaint on March 12, 1990. The judgment in Ritchey I was affirmed by the Ninth Circuit Court of Appeals. The complaint in Ritchey II names the same defen- dant as the previous suit, Upjohn. In Ritchey I, plaintiff essentially asserted that his use of Halcion caused him to suffer various psychological and physiological effects such as depression, paranoia, insanity, and hallucina- tions. Plaintiff alleges the same injuries in his new com- plaint. Plaintiff also alleges the same acts by defendant Upjohn caused the injuries, except that more acts were alleged in the previous complaint than are alleged here. “A cause of action does not consist of facts, but the unlawful violation of a right which the facts show.” McClain v. Apodaca, 793 F.2d 1031, 1033, note 3 (9th Cir. 1986). Plaintiff’s right to be free from personal injury is at the root of both actions. Similarly, both complaints allege that plaintiff’s injuries arising from his use of Halcion App. 22 were somehow caused by defendant Upjohn. Therefore, the underlying cause of action for both complaints is identical. A federal court may apply res judicata to a prior summary judgment granted by a federal court on the ground that the action is barred by the statute of limitations. Salveson v. Western States Bankard Ass'n, 731 F.2d 1423, 1429 (9th Cir. 1982).1 A final judgment has already been rendered on the causes of action set forth in plaintiff's new complaint. Thus, it is barred by the doc- trine of res judicata. Plaintiff contends in his motion to remand that Ritchey II is not barred by res judicata because conspiracy and pure economic fraud were not at issue in the prior action. Plaintiff is merely attempting to allege new legal theories to recover for violation of the same primary right. A subsequent action advancing a different legal theory based on the same events and injuries is barred by a final decision in the first action where that theory could have been argued as an alternative or additional ground for recovery. Salveson v. Western States Bankard Ass'n, 525 F.Supp. 566, 582 (N.D. Cal. 1981), aff’d in part, rev’d in part, 731 F.2d 1423 (9th Cir. 1982). Plaintiff’s fraud cause of action consists solely of allegations made in Ritchey I. The allegations in plaintiff’s “common law conspiracy” claim are identical to those contained in his “common law civil conspiracy” claim in Ritchey I.2 Regardless of the 1 Salveson was superseded by statute on other grounds, as noted in Etheridge v. Harbor House Restaurant, 861 F.2d 1389 (9th Cir. 1988). 2 This court dismissed plaintiff’s prior conspiracy claim with leave to amend his complaint. Instead, plaintiff pursued App. 23 legal theory used to obtain recovery, plaintiff's claims arising out of his use of Halcion are barred by the doc- trine of res judicata. While plaintiff contends that he has recently discov- ered information to support his new complaint, “addi- tional evidence of the same wrongful conduct and injury is not tantamount to a new right of action.” Salveson, 525 F.Supp. at 583. This is especially true where plaintiff “knew enough to allege fraud” in the first suit. Id. The fact that defendants Dement and Stanford were not named parties in Ritchey I does not affect their ability to assert that the new action is barred as to them. Once a plaintiff suspects or should suspect “wrongdoing,” the limitations period commences to run as to the universe of potential defendants. Bristol-Myers Squibb Company v. Superior Court (Carol Jones), 32 Cal.App.4th 959, 964 (1995). Therefore, plaintiff’s claims against defendants Dement and Stanford relating to their alleged role in plaintiff’s use of Halcion are also barred by the one-year statute of limitations. IV. ORDER For the foregoing reasons, the court grants defen- dants’ motions to dismiss. the fraud claim anu did not amend his conspiracy claim further in the previous action. App. 24 DATED: 9/6/96 /s/ Ronald M. Whyte RONALD M. WHYTE United States District Judge Copy of Order mailed on 9/9/96 to: Joe B. Ritchey 1088 La Madrona Drive Santa Cruz, CA 95060 Counsel in pro per Larry R. O’Neal Shook, Hardy & Bacon One Kansas City Place 1200 Main Street Kansas City, MO 64105 Counsel for Defendant The Upjohn Company Michael F. Healy Sedgwick, Detert, Moran & Arnold One Embarcadero Center, 16th Floor San Francisco, CA 94111-3765 Counsel for Defendant The Upjohn Company Elizabeth L. Ewert Preuss, Walker & Shanagher 595 Market Street, 16th Floor San Francisco, CA 94105-2825 Counsel for Defendants William Dement and Stanford Health Services App. 25 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA NO. C-96-20067 RMW ORDER DENYING JOE B. RITCHEY, Plaintiff, ‘ PLAINTIFF'S MOTION TO REMAND ee DRUG (Filed Sep. 9, 1996) DOES 1 through 10, ) ) ) ) ) ) WILLIAM DEMENT, and ) Defendants. ) ) Defendant Upjohn removed this action from the Santa Cruz Superior Court on January 29, 1996 on the basis of diversity jurisdiction. Plaintiff filed a timely motion to remand the action to state court. The court has read the moving and responding papers and heard the argument of counsel. For the reasons set forth below, the court denies plaintiff's motion to remand. I. BACKGROUND This court entered judgment against plaintiff in a prior, essentially identical action on October 26, 1993. Ritchey v. Upjohn, D.C. No. Civ. 92-20208 RMW (N.D. Cal. 1993) aff’d No. 9415171 (9th Cir. 1995) (“Ritchey I”). Plaintiff appealed that judgment to the Ninth Circuit Court of Appeals after filing the present action in Santa Cruz Superior Court on January 3, 1994 (“Ritchey II”). However, he made no attempt to serve or notify Upjohn of Ritchey II until he mailed Upjohn a copy of the sum- mons and complaint on December 29, 1995. Defendant _— App. 26 Upjohn claims that it received a copy of the complaint on January 9, 1996. Defendant Upjohn filed a notice of removal to this court on January 29, 1996. Plaintiff then filed a timely motion to remand the action to state court on February 27, 1996. Stanford Health Services filed a “Joinder In Notice of Removal of Action” on March 5, 1996.! Il. DISCUSSION A. WAS REMOVAL TIMELY? Plaintiff contends that defendants’ removal was untimely because of the one-year restriction in the second paragraph of 28 U.S.C. section 1446(b). Section 1446(b) provides: The notice of removal of a civil action or pro- ceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading set- ting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter. If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defen- dant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained 1 Defendant Stanford Health Services was sued as Stanford Sleep Disorders Clinic and claims it was never properly served. CRP err er App. 27 that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action. (Emphasis added). Essentially, plaintiff contends that the statute should be construed narrowly against removal by reading the last clause of section 1446(b), which contains the one-year restriction, as being applicable to both paragraphs of the subsection. Removal of any diversity case would then be barred after one year, regardless of whether the case was initially removable or later became removable on the basis of something other than the initial pleading. Defendants contend that the one-year limit in section 1446(b) only applies to diversity cases removed pursuant to the second paragraph of the section (those removed on the basis of something other than the initial pleading). In accordance with the first paragraph of the statute, defen- dants filed the petition for removal within 30 days after they were served with the original complaint. Therefore, defendants claim that removal was timely and that the second paragraph of 1446(b), including the one-year restriction, does not apply. The Ninth Circuit Court of Appeals has not addressed the issue of whether the one-year limitation on removal applies only to cases covered by the second paragraph of 1446(b), or to all removed diversity cases. The district court decisions are in conflict on this issue. Defendants heavily rely on Zogbi v. Federated Dept. Store, 767 F.Supp. 1037 (C.D.Cal. 1991) in support of their App. 28 position. The court finds the reasoning of Zogbi persua- sive and agrees with its result. In Zogbi, the plaintiff filed suit in state court in California and then waited almost three years before serving two California defendants. A third, non-resident defendant was not properly served, but received a copy of the complaint at the same time. The non-resident defendant promptly removed the case to federal court on the basis of diversity jurisdiction, but the plaintiff attacked the removal as improper because it was done more than one year after the commencement of the suit. The Zogbi court held that the one-year restriction clause in the second paragraph of 1446(b) does not apply to cases which are removable upon receipt of the initial pleading. Id. at 1042. Using the principles of statutory interpretation, the court reasoned that the “except that...” clause only limits the availability of removal on the basis of something other than the initial pleading. Id. at 1039. This conclusion is supported by the structure of the statute, i.e., the separation of the two sentences into distinct paragraphs. The “except that... ” clause cannot reasonably be read as also modifying the first paragraph of section 1446(b). Id. The first paragraph appears to state the general rule, while the second paragraph states a specific exception. In fact, section 1446(b) was composed solely of the first paragraph until the second paragraph was added in 1949. Kaneshiro v. North American Company for Life and Health Insurance, 496 F.Supp. 452, 460 (D.Haw. 1980). The court further stated that if Congress intended 2 The court also held that the California defendants were fraudulently joined. ict AE RES ILE RN PEERS IAA NRO E OE TI Fei ecient Re FOR ie App. 29 to prevent removal in all diversity cases commenced more than one year prior to removal, Congress could have worded the statute to accomplish that result. Zogbi, 767 F.Supp. at 1039-40. In addition to the principles of statutory interpreta- tion, the legislative history of section 1446(b) also sup- ports the conclusion that the one-year limitation only applies to cases removed pursuant to the second para- graph of section 1446(b). Congress was concerned “with removal of cases commenced in state courts that had progressed towards trial.” Id. at 1040 (citation omitted). However, when cases are timely removed by defendants after they are initially served, there is normally no delay or disruption of the proceeding. In the present case, no action has been taken in the state court and removal will not create any delay or frustrate the intentions of Con- gress. Moreover, application of the one-year limit to the first clause of section 1446(b), where it does not appear, would encourage plaintiffs to delay service, therefore preventing removal on the basis of diversity jurisdiction. Although removal statutes have historically been strictly construed, this court does not believe that Congress intended that a plaintiff could unilaterally defeat a defen- dant’s removal right by deliberating delaying service. The court recognizes that authority exists that sup- ports plaintiff’s position, namely that the one-year limita- tion provides an outside limit for removal even if none of the defendants has received notice of the action through service or otherwise within a year of its filing. Plaintiff primarily relies on three district court cases from this App. 30 circuit in which removal was barred because more than one year had passed since the action commenced: Rezendes v. Dow Corning Corp., 717 F.Supp. 1435 (E.D.Cal. 1989), Hom v. Service Merchandise Co., 727 F.Supp. 1343 (N.D.Cal. 1990), and Perez v. General Packer, Inc., 790 F.Supp. 1464 (C.D.Cal. 1992). In Hom, the court was faced with a removal based on an amended pleading. The Hom court looked only at the language of section 1446(b). The court did not examine the structure of the section, nor did it consider the legisla- tive history behind it. In Rezendes, the court instructed plaintiff to file a motion to remand the action in light of several procedural irregularities in the removal. While the court did consider the language and legislative history of section 1446(b), it did not consider the fact that the section is divided into two distinct paragraphs. The Rezendes court relied heavily on the general polity of strict construction against removal. This court is not persuaded by the Rezendes court’s broad reading of the section and its legislative history and respectfully disagrees with its decision. The legislature was concerned with changing the forum of actions which had progressed in the state court which is what normally will have occurred in the type of cases described in the second paragraph of section 1446(b), the paragraph to which the one-year limitation logically applies. Substantial progress will not have been accom- plished in cases like the present one and most of those described in the first paragraph of section 1446(b). Perez involved the somewhat unusual situation in which the complaint was amended after service of the % a RS “y iS a. * 4 % =. Ry + i 3 App. 31 two original diverse defendants (who plaintiff decided not to pursue) to name two foreign defendants. The court held that the removal by the two foreign defendants was barred because it was accomplished more than one-year after the action was commenced. Perez suggests that applying the one-year limit to both paragraphs of section 1446(b) preserves comity between state and federal courts. As discussed above, this court does not believe comity is normally threatened by the type of cases addressed in the first paragraph of section 1446(b). Fur- ther, it seems illogical that Congress would give a defen- dant a right to remove which could be defeated by the unilateral action of a plaintiff taken without notice to, or the knowledge of, the defendant. The basis for removal of this action was ascertained from the initial pleading, and the notice of removal was filed within thirty days after defendants’ receipt of the initial pleading. Since the court does not find that the one-year limitation as stated in the second paragraph of section 1446(b) applies to diversity cases removed on the basis of the initial pleading, the court finds that the removal of this action was timely.° 3 At least one court has held that the one year limitation is not triggered if the plaintiff does not attempt in good faith to serve the complaint. Greer v. Skilcraft, 704 F. Supp. 1570 (N.D. AL. 1989). However, it appears that in California an action is commenced when it is filed. Nevertheless, under the circumstances here, a good argument could be made that plaintiff should be estopped from objecting to removal on the basis that removal was not timely. Plaintiff filed Ritchey Il knowing that defendant Upjohn had previously removed Ritchey I. He then delayed giving any notice of Ritchey II to defendant even though he knew that defendant would App. 32 B. WAS REMOVAL PROPER? Under 28 U.S.C. section 1441, removal is authorized in any civil action brought in a state court of which the federal district courts have original jurisdiction. The fed- eral courts have original jurisdiction of civil actions where the matter in controversy exceeds the sum of $50,000 and is between citizens of different states pur- suant to 28 U.S.C. section 1332. Plaintiff contends that the presence of defendant Dement and the served Doe defendants destroys diver- sity. Defendants argue that Dr. Demerit and Stanford, both California residents, have been fraudulently joined and their citizenship should be disregarded for the pur- poses of determining if diversity jurisdiction exists.* Fraudulent joinder of parties exists where there is no reasonable basis in fact or colorable ground to support the claim against the joined defendant. Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 98 (1921); McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). Defendants argue that plaintiff has no colorable claim against defendants Dement and Stanford because the undoubtedly want to remove. The court, however, does not need to reach the issue of estoppel, since it has found that removal was timely under the first paragraph of section 1446(b). * Under 28 U.S.C. § 1446(a), all defendants in a state action must join in a petition for removal, except for nominal, unknown, or fraudulently joined parties. This rule only applies, however, to defendants properlyjoined and served in the action. Emrich v. Touche Ross & Co., 846 F.2d 1190, 1193 n.1 (9th Cir. 1988). App. 33 allegations against them are barred by the statute of limitations. On November 1, 1993, this court entered judgment against plaintiff in Ritchey I. Ritchey v. Upjohn, D.C. No. Civ. 92-20208 RMW (N.D. Cal. 1993) aff’d No. 94-15171 (9th Cir. 1995). This court concluded that personal injury arising from the ingestion of Halcion was the gravamen of plaintiff's complaint and, thus, the one-year statute of limitations applied. The court found that plaintiff was on notice of his claims arising out of his use of Halcion more than a year before he filed his complaint, and the case was dismissed. The judgment against plaintiff was affirmed by the Ninth Circuit upon appeal. Ritchey II was filed in state court in January 1994. The complaint in Ritchey II arises from the same alleged injuries and damages as in Ritchey I. Nearly all of the Ritchey II complaint was copied verbatim from the fraud and conspiracy causes of action in Ritchey I. See Exhibit EE to Declaration of Annette C. W. Hughes in Opposition of Plaintiff’s Motion to Remand to State Court. Plaintiff attempts to distinguish his claims in Ritchey II by calling them “direct fraud,” “economic fraud,” and “pure fraud.” However, plaintiff is merely attempting to allege new legal theories to recover for violation of the same primary right at issue in the prior action: the right to be free from personal injury. Regardless of the legal theory used to obtain recovery, plaintiff’s claims arising out of his use of Halcion are barred by the one-year statute of limitations. App. 34 The fact that defendants Dement and Stanford were not named parties to Ritchey I is irrelevant. Once a plain- tiff suspects or should suspect “wrongdoing,” the limita- tions period commences to run as to the universe of potential defendants. Bristol-Myers Squibb Company v. Superior Court (Carol Jones), 32 Cal.App.4th 959, 964 (1995). Therefore, plaintiff’s claims against defendants Dement and Stanford relating to their alleged role in plaintiff’s use of Halcion are also barred by the one-year statute of limitations. The previous judgment conclusively determined that plaintiff’s entire cause of action, regardless of the alleged theory of recovery, was time-barred. Plaintiff cannot now relitigate his claims and is bound by this court’s prior judgment. Because he cannot support a claim against defendants Dement and Stanford, this court finds that they have been fraudulently joined and diversity jurisdiction is not destroyed by their presence. If a nondiverse party is found to have been “fraudulently joined,” it may be dis- missed ana ignored for purposes of determining whether the case w: « properly removed to federal court. McCabe v. General Foods Corp., 811 F.2d 1336 (9th Cir. 1987). IV. ORDER For the foregoing reasons, the court denies plaintiff's motion to remand. DATED: 9/6/96 /s/ Ronald M. Whyte RONALD M. WHYTE United States District Judge ahh Ra ial an ee ole oY ce OE Ae NE eg Jean bac ge ha gn cee aerate NAIM ELIE 1 oe Reagan App. 35 Copy of Order mailed on 9/9/96 to: Joe B. Ritchey 1088 La Madrona Drive Santa Cruz, CA 95060 Counsel in pro per Larry R. O’Neal Shook, Hardy & Bacon One Kansas City Place 1200 Main Street Kansas City, MO 64105 Counsel for Defendant The Upjohn Company Michael F. Healy Sedgwick, Detert, Moran & Arnold One Embarcadero Center, 16th Floor San Francisco, CA 94111-3765 Counsel for Defendant The Upjohn Company Elizabeth L. Ewert Preuss, Walker & Shanagher 595 Market Street, 16th Floor San Francisco, CA 94105-2825 Counsel for Defendants William Dement and Stanford Health Services App. 36 NOT FOR PUBLICATION UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT JOE B. RITCHEY, No. 96-17014 Plaintiff-Appellant, D.C. No. CV-96-20067- RMW Vv. UPJOHN DRUG COMPANY; WILLIAM DEMENT, Defendants-Appellees. ORDER DENYING THE PETITION FOR REHEARING AND REJECTING THE SUGGESTION FOR REHEARING EN BANC (Filed May 27, 1998) Ne me ee me ee ee ee ee ee eee ee” Before: HUG, Chief Judge, FERNANDEZ, and THOMAS, Circuit Judges. The panel has unanimously voted to deny the appel- lant’s petition for rehearing. The suggestion for rehearing en banc was circulated to the judges of the court, and no judge requested a vote for en banc consideration. The petition for rehearing is DENIED and the sugges- tion for rehearing en banc is REJECTED. App. 37 In Pro Per JOE B. RITCHEY - Bar No. 52130 1088 La Madrona Drive Santa Cruz, CA 95060 (408) 426-6863 SUPERIOR COURT STATE OF CALIFORNIA COUNTY OF SANTA CRUZ JOE. B. RITCHEY, CASE NO. 128370 Plaintiff COMPLAINT FOR v. DAMAGES AND RECOVERY BASED THE UPJOHN DRUG COMPANY, William Dement and DOES 1 through 10, UPON FRAUD AND CONSPIRACY TO COMMIT FRAUD Defendants (Filed Jan. 3, 1994) / NOW COMES the Plaintiff, In Pro Per, and alleges the following as theories of recovery and causes of action: FIRST CAUSE OF ACTION Fraud and Intentional Misrepresentation 1. This complaint alleges violations of and recovery under California statutes and case law against a Califor- nia resident and the Upjohn Drug Company, a Corpora- tion with its principal place of business in Kalamazoo, Michigan. It also alleges violations of and recovery under state laws and federal statutes as to the Upjohn Drug Company, William Dement, various of its employees, agents and directors and “independent researchers and App. 38 clinicians.” The names of its employees, agents and direc- tors who joined with Defendant Upjohn to defraud and deceive the Food and Drug Administration and the con- suming public, by submitting incomplete, misleading, and false data in violation of the Federal Food, Drug and Cosmetic Act, are unknown to this Plaintiff who will seek leave to amend once the identities of said co-conspirators and participants are discovered. 2. Plaintiff is a resident of Santa Cruz, California and, following doctors’ recommendations and prescrip- tions ingested the drug Halcion, manufactured and dis- tributed by the Upjohn Drug Company. 3. All Defendants’, except the Upjohn Drug Com- pany, and William Dement, names are unknown at this time and thus sued as fictitious defendants. 4. The relief sought herein is for general and speci- fic compensatory damages, treble damages, punitive damages as allowed under California Statutory and Case Law. 5. The relevant times of wrongful conduct and con- spiracy the Upjohn Drug Company, William Dement, its employees, agents and directors, commenced with its first violation of the Food and Drug Cosmetic Act and continues to the present date as a conspiracy and scheme to devise, conduct and arrange concealment of, non- disclosure of, and misrepresentations of, the side effects and efficacy of the drug Halcion and to commit a fraud and deceit upon the FDA, the consuming public, Halcion users, and this Plaintiff specifically. See. kit EPL leis MON EREDAR gk ae ORE ’ art Ee Sailr. FA at di aS WRN Ee a ee 2 aT eT pat gM see Nas se a SY Se eR baeg \T bli a gig h2 kas i a aia Ck Alas Pees |e =F 5-4 3 3 “ay oy 5S Le Ps de ee a = 2. App. 39 6. In its scheme, the Defendant Upjohn Company, William Dement, certain of its employees, agents and directors, have carried out illegal and corrupt acts and continue to do so for the purpose of economic gain and to avoid civil and criminal penalties. Said Defendants have striven to conceal their civil and criminal liability and illegal acts under various federal statutes and promul- gated regulations and Plaintiff has just discovered a por- tion of them within the last 18 months and had not suspected any of them prior to a date on or about Sep- tember/October 1991. 7. Based upon information and belief this Plaintiff alleges that Defendant Upjohn Company is a multi- national corporation with yearly gross revenues exceed- ing $2,000,000,000 (Two Billion Dollars) per year, whose principal business is the design, manufacture, and distri- bution for public use of medical drugs for use by pre- scription and purchase over the counter. 8. Commencing in a date yet undetermined in the 1970’s, Defendant Upjohn, certain of its employees, agents and directors, began work to develop a new form of Benzodiazepine, specifically Triazolam, for company patent and tradename registration. As testing progressed, undesirable side effects were noticed which to reasonable unbiased observers would have raised concerns of the safety and efficacy and need for such a new form of sleeping aid. 9. As a scheme to capture a large market share of the sleeping aid market, Defendant Upjohn, William Dement, certain of its agents, employees and directors, commenced their conspiracy to, through use of economic App. 40 corruption and other means, withhold studies; misrepre- sent studies; select favorable investigators, clinicians, and monitors; adapt and continue to represent as true, false and fraudulent data; to coerce and threaten in attempts to suppress reasonable discussion of the safety of its prod- uct, Halcion; and to unreasonably and unprofessionally use the legal process against critics and injured claimants seeking compensation for damage caused by the drug Halcion. 10. The acts of Defendant Upjohn, William Dement, certain of its agents, employees and directors, relating to the creation, development, testing, distribution and sales of Halcion, represent a general manner of doing business by said Defendants. 11. In seeking FDA approval for Halcion, Defendant Upjohn, acting through certain of its corrupt agents, employees and directors, submitted protocol summaries and data, knowing them to be incomplete, false and misleading, and in seeking to represent the drug’s safety and efficacy, represented as true certain protocol studies and results, knowing them to be false, fraudulent and to have been rejected by the FDA. 12. Defendant Upjohn, William Dement, certain of its agents, employees and directors, knowingly under- took a course of conduct to conceal, minimize and silence warnings and concerns about the drug’s safety, knowing that FDA approval caused the public to believe in Hal- cion’s relative safety and efficacy. During all said times Upjohn and William Dement had knowledge of serious adverse undisclosed side effects and underreported the la a Sin aR es iat hhc SREP RPE EDTA LED Rig keratin ofa App. 41 frequency of previously disclosed side effects and dis- counted and minimized adverse reactions, knowing them to be serious adverse experiences of which the public would want to have knowledge in selecting which prod- uct to rely upon as a sleep aid. 13. Defendant Upjohn and William Dement, at the time of seeking FDA approval, knew of its duty to fully and fairly report adverse side effects and to select investi- gators who would fairly and without a bias study the drug and present findings. For the purpose of economic gain and competitive advantage, Upjohn failed to select investigators, sub-investigators, clinicians and monitors who had a neutral bias and lacked an inclination to favor Upjohn. Defendant Upjohn and William Dement failed to fully and fairly present study summaries and data to the FDA and, with a purpose of playing upon the sub- conscious of consumers, selected a trade name for its drug to calm concern of adverse reactions, to equate drug usage with peacefully, untroubled, happy and tranquil experiences, and, knowing it to be otherwise, represented that usage of the drug would lead to “golden, peaceful, tranquil” moments. 14. Acting in the conspiracy above described, Upjohn and William Dement violated civil statutes and regulations, failed to fully and fairly study the drug for the purpose of avoiding the confirmation of troubling reports of adverse reactions to its mismamed drug, vio- lated statutes and regulations calling for objective and unbiased review of all drugs submitted to the FDA, failed to reasonably notify its intended market of the potential hazards and dangers of Halcion usage, all the while intending that the select market population of potential App. 42 consumers would remain ignorant of adverse reactions to and/or potentially dangerous side effects stemming from use of the drug. 15. Commencing in 1983 Plaintiff was prescribed Halcion in dosages of 0.25 mg and 0.5 mg, purchased and obtained, used and ingested said Halcion tablets as intended by the manufacturer and as prescribed, such use being consistent with guidelines set by the Upjohn Drug Company and William Dement, and as intended and foreseen by said Defendant. At the time of ingestion of the tablets, the medication was pure and unadulterated and as originally manufactured by Upjohn. 16. Commencing on or about January 1984, and periodically to 1988, Plaintiff suffered, as a result of ingestion of Halcion, confusion, anxiety, nervousness, restlessness, fear of cancer and loss of health, clouding of cognition, and other untoward reactions. Commencing in May 1984 and periodically thereafter, Plaintiff ingested a dosage table of 0.5 mg exclusively to aid in his sleep. As a direct result of the 0.5 mg dosage, Plaintiff experienced a bewildering and bizarre series of reactions, including paranoia; severe clouding and cessation of thought; delu- sions; hallucinations; depthless severe depression; feel- ings of insanity; fear of insanity and of attack; panic; loss of health; profound fears of cancer, death and impending doom; worthlessness of life; thoughts of life termination; aggression; detachment from reality; and other unex- pected uncounseled reactions. 17. As a direct and proximate result of the apove described reactions and induced states, Plaintiff under- took a series of actions which culminated with his arrest Eee ern G er emmrmey TT App. 43 for serious crimes, loss of income, caused pain and suffer- ing to the Plaintiff, general and specific damage to Plain- tiff, loss of freedom, profession, and esteem, and resulted in extreme anguish, grief and loss. 18. As a direct and proximate result of the above described reactions and induced states, Plaintiff incurred costs and expenses and economic losses in excess of $1,000,000 and has sustained lasting and permanent dimi- nution of his earning potential. 19. At all times relevant to the above conduct of Upjohn and William Dement and of loss to the Plaintiff, DOES I through 10 were employees, agents, consultants and directors of Upjohn and William Dement, acting in concert with and within the scope, course, and confirmed authority of Upjohn and William Dement. 20. Asa direct and proximate result of the conspir- acy of suppression and silence as above stated, Plaintiff did not have reason to believe nor to reasonably suspect fraud and conspiracy to commit fraud by Defendant Upjohn Company, William Dement, certain of its employees, agents, consultants and directors, until late 1991. 21. As a direct and proximate result of the acts of Defendants, and each of them, Plaintiff has incurred and will continue to experience loss of income, wages, costs, other pecuniary damages, pain, suffering, distress, anguish, and other loss and damages of both a specific and general nature, in an extent not yet known to Plain- tiff. Leave is requested to amend this complaint to con- form to proof at the time of trial. App. 44 22. Having such knowledge, or having cause to have such knowledge, Upjohn, William Dement, DOES 1 through 5, intentionally and knowingly failed to warn Plaintiff or any other target user of the hazards and dangers of the ingestion of such formulation of Halcion. Knowing that a substantial segment of the intended user population was likely to develop, suffer, or experience serious adverse reactions, consequences, and results, and, after reasonable notice of the actual hazards and dangers, said Defendants, and each of them, concealed and sup- pressed the mounting evidence of such hazards and dan- gers. 23. The above acts of concealment and suppression were accompanied by disinformation, misrepresentation, deceit and fraud upon the public and FDA, with the intent to delay any and all adverse publicity that would detract from Defendants promotion and sales of Halcion. Said Defendants, and each of them, knew reports of adverse reactions, untoward and bizarre experiences, health threatening consequences, would negatively impact marketing and sales, and deter a significant mar- ket segment from purchase and use of said product. 24. At all times herein mentioned Defendant Upjohn Company, William Dement and DOES I through 10, inclusive, knew that the drug Halcion, manufactured and sold as a 0.25 mg and 0.5 mg tablet, was defective in the manner herein above pled, and that such defect unreasonably exposed the consuming public to personal injury of a serious and profound nature and, yet notwith- standing this knowledge, intentionally, willfully and con- sciously, and in knowing disregard of the safety of such persons and the Plaintiff herein, refrained from giving App. 45 effective and proper notice of the defect to the pur- chasers, placed and persisted in placing its defective product into the stream of commerce, knowing and desir- ing that the consuming purchaser would purchase said product in its defective condition. 25. Commencing on or about the time Upjohn first applied to the FDA for marketing approval of its drug Halcion, Defendant the Upjohn Company, and William Dement, and DOES I through 5, falsely and fraudulently represented the true consequences and reactions to Halc- ion. At said time and following through the manufactur- ing, marketing, and distribution for sale of the drug Halcion, the Defendant Upjohn Company, William Dement and DOES I through 5 inclusive, had knowledge that the drug caused potentially dangerous side effects of an undisclosed nature, had a significant propensity to cause health threatening reactions of a serious and pro- found nature, and to otherwise wreak adverse conse- quences upon the consuming public. 26. By submitting false and misleading information concerning Halcion to the FDA, the Upjohn Company, William Dement and DOES 1 through 5 inclusive, repre- sented Halcion as reasonably safe for its intended use, knowing said representations would be more likely to procure approval of the drug than would disclosure of true and unbiased studies, opinions, and investigations, and of the true foreign marketing experience theretofore observed with the drug Halcion. .5 27. When Defendant Upjohn Company, William Dement and DOES 1 through 5 inclusive, made such representations to the FDA they knew them to be false App. 46 and knowingly made said representations with the intent to deceive, mislead, and defraud the FDA and consuming public, with the intent to induce the consuming public to rely upon FDA approval obtained through unethical, unprofessional, unscientific, biased and slanted reports, investigations, and summaries. 28. Plaintiff, at the time of purchase and ingestion of the 0.25 mg and 0.5 mg dosage, was ignorant of the deceitful nature of Defendants’ conduct, was ignorant of the falsity of the representations, and of the false pre- tenses used to obtain FDA approval. Plaintiff reasonably relied upon FDA approvais had and obtained through deceitful, dishonest, intentionally wrongful means. Had Plaintiff known the true, actual facts, Plaintiff would not have purchased nor consumed said drug. 29. The said representations by Defendant Upjohn Company, William Dement and DOES 1 through 5 inclu- sive, were knowingly false in that said Defendants had received reports, letters, and data directly recounting adverse, untoward, dangerous, and adverse profound reactions to and experiences with the drug Halcion, and had chosen to ignore the reasonable need for clarifing investigations and research into said product, deciding to use the consuming public as its research experimental base, all for the purposes of economic gain and competi- tive advantage. 30. The aforementioned conduct of Defendant Upjohn, William Dement and DOES 1 through 5 inclu- sive, was intentional misrepresentation, knowing deceit, concealment and distortion of material facts, and having scienter and knowledge, said Defendants continued their App. 47 despicable conduct having reasonable notice that said conduct and wrongful acts would subject Plaintiff and the consuming public to cruel and unjust hardships. Said acts were taken in conscious disregard of the rights of the public, the rights of Plaintiff, and in knowin=~ disregard of the statutory and administrative regulations promu! gated to protect the consuming public from dangerous and/or unsafe drugs. 31. Commencing at a time on or about the first sale of the 0.5 mg and 0.25 mg tablet, Defendant [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386008_1487%3A1. Public record. Not legal advice.