State of Alaska v. Merck & Co., Inc.
ORDER granting 46 Motion to Remand; case is remanded to State Court. Signed by Judge Timothy M. Burgess on 2/6/15. (RMC, COURT STAFF)
IN THE UNITED STATES DISTRICT COURT
DISTRICT OF ALASKA
STATE OF ALASKA,
Case No. 3:06-cv-00018-TMB
MERCK & CO., INC.,
On December 23, 2005, Plaintiff State of Alaska (“State”) filed this lawsuit against
Defendant Merck & Co., Inc. (“Merck”) pursuant to the Unfair Trade Practices and Consumer
Protection Act, AS 45.50.471 et seq. (UTPA). 1 The State alleges that Merck, a pharmaceutical
company, knowingly engaged in misrepresentations concerning the advertising, soliciting,
selling, and distribution of a drug called Vioxx to consumers in Alaska. 2
On June 14, 2006, the
Judicial Panel on Multidistrict Litigation (MDL) transferred the case to the Eastern District of
Louisiana where two cases alleging similar claims against Merck were already pending. 3 After
eight years in Louisiana, the case returned to this Court. On December 3, 2014, the State filed a
renewed/supplemental motion for remand; Merck opposes. 4 For the reasons that follow, the
State’s Supplemental Motion to Remand at Docket 46 is GRANTED.
Id. at 2 ¶¶1, 2.
Dkts. 46 (Supplemental Motion to Remand); 55 (Response in Opposition).
Merck began marketing Vioxx to the public in May 1999. Initially, Vioxx was approved for
the treatment of osteoarthritis and primary dysmenorrhea and for the management of acute pain
in adults. Merck requested Vioxx be placed on the Alaska Medicaid Program’s list of drugs
subject to reimbursement, representing that the drug was at least as safe as other drugs on the
market that are in a similar class or used for the same purposes. 5 Research and clinical trials
revealed, however, that the use of Vioxx increases the risk of a heart attack and other serious
cardiovascular and cerebrovascular medical complications. 6 On September 30, 2004, Merck
withdrew Vioxx from the market.
The State filed a complaint against Merck in the Superior Court for the State of Alaska on
December 23, 2005, alleging that Merck engaged in “unfair methods of competition and unfair
or deceptive acts or practices in the conduct of trade or commerce” in violation of the UTPA. 7
The State claims that Merck started marketing Vioxx to physicians, the State, and the public in
Alaska as “safe and effective” when Merck knew that Vioxx was unsafe and presented
significant health risks. 8 The State contends that Merck also withheld or concealed additional
knowledge of the drug’s dangers obtained after Vioxx was advertised and sold to consumers. 9
According to the State, Merck’s misrepresentations regarding the safety of Vioxx “induced
the State of Alaska to authorize expenditures of Medicaid funds for the purchase of Vioxx…
Dkt. 1-3 at 4 ¶ 7.
AS 45.50.471(a); Dkt. 1-3.
Dkt. 1-3 at 5 ¶ 8.
Id. at 5 ¶ 10.
result[ing] in the expenditure of millions of dollars of state funds or state controlled funds on
Vioxx.” 10 Additionally, the State contends that Merck launched two campaigns in relation to the
marketing of Vioxx: “an expensive, promotional advertising campaign to convince lay people to
request Vioxx from their healthcare professionals for the treatment of their pain” and a
“campaign of intimidation against researchers and physicians who questioned the safety of
Vioxx.” 11 During these campaigns, Merck allegedly knew about the harmful effects of Vioxx,
which were confirmed by the company’s own medical research. 12 The State’s original complaint
sought the recovery of “the value of all payments that the State of Alaska made for Vioxx
prescriptions.” 13 In its amended complaint, the State eliminated that language and seeks
injunctive relief, civil penalties, costs and attorney’s fees, and pre-judgment and post-judgment
On January 17, 2006, Merck removed the case to federal court on the basis of federal
question jurisdiction. 15 Merck argued that the State’s claims implicate two areas of federal law:
the Food, Drug & Cosmetic Act, 21 U.S.C. § 301, et seq. (FDCA), and the statutes regulating
Medicaid, 42 U.S.C. §§ 1396r-8(d)(1)(B), (d)(4). 16 Merck then requested a stay of the
Dkt. 1-3 at 8 ¶¶ 22, 23.
Id. at 5-6 ¶ 10.
Id. at 5 ¶ 10.
Id. at 8 ¶ 2.
Dkt. 46-6 at 26.
Dkt. 46-4 at 4 ¶ 8.
proceedings pending transfer of the case to the MDL Panel. 17 Subsequently, the State filed a
motion to remand with the Court, which was opposed by Merck. 18
On February 7, 2006, the MDL Panel issued a conditional transfer of the case to the Vioxx
MDL in the Eastern District of Louisiana, stating that the action involves “questions of fact
which are common to the actions previously transferred” to the Vioxx MDL. 19 Based on the
MDL Panel’s conditional transfer order, the Court granted Merck’s request to stay the
proceedings. 20 The Court reasoned: “As this case does not plainly warrant immediate remand,
the Court finds that transfer to the MDL panel will promote efficient and coordinated
proceedings, including the consideration of remand motions.” 21
In October 2014, the case returned to this Court. On December 3, 2014, the State filed a
renewed/supplemental motion for remand. 22 The State argues that the original and amended
complaints allege claims under only Alaska law and that Merck’s liability “depends only on
whether its conduct violated Alaska law.” 23 Merck opposes the remand, again asserting that the
Dkts. 13 (Motion to Remand); 19 (Opposition to Motion to Remand).
Dkt. 17, Ex. A.
Id. The judge presiding over the Vioxx MDL proceedings expressed his preference that
remand motions be presented to the MDL Panel to promote consistency and fairness. Dkt. 19,
Ex. 1 (Transcript of Status Conference at 21, MDL No. 1657 (June 23, 2005)).
Id. at 1.
Court has federal question jurisdiction because the State’s claims “directly implicate federal
Medicaid law.” 24
The removing party bears the burden of establishing federal jurisdiction. 25 In a case brought
by a sovereign state, federal courts are advised to be “reluctant to snatch cases which a State has
brought from the courts of that State, unless some clear rule demands it.” 26 Once the case has
been removed, the nonmoving party bears the burden of proof and persuasion in establishing that
remand is appropriate. 27 The Court will decline to exercise jurisdiction and remand the case to
the state court “if there is any doubt as to the right of removal in the first instance.” 28
Merck removed the instant action on the basis of federal question jurisdiction. Federal
question jurisdiction can exist over claims asserted under state law, as long as the state law
claims: (1) “necessarily raise a stated federal issue”; (2) the federal issue is “actually disputed
and substantial”; and (3) the issue is one “which a federal forum may entertain without
disturbing any congressionally approved balance of federal and state responsibilities.” 29 Even a
complaint brought in state court that makes explicit allegations involving violations of federal
Dkt. 55 at 6.
Geographic Expeditions Inc. v. Estate of Lhotka, 599 F.3d 1102, 1106-07 (9th Cir. 2010).
Franchise Tax Bd. of Cal. v. Constr. Laborers Vacation Trust for So. Cal., 463 U.S. 1, 22
Mondragon v. Capital One Auto Finance, 736 F.3d 880, 883 (9th Cir. 2012).
Geographic Expeditions, 599 F.3d at 1107.
Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 312 (2005).
law does not necessarily confer federal jurisdiction. 30 The removing party must still show that
the state law claim necessarily raises a substantial issue of federal law. 31
The State’s Original Complaint alleges that Merck’s misrepresentations and suppression of
evidence of the risks of Vioxx “induced the State of Alaska to authorize expenditure of Medicaid
funds for the purchase of Vioxx.” 32 The State’s Amended Complaint omitted reference to
Medicaid and does not seek relief for state expenditures on Vioxx. 33 At oral argument, Merck
suggested that the State may be manipulating jurisdiction by amending its original complaint to
dismiss the claim for recovery of expenditures on Vioxx. The Court does not find such
manipulation; it is common for a plaintiff to amend its complaint to narrow the scope of the
issues or hone the claims, particularly after years of discovery and other proceedings.
Regardless, the Court finds that neither the Original Complaint nor the Amended Complaint give
rise to federal jurisdiction.
Merck contends that the State’s “theory of recovery is that it would not have covered Vioxx
prescriptions [under Medicaid] if Merck adequately disclosed the drug’s risks.” 34 Based on this
allegation, Merck argues that this case is governed by the Supreme Court’s holding in Grable. In
Grable, a plaintiff brought a state common law quiet title action alleging superior title over a
Nevada v. Bank of Am. Corp., 627 F.3d 661, 674-75 (9th Cir. 2012).
Id. at 674.
Dkt. 1-3 at 7 ¶22.
See, Dkt. 46-6.
Dkt. 55 at 11.
parcel of land that had been seized by the Internal Revenue Service (IRS). 35 The plaintiff’s
complaint alleged that he had superior title because the IRS failed to serve notice pursuant to 26
U.S.C. § 6335(a). 36 The defendant removed the case to federal court on federal question
jurisdiction, arguing that the plaintiff’s claim hinged upon an interpretation of federal tax law. 37
The Supreme Court held that federal jurisdiction was appropriate because a federal court may
entertain an action where the state law claim “implicate[s] significant federal issues.” 38
Here, however, the State’s claims do not hinge upon an interpretation of federal law. The
State does not contest its obligations to pay for approved drugs under Medicaid law; instead, the
State claims that it was fraudulently induced to cover Vioxx and this, in turn, triggered the
State’s obligation to reimburse payments spent on Vioxx prescriptions. Thus, the Court need not
analyze the Medicaid statutes in determining whether the State is entitled to relief. 39 Federal law
is therefore not implicated by the State’s claims.
Even if the State’s claims implicated federal law, the Court will not exercise federal
jurisdiction unless the resolution of a federal issue is necessary in order for the State to prevail on
its state law claims. 40 In Grable, federal jurisdiction was appropriate because the issue of
545 U.S. 308, 311 (2005).
Id. at 312.
While Merck removed this case on the grounds that substantial questions of federal law
involving both the FDCA and Medicaid statutes are raised by the State’s complaint, Merck did
not address the FDCA in its opposition to remand. Dkt. 55 at 8 FN 1.
Rains v. Criterion Systems, Inc., 80 F.3d 339, 345 (9th Cir. 1996); Nevada, 672 F.3d at 675.
“[w]hether Grable was given notice within the meaning of the federal statute” was an “essential
element” of his state common law claim. 41 In other words, the plaintiff could not obtain the
relief he sought without first establishing a violation of federal tax law.
In contrast, the federal Medicaid law raised in the State’s complaint is not an “essential
element” of the state law claims that must be analyzed before the State can obtain relief. The
Court need not assess the construction of Medicaid law or Medicaid regulations or apply them to
the facts of the case in order to resolve whether Merck violated the UTPA. State law
independently supports the State’s theory for relief. Thus, assuming arguendo that federal
Medicaid law is implicated by the state law claims, the Court does not find that the federal law is
a necessary element of the State’s theory for relief. 42
Moreover, federal jurisdiction requires “not only a contested federal issue, but a substantial
one,” which is lacking in the present lawsuit. 43 The Court reached the same conclusion in a
similar case, Alaska v. Eli Lilly & Co. 44 In Eli Lilly, the State of Alaska brought suit against a
pharmaceutical company seeking damages and penalties arising from alleged violations of the
UTPA from the marketing and sale of the drug Zyprexa. 45 Just as in this case, the defendant
asserted that since Medicaid program funds were at issue in the suit, the resolution of the claims
Grable, 545 U.S. at 312.
See, e.g., Gunn v. Minton, 133 S.Ct. 1059, 1065 (2013) (Finding that the resolution of a federal
patent infringement issue was “necessary” to the plaintiff’s state law malpractice claim because
the plaintiff first had to prove that “he would have prevailed in his federal patent infringement
case if only [defendants] had timely made an experimental-use argument on his behalf.”).
Grable, 545 U.S. at 308.
2006 WL 2168831 (D. Alaska July 28, 2006).
Id. at *1.
required application of federal Medicaid law. 46 The Court disagreed, finding that the State of
Alaska’s claims “do not implicate a substantial federal question.” 47 Eli Lilly is on all fours with
the instant action. Again, the Court finds that even if the State’s claims under the UTPA
implicate a necessary federal issue, it is not substantial enough to confer federal jurisdiction.
As explained by the Ninth Circuit, the federal jurisdiction established in Grable “applies to a
‘special and small category’ of cases.” 48 Even if an issue of federal law was present in this case,
federal jurisdiction must be “consistent with congressional judgment about the sound division of
labor between state and federal courts.” 49 Since the present case was brought by the State of
Alaska and the state law claims are not inextricably intertwined with federal issues, the Court
may not entertain the claims without disturbing the congressionally-approved balance of state
and federal judicial responsibilities.
For the foregoing reasons, the Court grants the State’s motion at Docket 46 and REMANDS
the case to state court.
IT IS SO ORDERED.
Dated at Anchorage, Alaska, this 6th day of February, 2015.
/s/ Timothy M. Burgess
TIMOTHY M. BURGESS
UNITED STATES DISTRICT JUDGE
Id. at *3.
Id. at *4.
Nevada, 672 F.3d at 674 (quoting Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677,
Grable, 545 U.S. at 313.
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