Cunningham v. Birch
Filing
63
MEMORANDUM OPINION AND ORDER by Magistrate Judge Nina Y. Wang on 2/17/17, GRANTING 24 Defendant's Motion to Dismiss, DENYING without prejudice 19 Plaintiff's Motion for Certification of Class, DENYING without prejudice 61 Motion for L eave to Intervene, and DENYING as MOOT 62 Defendant's Motion to Continue Hearing on Class Certification. This case is DISMISSED without prejudice due to lack of subject matter jurisdiction; and each party will bear its own costs and fees associated with this action. (nmarb, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 16-cv-02353-NYW
ROBERT CUNNINGHAM, on behalf of himself and all others similarly situated,
Plaintiff,
v.
SUSAN E. BIRCH, in her official capacity as Executive Director of the Colorado State
Department of Health Care Policy & Financing,
Defendant.
MEMORANDUM OPINION AND ORDER
Magistrate Judge Nina Y. Wang
This matter is before the court on Defendant’s Motion to Dismiss Under Fed. R. Civ. P.
12(b)(1) and 12(b)(6) (“Motion to Dismiss”) [#24, filed November 10, 2016].
The court
considers this motion pursuant to 28 U.S.C. § 636(c) and the Order of Reference dated October
31, 2016 [#18]. After considering the Parties’ briefing, including the Supplemental Authority
submitted by Plaintiff on February 14, 2017 [#60-1]; arguments at the December 22, 2016
hearing; and the applicable law, the court GRANTS Defendants’ Motion to Dismiss for lack of
standing.
BACKGROUND
The following facts are drawn from the Complaint, the briefing associated with the
instant Motion to Dismiss in this action, and viewed in the light most favorable to Plaintiff for
the purposes of considering the instant Motion to Dismiss.
The Medicaid program was
established by Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq. and is a cooperative
federal-state program that provides medical care to income-eligible families and individuals.
Blum v. Yaretsky, 457 U.S. 991, 993–94 (1982). While a state is not required to participate in the
Medicaid program, once it does, it must comply with the federal statutes and regulations
governing Medicaid. 42 U.S.C. § 1396a(a)(10). Colorado has elected to provide its citizens with
a Medicaid Program. Colo. Rev. Stat. § 25.5–4–101 et seq.
Defendant Susan E. Birch
(“Defendant”) is the Executive Director of the Colorado State Department of Health Care Policy
and Financing (“HCPF”), the agency responsible for administering the Colorado Medicaid
Program. [#1 at ¶ 5]. Plaintiff Robert Cunningham (“Plaintiff” or “Mr. Cunningham”) is a
Medicaid enrollee in Colorado who suffers from a chronic infection from HCV, a virus causing
Hepatitis C. [Id. at ¶¶ 1, 4, 7]. Untreated, chronic Hepatitis C can cause symptoms such as pain,
fatigue, depression, and an increased risk of liver failure, as well as fibrosis, cirrhosis, liver
cancer, and death. [Id.]. The severity of liver damage due to the Hepatitis C virus is measured
by a Metavir Fibrosis Score (“MFS”), with a score of F0 or F1 indicating no or minimal liver
scarring to F4 indicating cirrhosis. [Id. at ¶ 4 & n.1]. Mr. Cunningham has a MFS score of F1.
[Id. at ¶ 4].
Mr. Cunningham contends that under the HCPF’s criteria, his MFS score categorically
disqualifies him from receiving Direct Acting Antiviral medications (“DAAs”), which he
describes as “breakthrough medications.”
[Id.].
Starting in 2013, the Federal Drug
Administration (“FDA”) has approved a series of DAAs for the treatment of HCV, which are
capable of curing the disease within a relatively short course of once-daily pills over the course
of 8-12 weeks, with minimal side effects. [Id. at ¶ 19]. The FDA has approved DAAs for use on
HCV infected patients regardless of fibrosis score. [Id. at ¶ 20]. On November 5, 2015, the
federal Centers for Medicare and Medicaid Services (“CMS”) issued Guidance, advising state
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Medicaid agencies that the new DAAs should be included in coverage of outpatient prescription
drugs. [Id. at ¶ 28 (citing CENTERS FOR MEDICARE AND MEDICAID SERVICES, Assuring Medicaid
Beneficiaries Access To Hepatitis C (HCV) Drugs (Release No. 172), Nov. 5, 2015)]. In
pertinent part, CMS indicated that it was “concerned that some states are restricting access to
DAA HCV drugs contrary to the statutory requirements in section 1927 of the Act by imposing
conditions for coverage that may unreasonably restrict access to these drugs.” [Id. at ¶ 29]. Mr.
Cunningham cites to guidelines and studies that indicate that DAAs are recommended for all
patients with chronic HCV infections, with a narrow exception for patients with short life
expectancies that cannot be remediated by treating HCV, by transplantation or by other directed
therapy. [Id. at ¶ 23].
Mr. Cunningham’s physician submitted a prior authorization request (“PAR”) for DAAs
on or about August 8, 2016. [#24 at 6; #24-3 at ¶¶4–6]. The August 8 PAR was considered
under a previous version of HCPF’s Preferred Drug List [#24-2], and Colorado Medicaid denied
Mr. Cunningham DAA treatment because his MFS was F1. 1 [#1 at ¶ 4].
He avers that he is
“frustrated, irritated, disheartened, and disappointed” because he is unable to receive this
breakthrough medication that could cure him of HCV. [Id. at ¶¶ 1, 4].
On September 2, 2016, Colorado Medicaid promulgated a new Preferred Drug List and
modified the prior authorization criteria for DAA treatment, but did not eliminate the MFS
criteria completely. [Id. at ¶ 31; #24-1; #24-1 at 22–24]. Rather, it lowered the fibrosis score
minimum from F3 to F2 and eliminated the fibrosis score altogether for women planning to
1
Defendant does not agree that Mr. Cunningham’s prior authorization request was denied due to
his fibrosis score, but rather, because he did not submit sufficient information to satisfy the
criteria. [#24-2 at ¶ 8]. For the purposes of the Motion to Dismiss, however, this court takes the
allegations in Mr. Cunningham’s Complaint as true.
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become pregnant the following year. [#1 at ¶ 31; #24-1 at 23]. It also contemplates DAA
treatment for individuals “with serious extra-hepatic manifestations of HCV such as
leukocytoclastic
vasculitis,
hepatocellular
carcinoma
meeting
Milan
criteria,
membranoproliferative glomerulonephritis, or symptomatic cryoglobulinemia despite mild liver
disease” or “with fibrosing cholestatic HCV.” [#24-1 at 22]. As of the filing of this action, Mr.
Cunningham had not submitted a request for approval for treatment under the treatment criteria
effective October 1, 2016. 2 [#57 at 4].
LEGAL STANDARDS
I.
Subject Matter Jurisdiction and Standing
Federal courts are courts of limited jurisdiction. Under Article III of the United States
Constitution, federal courts only have jurisdiction to hear certain “cases” and “controversies.”
Susan B. Anthony List v. Driehaus, 134 S. Ct. 2334, 2341 (2014). As such, courts “are duty
bound to examine facts and law in every lawsuit before them to ensure that they possess subject
matter jurisdiction.” The Wilderness Soc. v. Kane Cty., Utah, 632 F.3d 1162, 1179 n.3 (10th Cir.
2011) (Gorsuch, J., concurring). Indeed, courts have an independent obligation to determine
whether subject matter jurisdiction exists, even in the absence of a challenge from any party.
1mage Software, Inc. v. Reynolds & Reynolds, Co., 459 F.3d 1044, 1048 (10th Cir. 2006) (citing
Arbaugh v. Y & H Corp., 546 U.S. 500 (2006)).
A plaintiff must establish Article III standing to bring each of his claims separately. See
DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352 (2006); Bronson v. Swensen, 500 F.3d 1099,
2
In January 2017, Mr. Cunningham’s treating physician submitted a renewed prior authorization
request for treatment with DAAs. [#57 at 4]. Mr. Cunningham’s latest request has neither been
denied nor approved under the current criteria. See [id.].
4
1106 (10th Cir. 2007). The standing inquiry has two components: constitutional and prudential.
To establish constitutional standing, a plaintiff must demonstrate “(1) an ‘injury in fact,’ (2)
sufficient ‘causal connection between the injury and the conduct complained of,’ and (3) a
‘likel[ihood]’ that the injury ‘will be redressed by a favorable decision.’” Susan B. Anthony List,
134 S. Ct. at 2341 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992)). A
plaintiff must also satisfy the requirements of prudential standing.
To establish prudential
standing, a plaintiff must (1) assert his own rights, rather than those belonging to third parties;
(2) demonstrate that his claim is not simply a “generalized grievance;” and (3) show that
plaintiff’s grievance falls within the zone of interests protected or regulated by statutes or
constitutional guarantee invoked in the suit. See Bd. of Cty. Comm’rs of Sweetwater Cty. v.
Geringer, 297 F.3d 1108, 1112 (10th Cir. 2002) (citations omitted). The elements of standing
“are not mere pleading requirements but rather an indispensable part of the plaintiff’s case.”
Lujan, 504 U.S. at 561.
In addition, in order to bring a class action, the named plaintiff must have individual
standing, and may not rely upon potential class members’ injuries to establish their standing. See
Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 40 n. 20, (1976) (citing Warth v. Seldin, 422
U.S. 490, 502 (1975) (stating that named plaintiffs who seek to represent a class “must allege
and show that they personally have been injured, not that injury has been suffered by other,
unidentified members of the class to which they belong and which they purport to represent”));
Thomas v. Metro. Life Ins. Co., 631 F.3d 1153, 1159 (10th Cir. 2011) (“Prior to class
certification, the named Plaintiffs’ failure to maintain a live case or controversy is fatal to the
case as a whole—that unnamed plaintiffs might have a case or controversy is irrelevant.”). If the
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named plaintiff does not have standing, then this court lacks subject matter over the action as a
whole. O’Shea v. Littleton, 414 U.S. 488, 494 (1974).
II.
Rule 12(b)(6)
Under Rule 12(b)(6), a court may dismiss a complaint for “failure to state a claim upon
which relief can be granted.” Fed. R. Civ. P. 12(b)(6). In deciding a motion under Rule
12(b)(6), the court must “accept as true all well-pleaded factual allegations . . . and view these
allegations in the light most favorable to the plaintiff.” Casanova v. Ulibarri, 595 F.3d 1120,
1124 (10th Cir. 2010) (quoting Smith v. United States, 561 F.3d 1090, 1098 (10th Cir. 2009)).
However, a plaintiff may not rely on mere labels or conclusions, “and a formulaic recitation of
the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
555 (2007).
“To survive a motion to dismiss, a complaint must contain sufficient factual matter,
accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 129 S.
Ct. 1937, 1949 (2009). Plausibility refers “to the scope of the allegations in a complaint: if they
are so general that they encompass a wide swath of conduct, much of it innocent, then the
plaintiffs ‘have not nudged their claims across the line from conceivable to plausible.’” Robbins
v. Oklahoma, 519 F.3d 1242, 1247 (10th Cir. 2008) (citation omitted). “The burden is on the
plaintiff to frame ‘a complaint with enough factual matter (taken as true) to suggest’ that he or
she is entitled to relief.” Id. The ultimate duty of the court is to “determine whether the
complaint sufficiently alleges facts supporting all the elements necessary to establish an
entitlement to relief under the legal theory proposed.” Forest Guardians v. Forsgren, 478 F.3d
1149, 1160 (10th Cir. 2007).
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ANALYSIS
I.
Standing
The court first considers whether Mr. Cunningham has sufficient standing to bring this
action. Defendant argues that Mr. Cunningham lacks standing because he is seeking prospective
relief only, but the Complaint only alleges a past injury, under a policy that is no longer in force,
to support his claim. [#24 at 11]. In support of its Motion to Dismiss, Defendant offers the
Affidavit of Brittany Schock, an employee of the HCPF, regarding Mr. Cunningham’s prior
authorization request. [#24-3 at 1]. Plaintiff urges this court to confine its inquiry only to the
allegations as pled in the Complaint, taken as true. [#40 at 10]. Plaintiff contends that he has
sufficiently pled standing because: (1) he is an eligible beneficiary under Colorado Medicaid;
(2) he has chronic HCV; (3) he has a fibrosis score of F1; and (4) he is therefore ineligible for
DAAs under HCPF’s current criteria. [Id.].
A.
Appropriate Standard of Review
As an initial matter, the court addresses the applicable standard of review. Standing is
adjudicated under Rule 12(b)(1) of the Federal Rules of Civil Procedure, because it is a challenge
to a court’s jurisdiction, under Article III of the Constitution, to adjudicate the action. Plaintiff
cites to no authority, and this court found none, that allows this court to simply decide to “apply
the Rule 12(b)(6) standard of review to Defendant’s standing challenge.” [#40 at 9]. Instead, the
court converts a motion brought under Rule 12(b)(1) to one under Rule 12(b)(6) or Rule 56 when
the jurisdictional question requires the resolution of an aspect of the substantive claim. See Holt
v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995). Plaintiff does not argue, nor does this
court find, that the issue of standing is intertwined with the merits of this action. Nor does this
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court agree that Defendant is making a facial challenge to Plaintiff’s standing; rather,
Defendant’s standing arguments implicate the factual underpinnings of the alleged injury to
Plaintiff. See generally [#24, #48].
Nevertheless, “[w]hen evaluating a plaintiff’s standing at the stage of a motion to dismiss
on the pleadings, ‘both the trial and reviewing courts must accept as true all material allegations
of the complaint, and must construe the complaint in favor of the complaining party.’” S. Utah
Wilderness All. v. Palma, 707 F.3d 1143, 1152 (10th Cir. 2013) (quoting Warth, 422 U.S. at
501). But it is equally clear that it is appropriate for this court to look beyond the four corners of
the Complaint, including affidavits submitted by the Parties, in resolving the issue of standing,
though those are also construed in the light most favorable to the plaintiff. Id. And even in
adjudicating a motion to dismiss under Rule 12(b)(6), this court would be permitted to consider
documentation (or lack thereof) of Plaintiff’s prior authorization requests related to DAAs as
well as the prior authorization criteria for DAAs without converting this instant motion to one for
summary judgment, as both are central to the claims raised in this suit and there is no dispute as
to its authenticity. See Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 (10th Cir. 2002)
(discussing when a court may look beyond the four corners of a complaint on a Rule 12(b)(6)
motion). Indeed, to hold otherwise would be to permit a plaintiff to simply ignore the facts
associated with his case, for a potentially more favorable pleading. Cf. GFF Corp. v. Associated
Wholesale Grocers, Inc., 130 F.3d 1381, 1385 (10th Cir. 1997).
B.
Concrete and Particularized Injury
The court now turns to whether Mr. Cunningham has constitutional standing to bring this
action. To establish the existence of an “injury in fact,” “a plaintiff must offer something more
8
than the hypothetical possibility of injury.”
Colorado Outfitters Ass’n v. Hickenlooper
(“Colorado Outfitters II”), 823 F.3d 537, 544 (10th Cir. 2016). Instead, the alleged injury must
be “concrete, particularized, and actual or imminent.” Id. (citing Lujan, 504 U.S. at 560). Where
a plaintiff seeks prospective relief like an injunction, the plaintiff must be suffering a continuing
injury or be under a real and immediate threat of being injured in the future. See Colorado Cross
Disability Coal. v. Abercrombie & Fitch Co., 765 F.3d 1205, 1211 (10th Cir. 2014).
In this case, there is no dispute that at the time of the inception of this litigation, Mr.
Cunningham had not submitted a PAR under the currently effective guidelines. [#1; #19-16 at
¶ 5]. Thus, the operative inquiry is whether Mr. Cunningham is under a real and immediate
threat of being injured in the future. During oral argument, Mr. Cunningham contended that no
such PAR was necessary, because given the effective criteria, he would not be eligible for
treatment. In support of this position, Mr. Cunningham points to his own Declarations and that
of his treating physician, Alvaro F. Martinez-Camacho, who indicated that Mr. Cunningham’s
medical conditions do not meet any of the prior authorization criteria for treatment. [#19-16;
#40-2; #40-1]. Defendant argued that Dr. Martinez-Camacho’s opinion that a subsequent PAR
would be futile could not confer standing, as there was no actual injury to Mr. Cunningham and
his request for prospective relief could not be premised on a past denial under criteria that were
no longer effective. Mr. Cunningham contends that he need not show that he has applied for
coverage and had been denied when it is clear an application would be rejected, as such a
requirement would be “silly.” [#40 at 12]. This court respectfully disagrees.
Plaintiff is correct that standing does not necessarily require a plaintiff to “await the
consummation of threatened injury to obtain preventive relief.”
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Blum, 457 U.S. at 1000.
Standing requires only that a plaintiff be immediately harmed or immediately threatened with
harm. Id. The concept of “imminence” is concededly “elastic,” and is put in place to ensure that
the alleged injury is not too speculative for Article III purposes. Clapper v. Amnesty Int’l USA,
133 S. Ct. 1138, 1147 (2013).
Yet allegations of possible future injury are generally not
sufficient to satisfy the requirements of constitutional standing. Id. Nor can this court simply
presume that standing is satisfied in order to reach the merits of this action, no matter the
importance of such claim. See Colorado Outfitters II, 823 F.3d at 543. Rather, the Supreme
Court has described “imminence” as “certainly impending.” Clapper, 133 S. Ct at 1147.
This court is persuaded under the cases cited by Defendant in this matter that Mr.
Cunningham’s prior denial of DAAs under a now-obsolete policy is insufficient to confer
standing to challenge a policy under which he had not applied until after the oral argument on the
Motion to Dismiss. See Buchwald v. Univ. of N.M. Sch. of Med., 159 F.3d 487, 491 (10th Cir.
1998); Schutz v. Thorne, 415 F.3d 1128, 1134–35 (10th Cir. 2005). The court also find this
conclusion supported by the Tenth Circuit’s determination in Smith v. United States Court of
Appeals for the Tenth Circuit, 484 F.3d 1281 (10th Cir. 2007). In that case, the plaintiff sought
to challenge the adequacy of state appellate review culminating in unpublished opinions, because
he had just taken his state appeal when he filed the action, and the state appellate court had taken
no action as to his appeal yet. In so ruling, the Tenth Circuit observed:
Mr. Smith had just taken his state appeal when he filed this action. He was in no
position to challenge the adequacy of state appellate review in cases culminating
in unpublished opinions unless he could show that he would in fact receive such
review from the state court of appeals (and from the state supreme court as well, if
it took the case on certiorari). As we have explained,
an injury in fact must be actual or imminent, not conjectural or
hypothetical. Allegations of possible future injury do not satisfy
10
the requirements of Art[icle] III. A threatened injury must be
certainly impending to constitute injury in fact. An Article III
injury must be more than a possibility. The threat of injury must be
both real and immediate.
Id. at 1155 (quotation marks, ellipses and citations omitted). Mr. Smith cannot
make this required showing because the manner of resolution of his future
appeals is entirely speculative.
Smith, 484 F.3d at 1285 (emphasis added).
Like in Smith, the manner of resolution of Mr. Cunningham’s PAR is still speculative at
this point, and was also speculative at the inception of this action as his physician had not
submitted a PAR under the currently effective criteria at that time. Cf. Barryman–Turner v.
D.C., 115 F. Supp. 3d 126, 136 (D.D.C. 2015) (finding no standing to seek prospective relief
when plaintiff had not sought relief under the existing statute that had been amended since
plaintiff’s denial of benefits). The self-determination, by Mr. Cunningham and his doctor, that
he will necessarily be denied, submitted after the inception of this action, is insufficient to
change this court’s conclusion. Standing is determined at the time the action is first brought; it
generally cannot be based on subsequent events. See Mink v. Suthers, 482 F.3d 1244, 1254 (10th
Cir. 2007). “Accordingly, the initial standing of the original plaintiff is assessed at the time of
the original complaint, even if the complaint is later amended.” S. Utah Wilderness All., 707
F.3d at 1153. At the inception of the action, Mr. Cunningham had not yet been subject to the
now effective criteria. Taken to its logical end, Plaintiff’s argument appears to be that a plaintiff
need not have suffered an actual injury or be imminently threatened with such injury to have
standing to challenge the Preferred Drug List criteria, but rather, have simply determined,
unilaterally, that his PAR will likely be denied.
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In this court’s view, such a unilateral
determination is insufficient to confer constitutional standing. Nor can the potential Intervenors
[#61] save this action from dismissal, even if they have standing in their own right.
Mr. Cunningham’s arguments to the contrary do not persuade this court. As an initial
matter, unlike Early v. Bankers Life and Cas. Co., 959 F.2d 75, 79 (7th Cir. 1992) cited by
Plaintiff, the law of this District does not permit a plaintiff to amend his complaint through
responding to a motion to dismiss. See In re Qwest Communications Int'l., Inc., 396 F. Supp. 2d
1178, 1203 (D. Colo. 2004). Second, Plaintiff cites no law, and this court could not find any,
that supported the proposition that a plaintiff’s unilateral determination of futility was sufficient
to confer constitutional standing. [#40 at 4–10]. Third, Mr. Cunningham’s request to defer
ruling on standing for an evidentiary hearing is unnecessary. This court does not base its
determination on Defendant’s characterization of its consideration on Plaintiff’s prior PAR under
no longer effective criteria; it reaches this conclusion based on the fact that Mr. Cunningham, at
the inception of this action, has failed to even seek review under the existing criteria. There is no
dispute as to that fact and, therefore, no need for an evidentiary hearing—particularly when
Plaintiff has already availed himself of the opportunity to submit additional evidence.
In reaching this conclusion, this court is particularly mindful that the Supreme Court has
repeatedly observed, “[n]o principle is more fundamental to the judiciary’s proper role in our
system of government than the constitutional limitation of federal-court jurisdiction to actual
cases or controversies.” Clapper, 133 S. Ct. at 1146 (citations omitted). Grounded in principles
of separation of powers, standing “serves to prevent the judicial process from being used to usurp
the powers of the political branches.” Id. (citations omitted). Even as in this case, where there is
no requirement for exhaustion of administrative remedies, this court concludes that standing
12
requires a plaintiff to do something more than simply predict that the actions of the executive
will harm him. This is particularly true when nothing about the circumstances prevent a plaintiff
from actually suffering the injury-in-fact; as Plaintiff himself observes, “thousands” of
Coloradans have been denied DAAs, presumably under the existing criteria. This is simply not a
case where the concept of “imminence” needs or should be stretched to ensure review of the
challenged criteria.
When a court dismisses a case for lack of subject matter jurisdiction, this is not a
determination on the merits of the case, but only a decision that the court lacks the authority to
adjudicate the action. See Castaneda v. INS, 23 F.3d 1576, 1580 (10th Cir. 1994) (recognizing
federal courts are courts of limited jurisdiction and may only exercise jurisdiction when
specifically authorized to do so). If the court determines that it lacks subject matter jurisdiction
over a claim, it may not consider any other issue. See Cunningham v. BHP Petroleum Great
Britain PLC, 427 F.3d 1238, 1245 (10th Cir. 2005) (holding that once a federal court determines
that it is without subject matter jurisdiction, it must not proceed to consider any other issue).
For the foregoing reasons, IT IS ORDERED that:
(1)
Defendants’ Motion to Dismiss [#24] is GRANTED;
(2)
Plaintiff’s Motion for Certification of Class, Approval of Class Representatives,
and Approval and Appointment of Class Counsel [#19] is DENIED without prejudice;
(3)
Motion for Leave to Intervene on Behalf of Samuel Wilson and Earby Moxon
[#61] is DENIED without prejudice;
(4)
Defendant’s Motion to Continue Hearing on Class Certification [#62] is DENIED
as MOOT and the hearing and status conference currently set for February 22, 2017, at 2:00
p.m. is VACATED;
(5)
This case is DISMISSED without prejudice due to lack of subject matter
jurisdiction; and
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(6)
Each party will bear its own costs and fees associated with this action.
DATED: February 17, 2017
BY THE COURT:
s/Nina Y. Wang__________
Nina Y. Wang
United States Magistrate Judge
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