State of Delaware v. Purdue Pharma L.P. et al

Filing 35

MEMORANDUM regarding Motion to Remand (D.I. #4 ). Signed by Judge Richard G. Andrews on 4/25/2018. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

STATE OF DELAWARE, ex rel.
MATTHEW P. DENN,
Attorney General of the State of Delaware,
Plaintiff,
v.
PURDUE PHARMA L.P.,
PURDUE PHARMA INC.,
THE PURDUE FREDERICK COMPANY,
ENDO HEALTH SOLUTIONS INC.,
ENDO PHARMACEUTICALS INC.,
MCKESSON CORPORATION,
CARDINAL HEALTH, INC.,
AMERISOURCEBERGEN CORPORATION,
ANDA PHARAMACEUTICALS, INC.,
H.D. SMITH, LLC,
CVS HEALTH CORPORATION, and
W ALGREENS BOOTS ALLIANCE, INC.,

Civil Action No. 1:18-383-RGA

Defendants.
MEMORANDUM

Plaintiff, State of Delaware, originally filed this suit in the Superior Court of the State of
Delaware against manufacturers, distributors, and pharmacy retailers of prescription opioids,
alleging state common law claims for their roles in Delaware's opioid crisis. (DJ. 8 at 1-2).
Plaintiff asserted five claims against Defendant McKesson Corporation complaining of overdistribution of prescription opioids into Delaware, including Consumer Fraud ("Count V"),
Public Nuisance ("Count VI"), Negligence ("Count VII"), Unjust Enrichment ("Count VIII"),
and Civil Conspiracy ("Count IX"). (D.I. 1 at 2). McKesson filed a notice ofremoval to this
Court, asserting this Court has federal question jurisdiction. (Id. at 4). McKesson asserts
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Plaintiffs claims "aris[e] solely [from duties] under the [F]ederal Controlled Substances Act"
("FCSA"). (D.I. 25 at 1).
Presently before the Court is Plaintiffs Motion to Remand for lack of federal subject
matter jurisdiction. (D.I. 4). The issues have been fully briefed. (D.I. 8, 25, 27). For the reasons
set forth below, Plaintiffs Motion is GRANTED, and this action will be remanded to Superior
Court.

I.

BACKGROUND
Plaintiff filed this action against Defendants in Superior Court of the State of Delaware

on January 19, 2018. 1 (D.I. 1-1 at p. 10). Plaintiff alleges that Defendants created and fueled
Delaware's opioid crisis by, among other things, violating both the Delaware Controlled
Substances Act and the Federal Controlled Substances Act. Plaintiff alleges McKesson diverted
prescription opioids to an illegitimate channel, filled suspicious orders of opioids, and allowed
opioids to be lost or stolen from inventory. (Id. at 19). Plaintiff alleges only state law claims
based on theories of consumer fraud, nuisance, negligence, unjust enrichment, and civil
conspiracy against McKesson. 2 (Id. at 114-27). Nonetheless, on March 9, 2018, McKesson filed

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Plaintiff asserts claims alleging consumer fraud, public nuisance, negligence, and unjust
enrichment against "Manufacturer Defendants" in Counts I-IV. (D.I. 1-1 at p. 105-14). Plaintiff
asserts similar claims against "Distributor Defendants" (including McKesson) and the
"Pharmacy Defendants" in Counts V-VIII. (Id. at 114-25). Plaintiff asserts a claim against all
Defendants alleging civil conspiracy in Count IX. (Id. at 125-27). McKesson does not rely upon
any claims other than the ones brought against it.
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McKesson does not argue that unjust enrichment raises a federal question. (D.I. 25 at 7). Thus,
I will only discuss Counts V, VI, VII, and IX.
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a notice of removal and asserted this Court has federal question jurisdiction pursuant to the
FCSA. (D.I. 1 at 4). Plaintiff filed a motion for remand on March 13, 2018. (D.I. 4).

II.

LEGALSTANDARD
Section 1441 (a) permits the removal of "any civil action brought in a State court of which

the district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). "Only
state-court actions that originally could have been filed in federal court may be removed to
federal court by the defendant." Kline v. Security Guards, Inc., 386 F.3d 246, 251 (3d Cir. 2004)
(quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987)). If the case could not have been
filed in federal court, then removal under § 1441 is improper and remand is appropriate. Id.
Removal jurisdiction should be strictly construed against removal, and "all doubts [should] be
resolved in favor ofremand." Brown v. Jevic, 575 F.3d 322, 326 (3d Cir. 2009). The party
seeking removal bears the burden of demonstrating that removal is proper. Id.
To remove this case to federal district court, McKesson must establish that this Court has
"original jurisdiction" due to the action "arising under" federal law. 3 28 U.S.C. § 1331. Federal
question jurisdiction is governed by the well-pleaded complaint rule, which "provides that
federal jurisdiction exists only when a federal question is presented on the face of the plaintiffs
properly pleaded complaint." Kline, 3 86 F .3d at 251. This Court has federal question
jurisdiction over all civil actions "arising under the Constitution, laws, or treaties of the United
States." 28 U.S.C. § 1331.

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This case turns on whether there is federal question jurisdiction pursuant to § 1331. McKesson
does not argue for jurisdiction on the basis of diversity of citizenship pursuant to 28 U.S.C. §
1332. (D.1. 1 at 4).
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The "arising under" standard can implicate federal jurisdiction when "federal law creates
the cause of action asserted." Gunn v. Minton, 568 U.S. 251, 256 (2013) (citing American Well
Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260 (1916)). Alternatively, some state law
claims can implicate federal jurisdiction when they "implicate significant federal issues."
Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 312 (2005). These
cases are exemplary and constitute a "special and small category" of federal question
jurisdiction. Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006). To
determine whether a state-law claim implicates federal question jurisdiction, "the question is,
does a state-law claim necessarily raise a stated federal issue, actually disputed and substantial,
which a federal forum may entertain without disturbing any congressionally approved balance of
federal and state judicial responsibilities." Grable & Sons Metal Prods., 545 U.S. at 314. But,
"the mere presence of a federal issue in a state cause of action does not automatically confer
federal-questionjurisdiction." Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 813 (1986).
III.

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DISCUSSION

Plaintiffs Motion to Remand is granted because McKesson fails to show that Plaintiffs
state law claims implicate federal jurisdiction. Because there is no dispute that Plaintiffs claims
arise under state law, McKesson must show that a federal issue is (1) necessarily raised, (2)

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actually disputed, (3) substantial, and (4) capable of resolution without disrupting the federal-

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state balance approved by Congress. Grable & Sons Metal Prods., 545 U.S. at 314.

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A. Necessarily Raised

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A federal issue is "necessarily raised" when "vindication of a right under state law must

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necessarily turn on some construction of federal law." Manning v. Merrill Lynch Pierce Fenner

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& Smith, Inc., 772 F.3d 158, 163 (3d Cir. 2014) (alterations omitted), aff'd, 136 S. Ct. 1562

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(2016); see Grable & Sons Metal Prods., 545 U.S. at 310-12 (quiet title claim alleging IRS failed
to give adequate notice as defined by federal law). An example of a state claim necessarily
raising a federal issue occurs when the determination of federal law is an essential element of the
plaintiffs state law claim. See Smith v. Kansas City Title & Trust Co., 255 U.S. 180 (1921)
(state law claims to forbid the defendant from investing in illegal securities where the source of
illegality was that the federal bonds were issued unconstitutionally).
In this case, McKesson asserts that Plaintiffs claims are "affirmatively premised" on
Defendants' violations of the FCSA. (D.I. 25 at 11). Thus, argues McKesson, federal issues are
necessarily raised. (Id.). Specifically, McKesson notes that the claims are based on Defendants'
failure to monitor for, report, and halt suspicious orders for prescription opioids, which are duties
that arise under the FCSA. (Id.). Although a determination of whether Defendants violated the
FCSA may occur while addressing Plaintiffs claims, there is also the possibility that the claims
will be resolved without resolution of the federal issue at all. Based on the complaint, it is
possible for the state law claims to be resolved solely under state law. See Manning, 772 F.3d at
163 ("We conclude it was improper for the District Court to foreclose the possibility that
particular state causes of action could permit recovery solely under state law."). Although the
complaint addresses some duties or requirements under the FCSA, the complaint also lists
several other duties and standards that arise solely under state statutory or common law. (D.I. 11).

Specifically, in Count V, Plaintiff asserts that Distributor and Pharmacy Defendants
"misrepresented material facts [or] suppressed, concealed, or omitted material facts with the
intent that consumers will rely thereon." (D.I. 1-1 at p. 114). McKesson asserts that the claim is
based on federal law because Count V states Defendants "have violated Delaware and Federal
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laws and regulations by ... habitually filling suspicious or invalid orders for prescription opioids
... and failing to operate a system to disclose suspicious orders of controlled substances." (D.I.
25 at 7; D.I. 1-1 at p. 115). Count V, however, makes reference to far more than McKesson
draws attention to. In Count V, Plaintiff proffers one theory that makes reference to federal law,
but Plaintiff also asserts five other theories by which Defendants misrepresented or concealed
facts, each of which is unrelated to federal law. Most importantly, Count V asserts that
Defendants' misrepresentations and concealed facts constitute violations of§ 2513(a) of the
Delaware Consumer Fraud Act. (D.1. 1-1 at p. 116). Although Plaintiff asserts Defendants
violated the Delaware Consumer Fraud Act by misrepresenting their alleged violations of federal
law, Defendants may be found to have violated the Delaware Consumer Fraud Act on any of the
other five theories Plaintiff asserted in the complaint. See Manning, 772 F.3d at 164 (noting no
federal question is necessarily raised where plaintiff could prevail on state claims without the
need to prove or establish a violation of federal law despite alleging both federal and state
violations). The federal issue of whether Defendants misrepresented their compliance or
violation of federal laws is not necessarily raised if Plaintiff's claim may proceed solely under
one of the many state law theories Plaintiff asserted. For example, "[d]efendants ...
misrepresented or concealed material facts that they ... have failed to implement effective
business practices to guard against diversion of highly-addictive opioid products." (D.1. 1-1 at p.
114-15).
In Count VI, Plaintiff asserts a public nuisance claim alleging Defendants unreasonably
interfered with "the common rights of the public" by distributing prescription opioids to
unauthorized users in Delaware. (Id. at 116-17). McKesson asserts that this claim cannot be
addressed without determining whether Defendants violated the FCSA regarding the reporting of
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"suspicious orders." (D.I. 25 at 12). Much like Count V, however, Plaintiff may prevail on this
claim by showing Defendants violated the Delaware Controlled Substances Act ("DCSA"). See
16 Del. C. § 4735(b)(l)-(2) (requiring distributors to maintain "effective controls against
diversion [into illegitimate] channels"). The DCSA requirements, although not as robust as
FCSA requirements, are likely broad enough to encompass the allegations in the complaint and
may avoid addressing the federal statute. 4 Even more relevant, McKesson noted that Plaintiff
must show that Defendants acted unreasonably or unlawfully, and based on Plaintiffs other
allegations in Count VI, it is possible for Plaintiff to show Defendants acted unreasonably
without reference to the FCSA. (D.I. 25 at 12; D.I. 1-1 at p. 116-20).
McKesson does not directly address whether Counts VII and IX necessarily raise federal
issues (D.I. 25 at 10-12), but the analysis is essentially the same. Plaintiff alleges Defendants'
conduct fell below the standard of care due to Defendants' violation of the FCSA and failure to
report suspicious orders of prescription opioids. (D.I. 1-1 at p. 121). Although Plaintiff again
references federal law in the claims, Plaintiff notes other standards of care, without reference to
federal law, which Defendants' conduct may fall below. Even ifthe violation of a federal statute
was an element of the state law negligence claim, "a complaint alleging a violation of a federal
statute as an element of a state cause of action ... does not state a claim 'arising under the
Constitution, laws, or treaties of the United States." Merrell Dow, 478 U.S. at 817 (holding state
law claim using violation of federal law as negligence per se insufficient to invoke federal

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Although McKesson asserts that the requirement of reporting and halting suspicious orders is
not found in the DCSA, the state court should be the court to make the determination of the reach
of its law. Manning, 772 F.3d at 163 (citing United Jersey Banks v. Parell, 783 F.2d 360, 367
(3d Cir. 1986)).
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question jurisdiction). Because the claims do not rely solely on Defendants' violations of federal
law, but rather rely on multiple alternative theories, I find that the federal issues in this case are
not necessarily raised. 5

B. Actually Disputed
The parties disagree as to the meaning of "actually disputed." (D.I. 8 at 12; D.I. 25 at 1213). Under the circumstances, I do not need to resolve the dispute, and will decline to do so.

C. Substantiality
Even assuming both that a federal issue is necessarily raised and that it is actually
disputed, the claims in this case do not meet the substantiality requirement. Federal issues must
be significant "to the federal system as a whole." Gunn, 568 U.S. at 260. "[I]t is not enough that
the federal issue be significant to the particular parties in the immediate suit." Id. "[S]omething
more, demonstrating that the question is significant to the federal system as a whole, is needed."
Id. at 264.

The determination of whether Defendants violated the FCSA is not substantial to the
government as a whole. Most importantly, the parties do not seek to interpret the FCSA such
that it affects the manner in which the government operates. This is unlike the case in Grable &
Sons, where the parties sought to determine the meaning of "notice," which would substantially

affect the way in which the IRS operated in satisfying its claims for delinquency. 545 U.S. at
315. Rather, the federal issues in this case will be substantial only to the parties. The outcome
will not necessarily be dispositive of Plaintiffs claims and will not be controlling in any other

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This result is not surprising. As the Court of Appeals has noted, "[o]nly a 'slim category' of
cases satisfy the Grable test." Manning, 772 F .3d at 163.
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case, as it will involve a factual determination relating to Defendants' conduct. See Empire

Healthchoice Assurance, Inc., 547 U.S. at 700 (noting that Grable & Sons was substantial
because its resolution "would be controlling in numerous other cases"). The federal issues here
are not a result of "the action of any federal department, agency, or service" but are a result of
determining whether Defendants acted negligently or engaged in consumer fraud, nuisance, or
civil conspiracy. See id.
Plaintiff argues that the absence of a federal cause of action in the FCSA precludes a
finding of substantiality in this case. (D.I. 8 at 13-14). I disagree with Plaintiff on this point. As
McKesson argues, a federal cause of action is not required to implicate federal question
jurisdiction, and some federal issues may be sufficiently substantial despite the lack of a federal
cause of action. See Grable & Sons Metal Prods., 545 U.S. at 318 ("[T]he absence of a federal
private right of action [i]s evidence relevant to, but not dispositive of, the 'sensitive judgments
about congressional intent' that § 1331 requires.").
Nevertheless, the federal issues in this case-whether Distributor Defendants violated the
FCSA-are not sufficiently substantial to the federal government as a whole. Much like the case
in Merrell Dow, the absence of a federal cause of action weighs heavily in favor of remanding a
state cause of action to state court. "[I]t would ... flout, or at least undermine, congressional
intent to conclude that the federal courts might nevertheless exercise federal-question jurisdiction
and provide remedies for violations of [a] federal statute solely because the violation of the
federal statute is said to be a 'rebuttable presumption' or a 'proximate cause' under state law,
rather than a federal action under federal law." Merrell Dow Pharm. Inc., 478 U.S. at 812.
Thus, without more, the federal issues in this case are not sufficiently substantial to give rise to
federal question jurisdiction.
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D. Federal and State Balance
Plaintiffs state law claims cannot be entertained without disrupting the division of labor
between state and federal courts. A federal court may entertain a state cause of action under
federal question jurisdiction if it can do so "without disturbing any congressionally approved
balance of federal and state judicial responsibilities." Grable & Sons Metal Prods., 545 U.S. at
314. Entertaining a claim would disrupt the congressionally-approved federal and state balance
if it would lead to a "horde of original filings and removal cases raising other state claims with
embedded federal issues." Id. at 318. Thus, in exercising jurisdiction over historically state
cases, a court must be aware of the potential shift of state cases into federal courts. See id. at
319.
In this case, the federal issues are merely elements of state common law claims. As
stated in Grable & Sons, "if the [FCSA] standard without a federal cause of action could get a
state claim into federal court, so could any other federal standard without a federal cause of
action." Id. at 318. This concern created the distinction between Merrell Dow and Grable &

Sons. Here, much like Merrell Dow, entertaining "garden variety" state law tort claims resting
on federal statutory violations, such as negligence and fraud, could lead to a flood of state law
claims entering federal courts and could disturb congressional intent regarding federal question
jurisdiction in§ 1331. See Merrell Dow Pharm., 478 U.S. at 812. Considering this potential
threat to the structural division of labor between state and federal courts, in addition to the
absence of a federal cause of action, it is "improbable that the Congress ... would have meant to
welcome any state-law tort case implicating federal law" merely because the federal statutes
create standards of care or elements to causes of action under state law. Grable & Sons Metal

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Prods., 545 U.S. at 319. Thus, the Court cannot entertain Plaintiffs state law claims without
disturbing the congressionally-approved division of labor between federal and state courts.
In sum, because I find the federal issues in this case are not necessarily raised,
substantial, or possible to entertain without disrupting the congressionally-approved balance
between state and federal courts, Plaintiffs state law claims do not "aris[e] under the
Constitution, laws, or treaties of the United States" and do not confer federal question
jurisdiction pursuant to § 1331.
IV.

CONCLUSION

For the foregoing reasons, Plaintiffs Motion to Remand is GRANTED.
An appropriate order will be entered.

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