Hood v. Fresenius Medical Care Holdings, Inc. et al
Judge Douglas P. Woodlock: MEMORANDUM AND ORDER entered in case 1:13-md-02428-DPW; granting (43) Motion to Remand; denying (43) Motion for Costs in case 1:14-cv-12384-DPW and declining to certify order of remand for interlocutory review. Associated Cases: 1:13-md-02428-DPW, 1:14-cv-12384-DPW(Woodlock, Douglas)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
IN RE: FRESENIUS GRANUFLO/
PRODUCTS LIABILITY LITIGATION )
MDL NO. 13-02428-DPW
This Order Relates To:
JIM HOOD, ATTORNEY GENERAL
OF THE STATE OF MISSISSIPPI,
ex rel. THE STATE OF
FRESENIUS MEDICAL CARE
HOLDINGS, INC. and FRESENIUS
CIVIL ACTION NO.
MEMORANDUM AND ORDER
January 2, 2015
The Attorney General of Mississippi on behalf of the State
of Mississippi filed this action against Defendants Fresenius
Medical Care Holdings, Inc. and Fresenius USA, Inc.
(collectively “Fresenius”) in the Chancery Court of DeSoto
The case made its way to me in Boston following removal to
the United States District Court for the Northern District of
Mississippi and then through transfer by the Judicial Panel for
Multidistrict Litigation under the rubric: In re Fresenius
Granuflo/Naturalyte Dialysate Products Liability Litigation,
(JPML No. 2428).
The Attorney General seeks to have me return
the matter to DeSoto County.
I conclude that the presence of
the State of Mississippi as a real party in interest in a case
founded solely on diversity jurisdiction requires me to do so.
The Complaint contains a single count alleging that
Fresenius engaged in unfair or deceptive trade practices in
violation of the Mississippi Consumer Protection Act, Miss. Code
Ann. §§ 75-24-1, et seq. (“MCPA”), by providing “false product
information” and misrepresenting or concealing the risks
associated with its GranuFlo and NaturaLyte dialysis products.
(Compl. ¶¶ 32-43.)
According to the Complaint, Fresenius
violated the MCPA “each time false or misleading product
information was provided to a Mississippian, including the
State, via a warning, instruction, training, advertisement or
other product information.”
(Id. ¶ 41.)
Through the Complaint,
the Attorney General seeks injunctive relief, “disgorgement of
all money wrongfully acquired by [Fresenius] from the sale of
GranuFlo and NaturaLyte administered to Mississippi Medicaid
recipients and members of the State Health Plan,” civil
penalties of “up to $10,000 for each violation of the [MCPA],”
punitive damages, and attorneys’ fees.
(Id. ¶ 51.)
to the Complaint, the monies to be disgorged represent payments
made by the State of Mississippi “through its Division of
Medicaid and the State Health Plan.”
(Id. ¶ 51(d).)
Fresenius removed the action to the United States District
Court for the Northern District of Mississippi pursuant to 28
U.S.C. §§ 1441 and 1446, alleging diversity jurisdiction under
28 U.S.C. § 1332(a)(1).
The State immediately moved to remand
the case to Mississippi state court – and for costs and fees but on Fresenius’s motion, the Mississippi federal court issued
a stay pending consideration of transfer of the case by the JPML
to this Court as part of the Fresenius GranuFlo/NaturaLyte
Dialysate Products Liability Litigation.
The case having been transferred to me by the JPML, I now
consider the State’s Renewed Motion to Remand and For Costs and
I. THE LACK OF CITIZENSHIP FOR STATES
UNDER FEDERAL DIVERSITY JURISDICTION
The only basis for removal asserted by Fresenius is
diversity of citizenship under 28 U.S.C. § 1332(a)(1). 1
can be no dispute that the exercise of diversity jurisdiction
pursuant to § 1332(a) requires complete diversity between the
parties to a lawsuit.
“[T]hat is, diversity jurisdiction does
Section 1332(a)(1) provides that “[t]he district courts shall
have original jurisdiction of all civil actions where the matter
in controversy exceeds the sum or value of $75,000 . . . between
citizens of different States.”
not exist unless each defendant is a citizen of a different
State from each plaintiff.”
Owen Equip. & Erection Co. v.
Kroger, 437 U.S. 365, 374 (1978) (emphases in original).
equally well established that “a State is not a ‘citizen’ for
purposes of diversity jurisdiction.”
Moor v. Alameda County,
411 U.S. 693, 717 (1973).
The Supreme Court has made clear that “the ‘citizens’ upon
whose diversity a plaintiff grounds jurisdiction must be real
and substantial parties to the controversy.”
v. Lee, 446 U.S. 458, 461 (1980).
Navarro Sav. Ass’n
This rule applies with equal
force where, as here, a State or state official is a named party
to an action.
See Mississippi ex rel. Hood v. AU Optronics, 134
S. Ct. 726, 745 (2014) (citing Missouri, K & T. R. Co. v.
Missouri Railroad and Warehouse Comm’rs, 183 U.S. 53, 58-59
Accordingly, in determining whether jurisdiction is
proper I must “disregard nominal or formal parties and rest only
upon the citizenship of the real parties to the controversy.”
Navarro, 446 U.S. at 461. 2
Contrary to what the State of Mississippi appears to suggest in
its submission, the recent decision of the Supreme Court last
term in Mississippi ex rel. Hood v. AU Optronics Corp., 134 S.
Ct. 736 (2014), did not disturb the proposition that in
determining diversity of citizenship under § 1332(a), a court
must look to the citizenship of the real parties in interest.
Rather, the Court in AU Optronics held that Congress did not
intend to import the real party in interest protocols from the
Court’s diversity jurisdiction jurisprudence into the mass
action provision of the Class Action Fairness Act of 2005
Fresenius concedes that the State of Mississippi is a real
party in interest to this action, insofar as the Mississippi
Attorney General is authorized to bring parens patriae actions
to vindicate the State’s “quasi-sovereign interest in the health
and well-being — both physical and economic — of its residents
See Alfred L. Snapp & Son v. Puerto Rico, ex rel.
Barez, 458 U.S. 592, 607 (1982); Louisiana ex rel. Caldwell v.
Allstate Ins. Co., 536 F.3d 418, 430 (5th Cir. 2008) (holding
State of Louisiana was real party in interest to claims for
injunctive relief under Louisiana’s antitrust statute); Hood v.
AstraZeneca Pharma., LP, 744 F. Supp. 2d 590, 596 (N.D. Miss.
2010) (concluding State of Mississippi was a real party in
interest to claims under MCPA, state Medicaid laws, and causes
of action in tort); Hood v. F. Hoffman-La Roche, Ltd., 639 F.
Supp. 2d 25, 32-33 (D.D.C. 2009) (concluding State of
Mississippi was real party in interest as to forfeiture and
penalty claims under state antitrust act); Hood v. Bristol-Myers
Squibb Co., 2013 WL 3280267 at *5-7 (N.D. Miss. June 27, 2013)
(concluding that State of Mississippi was a real party in
interest to claims under MCPA).
(“CAFA”). Id. at 742, 745. Fresenius does not allege CAFA
jurisdiction in this case; consequently, AU Optronics is not
directly on point for present purposes. Nevertheless, the
careful analysis of AU Optronics provides a recent example of
the need for balancing the several interests at issue when
considering the use of diversity jurisdiction for aggregate
litigation in the federal courts.
Fresenius contends, however, that despite the State’s
status as the only named plaintiff, the State of Mississippi is
not the only real plaintiff in interest to this action.
real plaintiffs in interest, according to Fresenius, include the
Mississippi State Division of Medicaid, on whose behalf the
State seeks disgorgement, as well as individual, unnamed
citizens of Mississippi whose injuries this suit aims to
See Louisiana ex rel. Caldwell 536 F.3d at 430-31
(concluding individual insurance policyholders who suffered
injuries were real parties in interest to claim for treble
damages under state antitrust statute); Hood v. F. Hoffman-La
Roche, Ltd., 639 F. Supp. 2d at 32-33 (concluding Mississippi
citizens were real parties in interest to claims for
compensatory damages under state antitrust statute); Hood v.
Bristol-Myers Squibb Co., 2013 WL 3280267 at *5-7 (concluding
individual consumers were real parties in interest to certain
damages claims under MCPA).
More specifically, Fresenius further contends that the
Division of Medicaid is not an “arm or alter ego of the State,”
but a sufficiently autonomous entity that for the purposes of
diversity jurisdiction should be considered a citizen of
See Moor, 411 U.S. at 717; University of Rhode
Island v. A.W. Chesterton Co., 2 F.3d 1200, 1202 (1st Cir. 1993)
(holding “a political subdivision possessing the formal status
of a ‘body politic and corporate,’ such as a county or
municipality, is presumed a ‘citizen’ for diversity purposes
unless it is simply the arm or alter ego of the State.”).
Assuming, arguendo, that the Division of Medicaid is not
merely an arm or alter ego of the State but rather a separate
party with Mississippi citizenship, the suit would then consist
of Mississippi citizen consumer beneficiaries, an institutional
Mississippi citizen (the Division of Medicaid) and a stateless
person (the State of Mississippi) versus a citizen of a state
other than Mississippi (Fresenius). 3
In Fresenius’s view,
Determining under First Circuit law whether a State-related
entity like the Division of Medicaid is merely an “arm or alter
ego” of the State — and thus a “stateless” person for diversity
purposes — or sufficiently independent and autonomous to be
considered a citizen for diversity purposes, is a complex,
highly-individualized and fact-dependent inquiry. See A.W.
Chesterton, 2 F.3d at 1204-05 (setting forth non-exhaustive
eight-factor test for determining alter-ego status, borrowed
from Eleventh Amendment sovereign immunity analysis). However,
because I conclude that the State’s presence as a real party in
interest destroys diversity jurisdiction regardless of whether
another diverse party is joined as a plaintiff, I need not
determine under the exhausting First Circuit protocol whether
the Division of Medicaid should be treated as an additional
party separate and apart from the State. In this connection, I
note further that having had occasion to undertake “arm of the
state” inquiries under Chesterton and the more recent directions
of Fresenius Medical Care Cardiovascular Resources, Inc. v.
Puerto Rico and the Caribbean Cardiovascular Center Corp., 322
F.3d 56 (1st Cir. 2003), see, e.g., Gallo v. Essex County
Sherriff’s Department, 2011 WL 1155385 (D. Mass. 2011), share
the views expressed by Judge Hornby in his concurring opinion in
Chesterton lamenting “such a complex analysis.” 2 F.3d at 1219,
1220. I also endorse Justice Breyer’s aspirational observation
that “when judges decide jurisdictional matters, simplicity is a
virtue.” Standard Fire Insurance Co. v. Knowles, 133 S. Ct
“[t]here is diversity here, because the State of Mississippi has
no citizenship to consider . . . and the Division of Medicaid, a
real party in interest, is a citizen of Mississippi and thus
diverse from Fresenius.”
Fresenius contends that “where a State
is not the only real party in interest on its side of the ‘v.’,
its mere presence in the case does not automatically destroy
diversity; rather, in determining diversity, the Court should
disregard the State and consider the citizenship of any other
real parties in interest.”
The State disagrees, contending that
a State’s mere presence as a real party in interest destroys
diversity jurisdiction regardless of the presence of other
Finding that upon this issue “a page of
history is worth a volume of logic,” New York Trust Co. v.
Eisner, 256 U.S. 345, 349 (1921), I conclude the State’s
position is the correct one.
While there may be a certain logic to the proposition that
a State’s lack of citizenship could be disregarded or treated as
a nullity when the remaining parties to an action are completely
diverse, the weight of authority compels the opposite result.
As a matter of history, parties without any state citizenship,
such as States, Indian tribes, or Americans domiciled abroad,
have been treated as “jurisdictional spoilers” whose mere
1345, 1350 (2013). Whether such laments will lead to the
realization of such aspirations cannot be demonstrated in this
presence in an action destroys complete diversity.
Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830 (1989);
Ninigret Develop. Corp. v. Narragansett Indian Wetuomuck Hous.
Auth., 207 F.3d 21, 27 (1st Cir. 2000).
The reason why a State — unless it is a nominal party only
— cannot simply be disregarded for diversity jurisdiction
purposes is because no congressional grant of federal
jurisdiction extends to diversity suits in which a State is a
Instead, the development of 28 U.S.C. § 1332(a)(1),
pursuant to which Fresenius removed this suit, makes clear the
statute requires that all parties be “citizens” of some state
and because a state has no citizenship, it cannot possibly be
party to a diversity action unless it is a party in name only.
Although the principle that a State is not a citizen of
itself for the purposes of diversity jurisdiction was regarded
by the Supreme Court as “well settled” as early as 1894, see
Postal Telegraph Cable Co. v. Alabama, 155 U.S. 482, 487 (1894)
(“under the judiciary acts of the United States it is well
settled that a suit between a state and a citizen or a
corporation of another state is not between citizens of
different states, and that the circuit court of the United
States has no jurisdiction of it, unless it arises under the
constitution, laws, or treaties of the United States”), little
has been written since then concerning the historical origins of
The principle had found expression, a few years before
Postal Telegraph Cable was handed down, in Stone v. South
Carolina, 117 U.S. 430 (1886), where the Supreme Court observed
“[t]here is no statute which authorizes the removal of a suit
between a state and citizens on the grounds of citizenship, for
a state cannot, in the nature of things, be a citizen of any
Id. at 433. The origins were fully explored two years
earlier in Ames v. Kansas, 111 U.S. 449 (1884), in which the
Supreme Court was called upon to interpret the Jurisdiction and
Removal Act of 1875, 18 Stat. 470, which created federal
As the Court in Ames explained, when the First Congress
passed the Judiciary Act of 1789, it conferred upon the Supreme
Court original but nonexclusive jurisdiction over suits “between
a state and citizens of other states.”
In the Court’s view,
No jurisdiction was given in such cases to any other
court of the United States, and the practical effect
of the enactment was therefore to give the supreme
court exclusive original jurisdiction in suits against
a state begun without its consent, and to allow the
state to sue for itself in any tribunal that could
entertain its case.
In this way states, ambassadors,
compulsory process of any court other than one suited
to their high positions, but were left free to seek
redress for their own grievances in any court that had
the requisite jurisdiction.
No limits were set on
their powers of choice in this particular.
Id. at 465 (emphasis added).
In other words, “[t]he evident
purpose was to open and keep open the highest court of the
nation for the determination . . . of suits involving a state
. . .
but [not] to compel a state to resort to this one
tribunal for the redress of all its grievances.”
Id. at 402. 4
It was against this historical background that Congress
enacted the Jurisdiction and Removal Act of 1875.
a precursor to 28 U.S.C. § 1331, provided for the removal by
either party from a State court to “the circuit court of the
United States for the proper district . . . any suit of a civil
nature . . . brought in any state court, . . . arising under the
constitution or laws of the United States.”
Ames, 111 U.S. at
The Supreme Court maintains original jurisdiction in diversity
cases involving suits between a state and citizens of another
state. That Court, however, has retained discretion to decline
to exercise jurisdiction over cases between a state and citizens
of another state. It will do so when exercising jurisdiction
would disserve the principles underlying the Article III grant
of jurisdiction and would interfere with the Supreme Court’s
other responsibilities. Ohio v. Wyandotte Chemicals Corp, 401
U.S. 493, 499 (1971). The principles underlying original
jurisdiction in these cases rest on concerns that when a state
is forced to sue in a court located in another state, “parochial
factors might often lead to the appearance, if not the reality,
of partiality to one’s own.” Id. at 500. If so, the Supreme
Court would be the only viable alternative forum that could hear
the case. Id. Under modern principles of personal
jurisdiction, however, state courts of the state bringing suit
will generally have personal jurisdiction over the out-of-state
defendant, thereby negating the concerns forming the basis for
the grant of original jurisdiction and providing grounds on
which the Supreme Court may choose to exercise its discretion
not to hear such cases. See, e.g., id. at 500.
Because the “statute itself [made] no exception of
suits to which a state is a party,” the Court reasoned, suits
arising under federal law could be removed even if a State was a
party to the action.
Id. at 403.
Critically, however, because the previously existing rule
provided that a State could not be compelled to litigate a suit
against citizens of another state in the lower federal courts,
the Supreme Court has interpreted the Jurisdiction and Removal
Act of 1875 as abrogating that rule only with respect to suits
arising under federal law.
With respect to cases in which no
federal question is raised, a State maintains the absolute right
to sue in its own courts.
See Stone v. South Carolina, 117 U.S.
at 433 (stating “[t]here is no statute which authorizes the
removal of a suit between a state and citizens on the grounds of
citizenship,” and noting that removal was proper in Ames
“because of the subject-matter of the action, and not because of
the citizenship of the parties.”); Germania Ins. Co.
v. Wisconsin, 119 U.S. 473, 475 (1886) (citing Ames for the
proposition that “[a] suit by a state in one of its own courts
cannot be removed to a circuit court of the United States, under
the act of 1875, unless it be a suit arising under the
constitution or laws of the United States . . . . .”); Postal
Telegraph Cable Co., 155 U.S. at 487 (citing Ames for the
propositions that “[a] state is not a citizen” and that a suit
to which a State is a party is not removable on the basis of
As did the Jurisdiction and Removal Act of 1875, the
current statute pursuant to which the district courts maintain
jurisdiction over suits arising under federal law provides that
“[t]he district courts shall have original jurisdiction of all
civil actions arising under the Constitution, laws, or treaties
of the United States.”
28 U.S.C. § 1331 (emphasis added).
as with the 1875 Act, it makes no exception for cases to which a
State is a party, the result being that cases arising under
federal law to which a State is a party are removable like any
The modern diversity jurisdiction statute, 28 U.S.C. §
1332(a), by contrast, provides as follows:
The district courts shall have original jurisdiction
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—
(1) citizens of different States;
(2) citizens of a State and citizens or subjects of a
foreign state . . . ;
(3) citizens of different States and in which citizens
or subjects of a foreign state are additional
(4) a foreign state . . . as plaintiff and citizens of
a State or of different States.
28 U.S.C. § 1332(a).
The plain language of the relevant
subsection, § 1332(a)(1), affirmatively grants to the district
courts jurisdiction over suits between “citizens of different
The remaining subsections of § 1332(a) then provide
for jurisdiction between citizens of States and other special
parties that do not possess any state citizenship.
§ 1332(a) does not provide a grant of jurisdiction for suits to
which a non-citizen State is a party.
As one court has
observed, “[c]learly, Congress contemplated the situation of
non-citizens and specifically allowed for suits by those noncitizens it thought appropriate.
The obvious conclusion is that
Congress did not intend the states of the United States to be
amenable to diversity jurisdiction in the federal courts.”
Batton v. Georgia Gulf, 261 F. Supp. 2d 575, 582 (M.D. La.
The First Circuit has consistently recognized that because
“federal courts are courts of limited jurisdiction, they can act
only where the Constitution and Congress endow them with some
affirmative ground to do so.”
U.S.I. Props. Corp. v. M.D.
Constr. Co., 230 F.3d 489, 499 (1st Cir. 2000) (internal
It is in this context that the First Circuit
has made clear that, “[i]n particular, Congress has not
empowered the federal courts to exercise diversity jurisdiction
over the states.
By the express terms of the statute, the
diversity jurisdiction does not ever extend to the states . . .
Other recent decisions of the First Circuit similarly
recognize that the presence of a stateless party defeats
diversity jurisdiction notwithstanding that the remaining
parties are completely diverse.
See D.B. Zwirn Special
Opportunities Fund, L.P. v. Mehrotra, 661 F.3d 124, 126 (1st
Cir. 2011) (per curiam) (holding that, because the citizenship
of a limited liability company is determined by the citizenship
of all of its members, if any member of the plaintiff LLC was “a
stateless person, or an entity treated like a stateless person,”
the court would lack diversity jurisdiction; noting by analogy
that “states are not ‘citizens’ for purposes of the diversity
statute.”); Ninigret Develop. Corp., 207 F.3d at 26-27 (holding
lack of diversity jurisdiction where private developer sued
Indian tribal authority and private diverse corporation in
federal court because “notwithstanding the joinder of other
diverse parties, the presence of an Indian tribe [a stateless
entity] destroys complete diversity.”).
Accordingly, with §
It is in part for this reason that Fresenius’s reliance on
Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546
(2005), is misplaced. Not only is Allapattah distinguishable in
that it concerned the exercise of supplemental jurisdiction
under 28 U.S.C. § 1367 over parties not individually meeting the
amount in controversy requirement, but the practical
considerations embraced by the Supreme Court in the
circumstances of that case plainly must yield to the statutory
requirement under § 1332 that all parties be citizens of some
state. Nothing in Allapattah suggests otherwise.
1332 diversity jurisdiction as the only asserted basis for
removal in this case, this court lacks subject matter
Most courts elsewhere have concluded unequivocally that a
State’s mere presence in a suit as a real party in interest
defeats diversity jurisdiction regardless of the presence of
other completely diverse parties. 6
I acknowledge Fresenius’s citation to several cases, including
one decided in this district by my late colleague Judge
McNaught, which appear to support the proposition that a State’s
lack of citizenship is simply disregarded when the remaining
parties to a suit are completely diverse. See, e.g., Hussain v.
Boston Old Colony Ins. Co.. 311 F.3d 626, 635 n.46 (5th Cir.
2002); Grammer v. Melnik, 2008 WL 501251, *3 (D.V.I. Feb. 14,
2008); Laird v. Chrysler Corp., 92 F.R.D. 473, 475 (D. Mass.
1981); United Pacific Ins. Co. v. Capital Develop. Bd., 482 F.
Supp. 541, 546 (N.D. Ill. 1979). Judge McNaught’s opinion in
Laird conflicts with subsequent precedents of the First Circuit
concerning the impact on diversity jurisdiction of stateless
parties, see D.B. Zwirn Special Opportunities Fund, L.P. v.
Mehrotra, 661 F.3d 124, 126 (1st Cir. 2011) (per curiam); U.S.I.
Props. Corp. v. M.D. Constr. Co., 230 F.3d 488, 499 (1st Cir.
2000); Ninigret Develop. Corp. v. Narragansett Indian Wetuomuck
Hous. Auth., 207 F.3d at 21, 26-27 (1st Cir. 2000). Laird also
relies on the reasoning of the Northern District of Illinois in
United Pacific Ins. Co., with which I disagree insofar as it
appears to misinterpret the Supreme Court’s statement in Owen
Equip. & Erection Co. v. Kroger, 437 U.S. 365 (1978), that
“diversity jurisdiction does not exist unless each defendant is
a citizen of a different state from each plaintiff” id. at 373
(emphasis in original) to suggest the state itself is a citizen.
Further, the suggestion in Hussain that jurisdiction would be
proper under § 1332 was made in unanalyzed dicta, after the
court had already concluded that federal subject matter
jurisdiction over that case existed pursuant to 28 U.S.C. §
1444, which governs foreclosure actions against the United
States. See Hussain, 311 F.3d at 635 n.46. A similar statement
in Grammer that “it cannot be said that [the Government of the
Virgin Islands] is a citizen of the Virgin Islands for purposes
In Louisiana v. Union Oil Co. of California, 458 F.3d 364
(5th Cir. 2006), the Fifth Circuit ordered an action remanded to
state court where the State of Louisiana, as a real party in
interest, joined a local school board in bringing suit against
diverse defendants because “the State of Louisiana is a real
party in interest in this suit, the presence of which defeats
Id. at 367.
Likewise, in a case bearing a striking similarity to the
present action, Judge Hogan of the United States District Court
for the District of Columbia remanded to state court an action
in which the real parties in interest were: “(1) the State of
Mississippi acting as parens patriae and represented by the
Mississippi Attorney General, . . . (2) Mississippi citizens
who, collectively, are the real party in interest for claims
seeking compensatory damages under the Mississippi Antitrust Act
and (3) the defendants, who are citizens of states other than
Hood v. Hoffman-La Roche, Ltd., 639 F. Supp. 2d
In Hoffman-La Roche, Judge Hogan observed that the only
exception to the rule that a State’s presence as a party
destroys diversity jurisdiction is where the State’s role in the
action is as a nominal party only.
See id. at 33.
of defeating diversity jurisdiction,” 2008 WL 501251 at *3,
appears to be a confused exercise in ipse dixit.
Other courts to have explicitly considered the question now
before me have reached the same result.
See Hood v. AstraZeneca
Pharma, LP, 744 F. Supp. 2d at 595, 598 (remanding to state
court action brought by the State of Mississippi, despite
explicitly assuming that a public employee benefit plan with
Mississippi citizenship was also a real party to the action,
because the “the existence of the State of Mississippi as a real
party in interest to this action destroys subject matter
jurisdiction pursuant to Section 1332.”); Batton v. Georgia
Gulf, 261 F. Supp. 2d at 581 (observing in a case where the
State of Louisiana was but one of many, otherwise diverse
defendants: “The question is whether having one defendant with
no citizenship destroys diversity jurisdiction.
Judge concluded that it does and the court agrees.”).
Finally, the Supreme Court summed matters up concisely this
year — albeit in dicta, but dicta that is essentially binding 7 —
with the observation that “a State’s presence as a party will
demolish complete diversity.”
AU Optronics, 134 S. Ct. at 745.
Vagrant suggestions to the contrary, see supra note 5, in the
Dicta from the Supreme Court is entitled to special
consideration even if the language does not directly govern the
disposition of the case. McCoy v. Massachusetts Institute of
Technology, 950 F.2d 13, 19 (1st Cir. 1991) (federal courts “are
bound by the Supreme Court’s considered dicta almost as firmly
as by the court’s outright holdings, particularly when, as here,
dictum is of recent vintage”).
case law of the lower federal courts are neither binding nor
II. COSTS AND FEES FOR REMOVAL
Arguing that AU Optronics definitively held that the
presence of a state in diversity litigation destroys diversity,
the Attorney General seeks fees and costs from Fresenius for
removing this case without an objectively reasonable basis for
As I have noted, however, the language of AU
Optronics is dicta, see supra note 7, although no less
persuasive - and potentially binding - for being such.
Moreover, the historical explorations of this Memorandum and
Order demonstrate that the dicta from AU Optronics that “a
State’s presence as a party will demolish complete diversity,”
134 S.Ct. at 745, expresses a long-established principle
reflected in multiple Supreme Court and reasoned lower court
holdings over the years.
Nevertheless, there is at least one contrary holding by a
judge of this court among a smattering of inadequately reasoned
lower court rulings, see supra note 6, to support the position
that Fresenius has taken here.
And while the First Circuit,
albeit in cases not precisely on point, has since made clear
that the real party status of certain entities for which
diversity jurisdiction is not expressly granted will destroy
diversity jurisdiction, see supra pp. 13-14, the cases to the
contrary have not been expressly overruled or called into
question by name.
Although I am strongly of the view the federal courts must
rigorously police removal practice, cf. Harvard Real EstateAllston, Inc. v. KMART Corp., 407 F. Supp. 2d 317 (D. Mass.
2005), and view this as a close question here, I conclude that
the defendants were not without grounds to challenge remand in
Accordingly, I decline to order Fees and Costs to
III. APPELLATE REVIEW OF REMAND
Hopeful that the lessons of history — as embodied in
essentially consistent case law treating the presence of a State
as a jurisdiction-destroyer in federal diversity cases — can
somehow be untaught by further litigation of the issue in the
federal courts, Fresenius has anticipatorily requested the
opportunity to test my adverse decision through interlocutory
review pursuant to 28 U.S.C. § 1292(b).
Fresenius seeks this
procedural initiative because Congress has directed that in
ordinary course, a decision to remand is not subject to review
“on appeal or otherwise.” 28 U.S.C. § 1447(d).
My decision to
remand, resting, as it does, “on lack of subject matter
. . . is not reviewable by appeal or mandamus, even if
Gonzalez-Garcia v. Williamson Dickie Mfg. Co., 99
F.3d 490, 491 (1st Cir. 1996). 8
I have observed that “[c]ertifications under § 1292(b) are
not looked upon with favor by the First Circuit”; indeed, I
approach Fresenius’s request by again observing that in nearly
three decades as a District Judge, “I cannot recall an occasion
in which I have been willing to make a § 1292(b) certification,”
other than in the case where I first made that observation.
Lawson v. FMR LLC, 724 F.Supp.2d 167, 168 (D. Mass. 2010).
singularity of that one occasion is underscored by the
subsequent history of that case.
It initially led to a reversal
by the First Circuit of my denial of an otherwise unappealable
motion to dismiss.
Lawson v. FMR LLC, 670 F.3d 61 (1st Cir.
The Supreme Court, acting unusually in the absence of a
split among the Circuits, then granted certiorari and reversed
the First Circuit, reinstating my initial decision.
FMR LLC, 134 S.Ct. 1158 (2014).
This case does not begin to approximate the “hens-teeth
rare” qualities of Lawson; the legal issues, while just
The absolute bar on appeal of an order of remand in the absence
of certification under 28 U.S.C. § 1292(b) is to be
distinguished from the separate mechanism for discretionary
appellate review of a remand order in a class action under the
Class Action Fairness Act of 2005, 28 U.S.C. § 1453(c)(1). See
generally, Dart Cherokee Basin Operating Co. v. Owens, 2014 WL
7010692, *8-9 (U.S. Dec. 15, 2015).
colorable enough to protect Fresenius from being found obligated
to pay attorneys fees and costs under § 1447(d), see supra
Section II, are plainly not open to substantial dispute.
principle is long settled; in the words Fresenius has used to
pose it, “a state’s mere presence in a lawsuit as a real party
in interest, even among other diverse parties, always and
automatically destroy[s] diversity jurisdiction.”
a matter of general policy, has declined to facilitate review of
orders to remand.
Section § 1292(b) should not be used in this
case for relief from that federal policy. 9
I conclude that the presence of the State of Mississippi as
a real party in interest to this action destroys complete
diversity and deprives this court of subject matter
Accordingly, I GRANT the motion of the state of
Mississippi for remand of this case to the Chancery Court of
DeSoto County, Mississippi.
Because suggestions of a contrary
resolution have not been expressly overruled, however, I DENY
the Attorney General’s motion for fees and costs against
Fresenius for contesting the issue before me.
I note that it does not appear that the propriety of this
remand will be subject to review in the state court either since
the purported availability of jurisdiction in the federal court,
as argued here by Fresenius, is immaterial to the exercise of
independently available jurisdiction in the Mississippi state
Fresenius’s request that I certify an interlocutory appeal of my
remand of the case.
/s/ Douglas P. Woodlock
DOUGLAS P. WOODLOCK
UNITED STATES DISTRICT JUDGE
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