Gardens Pharmacy, LLC v. Lyons et al
Filing
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ORDER granting 4 Motion to Remand to State Court. This case is remanded to the County Court of Jackson, Co., MS, from whence the action was removed. Signed by District Judge Halil S. Ozerden on 4/19/16. (RLW)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
GARDENS PHARMACY, LLC
v.
MICHAEL LYONS and
ODELL GLENN, JR.
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§
§
§
§
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PLAINTIFF
Civil No. 1:16cv12-HSO-JCG
DEFENDANTS
ORDER GRANTING PLAINTIFF GARDENS PHARMACY, LLC’S
MOTION TO REMAND [4]
BEFORE THE COURT is Plaintiff Gardens Pharmacy, LLC’s Motion [4] to
Remand to State Court. This Motion has been fully briefed. Having considered the
record and relevant legal authorities, the Court finds that this civil action does not
“arise[] under the Constitution, laws, or treaties of the United States,” such that the
Court’s federal question jurisdiction was improperly invoked. 28 U.S.C. § 1331.
Because the Court lacks subject-matter jurisdiction over this civil action, this case
must be remanded to State court pursuant to 28 U.S.C. § 1447(c).
I. BACKGROUND
On December 16, 2015, Plaintiff filed a Complaint in the County Court of
Jackson County, Mississippi. Compl. [1-2]. Plaintiff asserted eight State law
causes of action against Defendants Dr. Michael Lyons, PC and Odell Glenn, Jr.
Specifically, the Complaint contains two counts for breach of contract, one count for
misappropriation of trade secrets under Mississippi Code Annotated § 75-26-1, et
seq., one count for tortious interference with contract, one count for tortious
interference with business relations, a claim for sworn account, one count for
conversion, and a request for injunctive relief. Compl. [1-2], at 3–14. The
Complaint does not reference any federal laws, the Constitution, or any treaties of
the United States. See id.
On January 14, 2016, Defendants filed a Notice of Removal [1] pursuant to 28
U.S.C. § 1441, asserting that the Court has subject-matter jurisdiction over this
action based on federal question jurisdiction under 28 U.S.C. § 1331. Defendants
claim no breach of contract occurred because the contract at issue violated a federal
law, namely 42 U.S.C. § 1320a-7b(b), the Medicare Anti-Kickback Statute. Not.
Removal [2], at 2. Defendants filed an Answer and Counterclaims [2] the same day,
asserting State law causes of action for tortious interference with prospective
advantages, unfair competition, civil conspiracy, negligence, gross negligence, and
negligent misrepresentation/fraud. Answer/Counterclaims [2], at 9–14.
On February 2, 2016, Plaintiff filed a Motion [4] to Remand, arguing that
federal subject-matter jurisdiction is lacking under 28 U.S.C. § 1331, and
requesting attorneys’ fees and costs pursuant to 28 U.S.C. § 1447(c). Defendants
have filed a Response [15], and Plaintiff has filed a Reply [17].
II. DISCUSSION
A.
Legal Standard
Federal courts are courts of limited jurisdiction. Gunn v. Minton, 133 S. Ct.
1059, 1064 (2013). Under 28 U.S.C. § 1331, federal district courts are granted
jurisdiction over all civil actions arising under the Constitution, laws, or treaties of
the United States. The longstanding “well-pleaded complaint rule,” however,
defines when an action arises under federal law. Vaden v. Discover Bank, 556 U.S.
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49, 59–61 (2009) (citing Louisville & Nashville R. Co. v. Mottley, 211 U.S. 149, 152
(1908)). A suit arises under federal law only when a plaintiff’s statement of his own
cause of action in the complaint shows that the action is based upon federal law. Id.
Federal subject-matter jurisdiction cannot rest on an actual or anticipated defense,
or an actual or anticipated counterclaim. Holmes Grp., Inc. v. Vornado Air
Circulation Sys., Inc., 535 U.S. 826, 830–34 (2002) (discussing the well-pleaded
complaint rule and holding that even a compulsory counterclaim brought under
federal law does not establish federal question jurisdiction). “[A] defendant may not
remove a case to federal court unless the plaintiff’s complaint establishes that the
case arises under federal law.” Franchise Tax Bd. of State of Cal. v. Constr.
Laborers Vacation Trust for S. California, 463 U.S. 1, 10 (1983) (emphasis in
original).
A case raising only state law causes of action can “arise under federal law” in
a “special and small category” of cases if “federal law provides a necessary element
of the plaintiff's claim for relief.” Empire Healthchoice Assurance, Inc. v.
McVeigh, 547 U.S. 677, 699 (2006); Jones v. R.R. Donnelley & Sons Co., 541 U.S.
369, 376 (2004). The state-law claim must “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., Inc., v. Darue Eng’g & Mfg., 545 U.S.
308, 314 (2005)). That is, “federal jurisdiction over a state law claim will lie if a
federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4)
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capable of resolution in federal court without disrupting the federal-state balance
approved by Congress.” Id.
B.
Analysis
It is undisputed that the face of the Complaint [1-2] raises no federal claims
and asserts only State law causes of action. The Counterclaims [2] are also based
only on State law. Although Defendants have professed to raise a federal defense,
that there was no breach of contract because the contract in question violated the
federal Medicare Anti-Kickback Statute, the law is clear that federal subject-matter
jurisdiction cannot be founded upon an actual or anticipated defense. Holmes, 535
U.S. at 830–34.
In Franchise Tax, the Supreme Court explained the well-pleaded complaint
rule and why jurisdiction would be lacking in cases such as this:
For better or worse, under the present statutory scheme as it has existed
since 1887, a defendant may not remove a case to federal court unless the
plaintiff’s complaint establishes that the case arises under federal law.
A right or immunity created by the Constitution or laws of the United
States must be an element, and an essential one, of the plaintiff’s cause
of action
463 U.S. 10–11 (internal citation and quotation omitted, emphasis in original).
Applying the longstanding well-pleaded complaint rule, this Court lacks subjectmatter jurisdiction and Plaintiff’s action should be remanded to State court.
Even assuming the parties’ business relationship deteriorated because the
contract violated the federal Anti-Kickback Statute, this case does not raise any
substantial issues of federal law significant enough to establish federal subject
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matter jurisdiction under the narrow exception in Grable. See id. at 13 (“[F]ederal
jurisdiction demands not only a contested federal issue, but a substantial one,
indicating a serious federal interest in claiming the advantages thought to be
inherent in a federal forum.”). Defendants do not challenge the Anti-Kickback
Statute as unconstitutional or argue that the Court’s resolution of the issues here
will have a substantial impact on the federal system as a whole. Defendants claim
only that the Statute may have been violated in this case. See Defendants’
Response [15], at 2 (“This matter is simple—whether the agreement violates the
Federal Anti-Kickback Statute.”). This issue is not substantial to the federal
system as a whole. See Gunn, 133 S. Ct. at 1066 (“[I]t is not enough that the federal
issue be significant to the particular parties in the immediate suit . . . . The
substantiality inquiry under Grable looks instead to the importance of the issue to
the federal system as a whole.”). The Grable exception does not apply.
C.
Attorneys’ Fees and Costs
“An order remanding the case may require payment of just costs and any
actual expenses, including attorney fees, incurred as a result of the removal.” 28
U.S.C. § 1447(c). The Court should grant attorneys’ fees if a defendant’s decision to
remove was objectively improper at the time of removal. Hornbuckle v. State Farm
Lloyds, 385 F.3d 538, 541 (5th Cir. 2004). “[T]he question we consider in applying §
1447(c) is whether the defendant had objectively reasonable grounds to believe the
removal was legally proper.” Valdes v. Wal-Mart Stores, Inc., 199 F.3d 290, 293
(5th Cir. 2000).
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Based on consideration of the record and the parties’ arguments, the Court
will not award costs, expenses, or attorneys’ fees in this case.
III. CONCLUSION
IT IS, THEREFORE, ORDERED AND ADJUDGED, that Plaintiff
Gardens Pharmacy, LLC’s Motion [4] to Remand is GRANTED. The Court declines
to grant costs and actual expenses, including attorneys’ fees against Defendants.
IT IS, FURTHER, ORDERED AND ADJUDGED, that this case is
REMANDED to the County Court of Jackson County, Mississippi, from whence the
action was removed, pursuant to 28 U.S.C. § 1447(c), and a certified copy of this
Order of remand shall immediately be mailed by the Clerk to the clerk of the State
court.
SO ORDERED AND ADJUDGED, this the 19th day of April, 2016.
s/ Halil Suleyman Ozerden
HALIL SULEYMAN OZERDEN
UNITED STATES DISTRICT JUDGE
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