Balderas et al v. Purdue Pharma L.P. et al
Filing
37
MEMORANDUM OPINION AND ORDER by District Judge Judith C. Herrera granting 10 MOTION to Remand; denying as moot 5 MOTION to Stay; and denying as moot 11 MOTION to Expedite State of New Mexico's Motion to Remand [Doc 10] IT IS THE REFORE ORDERED that Plaintiff's Motion to Remand [Doc. 10 ] is GRANTED and the case is REMANDED to the First Judicial District Court of Santa Fe County. IT IS ALSO ORDERED that Distributor Defendants Joint Motion to Stay Pending Ruling by the Judicial Panel on Multidistrict Litigation [Doc. 5 ] and Plaintiff's Motion to Expedite Briefing on its Motion to Remand [Doc. 11 ] are DENIED as MOOT. (gr) Modified on 6/12/2018 removed italics. (gr).
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
STATE OF NEW MEXICO, ex rel.,
HECTOR BALDERAS, ATTORNEY
GENERAL,
Plaintiff,
v.
No. 1:18-cv-00386-JCH-KBM
PURDUE PHARMA L.P.; PURDUE
PHARMA, INC.; THE PURDUE FREDERICK
COMPANY, INC.; TEVA PHARAMACEUTICAL
INDUSTRIES USA, INC.; CEPHALON, INC.;
JOHNSON & JOHNSON; JANSSEN
PHARMACEUTICALS, INC.; ORTHOMCNEIL-JANSSEN PHARAMACEUTICALS, INC.
n/k/a JANSSEN PHARMACEUTICALS, INC.;
JANSSEN PHARAMACEUTICA INC. n/k/a
JANSSEN PHARAMACEUTICALS, INC.;
NORAMCO, INC.; ENDO HEALTH SOLUTIONS INC.;
ENDO PHARMACEUTICALS, INC.; ALLEGRAN
PLC f/k/a ACTAVIS PLC; WATSON
PHARAMACEUTICALS, INC. n/k/a ACTAVIS, INC.;
WATSON LABORATORIES, INC.; ACTAVIS LLC;
ACTAVIS PHARMA, INC. f/k/a WATSON PHARMA, INC.;
MALLINCKRODT PLC; MALLINCKRODT LLC;
INSYS THERAPEUTICS, INC.; McKESSON
CORPORATION; CARDINAL HEALTH INC.;
CARDINAL HEALTH 105, LLC; CARDINAL
HEALTH 108, LLC; CARDINAL HEALTH
110, LLC; CARDINAL HEALTH 200, LLC;
CARDINAL HEALTH 414, LLC; CARDINAL
HEALTH PHARMACY SERVICES, LLC; and
AMERISOURCEBERGEN DRUG CORP.,
Defendants.
MEMORANDUM OPINION AND ORDER
THIS MATTER is before the Court on Distributor Defendants’ Joint Motion to Stay
Pending Ruling by the Judicial Panel on Multidistrict Litigation [Doc. 5]; Plaintiff’s Motion to
Remand [Doc. 10]; and Plaintiff’s Motion to Expedite Briefing on its Motion to Remand [Doc.
11]. After careful consideration of the motions, briefs, and relevant law, the Court concludes that
Plaintiff’s Motion to Remand should be granted, and that the remaining motions should be
denied as moot.
I.
BACKGROUND
Plaintiff State of New Mexico ex rel. Hector Balderas, Attorney General, filed this
lawsuit in the First Judicial District of the State of New Mexico against manufacturers and
wholesale distributors of prescription opioids, alleging that Defendants improperly marketed and
distributed prescription opiate medications nationwide. According to Plaintiff’s First Amended
Complaint (Complaint) McKesson Corporation and other Distributor Defendants1 habitually
failed to monitor, report, investigate, and refuse suspicious orders2 for prescription opioids
originating from New Mexico in violation of the New Mexico Controlled Substances Act and the
federal Controlled Substances Act (FCSA), resulting in the diversion of these drugs into nonmedical, illicit channels. Plaintiff’s Complaint alleges that Defendants are liable on eight counts:
public nuisance under N.M. Stat. Ann. § 30-8-8-1 and New Mexico’s common law (Count I);
violation of New Mexico’s Unfair Practices Act, N.M. Stat. Ann. §§ 57-12-1 to -26 (Count II);
violation of New Mexico’s Medicare Fraud Act, N.M. Stat. Ann. §§ 30-44-1 to -8 (Count III);
violation of New Mexico’s Racketeering Act, N.M. Stat. Ann. §§ 30-42-1 to -6 (Count IV);
conspiracy to violate New Mexico’s Racketeering Act (Count V); violation of New Mexico’s
Fraud Against Taxpayers Act, N.M. Stat. Ann. §§ 44-9-1 to -14 (Count VI); negligence (Count
1
McKesson Corporation; Cardinal Health Inc.; Cardinal Health 105, LLC; Cardinal Health 108,
LLC; Cardinal Health 110, LLC; Cardinal Health 200, LLC; Cardinal Health 414, LLC; Cardinal
Health Pharmacy Services, LLC and Amerisourcebergen Drug Corporation.
2
According to Plaintiff’s Complaint, the term “suspicious orders” refers to orders of prescription
opioids characterized by their unusual size or frequency, or orders that deviate from a normal
ordering pattern. See Compl. ¶ 169, Doc. 1-2.
2
VII); and negligence per se (Count VIII). The Complaint alleges that Defendants’ conduct
exacted a huge financial burden on the State of New Mexico, and Plaintiff seeks various
damages against Defendants for their alleged role in igniting an opioid epidemic. In addition to
seeking temporary and permanent injunctions, various statutory damages and attorneys’ fees,
Plaintiff requests past and future damages for
(A) money wrongfully paid for opioids through government-funded insurance;
(B) costs for providing medical care, additional therapeutic care and prescription
drug purchases, and other treatments for patients suffering from opioid-related
addiction or disease, including overdoses and deaths; (C) costs for providing
treatment, counseling, and rehabilitation services; (D) costs for providing
treatment of infants born with opioid-related medical conditions; (E) costs for
providing welfare for children whose parents suffer from opioid-related disability
or incapacitation; and (F) costs associated with law enforcement and public safety
relating to the opioid epidemic.
Compl., Prayer for Relief, ¶ 9.
McKesson filed a notice of removal in this Court, asserting that because Defendants’
“duties governing reporting and shipping ‘suspicious’ orders [] arise solely from the federal
Controlled Substances Act,” this Court has federal jurisdiction over Plaintiff’s Complaint under
the FCSA. Notice of Removal, Doc. 1, ¶¶ 8, 16. In its Motion to Remand, Plaintiff argues that its
167-page Complaint does not allege any federal claims. Indeed, Plaintiff contends that the
Complaint explicitly disavows all federal causes of action, see e.g. Compl. ¶ 47, (“federal
question subject matter jurisdiction pursuant to 28 U.S.C. § 1331 is not invoked by the
Complaint … nowhere herein does Plaintiff plead … any cause of action or request any remedy
that arises under federal law.”) Plaintiff also claims that, despite the Complaint’s references to
federal law and regulations that are incorporated into various analogous New Mexico laws and
regulations, the Complaint does not rely on federal law to generate a cause of action. See id. ¶ 48
(“In this complaint, Plaintiff cites federal statutes and regulations. Plaintiff does so to state the
3
duty owed under New Mexico tort law, not to allege an independent federal cause of action and
not to allege any substantial federal question ….”)
Plaintiff explains in its Motion to Remand that New Mexico law “parallels” federal law
applicable to manufacturer and wholesale drug distributors, and that in order to comply with
state law, Defendants must also comply with federal law. The Complaint describes some state
law duties that incorporate federal standards, or require compliance with both New Mexico and
federal law. For instance, the Complaint explains how “[t]he [NMCSA] and Administrative Code
incorporate by reference relevant federal laws and regulations.” Compl. ¶ 162 (citing N.M. Code
R. § 16.19.8.13(I) and N.M. Stat. Ann, §§ 30-31-13(C), 30-31-16(A)). Further, “wholesale drug
distributors shall operate in compliance with applicable federal, state , and local laws and
regulations” and “[w]holesale drug distributors that deal in controlled substances shall register
with the [New Mexico Board of Pharmacy] and with the [federal Drug Enforcement Agency].”
Compl. ¶ 162 (citing N.M. Code. R. § 16.19.8.13(I) & (I)(2)). The same rules require that “any
diversion of a prescription drug be reported to the New Mexico Pharmacy Board, the FDA, and
… the DEA” and that this same duty exists under federal regulations, which are incorporated by
reference.” Compl. ¶ 163 (citing N.M. Code. R. § 16.19.8.13(I) & (F)(5); §§ 30-31-13(C), 30-3116(A)). Plaintiff’s Complaint also cites New Mexico regulations that require the Distributor
Defendants to guard against and report “diversion” of prescription opioids. For example, under
N.M. Code. R. § 16.19.8.13(F) “[w]holesale distributors shall report any theft, suspect theft,
diversion or other significant loss of any prescription drug … to the board ….” And under N.M.
Code. R. § 16.19.20.48(A) distributors and manufacturers “shall provide effective controls and
procedures to guard against theft and diversion of controlled substances.” See Compl. ¶¶ 161,
163.
4
Plaintiff’s Complaint also alleges that two DEA letters, written in 2006 and 2007,
reminded registered wholesale distributors such as Distributor Defendants of “their statutory and
regulatory duties” to monitor and report suspicious orders of controlled substances. Compl. ¶¶
167, 172, 173. The letters explained to the Distributor Defendants that they represented “one of
the key components of the distribution chain,” and that “[i]f the closed system is to function
properly … distributors must be vigilant in deciding whether a prospective customer can be
trusted to deliver controlled substances only for lawful purposes.” Id. ¶ 167. The 2006 letter
stated that “a distributor has a statutory responsibility to exercise due diligence to avoid filling
suspicious orders” that could find their way into illicit channels. Id. ¶ 172. And the 2007 letter
reminded distributors to “maintain effective controls against diversion” and “design and operate
a system to disclose to the registrant suspicious orders.” Id. ¶ 173.
McKesson responds that all of Defendants’ duties to monitor for, report, and refuse
suspicious orders for prescription opioids arise solely under the FCSA and its implementing
regulations. See Notice of Removal, ¶ 8. Specifically, Defendants’ duty to disclose suspicious
orders derives from a federal regulation, 21 C.F.R. § 1301.74(b), and McKesson argues that
Plaintiff identified no “provision of New Mexico law or regulation that contains a requirement
analogous to the federal CSA’s suspicious order-reporting requirement.” Id. ¶ 22 n. 4.
Concerning the Drug Distributor’s duty to not ship suspicious orders, McKesson does not argue
that the FCSA itself imposes such a duty. Rather, according to McKesson “[t]he source of the
asserted legal duty to suspend shipments of suspicious orders” arises from an interpretation of
the FCSA by the DEA in the 2006 and 2007 letters. Id. ¶ 38. McKesson argues that although
Plaintiff’s claims are packaged as state law negligence, fraud, public nuisance, unfair practices,
and racketeering claims, each claim is predicated upon disclosure and shipping duties arising
5
only under federal law. See Def.’s Resp. to Mot. to Remand, p. 8 (“the Complaint repeatedly
restates the same federal question: did the Distributor Defendants violate the DEA’s suspicious
order-reporting requirement, 21 C.F.R. § 1301.74(b), and a related DEA ‘shipping requirement’
[i.e. the 2006 and 2007 DEA letters].’”) McKesson thus argues that this Court has subject matter
jurisdiction because Plaintiff pleads facially federal claims in Counts I-VII, and that all of
Plaintiffs claims depend on a substantial federal question – namely, the meaning and application
of the FCSA, its implementing regulations, and the DEA letters.
II.
PROCEEDINGS
In the background of this case is a Judicial Panel on Multidistrict Litigation (JPML) that
formed a multidistrict litigation (MDL) arising from nationwide lawsuits addressing similar
issues raised in this case. On December 7, 2017 the JPML centralized proceedings in the United
States District Court for the Northern District of Ohio before the Honorable Dan A. Polster. On
April 26, 2018, the day after McKesson filed its Notice of Removal, Defendant Cardinal Health
Entities filed a tag-along notice with the JPML requesting that this case be transferred to the
MDL proceedings in the Northern District of Ohio. Plaintiff objected to transfer before the
JPML, and the parties will finalize arguments and briefing before the Panel on June 12, 2018.
McKesson has advised this Court that the Distributor Defendants expect that, as a matter of
course, in two or three months the JPML will issue an order conditionally transferring this case
to the MDL proceeding, and therefore request a stay of all proceedings in this Court until the
JPML makes a decision.3 In his first Case Management Order, Judge Polster placed a
3
This Court’s ability to rule on Plaintiff’s motion to remand is unaffected by any possible
conditional transfer of this case to the MDL proceeding. See J.P.M.L. Rule of Procedure 2.1(d)
(stating that “[t]he pendency of a motion … conditional transfer order … before the Panel …
does not affect or suspend orders and pretrial proceedings in any pending federal district court
action and does not limit the pretrial jurisdiction of that court.”).
6
moratorium on various motions, except for State remand motions. McKesson argues that
Plaintiff will have a federal forum before Judge Polster to argue its motion to remand, and
therefore Plaintiff would not be prejudiced by staying proceedings until this case is transferred as
a matter of course to Ohio. Plaintiff counters that Judge Polster has yet to develop a procedure
addressing State remand motions, and that “bounc[ing]” this case “between federal courts
lacking subject matter jurisdiction” would result in needless delay and waste judicial resources.
Pl.’s Resp. to Mot. to Stay 8, Doc. 24.
III.
LEGAL STANDARD
“Federal courts are courts of limited jurisdiction, possessing only that power authorized
by Constitution and statute.” Gunn v. Minton, 568 U.S. 251, 256 (2013). Removal statutes are to
be strictly construed, and the party invoking federal jurisdiction bears the burden of proof with a
presumption against federal jurisdiction. See Dutcher v. Matheson, 733 F.3d 980, 985 (10th Cir.
2013). Any doubts regarding subject matter jurisdiction are to be resolved against removal. See
Fajen v. Found. Reserve Ins. Co., 683 F.2d 331, 333 (10th Cir. 1982). In its notice of removal,
McKesson argues that two statutory provisions confer federal jurisdiction: 28 U.S.C. § 1331 and
28 U.S.C. § 1441. See Notice of Removal 5. 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.” Section 1331, the “general federal-question statute,” Michigan v. Bay Mills Indian
Cmty., ––– U.S. ––––, 134 S.Ct. 2024, 2030 n. 2 (2014), gives district courts original jurisdiction
over “all civil actions arising under the Constitution, laws, or treaties of the United States.” A
case improperly removed to federal court must be remanded to state court. See 28 U.S.C. § 1447.
Section 1331 “is invoked by and large by plaintiffs pleading a cause of action created by
federal law.” Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 312
7
(2005). However, causes of action under state law may nonetheless “arise under” federal law for
purposes of § 1331 even when the complaint does not explicitly plead a federal cause of action if
the four-pronged Grable test is met. Under that test, “federal jurisdiction over a state law claim
will lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4)
capable of resolution in federal court without disrupting the federal-state balance approved by
Congress.” Gunn, 568 U.S. at 258. Supreme Court decisions since Grable have suggested that
Grable’s recognition of jurisdiction absent a federal cause of action is of limited scope, noting
that only a “slim category” of cases satisfy the four-prong Grable test. Empire Healthchoice
Assurance, Inc. v. McVeigh, 547 U.S. 677, 701 (2006). The Supreme Court has stressed that “it
takes more than a federal element to open the arising under door,” id., and that mere allegations
of a “federal issue” are not a “password opening federal courts to any state action embracing a
point of federal law.” Grable, 545 U.S. at 314. Thus the “mere presence” of a federal issue in a
state cause of action and the “mere assertion of a federal interest” are not enough to confer
federal jurisdiction. Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 813 (1986). On the
other hand, a plaintiff cannot avoid federal subject matter jurisdiction by declining to plead
“necessary federal questions.” Rivet v. Regions Bank, 522 U.S. 470, 475 (1998).
To better contextualize this case, the Court briefly recounts some of the Supreme Court’s
seminal decisions analyzing jurisdiction under § 1331 based on the presence of a federal element
in a state law claim. In Merrell Dow, in two state tort law actions, the plaintiffs alleged that the
defendants misbranded a drug in violation of the Federal Food, Drug, and Cosmetic Act, which
created a rebuttable presumption of negligence under Ohio law. Thus, within a state law
negligence claim was a federal issue about the interpretation and application of the FDCA. The
defendant removed the actions, but the Supreme Court held the removal improper because the
8
case did not arise under federal law within the meaning of § 1331. The plaintiffs’ right to relief
did not necessarily depend on a resolution of federal law, the Court held, since the “[p]laintiffs’
causes of action referred to the FDCA merely as one available criterion for determining whether
Merrell Dow was negligent. Because the jury could find negligence on the part of Merrell Dow
without finding a violation of the FDCA, the plaintiffs’ causes of action did not depend
necessarily upon a question of federal law.” Merrell Dow, 478 U.S. at 807.
In Gunn, the Court readdressed somewhat similar issues raised in Merrell Dow – namely,
whether a state law tort action in which the defendant’s negligence turned on an issue of federal
law conferred federal jurisdiction. The federal law in Gunn was patent law. The plaintiff sued for
patent infringement, lost, and then sued his lawyer for legal malpractice in Texas state court for
mishandling the patent case. Because his legal malpractice claim was predicated on the
underlying patent case, the plaintiff argued that his case should have been brought in federal
rather than state courts (because federal courts have exclusive jurisdiction over patent law under
28 U.S.C. § 1338(a)). A unanimous Supreme Court disagreed. The plaintiff’s malpractice claim
– although it would necessarily require a state court to examine federal patent law – was not
substantial to the federal patent law system as a whole since a state court’s analysis of federal
patent law would not bind federal courts.
In contrast to Merrell Dow and Gunn, the Court’s case in Grable fell within the “slim
category” of cases where the Court upheld removal jurisdiction over a state law claim that
incorporated a federal element because that element implicated substantial federal interests –
namely, the federal tax code. In its state law quiet title action, the plaintiff in Grable alleged that
it had superior title to real property that the Internal Revenue Service had seized to satisfy a tax
delinquency because the IRS failed to follow the federal notice statute before the seizure.
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Because the plaintiff’s claim of superior title turned on whether it was given adequate notice, the
federal notice statutes were “an essential element of its quiet title claim.” Grable, 545 U.S. at
315. Moreover, federal jurisdiction embraced the plaintiff’s state law quite title action because
the embedded federal element was substantial to the federal system as a whole: “[t]he meaning
of the federal tax provision” and the government’s interest in satisfying its tax claims and to
provide secure title to purchasers at tax sales. Id. The IRS agency action presented “a nearly pure
issue of law, one that could be settled once and for all and thereafter would govern numerous tax
sale cases,” and thus “sensibly belonged in federal court.” Empire, 547 U.S. at 700.
IV.
DISCUSSION
a. Whether Plaintiff’s Claims Facially Arise under Federal Law
McKesson claims that Plaintiff’s claims facially arise under federal law because
Defendants’ manufacturing quotas and duties regarding reporting and shipping suspicious opioid
orders arise “solely” from the FCSA and its implementing regulations. See Notice of Removal ¶
8. Thus, McKesson argues that “[f]ederal question jurisdiction is independently proper in this
case because the Complaint facially pleads a cause of action under the federal CSA.” Def.’s
Resp. 24. However, Plaintiff’s Complaint does not allege a federal cause of action under the
FCSA – nor could it have because the FCSA provides no federal cause of action. See Zink v.
Lombardi, 783 F.3d 1089, 1113 (8th Cir. 2015) (“[The plaintiffs] acknowledge, however, that
there is no private right of action under federal law to enforce these alleged violations [of the
Controlled Substances Act].”); Durr v. Strickland, 602 F.3d 788, 789 (6th Cir. 2010) (same).
Because Plaintiff’s Complaint has not pleaded a non-existent federal cause of action under the
FCSA, federal jurisdiction will lie only if the state law claims implicate substantial federal
issues. See Grable, 545 U.S. at 312.
10
b. Whether Plaintiff’s Complaint Raises a Substantial Federal Issue
Thus, in order to establish removal jurisdiction Defendants must satisfy the four-prong
test in Grable. Turning to the second prong first, in its briefing Plaintiff made no substantive
arguments about whether the federal issues in its Complaint are “actually disputed,” and thus the
Court presumes the parties agree the second factor is met. But the parties do quarrel about
whether the other three factors derived from Grable are satisfied, so the Court will analyze those
components. The first factor that Defendants must show is that a federal issue is “necessarily
raised” in Plaintiff’s Complaint, meaning that “the issue is an ‘essential element’ of a plaintiff's
claim.” Gilmore v. Weatherford, 694 F.3d 1160, 1173 (10th Cir. 2012). McKesson argues that all
of Plaintiff’s claims depend necessarily on a purportedly federal issue – whether the Distributor
Defendants violated the DEA’s suspicious order-reporting requirement (21 C.F.R. § 1301.74(b)),
and related DEA shipping requirement as spelled out in the 2006 and 2007 DEA letters.
The Court first addresses McKesson’s arguments concerning the DEA letters. As noted
earlier, McKesson locates the source of a duty to suspend shipments not in the FCSA itself, but
in interpretations of the FCSA by the DEA in the 2006 and 2007 letters. Those letters are cited in
Plaintiff’s Complaint, and Plaintiff relies on them to show that the DEA “warned” and
“reminded” distributors to not fill suspicious orders. In a recent opioid related lawsuit brought by
the State of West Virginia, McKesson unsuccessfully removed the State’s case to federal court
on the basis that these same DEA letters alone imposed a duty on it to not fill suspicious orders.
See State of West Virginia ex rel. Morrisey v. McKesson Corp., No. 16-1773, 2017 WL 357307,
at *4 (S.D.W. Va.. Jan. 24, 2017). The court called into question whether these letters had “any
binding effect upon distributors,” especially since McKesson itself “concede[d] that [they] were
not binding.” Id. at *8. The court noted that whatever relevancy the letters had, “their guidance
11
may of course be marshalled in support of particular allegations,” but that the State’s claims did
not necessarily hinge on any putative duty owed under the letters since the State alleged
numerous other state law duties. Id.
Here, Plaintiff’s Complaint cites the DEA letters to show that the DEA reminded and
warned the Distributor Defendants of their statutory duties. However, like West Virginia’s
complaint in Morrisey, Plaintiff’s claims stretch beyond the DEA letters to include state law
duties applicable to prescription drug distributors – for instance to “report any theft, suspect
theft, diversion or other significant loss of any prescription drug” to the New Mexico Board of
Pharmacy, N.M. Code R. § 16.19.8.13(F), and to “provide effective controls and procedures to
guard against theft and diversion of controlled substances.” N.M. Code R. § 16.19.20.48(A).
McKesson argues that these two regulations in particular contain no requirement compelling the
Distributor Defendants to halt suspicious orders on which Plaintiff’s claims are allegedly based.
However, Plaintiff’s claims are not predicated exclusively on a duty to halt suspicious orders.
The Complaint alleges that the Distributor Defendants had a duty also to monitor, detect,
investigate, and refuse suspicious orders of opioids. See e.g. Compl. ¶¶ 175, 177-78. There is no
reason to believe that the New Mexico regulations cited above, which require the Distributor
Defendants to report on and guard against diversion of controlled substances could not include
the Complaint’s allegations that Defendants unlawfully distributed prescription opioids in New
Mexico.
Two federal courts have recently granted attorney general motions to remand that
presented nearly identical issues, and both courts held that state law language similar to New
Mexico’s imposed duties on McKesson and other defendants to not fill suspicious orders. See
Morrisey, 2017 WL 357307 *8 (West Virginia’s requirement that “[a]ll registrants shall provide
12
effective controls and procedures to guard against theft and diversion of controlled substances”
could support theory to not fill suspicious orders.); State of Delaware, ex rel. Matthew P. Denn,
Attorney General of the State of Delaware v. Purdue Pharma L.P., et al., 1:18-383-RGA, 2018
WL 1942363, at *3 (D. Del. Apr. 25, 2018) (holding that Delaware’s requirement that
distributors “maintain ‘effective controls against diversion [into illegitimate] channels’”
supported theory that defendants created a public nuisance by not reporting suspicious orders.)
Whatever putative duty exists under the DEA letters, McKesson has not shown that Plaintiff’s
claims are predicated solely on obligations under federal law because the Complaint identifies
other duties implicated by state law. As in Morrisey, removal jurisdiction is lacking because
Plaintiff’s Complaint alleges “specific state-law causes of action” implicating state law duties.
See Morrisey, 2017 WL 357307, at *8 (stating that “[f]ederal jurisdiction is disfavored for cases
… which involve substantial questions of state as well as federal law.”) (quoting Bender v.
Jordan, 623 F.3d 1128, 1130 (D.C. Cir. 2010)).
Thus, contrary to McKesson’s claim that Plaintiff can prevail only by showing that
Defendants violated the FCSA, it appears that Plaintiff could show that Defendants violated state
law duties to control, report and guard against the diversion of prescription drug orders, meaning
that the federal statute is not necessarily raised. While a determination of a duty and violation of
that duty under the FCSA will likely occur in examining Plaintiff’s claims, so also will
examination of New Mexico common law, statutes, and promulgated rules to determine
Defendants’ duty, if any, to prevent “diversion” of prescription drugs into illicit channels. And to
the extent, if any, that Plaintiff’s claims are “partially predicated on federal law, federal law
would still not be necessarily raised.” Manning v. Merrill Lynch Pierce Fenner & Smith, Inc.,
772 F.3d 158, 164 (3d Cir. 2014) (citing Christianson v. Colt Indus. Operating Corp., 486 U.S.
13
800, 810 (1988) (“[A] claim supported by alternative theories in the complaint may not form the
basis for [federal] jurisdiction unless [federal] law is essential to each.”)) (emphasis removed).
New Mexico state law provides alternate theories for a finding of liability against McKesson and
its codefendants because the Complaint implicates numerous alleged duties under state law.
Thus, as in Merrell Dow, the Complaint refers to the FCSA, its regulations, and the DEA letters
as “available criter[ia] for determining whether” Defendants are liable, but their liability, if any,
does not hinge exclusively on federal law, as McKesson argues. Merrell Dow, 478 U.S. at 807.
Nor are the federal issues raised in the Complaint “substantial” under the third Grable
factor in that they are not important “to the federal system as a whole.” Gunn, 568 U.S. at 260.
Even if there was a violation of the FCSA, its promulgated rules, and the DEA’s interpretation of
the statute, no large-scale federal interests of the kind in Grable – the tax code – are implicated
by such a violation. In Grable federal adjudication was appropriate over the plaintiff’s state law
quite title action because of the government’s interest in uniformly satisfying its tax claims and
providing secure title to purchasers at tax sales. Here, Plaintiff’s statutory and common law
claims of negligence, fraud, public nuisance, unfair practices, and racketeering raise no larger
substantial federal interests and do not implicate “the action of any federal department, agency,
or service,” such as the IRS. Empire, 547 U.S. at 700. Plaintiff’s claims will be “fact-bound and
situation-specific” and do not readily present a pure issue of law which federal adjudication
could resolve “once and for all.” Id. See Bender, 623 F.3d at 1130 (“[F]ederal jurisdiction is
disfavored for cases that are ‘fact-bound and situation specific’ or which involve substantial
questions of state as well as federal law.”) Moreover, the Court notes that, as here, “the absence
of a private right of action” under the FCSA is a “consideration in the assessment of
substantiality” – the “primary importance” of which is that “allowing jurisdiction when Congress
14
had not intended a private right of action would have seriously disrupt the balance of labor
between state and federal courts.” Nicodemus v. Union Pac. Corp., 440 F.3d 1227, 1233 n. 5
(10th Cir. 2006).
It is thus clear that the final element of Grable is not satisfied – namely, federal
adjudication of Plaintiff’s state law claims would “disrupt[] the federal-state balance approved by
Congress.” McKesson recently unsuccessfully removed a similar opioid related lawsuit brought
by the State of Delaware to a federal district court on similar grounds as its removal to this
District. As nicely stated by the Delaware federal district court, the final Grable prong counseled
against removal jurisdiction because
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. … 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.
Delaware ex rel. Denn, 2018 WL 1942363, at *5 (citing Grable, 545 U.S. at 318). Federal
jurisdiction over this case would result in a “horde of original filings and removal cases raising
other state claims with embedded federal issues,” Grable, 545 U.S. at 318, which weighs heavily
in factor of remanding this case to state court.
IT IS THEREFORE ORDERED that Plaintiff’s Motion to Remand [Doc. 10] is
GRANTED and the case is REMANDED to the First Judicial District Court of Santa Fe
County.
IT IS ALSO ORDERED that Distributor Defendants’ Joint Motion to Stay Pending
Ruling by the Judicial Panel on Multidistrict Litigation [Doc. 5] and Plaintiff’s Motion to
Expedite Briefing on its Motion to Remand [Doc. 11] are DENIED as MOOT.
15
IT IS SO ORDERED.
________________________________
UNITED STATES DISTRICT JUDGE
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