COUNTY OF SANTA CLARA v. SMITHKLINE BEECHAM CORPORATION et al
MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE CYNTHIA M. RUFE ON 2/28/2017. 2/28/2017 ENTERED AND COPIES E-MAILED TO LIAISON COUNSEL. (SEE PAPER # 5084 IN 07-MD-1871) (ems)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN RE: AVANDIA MARKETING, SALES
MDL NO. 1871
PRACTICES AND PRODUCT
THIS DOCUMENT APPLIES TO
County of Santa Clara v. GSK
FEBRUARY 28, 2017
Plaintiff has filed a Motion Appealing the Twenty-Fourth Report and Recommendation
of the Special Master (“R&R 24”). R&R 24 addressed an unusual situation: five years into this
litigation, in a case that was filed in—rather than removed to—federal court, Plaintiff filed a
Motion to Dismiss the case for lack of subject matter jurisdiction, claiming that the parties were
not completely diverse at the outset of the case, and therefore this Court lacks subject matter
jurisdiction over the case. 1 R&R 24 concluded that jurisdiction was and is proper in this case.
Upon consideration of Plaintiff’s Motion appealing the R&R, Defendant’s Response, and
Plaintiff’s Reply, and pursuant to this Court’s power to conduct a de novo review of proposed
recommendations to which objections are made, 2 the Court will approve and adopt
R&R 24 for the reasons set forth below.
Pursuant to 28 U.S.C. § 1332(a)(1), “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
. . . citizens of different States.” A state (or “the people” of the state) is not considered a citizen for diversity
purposes, but a county is considered a citizen of the state. Moor v. Cty. of Alameda, 411 U.S. 693, 717 (1973).
See Fed. R. Civ. P. § 53(f)(3).
The Avandia Multidistrict Litigation (“MDL 1871”) was created by the United States
Judicial Panel on Multidistrict Litigation, pursuant to 28 U.S.C. § 1407, to consolidate cases in
federal court that “arise from allegations that certain diabetes drugs manufactured by [Defendant
GlaxoSmithKline]—Avandia and/or two sister drugs containing Avandia (Avandamet and
Avandaryl)—cause an increased risk of heart attack and other physical injury, and that GSK
failed to provide adequate warnings concerning that risk.” 3 Both personal injury claims and
sales and marketing claims were consolidated in MDL 1871. The stated goal of the panel in
creating the MDL was to eliminate duplicative discovery, avoid inconsistent pretrial rulings, and
conserve the resources of the parties. 4 In its role as the MDL Court, this Court has, with the
assistance of court-appointed Special Discovery Masters and Settlement Masters, directed
discovery efforts, resolved common questions of law, decided Daubert motions, and overseen
the settlement of tens of thousands of individual cases.
In 2010, the County of Santa Clara (“the County”), individually and on behalf of the
People of the State of California (“the People”), filed this sales and marketing suit against
Defendant GlaxoSmithKline (“GSK”), alleging violations of California’s False Advertising Law
(“FAL”) in the marketing of Avandia. Plaintiff opted to file the suit in federal court, asserting
that the federal courts had diversity jurisdiction over the controversy, as Plaintiff and Defendant
were citizens of different states. Plaintiff originally filed suit in the United States District Court
for the Northern District of California, and the Judicial Panel on Multidistrict Litigation
subsequently transferred the case to MDL 1871 by a Conditional Transfer Order dated March 11,
October 16, 2007 Transfer Order of the United States Judicial Panel on Multidistrict Litigation, at *2 [071871, Doc. No. 1].
2010. There were no objections to the transfer. Before an answer was filed, Plaintiff filed a first
amended complaint on June 10, 2010. The amended complaint, like the original complaint,
alleged one count: “Violations of the California Business and Professions Code Section 17500, et
seq., by Plaintiff County of Santa Clara, individually, and on behalf of the People of the State of
California as against all Defendants.” 5
Defendant filed a motion to dismiss the amended complaint, seeking dismissal of claims
raised by the County on its own behalf, arguing that the County lacked standing under the FAL,
and further arguing that the County had failed to state a claim on behalf of the People. The Court
found that the County did not have standing to sue on its own behalf, but that it had adequately
pled its claims on behalf of the People. 6
After the Court ruled on the motion to dismiss, GSK filed an answer and the parties
began discovery efforts. In November 2012, while discovery was ongoing, the Attorney General
of California, as counsel for the People of the State of California, entered into a stipulated Final
Judgment with GSK in California state court, settling claims similar to those brought by the
County in federal court. GSK agreed to curtail or modify certain marketing activities, and to pay
the State of California approximately $7.3 million. The Final Judgment released GSK from
similar claims under the FAL, but excluded claims brought by the Santa Clara County Counsel’s
office for violations of the FAL to which residents of Santa Clara County were exposed. The
exception to the release “applies to and in favor of only persons or entities resident in the
Amended Compl. ¶¶ 88-96. Under the FAL, it is unlawful to make or disseminate any statement
concerning property or services that is untrue or misleading. Cal. Bus. & Prof. § 17500. “To state a claim for false
advertising, a plaintiff must allege that (1) the statements in the advertising are untrue or misleading and (2) the
defendants knew, or by the exercise of reasonable care should have known, that the statements were untrue or
misleading.” Goldsmith v. Allergan, Inc., No. 09–7088, 2011 WL 147714, at *3 (C.D. Cal. Jan. 13, 2011) (citing
People v. Lynam, 253 Cal. App. 2d 959, 965 (Cal. Ct. App. 1967)).
See In re Avandia Mktg., Sales Practices & Prod. Liab. Litig., No. 10-1637, 2011 WL 5105503, at *3
(E.D. Pa. Oct. 26, 2011).
County.” 7 Because the Final Judgment limited the scope of Plaintiff’s claims, the Court granted
Plaintiff leave to file a Second Amended Complaint (“SAC”). The SAC was filed on February
26, 2013 and named as Plaintiffs “County of Santa Clara and the People of the State of
California.” 8 GSK filed an answer, and the parties continued discovery efforts.
Shortly thereafter, on May 10, 2013, GSK filed a motion for partial summary judgment,
which sought to limit the scope of the County’s claims. First, the motion asked the Court to
interpret the release exclusion provision in the Final Judgment as limiting recovery not just to
Santa Clara residents exposed to allegedly misleading Avandia marketing, but to those Santa
Clara residents who could establish that that exposure occurred within the County limits. The
Court denied this request, as it was not supported by the language of the Final Judgment. GSK
also asked the Court to make certain rulings regarding the calculation of restitution, should
liability be established. The Court dismissed this issue without prejudice as premature.
As fact and expert discovery continued to proceed, on December 22, 2014, GSK filed
another motion for partial summary judgment, seeking dismissal of the County’s claim for
restitution under the FAL. On February 10, 2015, before the issue was fully briefed, Plaintiff
filed the instant Motion to Dismiss for Lack of Jurisdiction. 9 Although Plaintiff had opted to file
suit in federal court in 2010, then asserting that the federal court had diversity jurisdiction over
the case, and no party had suggested that the Court lacked jurisdiction during the subsequent five
years of litigation, Plaintiff now sought dismissal of the action so that it could be refiled in state
People of Cal. v. GlaxoSmithKline LLC, No. 37-2012-00085491-CU-MC-CTL, Final Judgment (Sup. Ct.
Nov. 15, 2012).
SAC, at 42.
Though Plaintiff in this Motion and in subsequent filings styles itself as “the People,” the Court will refer
to a singular Plaintiff in reference to the County of Santa Clara, the original named plaintiff in this case.
The Motion to Dismiss for Lack of Jurisdiction was referred to the Special Master for an
R&R. The Special Master reviewed the relevant case law, analyzed the facts of the case, and
concluded that this Court had diversity jurisdiction under the initial complaint, as the County had
asserted therein. Specifically, the Special Master concluded that the County, and not the People,
was the real party in interest to this suit, and as the County is a citizen of California, and GSK is
not, the parties were diverse. Plaintiff filed objections to the R&R. The matter was fully briefed
and the Court held oral argument on the issue.
PLAINTIFF’S OBJECTIONS TO R&R 24
Plaintiff objects to the R&R on several grounds. Plaintiff maintains that diversity
jurisdiction has never existed in this case, because the People, that is, the State of California, is
the only possible plaintiff in this case. Additionally, Plaintiff disagrees with the R&R’s
interpretation of Ninth Circuit cases, arguing that the case law supports a finding that there is no
diversity of citizenship in this case. Plaintiff contends that California courts routinely refuse to
exercise diversity jurisdiction in FAL cases brought by prosecutors on behalf of the People, and
this Court should follow their lead. 10 Plaintiff also argues that R&R 24 “betrays a fundamental
misunderstanding” of an earlier ruling by the Court in this case. Defendant agrees with the
findings of the Special Master, asserting that the County is the real party in interest in this case
because it is the County that stands to benefit.
The Court and the parties focus on decisions from the Ninth Circuit because of those courts’ familiarity
with California statutes.
A. The County Is the Real Party in Interest
Federal district courts have original jurisdiction of civil actions “between . . . citizens of
different States” where the amount in controversy exceeds $75,000. 11 It is well settled that
diversity jurisdiction is based on the citizenship of the parties to a case, and that a state is not a
citizen for diversity purposes. 12 A county is considered a citizen for diversity purposes. 13 To
determine whether diversity of citizenship exists, a court must “look behind the pleadings” and
inquire into the real party in interest because “in cases involving a State or state official, . . . a
State’s presence as a party will destroy complete diversity.” 14 “The defense of lack of subject
matter jurisdiction cannot be waived, and the court is under a continuing duty to dismiss an
action whenever it appears that the court lacks jurisdiction.” 15 Diversity jurisdiction depends on
the status of the parties as they existed at the time the complaint was filed. 16 Thus, the Court
must look to the original complaint in determining the existence of diversity of citizenship.
Plaintiff contends that the R&R misapplied a 2011 Ninth Circuit case upon which it
relied, as well as a subsequent Ninth Circuit case, and that the cases instead support a finding
that there is no diversity of citizenship in this case. The Court disagrees.
In Department of Fair Employment & Housing v. Lucent Technologies, Inc., the Ninth
Circuit established a new standard for determining the real party in interest, holding that the
determination should be made based on the record of the case as a whole, and that “general
28 U.S.C. § 1332(a)(1).
See, e.g., Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996); see also Moor, 411 U.S. at 717.
Moor, 411 U.S. at 721.
Miss. ex rel. Hood v. AU Optronics Corp., 134 S. Ct. 736, 745 (2014) (citing Mo., Kan. & Tex. Ry. Co. v.
Hickman, 183 U.S. 53, 58-59 (1901)).
Augustine v. United States, 704 F.2d 1074, 1077 (9th Cir. 1983) (citing Fed. R. Civ. P. 12(h)(3)).
Knop v. McMahan, 872 F.2d 1132, 1138 (3d Cir. 1989).
governmental interest[s] will not satisfy the real party to the controversy requirement.” 17 The
court considered whether diversity jurisdiction was proper in an action filed by the California
Department of Fair Employment and Housing (“DFEH”) in state court on behalf of an aggrieved
employee, and subsequently removed to federal court by the defendant-employer. 18 The Ninth
Circuit held that the real party in interest for diversity purposes was not the State of California
(acting through the DFEH), but rather the individual on whose behalf the DFEH had brought
suit. 19 Quoting a seminal Supreme Court case, the Lucent court held that a state’s general
interest in the welfare of its people will not make the state the real party in interest unless “the
relief sought is that which inures to it alone.” 20
The court in Lucent examined whether the state had a “substantial state interest” distinct
from the relief sought on behalf of the aggrieved individual. 21 The court focused on the broad
equitable relief sought, noting that it did not constitute a substantial state interest because it
“could be obtained by the individual aggrieved,” even though such relief would affect employees
of the company at work locations throughout California. 22 The court found that since the
interests of the DFEH were merely “tangential to the alleged relief sought” for the individual, the
true party in interest was the individual on whose behalf the DFEH had sued. 23
642 F.3d 728, 734 (9th Cir. 2011) (internal citations omitted).
Lucent, 642 F.3d at 736-38.
Id. at 738-39.
Id. (quoting Mo., Kan., & Tex. Ry. Co., 183 U.S. at 59).
Lucent, 642 F.3d at 739.
Id. Although Plaintiff argues Lucent is distinguishable because there the agency sought relief on behalf
of a single person, as the R&R notes, “this description fails to account for the full relief the agency sought, which
included an order requiring defendant to (1) cease and desist from discriminating against all its employees; (2)
develop, implement, and disseminate a nondiscrimination policy affecting all its employees; (3) train all its
managers regarding its non-discrimination obligations; and (4) post a notice in all its work locations about its
violations of the law.” R&R 24, at 16.
Lucent, 642 F.3d at 739.
Applying the standard it announced in Lucent, the Ninth Circuit came to the opposite
conclusion in Nevada v. Bank of America Corp., in which the Attorney General of Nevada sued
Bank of America under a state deceptive trade practices law in state court for allegedly
misleading customers about mortgage and foreclosure procedures. 24 The Ninth Circuit
distinguished the facts in Nevada from those in Lucent and found that the State of Nevada was
the real party in interest. 25 The court noted that “the Nevada Attorney General sued to protect
the hundreds of thousands of homeowners in the state allegedly deceived by Bank of America, as
well as those affected by the impact of Bank of America’s alleged frauds on Nevada’s
economy.” 26 The court underscored that foreclosures “work a widespread and devastating
injury” affecting not just defrauded borrowers, but also the economy of the state as a whole. 27 In
holding that the state of Nevada was the real party in interest, the Ninth Circuit focused on the
relief sought and noted that the state stood to benefit from enforcement of a consent judgment,
civil penalties under the statute, injunctive relief, and recoupment of costs of investigations into
Bank of America’s practices. 28
The Court agrees with the R&R that Lucent supports a finding that the real party in
interest is the County, and Nevada does not alter that conclusion. Instead, Nevada reinforces
Lucent’s holding that a court must examine “the essential nature and effect of the proceeding as
it appears from the entire record” to determine the real party in interest. 29 Here, as discussed
below, the record establishes that the real party in interest is the County.
672 F.3d 661, 664 (9th Cir. 2012).
Id. at 670-71.
Id. at 670.
Id. at 672.
Id. at 670 (quoting Geeslin v. Merriman, 527 F.2d 452, 455 (6th Cir. 1975)).
In addition to arguing that Lucent and Nevada compel the conclusion that the State is the
real party in interest in this case, Plaintiff cites several district court decisions in support of the
contention that California courts “have uniformly rejected diversity jurisdiction” where public
prosecutors bring cases on behalf of the People under the FAL or similar statutes. 30 None of
these cases presents a set of facts substantially similar to those presented here, and none shares
the procedural posture of this case. Additionally, four of the cases cited by Plaintiff pre-date
Lucent, and therefore do not apply the governing standard discussed above. 31 Of the cases that
came after Lucent, some inexplicably do not mention Lucent. 32
Additionally, the cases cited by Plaintiff were all decided in the context of a motion for
remand. 33 The rulings in favor of remand in these cases are often based on the principle that “a
court must construe the removal statute strictly and reject jurisdiction if there is any doubt
regarding whether removal was proper.” 34 The removal statute is not a concern in cases where
Pl. Mot. Appealing R&R 24, at 5.
See People of Cal., ex rel. Herrera v. Check ‘N Go of Cal., Inc., No. C 07-02789 JSW, 2007 WL
2406888, at *1 (N.D. Cal. Aug. 20, 2007); People of Cal. v. Time Warner, Inc., No. CV 08-4446 SVW(RZX), 2008
WL 4291435, at *1 (C.D. Cal. Sept. 17, 2008); People of Cal. v. Universal Syndications, Inc., No. C 09-1186
JF(PVT), 2009 WL 1689651, at *1 (N.D. Cal. June 16, 2009); People of Cal. v. Steelcase Inc., 792 F. Supp. 84, 85
(C.D. Cal. 1992).
See Hawaii, ex rel. Louie v. Bristol-Myers Squibb Co., No. CIV. 14-00180 HG-RLP, 2014 WL 3427387,
at *1 (D. Haw. July 15, 2014) (holding state is real party in interest in case brought by Attorney General of Hawaii
alleging false, deceptive, and unfair marketing of the prescription drug Plavix); Cty. of Santa Clara ex rel. Marquez
v. Bristol Myers Squibb Co., No. 5:12-CV-03256-EJD, 2012 WL 4189126, at *4 (N.D. Cal. Sept. 17, 2012) (citing
the Ninth Circuit’s strong presumption against removal in finding state is real party in interest and remanding case);
California v. Smartwear Techs., No. 11CV1361 JAH (NLS), 2012 WL 243343, at *1 (S.D. Cal. Jan. 25, 2012)
(finding state real party in interest and granting motion to remand); see also People of Cal. v. N. Trust Corp., No.
CV 12-01813 DMG (FMOX), 2013 WL 1561460, at *4 (C.D. Cal. Apr. 10, 2013) (“Because Lucent announces a
new standard for the real party in interest analysis, Bristol Myers’s and Smartwear’s silence on the applicability of
that case is of little assistance here.”).
See, e.g., People of Cal. v. Purdue Pharma L.P., No. SACV 14-1080-JLS (DFM), 2014 WL 6065907, at
*4 (C.D. Cal. Nov. 12, 2014) (holding that, under Lucent and Nevada, defendant had not met burden of showing
removal was proper).
Check ‘N Go, 2007 WL 2406888, at *2; see also 28 U.S.C. § 1441 (providing bases for removal).
the plaintiff originally brought suit in federal court by invoking diversity jurisdiction, 35 as the
County here did.
The record in this case supports the conclusion that the County is the real party in
interest, and has been since the case was filed. The original complaint stated, in relevant part:
In short, GSK bilked purchasers, including California diabetics, their insurers,
public healthcare providers, public entities, and government payors, including
Plaintiff County of Santa Clara, out of hundreds of millions of dollars by making
false representations that Avandia was better at lowering blood sugar and could
decrease diabetics’ cardiovascular risks. Plaintiff County of Santa Clara alone
paid approximately $2 million for Avandia between May 1999 and July
2009 . . . 36
In addition to restitution and civil penalties, the County sought treble damages, prejudgment
interest, fees and costs, and any other relief “that the Court deems just and proper.”
The language of the FAL does not support Plaintiff’s claim that the State is the real party
in interest. Though the complaint initially sought restitution on behalf of the People of
California, this restitution would go to individuals who had suffered harm, not to the state itself
or to the entire California population. Plaintiff insists that R&R 24 is incorrect in stating that the
civil penalties sought in this case would benefit the County, arguing instead that any such
penalties would benefit the public. However, the statute is clear that the entire amount of any
civil penalties collected would go to the County treasury to aid in enforcement of consumer
If the action is brought by the Attorney General, one-half of the penalty collected
shall be paid to the treasurer of the county in which the judgment was entered, and
See 1-8 Moore’s Federal Practice and Procedure § 8.05 (2015) (“The entitlement to removal is very
narrowly construed because it is a purely statutory right, and because of the concerns of federalism, a clear
congressional intent to limit removal jurisdiction, and the traditional preference to allow a plaintiff to choose the
forum of litigation.”). Whereas in a removal context a court must “reject jurisdiction if there is any doubt regarding
whether removal was proper, Check ‘N Go, 2007 WL 2406888, at *2, when a case is originally filed in federal court
under 28 U.S.C. § 1332, the appropriate standard of proof is preponderance of the evidence. McCann v. Newman
Irrevocable Trust, 458 F.3d 281, 289 (3d Cir. 2006).
Orig. Compl. ¶ 79.
one-half to the State Treasurer. If brought by a district attorney or county
counsel, the entire amount of penalty collected shall be paid to the treasurer of
the county in which the judgment was entered. If brought by a city attorney or
city prosecutor, one-half of the penalty shall be paid to the treasurer of the county
and one-half to the city. The aforementioned funds shall be for the exclusive use
by the Attorney General, district attorney, county counsel, and city attorney for
the enforcement of consumer protection laws. 37
Thus, the relief sought would not inure to the benefit of the state alone. 38 Furthermore, as in
Lucent, the statute here allows individuals to bring suits seeking injunctive relief and restitution,
so the relief sought here could also be sought by an aggrieved individual. 39
Moreover, since the start of this litigation in 2010, the county counsel that prosecuted the
action “controlled the strategy and progress of the case.” 40 As explained in R&R 24:
The county and not the state will determine whether the case is settled or
voluntarily dismissed. The county and not the state is subject to any court order
requiring the payment of costs, sanctions, or attorneys’ fees. And the county
treasury will receive any funds paid as a civil penalty. 41
The SAC further highlights that diversity jurisdiction is proper in this case. As the R&R
notes, “If the state ever had any interest in this case (which, as discussed above, was not
substantial enough to render it the real party in interest), it has disclaimed any such interest
following its resolution of its claims against GSK and unquestionably has left this case in the
county’s hands.” 42 Whereas the original complaint and the first amended complaint had named
only one plaintiff (the County), the SAC named as plaintiffs both the County of Santa Clara and
the People of the State of California “acting by and through” the acting County counsel. In
Cal. Bus. & Prof. Code § 17536(c) (emphasis added).
Lucent, 642 F.3d at 737 (“a State’s presence in a lawsuit will defeat jurisdiction under 28 U.S.C. §
1332(a)(1) only if ‘the relief sought is that which inures to it alone’”) (quoting Mo., Kan. & Tex. Ry. Co., 183 U.S. at
Lucent, 642 F.3d at 739 (“DFEH’s claim that these equitable remedies constitute a substantial state
interest is unavailing, as most of these forms of equitable relief could be obtained by the individual aggrieved.”).
R&R 24, at 33.
Id. at 34.
addition to the relief sought in the original complaint, the SAC requested permanent injunctive
relief against Defendant. The SAC recognized that the relief requested was limited by the Final
Judgment entered into by the Attorney General of California, as counsel for the People of the
State of California, and GSK. 43 Thus, because the Final Judgment released GSK from claims by
the People, it is even clearer under the SAC that the relief sought would not inure to the State.
Finally, Plaintiff argues that this Court’s earlier ruling that the County does not have
statutory standing to sue on its own behalf establishes that the County is not the real party in
interest. This is a misstatement of the Court’s decision. In its October 26, 2011 ruling, the Court
noted that the FAL allows an individual, partnership, firm, association, or corporation to bring a
claim, but does not expressly provide for suits by a county on its own behalf. Accordingly, the
Court rejected Plaintiff’s argument that the County was a corporation, and found that it therefore
did not have standing to sue on its own behalf under the FAL. In so doing, the Court did not
hold that the State of California was the real party in interest. 44 The interests that dictate whether
a party has standing do not necessarily dictate whether the party is the real party in interest, 45
The Final Judgment stated, in relevant part:
By execution of this Judgment, the State of California releases and forever discharges Defendant
. . . from the following: all civil claims, causes of action, damages, restitution, fines, costs,
attorneys’ fees, remedies and/or penalties that were or could have been asserted against the
Released Parties by the Attorney General . . . .
Final Judgment ¶ 10. The Final Judgment excluded “[a]ny claims that have been brought by the Santa
Clara County Counsel’s Office, as of the date of entry of this Judgment, for violations of California Business and
Professions Code section 17500 concerning all Covered Conduct as defined in this Judgment, to which persons
resident in the County of Santa Clara were exposed.” Id. ¶ 11(E).
In re Avandia Mktg., Sales Practices & Prod. Liab. Litig., No. 10-1637, 2011 WL 5105503, at *3 (E.D.
Pa. Oct. 26, 2011). It bears noting that Plaintiff did not question the Court’s jurisdiction at that time.
See Lucent, 642 F.3d at 738 (“Although there is little doubt that this provision supports a finding that
California is a real party in interest for the purposes of  standing, . . . this language fails to render it a real party in
the controversy for the purposes of diversity jurisdiction because these articulated interests are the very “general
governmental interest[s]” that the Supreme Court has stated cannot satisfy the diversity requirement.”); Davis v.
Yageo Corp., 481 F.3d 661, 678 (9th Cir. 2007) (“‘real party in interest’ is very different from standing”) (quoting
Kent v. N. California Reg'l Office of Am. Friends Serv. Comm., 497 F.2d 1325, 1329 (9th Cir. 1974); In re O'Kelley,
420 B.R. 18, 23 (D. Haw. 2009) (“Whether a party is ‘real party in interest’ is a different inquiry than whether the
party has standing; a party may meet one requirement but not the other.”); Ramada Inns, Inc. v. Rosemount Mem’l
and, as discussed above, the facts of this case make clear that the County, and not the state, has
been the real party in interest since the beginning of the case. Moreover, the Final Judgment and
subsequent narrowing of Plaintiff’s complaint only reinforce the fact that the State does not have
sufficient interest in the case to render it the real party in interest.
Because the Court concludes that the real party in interest is the County of Santa Clara,
diversity of citizenship existed when the case was filed and continues to exist now.
B. The Court Will Certify this Matter for Interlocutory Review
A district court may certify an order for interlocutory review if (1) the order involves a
“controlling question of law”; (2) there is a “substantial ground for difference of opinion” as to
the question; and (3) interlocutory appeal may “materially advance the ultimate termination of
the litigation.” 46
First, this matter involves a “controlling question of law” because the issue of subject
matter jurisdiction “goes to the very power of a court to hear a controversy.” 47 Second, there is
“substantial ground for difference of opinion” in this case. The procedural posture of this case is
uncommon, and there appear to be no Supreme Court, Third Circuit, or Ninth Circuit cases that
directly address the issue presented here. Finally, regarding whether interlocutory review would
materially advance the termination of the case, if the analysis of this Court is incorrect and the
Court in fact does not have jurisdiction over this case, “continued litigation would waste time
and resources by requiring the Court to render decisions that would ultimately be deemed
Park Ass’n, 598 F.2d 1303, 1306 (3d Cir. 1979) (“the question whether a state is the real party in interest will turn
on factors widely variant from case to case”).
Katz v. Carte Blanche Corp., 496 F.2d 747, 754 (3d Cir. 1974) (citing 28 U.S.C. § 1292(b)).
Ala. Hosp. Ass’n v. United States, 656 F.2d 606, 610 (Ct. Cl. 1981); see also Beazer E., Inc. v. The Mead
Corp., No. 91-408, 2006 WL 2927627, at *2 (W.D. Pa. Oct. 12, 2006) (“the fundamental issue of subject matter
jurisdiction is one of the clearest examples of a ‘controlling question of law’ within the meaning of
void.” 48 Accordingly, the Court will certify the matter for interlocutory review and grant
Plaintiff’s request for a stay pending review by the Third Circuit.
The Court will approve and adopt R&R 24 in its entirety and deny Plaintiff’s Motion to
Dismiss. The Court will certify the matter for interlocutory review. An appropriate Order
Pl. Mot. Appealing R&R 24, at 15.
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