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Uintah County v. Purdue Pharma L.P.

United States District Court, D. Utah, Central Division

August 7, 2018

UINTAH COUNTY, UTAH; DUCHESNE COUNTY, UTAH; DAGGETT COUNTY, UTAH; and TRI-COUNTY HEALTH DEPARTMENT, Plaintiffs,
v.
PURDUE PHARMA, L.P., et al., Defendants.

          MEMORANDUM DECISION AND ORDER GRANTING MOTION TO REMAND

          ROBERT J. SHELBY, DISTRICT JUDGE.

         Before the court is Plaintiffs Uintah County, Utah; Duchesne County, Utah; Daggett County, Utah; and Tri-County Health Department's Motion to Remand[1] this action to the Eighth District Court of the District of the State of Utah, Uintah County. Defendant McKesson Corporation recently removed this action, arguing the court has federal question subject matter jurisdiction over Plaintiffs' claims against a group of Defendants, and may exercise supplemental jurisdiction over any remaining claims under 28 U.S.C. § 1367. For the reasons discussed below, the court concludes it lacks federal question subject matter jurisdiction. Plaintiffs' Motion is thus GRANTED. The action shall be REMANDED.

         I. Background

         Plaintiffs filed this action in Utah's Eighth District Court, Uintah County, on June 7, 2018, asserting in a 252-page Complaint eight state-law-based causes of action against numerous Defendants who manufacture, distribute, or are otherwise connected to the opioid pharmaceutical industry.[2] Plaintiffs claim the Defendants concealed for their own financial gain the risks of addiction and attendant harm prescription opioids present, all while promoting ever-increasing consumer use. Plaintiffs assert against the Defendants claims for: (1) Violation of the Utah Consumer Sales Practices Act; (2) Public Nuisance; (3) Fraud; (4) Strict Products Liability; (5) Negligence; (6) Negligent Marketing; (7) Civil Conspiracy; and (8) Unjust Enrichment.[3]

         On June 22, 2018, Plaintiffs served the Complaint on Defendant McKesson Corporation-an opioid distributor. On July 23, 2018, McKesson timely removed the action to this court, citing as grounds federal question subject matter jurisdiction and possible supplemental jurisdiction.[4] All other Defendants appearing have consented to the removal.

         McKesson contends in its Notice of Removal that Plaintiffs have pled in their Complaint that “alleged violations of federal law form the basis for [their] claims”[5] against the opioid distributor Defendants (Distributors). McKesson's argument stems from allegations set forth in a handful of paragraphs in the Complaint's factual background, including that the Distributors:

• had a duty to notice and report suspicious opioid orders to governing authorities, “including the DEA and the Utah Department of Health;”[6]
• “knew or should have known that they were supplying vast amounts of dangerous drugs in Uintah, Duchesne, and Daggett County that were already facing abuse, diversion, misuse, and other problems . . . [and] failed in their duty to take any action to prevent or reduce the distribution of these drugs;”[7]
• had a duty to “inspect, report, or otherwise limit” suspicious opioid orders;[8]
• breached their duty when they “fail[ed] to submit suspicious order reports”[9] and “shipped millions of doses of highly addictive controlled opioid pain killers into Uintah, Duchesne, and Daggett County” despite the fact that many such orders should either have been stopped or investigated as suspicious orders.[10]
• were fined and penalized by government authorities for actions in filling suspicious orders;[11] and
• received briefings from the DEA concerning their obligations under federal law.[12]

         McKesson argues the above-referenced duties imposed on Distributors governing “suspicious” orders arise solely from federal law-the Controlled Substances Act[13] and its implementing regulations. Although the statute is not cited in the Complaint paragraphs McKesson relies upon, [14] McKesson contends that Plaintiffs necessarily “plead that alleged violations of federal law form the basis for [their] claims.”[15] In short, while state law is the express basis for all of Plaintiffs' claims, [16] McKesson argues the Complaint raises a “substantial question of federal law sufficient to warrant removal . . . .”[17]

         Upon removal, the case was initially assigned to a Magistrate Judge. Plaintiffs promptly filed a Motion to Remand on July 26, 2018, [18] arguing federal question jurisdiction is lacking where their claims are neither rooted in federal law nor necessarily raise a disputed and substantial issue of federal law, and that in any event, the court should apply abstention doctrines to decline to hear this case.

         The next day, on July 27, 2018, Plaintiffs filed a Request for an Expedited Conference with the Court, seeking a hearing that same afternoon.[19] Plaintiffs explained that they had just received “Notice of Potential Tag-along Actions, re: MDL No. 2804, ” informing them that the action might be transferred into existing multidistrict litigation (MDL) pending before U.S. District Judge Dan Polster in the Northern District of Ohio. Judge Polster had in February 2018 issued an order placing a moratorium on all filings in the MDL-including motions to remand.[20]Plaintiffs urgently sought a hearing to discuss the potential transfer due to an apparent concern that transfer of this case to the MDL might be imminent, and that resolution of their pending Motion to Remand might be indefinitely delayed.[21]

         After Plaintiffs filed a Request for an Expedited Conference, the action was reassigned to another District Court Judge on Friday, July 27, 2018, [22] and then was reassigned to the undersigned on July 30, 2018.[23] In the evening of July 30, 2018, three Defendants-McKesson Corporation; Cardinal Health, Inc.; and AmerisourceBergen Corporation-filed a Joint Motion to Stay[24] all proceedings in this action pending a determination of whether this case would be transferred to the pending MDL.

         In view of Plaintiffs' urgent view of the case, the court on July 31, 2018 ordered expedited briefing on the Motion to Remand.[25] That same day, the court denied the Motion to Stay.[26]

         On August 1, 2018, the Judicial Panel on Multidistrict Litigation issued a Conditional Transfer Order directing that this action along with several others be transferred to the MDL before Judge Polster. But the JPML stayed its Order for seven days, until August 8, 2018, to permit any parties to give notice of opposition to the transfer.[27] And if any party does give such notice, “the stay will be continued until further order of the Panel.”[28]

         On August 2, 2018, McKesson filed a Memorandum in Opposition[29] to the Motion to Remand. Plaintiffs submitted a Reply in support of their Motion on August 3, 2018.[30]

         II. Legal Principles

         “Federal courts are courts of limited jurisdiction, possessing only that power authorized by Constitution and statute.”[31] There generally exists a presumption “that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction.”[32] Under these principles, McKesson bears the burden to show the propriety of removal by establishing that this court enjoys subject matter jurisdiction over the action.

         The removal statute, 28 U.S.C. § 1441, provides that “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants . . . .” McKesson contends the court has original jurisdiction over this action because it presents a federal question.

         28 U.S.C. § 1331 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.” “Although the constitutional meaning of ‘arising under' may extend to all cases in which a federal question is ‘an ingredient' of the action, ” the Supreme Court has “long construed the statutory grant of federal question jurisdiction as conferring a more limited power.”[33]

         The Supreme Court instructs that the “question of whether a claim ‘arises under' federal law must be determined by reference to the ‘well-pleaded complaint.'”[34] Under this rule, a suit arises under federal law when the “plaintiff's statement of his own cause of action”-and ignoring “potential defenses”-shows that it is based on federal law.”[35] “This rule makes the plaintiff the master of the claim.”[36] Plaintiffs can generally “guarantee an action will be heard in state court” by “omitting federal claims from a complaint, ” because “[a] defense that raises a federal question is inadequate to confer federal jurisdiction.”[37]

         The “vast majority” of cases in which parties establish federal question subject matter “are those in which federal law creates the cause of action.”[38] But a case may also arise under federal law where there exists an ‘embedded' federal issue if the “‘plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law.'”[39]

         To establish federal question jurisdiction in this way, the proponent must show that a state law claim “necessarily raise[s]” a substantial federal issue that is “actually disputed, ” and “which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities.”[40] The Supreme Court has cautioned, however, that this is a “small and special”[41] and “slim”[42] category of cases; and “the mere presence of a federal issue in a state cause of action does not automatically confer federal-question jurisdiction.”[43]Likewise, the Tenth Circuit instructs that this “branch of federal question jurisdiction is exceedingly narrow. . . .”[44]

         To illustrate, the Supreme Court in Merrell Dow Pharmaceuticals, Inc. v. Thompson found no federal question subject matter jurisdiction over a state law tort claim asserted against a drug manufacturer, despite the fact that the plaintiffs in the consolidated case had claimed that the drug “was ‘misbranded' in violation of the Federal Food, Drug, and Cosmetic Act (FDCA) . . . [and] that the violation ‘in the promotion' of [the drug] Bendectin” created a “rebuttable presumption of negligence” and “directly and proximately caused the injuries” alleged.[45] The Court emphasized that the FDCA provided no private right of action-important evidence that Congress did not intend for federal courts to “nevertheless exercise federal-question jurisdiction and provide remedies for that federal statute;”[46] and that “the presence of a claimed violation of the statute as an element of a state cause of action is insufficiently ‘substantial' to confer federal-question jurisdiction.”[47] Thus, after disposing of the defendant's other arguments, the court held there was no federal question subject matter jurisdiction over the plaintiffs' “complaint alleging a violation of a federal statute as an element of a state cause of action, when Congress has determined that there should be no private, federal cause of action for the violation . . . .'”[48]

         In contrast, the Supreme Court in Grable & Sons Metal Products v. Darue Engineering & Manufacturing[49] found federal question jurisdiction over a state law quiet title claim. The case arose after the Internal Revenue Service seized the plaintiff's property to a satisfy tax delinquency. For the seizure to be proper, federal law required the IRS to provide adequate notice. The IRS had provided notice by certified mail. After the seizure, the IRS sold the property to the defendant. Plaintiff eventually brought a state law quiet title action in state court against the defendant, contending the sale was invalid because the IRS had failed to comply with the federal notice law requirements. The plaintiff argued that personal service-not simply certified mail-was required but had not been effectuated.[50] The defendant removed the action to federal court, and the Sixth Circuit and Supreme Court each affirmed the district court's denial of plaintiff's motion to remand.

         In reaching that conclusion, the Supreme Court explained that the plaintiff's quiet title claim was premised on the “essential element” of an alleged “failure by the IRS to give it adequate notice, as defined by federal law.”[51] The federal form of notice issue was “the only legal or factual issue contested in the case, ” and was “an important issue of federal law” where the “ability of the IRS to satisfy its claims . . . requires clear terms of notice.”[52] The court emphasized that “because it will be the rare state title case that raises a contested matter of federal law, federal jurisdiction to resolve genuine disagreement over federal tax title provisions will portend only a microscopic effect on the federal-state division of labor.”[53]

         The Grable Court noted its decision was not at variance with Merrell Dow, despite the fact that in both cases, the federal statute at issue did not create a private right of action. That common fact was not dispositive to either case. The Merrell Dow Court had considered that fact highly relevant to the determination of whether the federal issue there was substantial and whether federal court consideration would upset a balance struck by Congress, in addition to other practical considerations that were very different in Merrell Dow compared to Grable:

The [Merrell Dow] Court saw the missing cause of action not as a missing federal door key, always required, but as a missing welcome mat, required in the circumstances, when exercising federal jurisdiction over a state misbranding action would have attracted a horde of original filings and removal cases raising other state claims with embedded federal issues. For if the federal labeling 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. And that would have meant a tremendous number of cases.[54]

         The Grable Court explained that in contrast, though there was no private right of action provided in the federal IRS notice statute, “it is the rare state quiet title action that involves contested issues of federal law.”[55] Thus, federal jurisdiction over such actions “would not materially affect, or threaten to affect, the normal currents of litigation.”[56]

         III. Discussion

         Under the foregoing guidance, the court evaluates whether it enjoys federal question subject matter jurisdiction over the claims against the Distributors set forth in Plaintiffs' Complaint. Plaintiffs assert no claims in which federal law creates the cause of action. McKesson argues only that federal subject matter jurisdiction exists because the claims against the Distributors raise ‘substantial questions' of federal law involving the Controlled Substances Act (CSA). Below, the court considers whether McKesson has established that a substantial federal issue is necessarily raised, actually disputed, and amenable to resolution in this court without disrupting congressional intent and balancing of judicial responsibilities.

         A. Plaintiffs' Complaint does not necessarily raise substantial federal issues.

         The allegations in Plaintiffs' Complaint undoubtedly reference federal laws and some Defendants' breaches of those laws. But Plaintiffs assert only state law claims, and provide bases for the claims which do not arise out of or necessarily depend on an interpretation of a disputed CSA provision. Under these circumstances, the Complaint does not necessarily raise federal issues.[57]

         First, Plaintiffs identify non-federal sources for the legal duties they claim the Distributors owe. These include Utah statutes referenced in the Complaint, as well as the common law.[58]

         Indeed, the Distributors acknowledge in their briefing the claimed state law bases for Plaintiffs' claims.[59] But, they contend Plaintiffs' non-federal law sources for duties will ultimately fail because none truly create the duties alleged.[60] The validity of the alleged independent sources of the Distributors' duties is not an issue for this court. At this stage, involving subject matter jurisdiction determinations, Plaintiffs are the masters of their claims- whether eventually successful on the merits or not. Thus, even assuming the court could discern that those independent bases for claimed duties would ultimately fail-which it cannot-this conclusion would not preclude a finding that federal subject matter jurisdiction is lacking and that the case demands remand.[61]

         But even if Plaintiffs relied only on a breach of the federal CSA for a given state law claim against the Distributors to establish to their state law claims against the Distributors, the court likely still would not find the presence of a substantial issue of federal law. Doing otherwise, as McKesson urges, would seemingly flout Merrell Dow, in which the Supreme Court found no federal subject matter jurisdiction under analogous facts where plaintiffs directly claimed the defendant's alleged breach of a federal drug labeling statute established the defendant had been negligent per se and that negligence was the proximate cause of the injuries alleged in the consolidated cases. As with the CSA, the federal statute at issue in Merrell Dow provided no private right of action. If federal question subject matter jurisdiction was lacking there, it is certainly not established here, where Plaintiffs do not expressly rely on the CSA in stating their claims and offer in their papers that their claims are not directly based on the CSA.

         The court concludes McKesson has not established that Plaintiffs' Complaint necessarily raises a federal issue.

         B. McKesson does not identify any actually disputed substantial federal issues.

         The court next evaluates whether a substantial federal issue appears to be disputed. McKesson contends the parties will actually dispute substantial federal issues because Plaintiffs will be required to litigate the contours of any duty under the CSA, whether the Distributors' conduct amounted to a breach of that duty, whether the violations occurred in the proximity of the Plaintiff-Counties, during the statute of limitations, and in a way that cased the Plaintiffs harm.[62] But this litany ignores it is undisputed that Distributors have paid fines to the DEA regarding suspicious orders, and that the bulk of the other issues-where violations occurred, when they occurred, and whether they harmed Plaintiffs-likely will be determined under state law, and almost certainly without even a reference to the CSA, which provides no private right of action. Perhaps most critically, though they claim the parties will “contest whether the Distributors violated the CSA”[63] McKesson fails to identify a specific provision in the CSA which will require interpretation or construction by any court, let alone a substantial and disputed statutory issue on which Plaintiffs' claims against it necessarily succeed or fail.

         And this is in stark contrast to the issue presented in Grable-whether the federal law requiring the IRS to provide notice permitted notice via certified mail or required personal service. There, the parties disputed the interpretation of specific provision of federal law entirely ...


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