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State ex rel. Denn v. Purdue Pharma L.P.

United States District Court, D. Delaware

April 25, 2018

STATE OF DELAWARE, ex rel. MATTHEW P. DENN, Attorney General of the State of Delaware, Plaintiff,
v.
PURDUE PHARMA L.P., PURDUE PHARMA INC., THE PURDUE FREDERICK COMPANY, ENDO HEALTH SOLUTIONS INC., ENDO PHARMACEUTICALS INC., MCKESSON CORPORATION, CARDINAL HEALTH, INC., AMERISOURCEBERGEN CORPORATION, ANDA PHARAMACEUTICALS, INC., H.D. SMITH, LLC, CVS HEALTH CORPORATION, and WALGREENS BOOTS ALLIANCE, INC., Defendants.

          MEMORANDUM

         Plaintiff, State of Delaware, originally filed this suit in the Superior Court of the State of Delaware against manufacturers, distributors, and pharmacy retailers of prescription opioids, alleging state common law claims for their roles in Delaware's opioid crisis. (D.I. 8 at 1-2). Plaintiff asserted five claims against Defendant McKesson Corporation complaining of over-distribution of prescription opioids into Delaware, including Consumer Fraud ("Count V"), Public Nuisance ("Count VI"), Negligence ("Count VII"), Unjust Enrichment ("Count VIII"), and Civil Conspiracy ("Count DC"). (D.I. 1 at 2). McKesson filed a notice of removal to this Court, asserting this Court has federal question jurisdiction. (Id. at 4). McKesson asserts Plaintiffs claims "aris[e] solely [from duties] under the [F]ederal Controlled Substances Act" ("FCSA"). (D.I. 25 at 1).

         Presently before the Court is Plaintiffs Motion to Remand for lack of federal subject matter jurisdiction. (D.I. 4). The issues have been fully briefed. (D.I. 8, 25, 27). For the reasons set forth below, Plaintiffs Motion is GRANTED, and this action will be remanded to Superior Court.

         I. BACKGROUND

         Plaintiff filed this action against Defendants in Superior Court of the State of Delaware on January 19, 2018.[1] (D.I. 1-1 at p. 10). Plaintiff alleges that Defendants created and fueled Delaware's opioid crisis by, among other things, violating both the Delaware Controlled Substances Act and the Federal Controlled Substances Act. Plaintiff alleges McKesson diverted prescription opioids to an illegitimate channel, filled suspicious orders of opioids, and allowed opioids to be lost or stolen from inventory. (Id. at 19). Plaintiff alleges only state law claims based on theories of consumer fraud, nuisance, negligence, unjust enrichment, and civil conspiracy against McKesson.[2] (Id. at 114-27). Nonetheless, on March 9, 2018, McKesson filed a notice of removal and asserted this Court has federal question jurisdiction pursuant to the FCSA. (D.I. 1 at 4). Plaintiff filed amotion for remand on March 13, 2018. (D.I. 4).

         II. LEGAL STANDARD

         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." 28 U.S.C. § 1441(a). "Only state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant." Kline v. Security Guards, Inc., 386 F.3d 246, 251 (3d Cir. 2004) (quoting Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987)). If the case could not have been filed in federal court, then removal under §1441 is improper and remand is appropriate. Id. Removal jurisdiction should be strictly construed against removal, and "all doubts [should] be resolved in favor of remand." Brown v. Jevic, 575 F.3d 322, 326 (3d Cir. 2009). The party seeking removal bears the burden of demonstrating that removal is proper. Id.

         To remove this case to federal district court, McKesson must establish that this Court has "original jurisdiction" due to the action "arising under" federal law.[3] 28 U.S.C. § 1331. Federal question jurisdiction is governed by the well-pleaded complaint rule, which "provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiffs properly pleaded complaint." Kline, 386 F.3d at 251. This Court has federal question jurisdiction over all civil actions "arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331.

         The "arising under" standard can implicate federal jurisdiction when "federal law creates the cause of action asserted." Gunn v. Minton, 568 U.S. 251, 256 (2013) (citing American Well Works Co. v. Layne & Bowler Co., 241 U.S. 257, 260 (1916)). Alternatively, some state law claims can implicate federal jurisdiction when they "implicate significant federal issues." Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 312 (2005). These cases are exemplary and constitute a "special and small category" of federal question jurisdiction. Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 699 (2006). To determine whether a state-law claim implicates federal question jurisdiction, "the question is, does a state-law claim 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., 545 U.S. at 314. But, "the mere presence of a federal issue in a state cause of action does not automatically confer federal-question jurisdiction." Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 813 (1986).

         III. DISCUSSION

         Plaintiffs Motion to Remand is granted because McKesson fails to show that Plaintiffs state law claims implicate federal jurisdiction. Because there is no dispute that Plaintiffs claims arise under state law, McKesson must show that a federal issue is (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution without disrupting the federal-state balance approved by Congress. Grable & Sons Metal Prods., 545 U.S. at 314.

         A. Necessarily Raised

         A federal issue is "necessarily raised" when "vindication of a right under state law must necessarily turn on some construction of federal law." Manning v. Merrill Lynch Pierce Fenner & Smith, Inc., 772 F.3d 158, 163 (3d Cir. 2014) (alterations omitted), aff'd, 136 S.Ct. 1562 (2016); see Grable & Sons Metal Prods., 545 U.S. at 310-12 (quiet title claim alleging IRS failed to give adequate notice as defined by federal law). An example of a state claim necessarily raising a federal issue occurs when the determination of federal law is an essential element of the plaintiffs state law claim. See Smith v. Kansas City Title & Trust Co., 255 U.S. 180 (1921) (state law claims to forbid the defendant from investing in illegal securities where the source of illegality was that the federal bonds were issued unconstitutionally).

         In this case, McKesson asserts that Plaintiffs claims are "affirmatively premised" on Defendants' violations of the FCSA. (D.I. 25 at 11). Thus, argues McKesson, federal issues are necessarily raised. (Id.). Specifically, McKesson notes that the claims are based on Defendants' failure to monitor for, report, and halt suspicious orders for prescription opioids, which are duties that arise under the FCSA. (Id.). Although a determination of whether Defendants violated the FCSA may occur while addressing Plaintiffs claims, there is also the possibility that the claims will be resolved without resolution of the federal issue at all. Based on the complaint, it is possible for the state law claims to be resolved solely under state law. See Manning, 772 F.3d at 163 ("We conclude it was improper for the District Court to foreclose the possibility that particular state causes of action could permit recovery solely under state law."). Although the complaint addresses some duties or requirements under the FCSA, the complaint also lists several other duties and standards that arise solely under state statutory or common law. (D.I. 1-1).

         Specifically, in Count V, Plaintiff asserts that Distributor and Pharmacy Defendants "misrepresented material facts [or] suppressed, concealed, or omitted material facts with the intent that consumers will rely thereon." (D.I. 1-1 at p. 114). McKesson asserts that the claim is based on federal law because Count V states Defendants "have violated Delaware and Federal laws and regulations by . .. habitually filling suspicious or invalid orders for prescription opioids ... and failing to operate a system to disclose suspicious orders of controlled substances." (D.I. 25 at 7; D.I. 1-1 at p. 115). Count V, however, makes reference to far more than McKesson draws attention to. In Count V, Plaintiff proffers one theory that makes reference to federal law, but Plaintiff also asserts five other theories by which Defendants misrepresented or concealed facts, each of which is unrelated to federal law. Most importantly, Count V asserts that Defendants' misrepresentations and concealed facts constitute violations of § 2513(a) of the Delaware Consumer Fraud Act. (D.I. 1-1 at p. 116). Although Plaintiff asserts Defendants violated the Delaware Consumer Fraud Act by misrepresenting their alleged violations of federal law, Defendants may be found to have violated the Delaware Consumer Fraud Act on any of the other five theories Plaintiff asserted in the complaint. See Manning, 772 F.3d at 164 (noting no federal question is necessarily raised where plaintiff could prevail on state claims without the need to prove or establish a violation of federal law despite alleging both federal and state violations). The federal issue of whether Defendants misrepresented their ...


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