Com. of Massachusetts v. Philip Morris Inc.

• Decision Date: 20 May 1996
• Docket Number: Civil Action No. 96-10014-GAO.
• Citation: 942 F.Supp. 690
• Parties: COMMONWEALTH OF MASSACHUSETTS, Plaintiff, v. PHILIP MORRIS INC., R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation, B.A.T. Industries P.L.C., Lorillard Tobacco Company, Liggett Group, Inc., New England Wholesale Tobacco Co., Inc., Albert H. Notini & Sons, Inc., The Council for Tobacco Research — U.S.A., Inc., and The Tobacco Institute, Inc., Defendants.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 690

942 F.Supp. 690

COMMONWEALTH OF MASSACHUSETTS, Plaintiff, v. PHILIP MORRIS INC., R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation, B.A.T. Industries P.L.C., Lorillard Tobacco Company, Liggett Group, Inc., New England Wholesale Tobacco Co., Inc., Albert H. Notini & Sons, Inc., The Council for Tobacco Research — U.S.A., Inc., and The Tobacco Institute, Inc., Defendants.

Civil Action No. 96-10014-GAO.

United States District Court, D. Massachusetts.

May 20, 1996.

Thomas M. Sobol, Brown, Rudnick, Freed & Gesmer, Boston, MA, Ronald L. Motley, Motley, Loadholt, Richardson & Poole, Charleston, SC, L. Scott Harshbarger, Attorney General's Office, Torts Division, Boston, MA, Michael P. Thornton, Thornton, Early & Naumes, Boston, MA, Jeffrey D. Woolf, Boston, MA, Laurence H. Tribe, Cambridge, MA, Richard M. Heimann, Lieff, Caraser, Heimann & Bernstein, San Francisco, CA, for Com. of Massachusetts.

Kenneth J. Parsigian, Marshall Simonds, Goodwin, Proctor & Hoar, Boston, MA, Herbert M. Wachtell, Peter C. Hein, Ben M. Germana, Wachtell, Lipton, Rosen & Katz, New York City, for Philip Morris, Inc.

Robert F. McDermott, Jones, Day, Reavis & Pogue, Washington, DC, for R.J. Reynolds Tobacco Company.

John H. Henn, David R. Geiger, Mark D. Rosen, Foley, Hoag & Eliot, Boston, MA, Stephen D. McCormick, Kirkland & Ellis, Chicago, IL, Majorie Press Lindblom, Kirkland & Ellis, New York City, David Bernick, Kirkland & Ellis, Chicago, IL, for Brown & Williamson Tobacco Corp.

Mary Elizabeth McGarry, Roy L. Reardon, Joseph M. McLaughlin, Jennifer S. Dominitz, Simpson, Thacher & Bartlett, New York City, James S. Dittmar, Joseph C. Marrow, Hutchins, Wheeler & Dittmar, Boston, MA, for B.A.T. Industries P.L.C.

Gael Mahony, Richard M. Zielinski, Boston, MA, Theos D. McKinney, Hill & Barlow, Boston, MA, Gene E. Voigts, Shook, Hardy & Bacon, Kansas City, MO, for Lorillard Tobacco Co.

Samuel Adams, Joseph J. Leghorn, Alexis S. Hamdan, Warner & Stackpole, Boston, MA, James V. Kearney, Latham & Watkins, New York City, James Cherney, Latham & Watkins, Chicago, IL, for Liggett Group, Inc.

Nelson Gediman, Boston, MA, for New England Wholesale Tobacco Co., Inc.

Robert Gilbert, Law Offices of Robert J. Gilbert, P.C., Andover, MA, for Albert H. Notini & Sons, Inc.

Steven Klugman, Joseph P. Moodhe, Joseph W. Rand, Debevoise & Plimpton, New York City, Thomas E. Peisch, Conn, Kavanaugh, Rosenthal & Peisch, Boston, MA, for Council for Tobacco Research-U.S.A., Inc.

Robert J. Muldoon, Jr., David A. Guberman, Sherin & Lodgen, Boston, MA, Paul R. Duke, Covington & Burling, Washington, DC, for Tobacco Institute, Inc.

Harry G. Potter, III, Special Assistant Attorney General, Austin, TX, for Attorney General of the State of Texas.

MEMORANDUM AND ORDER

O'TOOLE, District Judge.

After this action was commenced in the Massachusetts Superior Court, the defendants removed it to this Court. The plaintiff Commonwealth of Massachusetts has objected that the removal was improper and now asks that it be remanded. The principal issue raised by Massachusetts' motion is whether the complaint presents a "federal question" lying within the jurisdiction of this Court or whether the claims asserted arise only under state law. The defendants also contend that the action is equivalent to a claim on behalf of the United States, and so falls within this Court's jurisdiction. For the reasons that follow, the Court concludes that none of the causes of action pleaded in the complaint arises under federal law, that the action is not one on behalf of the United States and that this Court accordingly lacks subject matter jurisdiction over it. The plaintiff's motion is therefore granted, and the case is remanded to the Massachusetts state courts.

The Complaint

Massachusetts' action is brought against six cigarette manufacturers, two trade associations in the tobacco industry, and two Massachusetts wholesalers of tobacco products. The complaint alleges that "[e]ach year, the Commonwealth must spend millions of dollars to purchase or provide medical and related services for Massachusetts citizens suffering from diseases caused by cigarette smoking." Complaint, ¶ 4, at 2-3. The "smoking-related costs to the Commonwealth" are said to include, but not be limited to, "[m]edical assistance provided under Massachusetts' Medicaid program pursuant to [Mass.Gen.L. ch.] 118E" and "[m]edical assistance provided under the CommonHealth Program pursuant to [Mass.Gen.L. ch.] 118E, §§ 16, 16A." Id., ¶ 6, at 3-4. The complaint seeks "both monetary damages and injunctive relief." Id., ¶ 5, at 3.

The claims are stated in five counts: the undertaking and violation of a special duty regarding the health effects of smoking (Count I); sales of tobacco products in breach of a warranty of merchantability (Count II); conspiracy to suppress information regarding the safety of smoking (Count III); restitution for injury caused by wrongful conduct (Count IV); and unjust enrichment from unlawful conduct (Count V). Id., ¶¶ 184-216, at 66-73. The complaint recites that the claims are asserted pursuant to specific authority conferred by two recent enactments that purport to create causes of action on behalf of Massachusetts against any "third party" liable for medical expenses of a person who has received medical assistance payments, Mass.Gen.L. ch. 118E, § 22, and, in particular, against cigarette manufacturers, 1994 Mass. Acts, ch. 60, § 276. Complaint ¶ 6, at 3. Except for a passing reference to the fact that the federal government bears some of the costs of the Medicaid program, the complaint contains no express invocation, or even mention, of federal law.

The Removal

In removing the action, the defendants relied on 28 U.S.C. § 1441, which authorizes the removal of any civil action that lies within the original jurisdiction of the United States District Courts. The defendants contend that Massachusetts' claims to recover benefits paid under the Medicaid program are, by their nature and regardless of what they are called, claims that arise under federal law and thus lie within the original "federal question" jurisdiction of this Court pursuant to 28 U.S.C. § 1331.¹ In addition, they say, because the United States would receive its share of any recovery by Massachusetts from these defendants of benefits paid to Medicaid recipients, the United States is, in effect, an unnamed plaintiff with a real interest in the suit, giving this Court original jurisdiction under 28 U.S.C. § 1345.² By its remand motion, Massachusetts attacks each of these asserted bases for jurisdiction. In particular, it disavows any intention to rely on federal law and insists that the causes of action asserted are not federal in their nature.

1. FEDERAL QUESTION

Title XIX of the Social Security Act, 42 U.S.C. § 1396 et seq., establishes the medical assistance program known generally as "Medicaid." Medicaid is "a cooperative Federal and State program which provides payment for medical services to eligible individuals and families." Haley v. Comm'r of Pub. Welfare, 394 Mass. 466, 476 N.E.2d 572, 574 (1985). "The Federal Government shares the costs of Medicaid with States that elect to participate in the program. In return, participating States are to comply with requirements imposed by the Act and by the Secretary of Health and Human Services." Atkins v. Rivera, 477 U.S. 154, 156-57, 106 S.Ct. 2456, 2458, 91 L.Ed.2d 131 (1986) (citations omitted).

A State that elects to participate in the Medicaid program must submit a "State plan[] for medical assistance" to the Secretary and obtain her approval of the plan. 42 U.S.C. § 1396. The federal statute sets forth in considerable detail certain mandatory features of any acceptable State plan. Pertinent to the present controversy, a State plan must provide:

(A) that the State ... will take all reasonable measures to ascertain the legal liability of third parties ... to pay for care and services available under the plan, including —

.... (ii) the submission to the Secretary of a plan (subject to approval by the Secretary) for pursuing claims against third parties ... [and]

....

(B) that in any case where such a legal liability is found to exist after medical assistance has been made available on behalf of the individual and where the amount of reimbursement the State can reasonably expect to recover exceeds the costs of such recovery, the State ... will seek reimbursement for such assistance to the extent of such legal liability,...

Id., § 1396a(a)(25).

Additionally, State plans must require individuals who receive benefits "to assign the State any rights ... to support ... and to payment for medical care from any third party." 42 U.S.C. § 1396k(a)(1)(A); see also 42 U.S.C. §§ 1396a(a)(45), 1396k(a)(1)(B). Regulations of the Department of Health and Human Services further specify a participating State's obligations. See 42 C.F.R. §§ 433.135-433.153.

Massachusetts' participation in the Medicaid program is governed at the state level by Mass.Gen.L. ch. 118E. That statute reflects the State's obligation to comply with the requirements imposed by Title XIX and the regulations adopted under its authority. See, generally, e.g., Mass.Gen.L. ch. 118E, §§ 9, 11, 12, 15. In particular, section 22 of chapter 118E provides that the State "shall be subrogated to a [Medicaid recipient's] entire cause of action or right to proceed against any third party and to a [recipient's] claim for monies to the extent of assistance provided" under Medicaid. Section 22 further purports to create for Massachusetts "a separate and independent cause of action to recover, from any third party, assistance provided to a claimant under [Medicaid], which cause of action shall be in addition to other causes of action." As noted above, the complaint asserts that the present action is authorized, in part, by section 22. Complaint, ¶ 6, at 3.

In addition, 1994 Mass. Acts, ch. 60, § 276,...