Eastern States Health & Welfare Fund v. Philip Morris, Inc., 97 Civ. 7346(SS).
| Decision Date | 29 June 1998 |
| Docket Number | No. 97 Civ. 8462(SS).,No. 97 Civ. 7346(SS).,Nos. 97 Civ. 9395(SS)-97 Civ. 9402(SS).,97 Civ. 7346(SS).,97 Civ. 8462(SS).,s. 97 Civ. 9395(SS)-97 Civ. 9402(SS). |
| Parties | EASTERN STATES HEALTH & WELFARE FUND; ILGWU Health Services Plan; Health and Vacation Fund of the Amalgamated Ladies Garment Cutters Union; Local 10, Unite; and Health and Welfare Fund of Local 99 Unite, Plaintiffs, v. PHILIP MORRIS, INC.; R.J. Reynolds Tobacco Co.; RJR Nabisco Holding Corp.; RJR Nabisco, Inc.; American Tobacco Company; Brown & Williamson Tobacco Corp.; B.A.T. Industries, PLC; British American Tobacco Company, Ltd.; Liggett & Myers, Inc.; Lorillard Tobacco Co., Inc.; United States Tobacco Co.; The Council for Tobacco Research — U.S.A., Inc.; The Tobacco Institute, Inc.; Smokeless Tobacco Council, Inc.; and Hill & Knowlton, Inc., Defendants. PUERTO RICAN ILGWU HEALTH & WELFARE FUND, Plaintiff, v. PHILIP MORRIS, INC., et al., Defendants. DAY CARE COUNCIL — LOCAL 205 D.C. 1707 WELFARE FUND, Plaintiff, v. PHILIP MORRIS, INC., et al., Defendants. IBEW LOCAL 363 WELFARE FUND, Plaintiff, v. PHILIP MORRIS, INC., et al., Defendants. LONG ISLAND REGIONAL COUNCIL OF CARPENTERS WELFARE FUND, Plaintiff, v. PHILIP MORRIS, INC., et al., Defendants. LOCAL 840, INTERNATIONAL BROTHERHOOD OF TEAMSTERS HEALTH & INSURANCE FUND, Plaintiff, v. PHILIP MORRIS, INC., et al., Defendants. LOCAL 1199 NATIONAL BENEFIT FUND FOR HEALTH & HUMAN SERVICES EMPLOYEES, Plaintiff, v. PHILIP MORRIS, INC., et al., Defendants. IBEW LOCAL 25 HEALTH & BENEFIT FUND, Plaintiff, v. PHILIP MORRIS, INC., et al., Defendants. LOCAL 1199 HOME CARE INDUSTRY BENEFIT FUND, Plaintiff, v. PHILIP MORRIS, INC., et al., Defendants. LOCAL 138, 138A AND 138B INTERNATIONAL UNION OF OPERATING ENGINEERS WELFARE FUND, Plaintiff, v. PHILIP MORRIS, INC., et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Zwerling, Schachter & Zwerling, New York City, Joseph Lipofsky, Robert S. Schachter, Dan Drachler, Natalie T. Blaney, Meyer, Suozzi, English & Klein, P.C., Mineola, NY, Michael A. Ciaffa, G. Oliver Koppell, for All Plaintiffs.
Levy, Ratner & Behroozi, P.C., New York City, Law Office of David Paul Horowitz, New York City, David Paul Horowitz, for Plaintiffs Local 1199 National Benefit Fund for HHS Employees and Local 1199 Home Care Industry Benefit Fund.
Wachtell, Lipton, Rosen & Katz, New York City, Peter C. Hein, Barbara Robbins, Phillips, Lytle, Hitchcock, Blaine & Huber, Buffalo, NY, Paul K. Stecker, Paul F. Jones, for Defendant Philip Morris, Inc. Kirkland & Ellis, New York City, Marjorie Press Lindblom, Peter A. Bellacosa, Chicago, IL, David M. Bernick, Washington, DC, Kenneth N. Bass, Paul B. Taylor, for Defendant Brown & Williamson Tobacco Corp. and American Tobacco Co.
Jones, Day, Reavis & Pogue, New York City, Robert W. Gaffey, Michael S. Chernis, Washington, DC, Robert F. McDermott, Jr., Donald B. Ayer, for Defendants R.J. Reynolds Tobacco Co., RJR Nabisco Holdings Corp., and RJR Nabisco, Inc.
Simpson Tracher & Bartlett, New York City, Mark Cunha, Adam Stein, for Defendants B.A.T. Industries plc and British-American Tobacco Co. Ltd.
Chadbourne & Parke, New York City, Thomas J. McCormack, Robert Pruyne, for Defendant British-American Tobacco Co. Ltd.
Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, New York City, Alan E. Mansfield, Shook, Hardy & Bacon, LLP, Kansas City, MO, Robert E. Northrip, Bruce R. Tepikian, Samuel B. Sebree, for Defendant Lorillard Tobacco Co.
Skadden, Arps, Slate, Meagher & Flom LLP, New York City, Peter J. McKenna, Eric S. Sarner, Mark S. Cheffo, for Defendant United States Tobacco Co.
Seward & Kissel, New York City, Anthony Mansfield, for Defendant The Tobacco Institute, Inc.
Debevoise & Plimpton, New York City, Steven Klugman, for Defendant Council for Tobacco Research — U.S.A., Inc.
Kasowitz, Benson, Torres & Friedman, New York City, Michael M. Fay, for Defendant Liggett Group, Inc.
Davis & Gilbert, New York City, Bruce M. Ginsberg, Michael C. Lasky, for Defendant Hill & Knowlton, Inc.
Jacob, Medinger & Finnegan, LLP, New York City, Barry S. Schaevitz, for Defendant Smokeless Tobacco Council, Inc.
The motion before the Court in these ten related cases represents a small but procedurally complex skirmish in the tobacco wars raging throughout the courts of this country. The plaintiffs are various employee benefit plans (collectively referred to hereinafter as the "Funds") which seek to recoup from the defendants, cigarette manufacturers and tobacco industry organizations (collectively referred to hereinafter as the "Companies"), medical and health care benefits which the Funds claim they have paid to their beneficiaries because of the allegedly tortious conduct of the Companies. Plaintiffs originally filed these actions in New York State Supreme Court but the defendants removed the actions to this Court, claiming federal question jurisdiction. The Funds now move to remand the actions to the state court on the ground that this Court lacks subject matter jurisdiction. For the reasons that follow, the Court grants the Funds' motion to remand.
The complaints in these cases allege the following facts. Each of the plaintiffs is an employee benefit plan governed by the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. § 1001 et seq., and are established to provide health-care benefits to participants and their dependents. The Funds assert various common-law tort and statutory causes of action stemming from the Companies' marketing of tobacco products. The first twelve claims allege torts committed directly against the Funds themselves — e.g., that the Companies' alleged fraudulent concealment of the health hazards of tobacco use resulted in the Funds' failure to take actions to discourage smoking among its participants and in correspondingly higher benefit payments to those participants.
The claim which provides the alleged federal jurisdictional basis is the thirteenth cause of action of the Complaint, entitled "Subrogation." Although the details of the parties' arguments will be discussed in much greater detail below, in essence the dispute over subject matter jurisdiction is that the Funds claim that they have a cause of action, arising solely under New York state law, for subrogation of the tort claims which their plan participants could assert against the Companies. That is, as subrogees of their participants, the Funds claim a state-law based right to recover the medical costs of their participants attributable to the Companies' allegedly tortious conduct towards those participants, up to and including the amount actually paid out by the Funds to the beneficiaries.
The Funds' actions were filed in the Supreme Court of New York, New York County. The Companies removed each case to this district, and the Funds have now moved, pursuant to 28 U.S.C. § 1447(c), to remand for lack of subject-matter jurisdiction.1
Under 28 U.S.C. § 1441(a), any action filed in state court "of which the district courts of the United States have original jurisdiction" may be removed by the defendants to federal district court, assuming the procedural requirements of 28 U.S.C. § 1446, not in dispute here, are met. The question, in other words, is whether the case originally could have been filed in federal court. See Marcus v. AT&T Corp., 138 F.3d 46, 52 (2d Cir.1998). There being no dispute about the propriety of the Companies' removal procedure, the only dispute to be resolved by this Court is whether there is subject matter jurisdiction over these cases. Defendants do not assert that diversity of citizenship is present in any of these cases; therefore, federal question jurisdiction is required for removal. See id. The Companies, as the parties asserting federal jurisdiction, bear the burden of establishing any facts necessary to support removal. See Gilman v. BHC Securities, Inc., 104 F.3d 1418, 1421 (2d Cir.1997).
The Companies make two arguments for federal question jurisdiction. First, they assert that the resolution of the Funds' subrogation claims depends upon this Court's answering several substantial issues of federal law. Second, the Companies claim that ERISA so completely preempts New York subrogation law that any subrogation claim necessarily arises under federal law and is removable on that basis.
The Companies do not contest that the first twelve causes of action arise under state law, not federal; only the subrogation action is asserted as a possible federal-law claim. As will be discussed, the Funds, for their part, have completely disclaimed any federal cause of action for subrogation and have chosen instead to rely solely on the validity of their state-law claim. The Companies assert in arguing this motion, and almost certainly will continue to argue after this jurisdictional question is decided, that a state-law subrogation claim is preempted by ERISA and must be dismissed.
There are thus two possible scenarios following this motion to remand. If the Court decides to remand, then the New York courts will decide all thirteen claims, including the question of whether ERISA preempts the state law of subrogation. If the Court decides not to remain, then this Court will determine the preemption question; if the state-law cause of action is determined to be preempted, then the Funds' disclaimer of a federal subrogation claim will require dismissal of the thirteenth count, and if the state law cause of action is not preempted, of course, the state-law subrogation claim remains. In either case, only state law causes of action will remain, and this Court is almost certain to decline to exercise supplemental jurisdiction. In other words, these cases look to be heading back to state court under any conceivable scenario.
The only issue at stake in this motion, then, is which court — federal or state — will decide whether the Funds' New York subrogation claim is...
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