Hawaii v. Abbott Laboratories, Inc.

• Citation: 469 F.Supp.2d 842
• Decision Date: 30 November 2006
• Docket Number: No. CV 06-00437 DAE/BMK.,CV 06-00437 DAE/BMK.
• Parties: State of HAWAII, Plaintiff, v. ABBOTT LABORATORIES, INC., et al., Defendants.
• Court: U.S. District Court — District of Hawaii

469 F.Supp.2d 842

State of HAWAII, Plaintiff, v. ABBOTT LABORATORIES, INC., et al., Defendants.

No. CV 06-00437 DAE/BMK.

United States District Court, D. Hawaii.

November 30, 2006.

COPYRIGHT MATERIAL OMITTED

Robert S. Libman, Esq., Miner, Barnhill & Galland, P.C., Chicago, IL, Warren Price, III, Esq., Rick J. Eichor, Esq., Price Okamoto Himeno & Lum, Honolulu, HI, for Plaintiffs.

John T. Komeiji, Esq., Watanabe Ing & Komeiji, Frederick W. Rohlfing, III, Esq., Case Bigelow & Lombardi, Kunio Kuwabe, Esq., Hisaka Yoshida & Cosgrove, William C. McCorriston, Esq., Kenneth J. Mansfield, Esq., McCorriston Miller Mukai MacKinnon, Honolulu, HI, Michael Flynn, Esq., Carlos M. Pelayo, Esq. (via phone), Davis Polk & Wardwell, New York City, Edward Burke, Esq., Burke McPheeters Bordner & Estes, Arthur F. Roeca, Esq., Roeca, Louie & Hiraoka, Lisa W. Munger, Esq., Corlis J. Chang, Esq., Thomas Benedict, Esq., Dawn. T. Sugihara, Esq., Goodsill Anderson Quinn & Stifel, Jerold T. Matayoshi, Esq., Fukunaga Matayoshi Hershey & Ching, Calvert G. Chipchase, IV, Esq., Cades Schutte, Honolulu, William A. Escobar, Esq. (via phone), Kelley Drye & Warren, New York City, Ewing M. Martin, III, Esq., Kessner Duca Umebayashi Bain & Matsunaga, Brook Hart, Esq., Gregory W. Kugle, Esq., Damon Key Leong Kupchak Hastert, Bruce D. Voss, Esq., Bays Deaver Lung Rose & Baba, Dale W. Lee, Esq., Kobayashi, Sugita & Goda, Margery S. Bronster, Esq., Bronster, Crabtree & Hoshibata, Honolulu, J. Steven Baughman, Esq. (via phone), Ropes & Gray, Washington, D.C., Tina L. Colman, Esq., Alston Hunt Floyd & Ing, Honolulu, HI, for Defendants.

ORDER DENYING DEFENDANT DEY'S APPEAL OF MAGISTRATE'S AMENDED ORDER AND ADOPTING MAGISTRATE'S AMENDED FINDING AND RECOMMENDATION

EZRA, District Judge.

On November 27, 2006, the Court heard Defendant Dey, Inc.'s ("Dey") Appeal of Magistrate Judge Barry M. Kurren's ("the Magistrate") Amended Order denying Defendant's Motion For Leave to File a Supplemental Notice of Removal ("Appeal") and Defendants' Objections to the Magistrate's Amended Finding and Recommendation that Plaintiff's Motion to Remand Be Granted ("Defendants' Objections"). Rick Eichor, Esq., appeared at the hearing on behalf of Plaintiff, as well as Robert Libman, Esq., who was present via telephone; Jeffrey Portnoy, Esq., and William Escobar, Esq., appeared at the hearing on behalf of Defendants Dey and Mylan; Lisa Bail, Esq., with Jeff Galloway, Esq., appeared at the hearing on behalf of Defendant Merck; Randolf Baldemor, Esq., appeared at the hearing on behalf of Defendant Ben Venue Laboratories and the Boehringer Defendants; Kimberly Koide, Esq., appeared at the hearing on behalf of Defendant Sandoz, Inc.; Edmund Saffery, Esq., appeared at the hearing on behalf of Defendant Novartis Pharmaceuticals, Inc.; Margery Bronster, Esq., appeared at the hearing on behalf of Defendant Pfizer and Pharmacia; Robert Harris, Esq., appeared at the hearing on behalf of Defendant Ivax Corp.; Kurt Fritz, Esq., appeared at the hearing on behalf of Defendant Schering-Plough Corp.; William McCorriston, Esq., and Elizabeth Robinson, Esq., appeared at the hearing on behalf of Defendant AstraZeneca, along with Carlos Pelayo, Esq., who was present via telephone; and Frederick Rohlfing, Esq., appeared at the hearing on behalf of the Watson Defendants and Defendants Alpharma and Purepac. After reviewing the Appeal, Defendants' Objections, and the supporting and opposing memoranda, the Court DENIES Defendant Dey's Appeal and Defendants' Objections and ADOPTS the Magistrate's Amended Finding and Recommendation.

BACKGROUND

On August 10, 2006, Defendants filed a Notice of Removal from state court to federal district court on the ground that Plaintiffs claim to recover Medicare Part B co-payments under state tort laws raises a substantial federal question under the federal laws related to Medicare. Fifteen days later, Plaintiff filed a Motion to Remand on the basis that, inter alias the action arises exclusively under state law, depriving this Court of federal jurisdiction. While that Motion was pending, on October 11, 2006, Dey filed a Supplemental Notice of Removal ("Supplemental Notice") within 30 days after his counsel received delivery of a complaint that had been unsealed in the case, United States ex re. Ven-A-Care of the Florida Keys, Inc. v. Dey, Inc. et al., Civ. Action No. 05-11084-MEL (D.Mass.) (the "Federal Qui Tam Action"). That case was brought under the False Claims Act ("FCA"), 31 U.S.C. § 3729 et seq. Defendant Abbott Laboratories, Inc., consented to the Supplemental Notice.

On October 27, 2006, the Magistrate issued an Order denying Dey's Supplemental Notice and issued a Finding and Recommendation granting Plaintiffs motion to remand, both of which were amended three days later for typographical errors ("Amended Order" and "Amended F & R," respectively). In denying Dey's Supplemental Notice, the Magistrate found that allowing such a supplement would be futile because Dey failed to meet the procedural requirements for removal to federal court and, substantively, Dey lacked original jurisdiction.

In the Amended F & R, the Magistrate found that "Defendants [were] unable to meet their burden of showing that the meaning of the Medicare provisions at issue are either actually disputed or substantial enough to create federal jurisdiction," as required by law. The Magistrate concluded by stating that,

[a]llowing federal jurisdiction here, where only a federal standard is implicated, would likely lead to many other cases in unrelated matters being regularly removed to federal court. Adjudication of this type of case could well disturb the congressionally approved balance between federal courts and state courts, providing [] additional grounds for remand.

Accordingly, the Magistrate granted Plaintiffs Motion for Remand to state court.

On November 7, 2006, Dey appealed the Magistrate's Amended Order denying his Supplemental Notice, and, on November 14, 2006, Dey filed Objections to the Magistrate's Amended F & R.

STANDARD OF REVIEW

A. Appeal of the Magistrate's Amended Order

Under Local Rule 74.1, "[a] district judge shall consider the appeal and shall set aside any portion of the magistrate judge's order found to be clearly erroneous or contrary to law." See also Rockwell Int'l, Inc. v. Pos-A-Traction Indus., Inc., 712 F.2d 1324, 1325 (9th Cir.1983). "For a magistrate's decision to be `clearly erroneous,' the district court must have a `definite and firm conviction that a mistake has been committed.'" Conant v. McCoffey, No. C 97-0139 FMS, 1998 WL 164946, at *2 (N.D.Cal.1998) (citing Sana for Sana v. Hawaiian Cruises, Ltd., 961 F.Supp. 236, 238 (D.Haw.1997), rev'd on other grounds, 181 F.3d 1041 (9th Cir.1999)). "A decision is `contrary to law' if it applies an incorrect legal standard or fails to consider an element of the applicable standard." Id.

B. Objections to the Magistrate's Amended F & R

Any party may serve and file written objections to proposed findings and recommendations. See 28 U.S.C. § 636(b). Pursuant to Local Rule 74.2, when a party objects to a magistrate judge's dispositive order, findings, or recommendations, the district court must make a de novo determination. A de novo review means "the court must consider the matter anew, the same as if it had not been heard before and as if no decision previously had been rendered." U.S. Pac. Builders v. Mitsui Trust & Banking Co., 57 F.Supp.2d 1018, 1024 (D.Haw.1999) (citation omitted).

"The court may `accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate.' The judge may also receive further evidence or recommit the matter to the magistrate with instructions." McDonnell Douglas Corp. v. Commodore Bus. Machs., Inc., 656 F.2d 1309, 1313 (9th Cir.1981) (citation omitted); LR 74.2.

DISCUSSION

A. Appeal of the Magistrate's Amended Order

Dey contends that the Magistrate's Amended Order denying its Supplemental Notice as "futile" was contrary to law, arguing that the procedural requirements for removal were satisfied under Federal Rules of Civil Procedure 15(c) ("Rule 15(c)") and/or under 28 U.S.C. § 1446(b) (1988) and that original jurisdiction exists under 31 U.S.C. § 3732(b) (1986).

1. Procedural requirements for removal

Dey asserts that the procedural requirements for removal may be satisfied in two ways: (1) by finding that the initial Notice of Removal constitutes a "pleading" under Rule 15(c), thus allowing an amendment or a supplement of that Notice to relate back to the date of the Notice, and/or (2) by finding that the Federal Qui Tam Action constitutes an. "other paper" within the meaning of 28 U.S.C. § 1446(b) to permit supplementation within thirty days of receipt

a. "Pleading" under Rule 15(c)

Dey cites out-of-district cases in support of the proposition that a notice of removal may constitute a "pleading" under Rule 15, thus permitting the Supplemental Notice to "relate back" to the original notice. The cases cited, however, merely uphold the general rule that parties may amend pleadings under Rule 15 to cure a technical defect in the jurisdictional allegation, namely, to allege diversity of citizenship in full. See, e.g., Grow Group, Inc. v. Jandernoa, No. 94 Civ. 5679, 1995 WL 60025, at *2-3 (S.D.N.Y.1995) (permitting amendment of a removal notice where the original notice did not allege complete diversity); Kingman v. Sears, Roebuck & Co., 526 F.Supp. 1182, 1185 (D.Me.1981) ("Matters of form and technical defects and even a defective statement of jurisdictional grounds (in a removal petition) are subject to amendment under (Fed.R.Civ.P.15(a) and 28 U.S.C. s 1653)," thus allowing a notice of removal to be amended to allege diversity) (citation omitted).; Handy v. Uniroyal, Inc., 298 F.Supp. 301, 302, 305 (D.Del.1969) (finding that "it is clear that both under 28 U.S.C. § 1653 and Rule 4(h), Fed.R.Civ.P., and possibly also under Rule...