Hood ex rel. Mississippi v. Fresenius Med. Care Holdings, Inc. (In re Fresenius Granuflo/ Naturalyte Dialysate Prods. Liab. Litig.), MDL No. 13–02428–DPW.

• Decision Date: 02 January 2015
• Docket Number: Civil Action No. 14–12384–DPW.,MDL No. 13–02428–DPW.
• Citation: 76 F.Supp.3d 268
• Parties: In re FRESENIUS GRANUFLO/ NATURALYTE DIALYSATE PRODUCTS LIABILITY LITIGATION This Order Relates to: Jim Hood, Attorney General of the State of Mississippi, ex rel. the State of Mississippi, Plaintiffs, v. Fresenius Medical Care Holdings, Inc. and Fresenius USA, Inc., Defendants.
• Court: U.S. District Court — District of Massachusetts

76 F.Supp.3d 268

In re FRESENIUS GRANUFLO/ NATURALYTE DIALYSATE PRODUCTS LIABILITY LITIGATIONThis Order Relates to: Jim Hood, Attorney General of the State of Mississippi, ex rel. the State of Mississippi, Plaintiffs

v.Fresenius Medical Care Holdings, Inc. and Fresenius USA, Inc., Defendants.

MDL No. 13–02428–DPW.

Civil Action No. 14–12384–DPW.

United States District Court, D. Massachusetts.

Signed Jan. 2, 2015.

Geoffrey C. Morgan, Mississippi Attorney General's Office, George W. Neville, Office of The Attorney General, Robert A. Malouf, Malouf & Malouf, Jackson, MS, Jason L. Nabors, Smith, Phillips, Mitchell & Scott, Richard T. Phillips, Smith, Phillips, Mitchell, Scott & Rutherford, Batesville, MS, W. Ellis Pittman, Pittman & Associates, PLLC, Clarksdale, MS, for Plaintiffs.

Juanita R. Brooks, Fish & Richardson P.C., San Diego, CA, Kevin C. Newsom Philadelphia, PA, Leigh Anne Hodge, Bradley Arant Boult Cummings LLP, Birmingham, AL, Margaret Oertling Cupples, Roy D. Campbell, III, Slates C. Veazey, Bradley Arant Boult Cummings LLP, Jackson, MS, Thomas M. Melsheimer Fish & Richardson, P.C. Dallas, TX, for Defendants.

MEMORANDUM AND ORDER

DOUGLAS P. WOODLOCK, District Judge.

The Attorney General of Mississippi on behalf of the State of Mississippi filed this action against Defendants Fresenius Medical Care Holdings, Inc. and Fresenius USA, Inc. (collectively “Fresenius”) in the Chancery Court of DeSoto County, Mississippi.

The case made its way to me in Boston following removal to the United States District Court for the Northern District of Mississippi and then through transfer by the Judicial Panel for Multidistrict Litigation under the rubric: In re Fresenius Granuflo/Naturalyte Dialysate Products Liability Litigation, (JPML No. 2428). The Attorney General seeks to have me return the matter to DeSoto County. I conclude that the presence of the State of Mississippi as a real party in interest in a case founded solely on diversity jurisdiction requires me to do so.

The Complaint contains a single count alleging that Fresenius engaged in unfair or deceptive trade practices in violation of the Mississippi Consumer Protection Act, Miss.Code Ann. §§ 75–24–1 et seq. (“MCPA”), by providing “false product information” and misrepresenting or concealing the risks associated with its GranuFlo and NaturaLyte dialysis products. (Compl. ¶¶ 32–43.) According to the Complaint, Fresenius violated the MCPA “each time false or misleading product information was provided to a Mississippian, including the State, via a warning, instruction, training, advertisement or other product information.” (Id. ¶ 41.) Through the Complaint, the Attorney General seeks injunctive relief, “disgorgement of all money wrongfully acquired by [Fresenius] from the sale of GranuFlo and NaturaLyte administered to Mississippi Medicaid recipients and members of the State Health Plan,” civil penalties of “up to $10,000 for each violation of the [MCPA],” punitive damages, and attorneys' fees. (Id. ¶ 51.) According to the Complaint, the monies to be disgorged represent payments made by the State of Mississippi “through its Division of Medicaid and the State Health Plan.” (Id. ¶ 51(d).)

Fresenius removed the action to the United States District Court for the Northern District of Mississippi pursuant to 28 U.S.C. §§ 1441 and 1446, alleging diversity jurisdiction under 28 U.S.C. § 1332(a)(1). The State immediately moved to remand the case to Mississippi state court—and for costs and fees—but on Fresenius's motion, the Mississippi federal court issued a stay pending consideration of transfer of the case by the JPML to this Court as part of the Fresenius GranuFlo/NaturaLyte Dialysate Products Liability Litigation.

The case having been transferred to me by the JPML, I now consider the State's Renewed Motion to Remand and For Costs and Fees.

I. THE LACK OF CITIZENSHIP FOR STATES UNDER FEDERAL DIVERSITY JURISDICTION

The only basis for removal asserted by Fresenius is diversity of citizenship under 28 U.S.C. § 1332(a)(1).¹ There can be no dispute that the exercise of diversity jurisdiction pursuant to § 1332(a) requires complete diversity between the parties to a lawsuit. “[T]hat is, diversity jurisdiction does not exist unless each defendant is a citizen of a different State from each plaintiff.” Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978) (emphases in original). It is equally well established that “a State is not a ‘citizen’ for purposes of diversity jurisdiction.” Moor v. Alameda County, 411 U.S. 693, 717, 93 S.Ct. 1785, 36 L.Ed.2d 596 (1973).

The Supreme Court has made clear that “the ‘citizens' upon whose diversity a plaintiff grounds jurisdiction must be real and substantial parties to the controversy.” Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 461, 100 S.Ct. 1779, 64 L.Ed.2d 425 (1980). This rule applies with equal force where, as here, a State or state official is a named party to an action. See Mississippi ex rel. Hood v. AU Optronics, ––– U.S. ––––, 134 S.Ct. 736, 745, 187 L.Ed.2d 654 (2014) (citing Missouri, K & T. R. Co. v. Missouri Railroad and Warehouse Comm'rs, 183 U.S. 53, 58–59, 22 S.Ct. 18, 46 L.Ed. 78 (1901) ). Accordingly, in determining whether jurisdiction is proper I must “disregard nominal or formal parties and rest only upon the citizenship of the real parties to the controversy.” Navarro, 446 U.S. at 461, 100 S.Ct. 1779.²

Fresenius concedes that the State of Mississippi is a real party in interest to this action, insofar as the Mississippi Attorney General is authorized to bring parens patriae actions to vindicate the State's “quasi-sovereign interest in the health and well-being—both physical and economic—of its residents in general.” See Alfred L. Snapp & Son v. Puerto Rico, ex rel. Barez, 458 U.S. 592, 607, 102 S.Ct. 3260, 73 L.Ed.2d 995 (1982) ; Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418, 430 (5th Cir.2008) (holding State of Louisiana was real party in interest to claims for injunctive relief under Louisiana's antitrust statute); Hood v. AstraZeneca Pharma., LP, 744 F.Supp.2d 590, 596 (N.D.Miss.2010) (concluding State of Mississippi was a real party in interest to claims under MCPA, state Medicaid laws, and causes of action in tort); Hood v. F. Hoffman–La Roche, Ltd., 639 F.Supp.2d 25, 32–33 (D.D.C.2009) (concluding State of Mississippi was real party in interest as to forfeiture and penalty claims under state antitrust act); Hood v. Bristol–Myers Squibb Co., 2013 WL 3280267 at *5–7 (N.D.Miss. June 27, 2013) (concluding that State of Mississippi was a real party in interest to claims under MCPA).

Fresenius contends, however, that despite the State's status as the only named plaintiff, the State of Mississippi is not the only real plaintiff in interest to this action. Other real plaintiffs in interest, according to Fresenius, include the Mississippi State Division of Medicaid, on whose behalf the State seeks disgorgement, as well as individual, unnamed citizens of Mississippi whose injuries this suit aims to redress. See Louisiana ex rel. Caldwell 536 F.3d at 430–31 (concluding individual insurance policyholders who suffered injuries were real parties in interest to claim for treble damages under state antitrust statute); Hood v. F. Hoffman–La Roche, Ltd., 639 F.Supp.2d at 32–33 (concluding Mississippi citizens were real parties in interest to claims for compensatory damages under state antitrust statute); Hood v. Bristol–Myers Squibb Co., 2013 WL 3280267 at *5–7 (concluding individual consumers were real parties in interest to certain damages claims under MCPA).

More specifically, Fresenius further contends that the Division of Medicaid is not an “arm or alter ego of the State,” but a sufficiently autonomous entity that for the purposes of diversity jurisdiction should be considered a citizen of Mississippi. See Moor, 411 U.S. at 717, 93 S.Ct. 1785 ; University of Rhode Island v. A.W. Chesterton Co., 2 F.3d 1200, 1202 (1st Cir.1993) (holding “a political subdivision possessing the formal status of a ‘body politic and corporate,’ such as a county or municipality, is presumed a ‘citizen’ for diversity purposes unless it is simply the arm or alter ego of the State.”).

Assuming, arguendo, that the Division of Medicaid is not merely an arm or alter ego of the State but rather a separate party with Mississippi citizenship, the suit would then consist of Mississippi citizen consumer beneficiaries, an institutional Mississippi citizen (the Division of Medicaid) and a stateless person (the State of Mississippi) versus a citizen of a state other than Mississippi (Fresenius).³ In Fresenius's view, “[t]here is diversity here, because the State of Mississippi has no citizenship to consider ... and the Division of Medicaid, a real party in interest, is a citizen of Mississippi and thus diverse from Fresenius.” Fresenius contends that “where a State is not the only real party in interest on its side of the ‘ v.’, its mere presence in the case does not automatically destroy diversity; rather, in determining diversity, the Court should disregard the State and consider the citizenship of any other real parties in interest.” The State disagrees, contending that a State's mere presence as a real party in interest destroys diversity jurisdiction regardless of the presence of other diverse parties. Finding that upon this issue “a page of history is worth a volume of logic,”New York Trust Co. v. Eisner, 256 U.S. 345, 349, 41 S.Ct. 506, 65 L.Ed. 963 (1921), I conclude the State's position is the correct one.

While there may be a certain logic to the proposition that a State's lack of citizenship could be disregarded or treated as a nullity when the remaining parties to an action are completely diverse, the weight of authority compels the opposite result. As a matter of history, parties without any state citizenship, such as States, Indian tribes, or Americans domiciled abroad, have been treated as ...