In re Pharmaceutical Ind. Aver. Whole. Price Lit.
| Decision Date | 14 April 2006 |
| Docket Number | Civ. Action No. 04-11503-PBS.,Civil Action No. 01-12257-PBS.,M.D.L. No. 1456. |
| Citation | 431 F.Supp.2d 109 |
| Parties | In re PHARMACEUTICAL INDUSTRY AVERAGE WHOLESALE PRICE LITIGATION. This Document Relates To: International Union of Operating Engineers, Local No. 68 Welfare Fund, Plaintiff, v. AstraZeneca PLC, et al., Defendants. |
| Court | U.S. District Court — District of Massachusetts |
Plaintiff International Union of Operating Engineers, Local No. 68 Welfare Fund ("Local 68") filed this proposed class action in the Superior Court of New Jersey against fifty-five named pharmaceutical companies and three named physicians. Local 68 alleged that the defendants violated New Jersey state law by engaging in a fraudulent scheme and conspiracy to market and sell cancer, inhalant and miscellaneous other drugs at inflated prices. Defendant AstraZeneca, one of the named pharmaceutical company defendants, removed the case to federal district court, asserting that ERISA's civil enforcement provision, 29 U.S.C. § 1132, completely preempted Local 68's state-law claims and that the state law claims required the resolution of substantial federal questions. Local 68 filed a motion to remand pursuant to 28 U.S.C. § 1447, alleging that AstraZeneca violated the rule of unanimity by removing without the consent of the physician defendants. Local 68 also disagreed that there was subject matter jurisdiction over the state law claims. AstraZeneca opposed the motion on the ground that Local 68 fraudulently joined and improperly served the physicians. Local 68 not only disagreed with AstraZeneca's opposition but also argued that AstraZeneca made material misrepresentations in the removal petition when it indicated that the physicians would consent to removal.
After hearing and review of the briefs, Plaintiffs motion to remand is ALLOWED.
This action arises out of the alleged fraudulent scheme by the pharmaceutical company defendants to inflate the prices of drugs by misstating the "Average Wholesale Price" ("AWP") of their drugs in industry publications. These allegations have engendered an enormous class action suit and multi-district litigation in this Court. This Court has fully outlined these allegations in earlier orders. See, e.g., In re Pharm. Indus. Average Wholesale Price Litig., 230 F.R.D. 61 (D.Mass.2005); Montana v. Abbot Labs., 266 F.Supp.2d 250 (D.Mass.2003). The particular facts, which are not in dispute except where noted, and procedural history of this action follow.
Local 68 filed a five-count class action complaint in the Superior Court of New Jersey on June 30, 2003, asserting only state law claims.1 The complaint named as defendants fifty-five pharmaceutical companies and three licensed physicians specializing in urology. Two of the physician defendants, Saad Antoun, M.D. ("Antoun") and Stanley C. Hopkins, M.D. ("Hopkins"), pled guilty to federal criminal charges in connection with billing patients for free samples of Zoladex received from AstraZeneca. The third physician defendant, Robert A. Berkman, M.D. ("Berkman"), was charged with the same conduct.
On June 30, 2003, Local 68 sent the complaint and summons via Federal Express to counsel for AstraZeneca and counsel for Antoun. On the same day, Local 68 mailed the complaint and summons via certified U.S. mail to the respective attorneys of the other defendants. (See Fowler Decl. Ex. 2, May 6, 2005.)
On July 1, 2003, AstraZeneca's counsel received the summons and complaint. (AstraZeneca Supp. Mem. 2-3.) Antoun's counsel asserts that he "accepted service of the Class Action Complaint on behalf of his client, defendant, Saad Antoun, M.D., via Federal Express overnight delivery, on July 1, 2003." (Antoun Joinder ¶ 2.) Hopkins's counsel also asserts that he "accepted service of the Class Action Complaint on behalf of his client, defendant, Stanley C. Hopkins, M.D., on July 3, 2003." (Hopkins Joinder ¶ 3.) Berkman's counsel, however, asserts that he "would not accept" and "never accepted service of the summons and complaint in the New Jersey Action on behalf of Dr. Berkman." (Fowler Decl. Ex. 1 ¶ 3, Dec. 28, 2005.)
On July 3, 2003, the notice of removal was drafted under the supervision of D. Scott Wise, a member of the law firm Davis Polk & Wardwell and counsel to Defendant AstraZeneca. At Wise's request and based on his representations, David J. Cooner, AstraZeneca's New Jersey counsel, signed and filed the notice of removal in the federal district court for the District of New Jersey that same day. (Wise Decl. ¶¶ 1-2, Sept. 19, 2005.) The notice was timely. AstraZeneca based the notice of removal on federal question jurisdiction, asserting that ERISA completely preempted Local 68's state law claims and that the claims required the resolution of substantial federal questions. (Removal Notice ¶ 10.) With regard to the consent of defendants required for removal, the notice stated:
Consent to removal is required only for served defendants. AstraZeneca has conducted a reasonably diligent inquiry, and based on this investigation, is informed and believes that, as of the date of this Notice, none of the other named defendants has been serve [sic] with the Class Action Complaint. Counsel for AstraZeneca is further informed and believes, based on this investigation, that all defendants will consent to this removal and will join herein following the service of process.
(Id. ¶ 19 (emphasis added).)
On July 9, 2003, Local 68 moved to remand the case to state court on the grounds that AstraZeneca violated the rule of unanimity requiring all defendants to consent timely to removal, that Local 68's state law claims were not preempted by ERISA, and that Local 68 explicitly disavowed any claims under federal law. (Remand Mot. 2.) On July 16, 2003, Berkman filed a letter stating that he "does not consent to the jurisdiction of the federal court in this case" and instead, "desires to have this case proceed in New Jersey State Court." (Sherman Letter, July 16, 2003.) On July 18, 2003, Antoun joined in Local 68's motion to remand and in the alternative, moved separately to remand. (Antoun Joinder.)
On July 21, 2003, the district court for the District of New Jersey denied the motion to remand without prejudice to reconsideration by the MDL court. (See Hr'g Mins., July 21, 2003; Hr'g Tr. 44-46, July 21, 2003.) On August 4, 2003, Hopkins also joined in Local 68's motion to remand and in the alternative, moved separately to remand. (Hopkins Joinder.)
On December 3, 2003, the Judicial Panel on Multi-District Litigation ordered that the case be transferred to this Court for inclusion in the Pharmaceutical Industry Average Wholesale Price Litigation, M.D.L. No. 1456. This Court received the case on July 2, 2004.
On November 23, 2004, the Court issued a procedural order stating that:
The Court orders that parties in cases transferred into this multi-district litigation shall inform the Court whether they are pressing any pending motions, and if so, shall file supplemental briefing on pending motions in light of the former orders. Failure to comply with this Order by December 22, 2004 will result in denial of the motions.
(Procedural Order, Nov. 23, 2004.) No parties in this case responded to this procedural order until Local 68 renewed its motion to remand in 2005.
This Court ordered supplemental briefing, which Plaintiff Local 68 and Defendant AstraZeneca submitted. After reviewing these, this Court issued an Order on August 19, 2005 requiring counsel for AstraZeneca to "submit an affidavit explaining the factual basis for its statement in the notice [of removal] that `all defendants will consent to this removal and join herein following the service of process'" and limiting discovery to sixty days on the claim that Local 68 fraudulently joined the physician defendants. (Mem. & Order, Aug. 19, 2005.) Local 68 and AstraZeneca subsequently submitted additional briefs. The Court held a hearing on January 27, 2006, after which the parties submitted more briefs. In this last round of submissions, Local 68 moved for attorneys' fees and costs expended in connection with the removal pursuant to 28 U.S.C. § 1447(c) or in the alternative, to Fed.R.Civ.P. 11.
On September 19, 2005, AstraZeneca submitted three declarations in response to the Court's Order of August 19, 2005, requiring counsel to "submit an affidavit explaining the factual basis for its statement in the notice [of removal] that `all defendants will consent to this removal and join herein following the service of process.'"
On July 3, 2003, Wise, member of Davis Polk & Wardwell and AstraZeneca's counsel, sent an e-mail to all other named defendant pharmaceutical companies to determine whether any defendant had been served. (Wise Decl. ¶¶ 1, 5(b), Sept. 19, 2005.) "[M]any defendants indicated in their responsive e-mails not only that they had not been served, but also that they would consent to removal if served." (Id. ¶ 5(b).)
Those corporate defendants that did not expressly indicate their consent to removal of this case in response to my email had previously consented to removal in virtually identical AWP-related cases. Accordingly, on July 3, 2003, [Wise] believed, based on these e-mail communications and the prior practice of these same corporate defendants in virtually identical cases, that all corporate defendants would consent to removal and join in the Notice of Removal once served.
(Id. ¶ 5(c).)
Regarding the individual physician defendants, Wise attempted to reach Antoun's counsel on the same day. "After several attempts, [Wise] was informed that Dr. Antoun's counsel, Mr. Mustokoff, was unreachable, because he was on...
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