Louisiana v. Ab

• Decision Date: 11 September 2015
• Docket Number: CIVIL ACTION NO. 15-274-JWD-RLB
• Parties: STATE OF LOUISIANA v. ASTRAZENECA AB, ET AL.
• Court: U.S. District Court — Middle District of Louisiana

STATE OF LOUISIANA
v.
ASTRAZENECA AB, ET AL.

CIVIL ACTION NO. 15-274-JWD-RLB

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF LOUISIANA

September 11, 2015

NOTICE

Please take notice that the attached Magistrate Judge's Report has been filed with the Clerk of the United States District Court.

In accordance with 28 U.S.C. § 636(b)(1), you have fourteen (14) days after being served with the attached Report to file written objections to the proposed findings of fact, conclusions of law and recommendations therein. Failure to file written objections to the proposed findings, conclusions, and recommendations within 14 days after being served will bar you, except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal conclusions of the Magistrate Judge which have been accepted by the District Court.

ABSOLUTELY NO EXTENSION OF TIME SHALL BE GRANTED TO FILE WRITTEN OBJECTIONS TO THE MAGISTRATE JUDGE'S REPORT

Signed in Baton Rouge, Louisiana, on September 11, 2015.

/s/_________
RICHARD L. BOURGEOIS, JR.
UNITED STATES MAGISTRATE JUDGE

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MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

This matter is before on Plaintiff's Motion to Remand. (R. Doc. 9). The motion is opposed. (R. Doc. 16). Defendants moved for oral argument (R. Doc. 17), which the undersigned denied as unnecessary for the purpose of issuing this Report and Recommendation. (R. Doc. 18). After careful review of the pleadings, arguments of the parties, and applicable law, it is the recommendation of the magistrate judge that the Plaintiff's Motion to Remand be GRANTED, and the action REMANDED to the 19th Judicial District Court, Baton Rouge, Louisiana.

I. Background

On March 18, 2015, the State of Louisiana, through its Attorney General, (the "State" or "Plaintiff") filed a parens patriae action against defendants AstraZeneca AB, AstraZeneca LP, AstraZeneca Pharmaceuticals LP, and Aktibolaget Hässle (collectively, "AstraZeneca" or "Defendants") in the 19th Judicial District Court, East Baton Rouge Parish, Louisiana. (R. Doc. 1-2, "Petition"). The action concerns patents governing Toprol-XL, a prescription drug manufactured by AstraZeneca and approved by the United States Food and Drug Administration ("FDA") for the treatment of angina, hypertension, and congestive heart failure. (Petition, ¶ 3).

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The State alleges that AstraZeneca obtained U.S. Patent 5,001,61 (the "161 patent") and U.S. Patent 5,081,154 (the "154 patent"), which govern the use of metoprolol succinate in Toprol-XL, through "inequitable conduct" before the U.S. Patent and Trademark Office ("PTO"). (Petition, ¶ 5). The State alleges that the 161 and 154 patents contain claims regarding metoprolol succinate that were "obvious" from an earlier filed patent (the "318 patent"). (Petition, ¶ 2). The State alleges that in the absence of AstraZeneca's inequitable conduct, the PTO would not have issued the 161 and 154 patents. (Petition, ¶ 5, 82-86). The State further alleges that AstraZeneca improperly caused these patents to be listed in the FDA publication titled "Approved Drug Products With Therapeutic Equivalence Evaluation" (the "Orange Book"), which led the State to reimburse purchases of Toprol-XL through its Medicare program. (Petition, ¶¶ 5, 29, 54-59). Finally, the State alleges that AstraZeneca filed "baseless patent infringements actions" against generic manufacturers to maintain its monopoly over metoprolol succinate despite having known or should have known that the patents were unenforceable. (Petition, ¶¶ 9-11, 136-147).¹

In light of the foregoing allegations, the State brought this enforcement action pursuant to the Louisiana Monopolies Act, La. R.S. §§ 51:121, et seq., the Louisiana Unfair Trade Practices Act, La. R.S. §§ 51:1401, et seq, and, in the alternative, unjust enrichment. (Petition, ¶¶ 15, 157-179). The State alleges that as a result of AstraZeneca's actions, including allegedly frivolous patent infringement litigation that allowed AstraZeneca to retain a monopoly over metoprolol succinate for at least 30 months longer than it should have, the State has lost millions of dollars by being forced to purchase the brand product (Troprol XL) at a higher rate than generic

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products would have sold for. (Petition, ¶¶ 8, 13, 14, 64, 65, 154). The State seeks restitution and to recover treble damages, as well as attorney fees and costs. (Petition, ¶ 181.)

On April 28, 2015, AstraZeneca removed the case alleging that the court has subject matter jurisdiction under the federal question statute, 28 U.S.C. § 1331, and the patent jurisdiction statute, 28 U.S.C. § 1338. (R. Doc. 1). AstraZeneca alleges the state law claims in the Petition raise substantial and disputed issues of patent law, which provides jurisdiction pursuant to § 1331 and § 1338 pursuant to the doctrines announced in Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314 (2005) (R. Doc. 1 at 4-5).

On May 29, 2015, the State moved to remand the action on the basis that the court does not have subject-matter jurisdiction over its claims, which are all expressly brought pursuant to state law. (R. Doc. 9).

II. Arguments of the Parties

The State argues that under both § 1331 and § 1338, the court must look to whether a federal cause of action is pled in the state court pleading. (R. Doc. 9-1 at 8-12). The State argues that to the extent an issue of patent law is necessarily raised by its antitrust and deceptive trade practices claims, the invalidity of the patents at issue is not in dispute, as that issue has been resolved by other courts. (R. Doc. 9-1 at 11-12). The State further argues that its claims do not fit in the narrow and rare circumstances in which a federal court can exercise jurisdiction in the absence of an alleged federal claim. (R. Doc. 9-1 at 12-17). The State references two federal court decisions in support of the specific proposition that this court cannot exercise jurisdiction over a parens patriae action brought against a pharmaceutical manufacturer under state antitrust and consumer protection laws on the basis that the manufactures commenced frivolous patent infringement litigation. (R. Doc. 9-1 at 14-16). The State also argues that to the extent the

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Defendants raise federal defenses to its state-law claims, the well-pleaded complaint rule prevents removal. (R. Doc. 9-1 at 18-19). Finally, the State argues that failing to remand the action would upset the balance between state court and federal court jurisdiction. (R. Doc. 9-1 at 19-20).

As in their Notice of Removal, AstraZeneca states that the court has subject matter jurisdiction over this action pursuant to § 1331 and § 1338. (R. Doc. 16 at 3). AstraZeneca argues that the resolution of the alleged state law claims necessarily depends upon the resolution of the "federal patent law question of inequitable conduct." (R. Doc. 16 at 4-6). AstraZeneca asserts that the "inequitable conduct" alleged by the State in the Petition was vacated by the Federal Circuit in 2007 (R. Doc. 16 at 5), and the Federal Circuit has since heightened the standard for proving inequitable conduct. (R. Doc. 16 at 5). Accordingly, AstaZeneca argues that based on the allegations in the Petition regarding its alleged inequitable conduct, issues of federal law are "necessarily raised" and "actually disputed." (R. Doc. 16 at 6-7). AstaZeneca then argues that the States' claims involve a "substantial" dispute over federal law in light of the following factors: (1) whether the federal question involves federal agency; (2) the importance of the federal question; (3) whether the action will resolve the federal question; and (4) whether a decision as to the federal question will control subsequent decisions. (R. Doc. 16 at 7-10). Finally, AstraZeneca argues that the resolution of Plaintiff's claims will not disrupt the federal-state balance and, to the contrary, the exercise of federal jurisdiction is proper because the action concerns the determination of inequitable conduct pursuant to federal patent law. (R. Doc. 16 at 10-11).

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III. Law and Analysis

A. Legal Standards

This court has original subject matter jurisdiction "of all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Nevertheless, because federal courts are courts of limited jurisdiction, it is presumed that a suit removed to federal court lies outside this limited jurisdiction. Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001). The party seeking removal bears the burden of demonstrating that a federal question exists. Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008). A federal question exists "if there appears on the face of the complaint some substantial, disputed question of federal law." In re Hot-Hed, Inc., 477 F.3d 320 (5th Cir. 2007) (quoting Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362, 366 (5th Cir. 1995)).

Whether a case is removable upon the basis of federal question jurisdiction is to be determined by the allegations of the plaintiff's "well-pleaded complaint" as of the time of removal. See Medina v. Ramsey Steel Co., Inc., 238 F.3d 674, 680 (5th Cir. 2001). Because the plaintiff...