Louisiana v. Smithkline Beecham Corp.

• Decision Date: 04 February 2016
• Docket Number: CIVIL ACTION NO.: 15-00055-BAJ-EWD
• Parties: STATE OF LOUISIANA v. SMITHKLINE BEECHAM CORPORATION
• Court: U.S. District Court — Middle District of Louisiana

STATE OF LOUISIANA v. SMITHKLINE BEECHAM CORPORATION

CIVIL ACTION NO.: 15-00055-BAJ-EWD

UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF LOUISIANA

February 4, 2016

RULING AND ORDER

This case requires the Court to determine whether certain state law claims arise under 28 U.S.C. § 1331. which provides that "[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States."

I. BACKGROUND

On December 29, 2014, the State of Louisiana, through its Attorney General, (hereinafter, "Plaintiff") filed a parens patriae action against SmithKline Beecham Corporation d/b/a GlaxoSmithKline plc (hereinafter, "Defendant" and "GSK").¹ (Doc. 1-2). Plaintiff asserts that Defendant manipulated administrative procedures set forth by the Food, Drug, and Cosmetic Act (hereinafter "FDCA") and enforced by the Food and Drug Administration (hereinafter. "FDA") to delay the introduction of a generic version of the drug Flonase, a prescription drug manufactured by Defendantand approved by the FDA. (Id. at ¶¶ 1—2, 47—49, 86). Specifically, Plaintiff asserts that Defendant filed baseless citizen petitions to prevent or delay generic entry into the market.² (Id. at ¶54). Plaintiff further asserts that "[b]y preventing generic competitors from entering the market. GSK injured Plaintiff by causing it to pay more for fluticasone propionate products than they otherwise would have paid." (Id. ¶ at 86).

Plaintiff filed its action in the Nineteenth Judicial District Court for the Parish of East Baton Rouge, asserting claims for violations of the antitrust laws of Louisiana, LA. REV. STAT. ANN. § 51:121, et seq., violations of the Louisiana Unfair Trade Practice and Consumer Protection Act, LA. REV. STAT. ANN. § 51:1401, et seq., and unjust enrichment, LA. CIV. CODE art. 2298. (Id. at pp. 19—24). Plaintiff asserts that itsaction is brought exclusively under Louisiana law, and that it makes no claims arising under the laws of the United States. (Id. at ¶ 6).

On February 4, 2015, Defendant filed a timely notice of removal asserting that the Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331. (Doc. 1 at ¶ 3). While Defendant recognizes that Plaintiff did not seek relief pursuant to a federal statute on the face of its petition. Defendant asserts that Plaintiff's state law claims necessarily turn on whether Defendant's conduct before the FDA was improper, which in turn implicates "a number of federal statutes and regulations and the FDA's implementation thereof." (Id. at ¶¶ 15). Accordingly, Defendant argues that Plaintiff's claims satisfy the test set forth in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing, 545 U.S. 308 (2005), wherein the Supreme Court clarified the limitations of "arising under" jurisdiction. (Id. at ¶¶ 4—21).

On March 6, 2015, Plaintiff moved to remand its action on the basis that the Court does not have subject matter jurisdiction over the claims contained therein, which are all expressly brought pursuant to state law.³ (See Doc. 5). Plaintiff asserts that Defendant has failed to establish that its claims satisfy the strict "arising under" test set forth in Grable. On April 10, 2015, Defendant filed a response to Plaintiff'smotion to remand, (Doc. 18), and both parties have thoroughly briefed this issue by way of replies and supplemental briefing,⁴ (Docs. 25, 29. 30).

II. STANDARD AND APPLICABLE LAW

"A case aris[es] under federal law for § 1331 purposes if a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal law." Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 678 (2006) (internal quotations omitted). Because federal courts are courts of limited jurisdiction, it is presumed that a suit removed to federal court lies outside this limited jurisdiction, and the party seeking removal bears the burden of demonstrating that a federal question exists pursuant to 28 U.S.C. § 1331. See Howery v. Allstate Ins. Co., 243 F.3d 912, 916 (5th Cir. 2001). Doubts about the propriety of removal are resolved in favor of remand. See Gutierrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008).

Absent a federal statutory cause of action, the Supreme Court has recognized the difficulty in determining when state law claims are so intertwined with issues offederal law such that they "aris[e] under" federal law for purposes of 28 U.S.C. § 1331. See Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 808 (1986) (some internal quotations omitted) (citing Franchise Tax Board v. Constuction Laborers Vacation Trust. 463 U.S. 1. 8 (1983)) ("There is no single, precise definition of that concept; rather, the phrase 'arising under' masks a welter of issues regarding the interrelation of federal and state authority and the proper management of the federal judicial system."). When a claim finds its origins in state rather than federal law, the Supreme Court has "identified a 'special and small category' of cases in which arising under jurisdiction still lies." Gunn v. Minton, ___ U.S. ___, ___, 133 S.Ct. 1059, 1065 (2013) (commenting also that "[i]n outlining the contours of this slim category, we do not paint on a blank canvas. Unfortunately, the canvas looks like one that Jackson Pollock got to first") (citations omitted).

As indicated by the parties, the most current and instructive test to determine if arising under jurisdiction is proper was set forth in Grable, 545 U.S. at 314. In Grable, the Supreme Court found that a dispute centering on whether action taken by a federal agency (the IRS) was compatible with a federal statute gave rise to federal question jurisdiction. Id. at 315 (commenting that "[w]hether Grable was given notice within the meaning of the federal statute is thus an essential element of its quiet title claim, and the meaning of the federal statute is actually in dispute; it appears to be the only legal or factual issue contested in the case."). In finding jurisdiction proper, the Supreme Court set forth a four-part test when it framed the inquiry as follows: "does a state-law claim necessarily raise a stated federal issue,actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities." Id. The decision in Grable further instructed that lack of a private cause of action under federal law is not dispositive of the question of whether arising under jurisdiction is proper and instead is simply a factor that weighs against exercising jurisdiction. Id. at 316—18 (discussing Merrell Dow, 478 U.S. 804).

Since Grable, district courts have been confounded by how to determine if a necessary and disputed federal issue is "substantial." See Bd. of Comm'rs of the Se. Louisiana Flood Prot. Authority—East v. Tennessee Gas Pipeline Co., LLC, 29 F. Supp. 3d 808, 859—63 (E.D. La. 2014) (addressing the elasticity of the substantiality inquiry). In Gunn, the Supreme Court did. however, expand on Grable and instruct that "for a case to be substantial in the relevant sense, it is not enough that the federal issue be significant to the particular parties in the immediate suit" and the substantiality inquiry "instead looks at the importance of the [federal] issue to the federal system as a whole." Gunn, 133 S.Ct. at 1066. In Gunn, the success of a state malpractice claim necessarily turned on the resolution of an issue of patent law. Id. at 1065—66. The Supreme Court held that arising under jurisdiction was not proper, because resolution of the patent issue would unlikely impact other cases and was not of "broader significance . . . for the Federal Government." Id. at 1066.

III. DISCUSSION

To the extent the federal regulations identified by Defendant necessarily raise disputed federal issues that are significant to the parties in this case, the Court findsthat such issues are not sufficiently substantial to meet the third element of Grable's four-part test. See Gunn, 133 S.Ct. at 1066—67. The federal regulations identified by Defendant are only tangentially relevant to Plaintiff's state law claims, as they do not challenge the FDA's conduct, its decision making, or its authority to regulate. See In re Vioxx Products Liability Litigation, 843 F. Supp. 2d 654, 668—71 (E.D. La. 2012) (declining to exercise arising under jurisdiction in parens patriae action where state law antitrust claims alleged facts regarding a drug manufacturer's conduct vis a vis the FDA, but where those facts were only some of the allegations among many); cf. Hughes v. Chevron Phillips Chem. Co. LP. 478 F.App'x 167, 170—71 (5th Cir. 2012) (where arising under jurisdiction was proper because the plaintiff's claims required a determination as to whether an administrative agency had authority to take certain action and whether it followed the proper procedures in doing so). Defendant's assertion that the "state attempts to insert itself directly into the federal relationship between [it] and the FDA" is simply overstated. (See Doc. 18 at p. 10).

At most, Plaintiff's assertion that Defendant filed objectively and subjectively baseless citizen petitions challenges the specific actions and motivations of Defendant when it availed itself of the citizen petition process. See W. Virginia ex rel. Morrisey v. Pfizer, Inc., 969 F. Supp. 2d 476, 488 (S.D.W. Va. 2013) (finding that similar claims and facts do not arise under 28 U.S.C. §1331 pursuant to Grable). Because the purpose underlying Defendant's use of the citizen petition process will require factual determinations, resolution of Plaintiff's state law claims will have little, if any, bearing outside of the immediate suit. See Gunn, 133 S.Ct. at 1068 (quoting Empire,547 U.S. at 701) (remarking that, "[s]uch 'fact bound and situation-specific' effects are not...