Oregon ex rel. Kroger v. Johnson & Johnson

• Decision Date: 07 December 2011
• Docket Number: Case No. 3:11–CV–86SI.
• Citation: 832 F.Supp.2d 1250
• Court: U.S. District Court — District of Oregon
• Parties: State of OREGON, ex rel. John R. KROGER, Attorney General of Oregon, Plaintiff, v. JOHNSON & JOHNSON, McNeil–PPC, Inc., and McNeil Healthcare, LLC, Defendants.

832 F.Supp.2d 1250

State of OREGON, ex rel. John R. KROGER, Attorney General of Oregon, Plaintiff,

v.JOHNSON & JOHNSON, McNeil–PPC, Inc., and McNeil Healthcare, LLC, Defendants.

Case No. 3:11–CV–86SI.

United States District Court, D. Oregon.

Dec. 7, 2011.

John R. Kroger, Attorney General of Oregon, David A. Hart, Assistant Attorney–in–Charge, Roger J. De Hoog, Senior Assistant Attorney General, Merrill A. Maiano, Assistant Attorney General, Portland, OR, Of Attorneys for Plaintiff.

James T. McDermott, Dwain M. Clifford, Ball Janik LLP, Portland, OR, Ethan M. Posner, Covington & Burling LLP, Washington, DC, Of Attorneys for Defendants.

OPINION AND ORDER

SIMON, District Judge.

SUMMARY OF CASE

The State of Oregon (“Plaintiff”) originally filed this action in Multnomah County Circuit Court against Johnson & Johnson and its subsidiaries McNeil–PPC, Inc. and McNeil Healthcare, LLC (collectively, “Defendants”), asserting multiple claims under the Oregon Unlawful Trade Practices Act (“UTPA”) (Or.Rev.Stat. §§ 646.605–56). Defendants removed the action to this court, asserting that federal question jurisdiction exists for two reasons: first, because the state claims necessarily raise substantial and disputed issues of federal law, and second, because they are completely pre-empted by the federal Food, Drug, and Cosmetics Act, 21 U.S.C. §§ 301–399 (“FDCA”). Plaintiff timely moved for remand. (Doc. 14.) For the reasons that follow, Plaintiff's motion is GRANTED, and this case is remanded to the Multnomah County Circuit Court for the State of Oregon.

STATEMENT OF FACTS

Defendants manufacture, promote, and sell Motrin® IB caplets (“Motrin”), a brand of ibuprofen available without a prescription. Compl. ¶ 13. Plaintiff alleges that, during routine testing at Defendants' plant in Puerto Rico in November 2008, Defendants discovered that Motrin lot SHC003 “failed to dissolve at the rate required by specifications for good manufacturing practices.” Id. ¶ 17. Defendants reported the dissolution failure to the Food and Drug Administration (“FDA”) through an initial Field Alert Report (“FAR”). Id. ¶ 19. According to the complaint, Defendants did not notify wholesalers, retailers or consumers of the allegedly defective Motrin, and at least one wholesaler continued to ship Motrin to Oregon retailers. Id. ¶ 20.

In a follow-up FAR to the FDA, Defendants asserted that the affected Motrin “is not likely to cause an increased risk of serious adverse health consequences,” but that consumers “might be receiving less than the expected dose of ibuprofen.” Id. ¶ 23. Instead of conducting a public recall, Defendants allegedly hired another company to purchase the potentially affected Motrin from store shelves around the country, including in Oregon. Id. ¶¶ 25–26, 30. Plaintiffs assert that Defendants waited until February 2010 to notify publicly retailers and wholesalers that certain lots of Motrin were potentially defective. Id. ¶ 47.

On January 11, 2011, Plaintiff sued Defendants under Oregon's UTPA on four grounds. First, Plaintiff claims Defendants willfully represented that their product “conformed with current good manufacturing practices” and was “effective for [its] intended use” when they knew it may not be, thereby misrepresenting the drug's benefits and qualities in violation of Or.Rev.Stat. § 646.608(1)(e). Second, Plaintiff claims Defendants willfully failed to disclose that their product “may not have been manufactured consistent with current good manufacturing practices,” thereby creating a likelihood of misunderstanding as to the source, sponsorship, approval or certification of goods in violation of Or.Rev.Stat. § 646.608(1)(b). Third, Plaintiff claims this willful nondisclosure also constituted a misrepresentation of the product's standard, quality or grade in violation of Or.Rev.Stat. § 646.608(1)(g). Finally, Plaintiff claims Defendants willfully failed to disclose that their product “may have been ineffective for [its] intended use,” which constituted an unconscionable tactic related to the sale of goods in violation of Or.Rev.Stat. § 646.607. For these alleged violations of Oregon's UTPA, Plaintiff seeks damages, attorney fees and costs, and full restitution to all Oregon purchasers of the potentially defective Motrin, as well as an injunction ordering Defendants to comply with good manufacturing practices and to “clearly and conspicuously post the existence” of any recall it undertakes of a product advertised or sold in Oregon.

Plaintiff alleges in three of its claims that the Oregon UTPA was violated because Defendants did not disclose that their product “may not have been manufactured consistent with current good manufacturing practices.” Although not explicit in the complaint, the term “current good manufacturing practices” (“cGMPs”) refers to certain regulations promulgated by the FDA pursuant to the FDCA. These regulations set out the baseline “methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packing, or holding of a drug to assure that such drug meets the requirements of the act as to safety, and has the identity and strength and meets the quality and purity characteristics that it purports or is represented to possess.” 21 C.F.R. § 210.1(a). Failure to comply with cGMPs renders a drug “adulterated.” Id. § 210.1(b).

Defendants removed the case to this court on January 24, 2011. Their notice of removal asserted that federal-question jurisdiction exists because the complaint raises questions about the FDA's conduct; alleges violations of the FDA's cGMP regulations; and asserts claims that are pre-empted by the FDCA. Defendants also moved to stay the case in this court pending the decision of the U.S. Judicial Panel on Multidistrict Litigation, which conditionally transferred the case in February 2011 to the U.S. District Court for the District of Eastern Pennsylvania. Plaintiff opposed both the transfer and the request for a stay and separately filed a motion for remand. Magistrate Judge Acosta granted Defendants' motion to stay on April 8, 2011, 2011 WL 1347069. The U.S. Judicial Panel on Multidistrict Litigation vacated its conditional transfer order on May 20, 2011, and denied Defendants' motion for reconsideration on August 8, 2011. The case was reassigned to me on September 8, 2011.

DISCUSSION

I. Legal Standards

A civil action may be removed from state court to federal court if the federal district court would have had originaljurisdiction over it. 28 U.S.C. § 1441(a). When there is no diversity of citizenship, and there is none in this case,¹ removal is proper if a federal question is apparent on the face of the plaintiff's well-pleaded complaint. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). The well-pleaded complaint rule makes the plaintiff the master of the claim, able to avoid federal jurisdiction by relying exclusively on state law. Id. This rule is a “powerful doctrine [that] severely limits the number of cases in which state law ‘creates the cause of action’ that may be initiated or removed to federal district court....” Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 9–10, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). Notwithstanding this rule, “a plaintiff may not defeat removal by omitting to plead necessary federal questions in a complaint.” Id. at 22, 103 S.Ct. 2841. A defense that raises a federal question, however, does not confer federal jurisdiction, even if the complaint anticipates the defense and even if both parties agree that the defense is the only issue in dispute. Id. at 14, 103 S.Ct. 2841;see also Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152–53, 29 S.Ct. 42, 53 L.Ed. 126 (1908).

In the vast majority of cases coming under the federal-question jurisdiction of 28 U.S.C. § 1331, the complaint invokes a federally created cause of action. Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986). When the plaintiff pleads solely state causes of action, as Oregon has done here, federal-question jurisdiction “is unavailable unless it appears that some substantial, disputed question of federal law is a necessary element of one of the well-pleaded state claims, or that one or the other claim is ‘really’ one of federal law.” Franchise Tax Bd., 463 U.S. at 13, 103 S.Ct. 2841. That is, even when there is no federal cause of action, federal-question jurisdiction may nonetheless exist if the complaint necessarily raises a substantial and disputed question of federal law, see Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005), or if federal law completely pre-empts the state law claim, see Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 123 S.Ct. 2058, 156 L.Ed.2d 1 (2003). Defendants argue that both circumstances are present in this case.

A motion to remand is the proper procedure for challenging removal. Moore–Thomas v. Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir.2009). On a motion to remand, the party seeking removal bears the burden of establishing that removal is proper. Id. The removal statute is strictly construed, and the court resolves any doubt in favor of remand. Provincial Gov't of Marinduque v. Placer Dome, Inc., 582 F.3d 1083, 1087 (9th Cir.2009); Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992) (per curiam).

II. Substantial and Disputed Federal Issue

Defendants argue that federal-question jurisdiction exists over the present case because Plaintiff's claims “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.” Grable, 545 U.S. at 314, 125 S.Ct. 2363. In Grable, the Internal Revenue Service (“IRS”) had seized the plaintiff's property and sold it to the defendant. Id. at 310, 125 S.Ct....