Staubus v. Purdue Pharma, L.P.

• Decision Date: 20 October 2017
• Docket Number: No.: 2:17-CV-122-TAV-CLC,: 2:17-CV-122-TAV-CLC
• Parties: BARRY STAUBUS, in his official capacity as the District Attorney General for the Second Judicial District, Tennessee; TONY CLARK, in his official capacity as the District Attorney General for the First Judicial District, Tennessee; DAN ARMSTRONG, in his official capacity as the District Attorney General for the Third Judicial District, Tennessee; and BABY DOE, by and through his Guardian Ad Litem, Plaintiffs, v. PURDUE PHARMA, L.P.; PURDUE PHARMA, INC.; THE PURDUE FREDERICK COMPANY; MALLINCKRODT LLC; ENDO HEALTH SOLUTIONS, INC; ENDO PHARMACEUTICALS, INC; CENTER POINTE MEDICAL CLINIC, LLC; ELIZABETH ANN BOWERS CAMPBELL; PAMELA MOORE; and ABDELRAHMAN HASSABU MOHAMED, Defendants.
• Court: U.S. District Court — Eastern District of Tennessee

BARRY STAUBUS, in his official capacity as the District Attorney General
for the Second Judicial District, Tennessee; TONY CLARK, in his official capacity
as the District Attorney General for the First Judicial District, Tennessee;
DAN ARMSTRONG, in his official capacity as the District Attorney General
for the Third Judicial District, Tennessee; and BABY DOE, by and through his Guardian Ad Litem, Plaintiffs,
v.
PURDUE PHARMA, L.P.; PURDUE PHARMA, INC.; THE PURDUE FREDERICK COMPANY;
MALLINCKRODT LLC; ENDO HEALTH SOLUTIONS, INC;
ENDO PHARMACEUTICALS, INC; CENTER POINTE MEDICAL CLINIC, LLC;
ELIZABETH ANN BOWERS CAMPBELL; PAMELA MOORE;
and ABDELRAHMAN HASSABU MOHAMED, Defendants.

No.: 2:17-CV-122-TAV-CLC

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TENNESSEE

October 20, 2017

MEMORANDUM OPINION

This civil matter is before the Court on plaintiffs' Motion to Remand [Doc. 11]. Defendants Endo Health Solutions, Inc. and Endo Pharmaceuticals, Inc. (collectively, "Endo") responded in opposition to the motion as it applied to the Manufacturer

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Defendants¹ [Doc. 21], and plaintiffs' reply was directed to both the Manufacturer Defendants and the Provider Defendants² (collectively, "defendants") [Doc. 24]. No other Manufacturer Defendants or Provider Defendants have filed responses in opposition to plaintiffs' motion to remand. For the reasons that follow, the Court will grant the plaintiffs' motion.

I. Background

Plaintiffs commenced this action in the Circuit Court for Sullivan County, Tennessee, on June 13, 2017 [Doc. 1-1]. Plaintiffs are three district attorneys acting on behalf of opioid-affected counties in Tennessee and a minor Tennessee citizen acting through his Guardian Ad Litem. They asserted claims of common law nuisance, statutory nuisance, and a violation of Tennessee's Drug Dealer Liability Act ("DDLA"), Tenn. Code Ann. § 29-38-103, against defendants. Plaintiffs allege defendants, together, created a fraudulent scheme to grow the prescription opioid market by misleading doctors and the public about the addictive nature of opioids. Plaintiffs are all citizens of Tennessee [Doc. 1-2 pp. 4-5]. Manufacturer Defendants are citizens of states or a foreign state other than Tennessee [Doc. 1-2 pp. 5-8]. Provider Defendants are citizens of Tennessee [Doc. 1-2 pp. 8-9].

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On July 27, 2017, defendants filed a Notice of Removal, claiming diversity jurisdiction as the basis of removal [Doc. 1]. Plaintiff filed the instant motion to remand to state court, arguing that defendants did not obtain consent from all defendants and that the presence of Provider Defendants defeats the diversity of citizenship requirement.

II. Standard of Review

After a plaintiff files a case in state court, a defendant may remove it to federal court when certain conditions are met. Pursuant to 28 U.S.C. § 1441(a), defendants may remove to federal district court "any civil action brought in a State court of which the district courts of the United States have original jurisdiction." However, federal courts have limited original jurisdiction and may only exercise "power authorized by Constitution and statute." Freeland v. Liberty Mut. Fire Ins. Co., 632 F.3d 250, 255 (6th Cir. 2011) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). A presumption against federal jurisdiction exists, and federal courts must carefully guard against the temptation to expand beyond the jurisdictional bounds established by Congress. See Kokkonen, 511 U.S. at 377 ("Federal jurisdiction may not be 'maintained by mere averment,' 'inferred argumentatively,' or 'supplied by inference[.]'" (internal citations omitted)); Am. Fire & Cas. Co. v. Finn, 341 U.S. 6, 18 (1951) ("To permit a federal trial court to enter a judgment . . . where the federal court could not have original jurisdiction . . . [would] give district courts power the Congress has denied them."); Mason v. Lockwood, Andrews & Newnam, P.C., 842 F.3d 383, 391-92 (6th Cir. 2016). Under this presumption, "the general rule [is] that an action may be removed from state court to federal court only

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if a federal district court would have original jurisdiction over the claim in suit." Jefferson Cty. v Acker, 527 U.S. 423, 430 (1999) (citing § 1441(a)).

A federal district court has original subject matter jurisdiction over two types of actions. First, the district court has original subject matter jurisdiction over actions that arise under the federal Constitution, federal law, or treaties of the United States. 28 U.S.C. § 1331. Second, the district court has original subject matter jurisdiction over actions based on diversity of citizenship, which are disputes between citizens of different states where the matter in controversy exceeds $75,000. 28 U.S.C. § 1332.

In order to remove an action based solely on diversity jurisdiction, all properly joined defendants must consent to removal, and no properly joined defendant may be a citizen of the state in which the action is brought. See 28 U.S.C. §§ 1441(b)(2), 1446(b)(2)(A). This is sometimes referred to as the rule of unanimity, which the Sixth Circuit has adopted. Loftis v. United Parcel Serv., Inc., 342 F.3d 509, 516 (6th Cir. 2003). The party removing an action to federal court has the burden of showing that the federal jurisdictional requirements are satisfied. Gafford v. Gen. Elec. Co., 997 F.2d 150, 158 (6th Cir. 1993). When ambiguities arise in determining whether federal jurisdiction requirements are satisfied, courts must strictly construe the statutes and resolve ambiguities "in favor of remand to the state courts." Brierly v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527, 534 (6th Cir. 1999). If the court determines that the removing party has failed to meet this burden, then the court should remand the case back to state court.

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III. Analysis

In their Notice of Removal, Endo distinguishes the "Manufacturer Defendants" from the "Provider Defendants" [Doc. 1]. Endo states that the Manufacturer Defendants all consented to removal [Doc. 1 p. 11]. One Provider Defendant, Center Pointe Medical Clinic, LLC, has since consented to removal [Doc. 7]. The remaining Provider Defendants have not consented to removal. In fact, one Provider Defendant filed a Motion to Remand the action, clearly opposing removal [Doc. 37].³ Endo submits that the Provider Defendants were not properly joined, so their consent was not necessary for removal, and the Court can ignore their citizenship for purposes of diversity jurisdiction. This theory rests on the Court adopting the fraudulent misjoinder doctrine, which prevents plaintiffs from defeating diversity jurisdiction by including claims against parties that are not related. Endo asserts that plaintiffs' claims against the Provider Defendants have a different legal and factual basis than plaintiffs' claims against the Manufacturer Defendants. Because plaintiffs fraudulently misjoined the defendants in an attempt to defeat diversity jurisdiction, Endo asserts, the fraudulent misjoinder doctrine allows the Court to ignore the citizenship of the Provider Defendants for purposes of diversity jurisdiction. Endo also

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submits, in the alternative, that the Provider Defendants are dispensable parties subject to severance.

The threshold issue in deciding this motion to remand is whether Endo's Notice of Removal [Doc. 1] was procedurally defective. Pursuant to 28 U.S.C. §§ 1441, 1446, the Court must first determine whether defendants were properly joined before turning to the issue of consent and the principle of complete diversity.

A. Fraudulent Joinder

Before discussing the arguments submitted by the plaintiffs and Endo, it is important to distinguish the doctrine of fraudulent joinder from the doctrine of fraudulent misjoinder (also called "procedural misjoinder"). The fraudulent joinder doctrine applies when a plaintiff, to defeat diversity jurisdiction, joins a non-diverse party against whom the plaintiff has no cause of action. See Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999). By contrast, under the fraudulent misjoinder doctrine, a plaintiff has a cause of action against a non-diverse party, but that claim does not arise from the same transaction or occurrence, or the cause of action does not stem from a common question of law or fact. See Fed. R. Civ. P. 20; Tapscott v. MS Dealer Service Corp., 77 F.3d 1353, 1360 (1996).

To illustrate, if a Tennessee singer-songwriter sued a New York venue where she was to perform, seeking $100,000 in damages for breach of contract, the New York venue could remove the case to federal court based on diversity jurisdiction. See § 1332. If the Tennessee singer-songwriter wanted to defeat diversity jurisdiction by also including in the action a defamation claim against a Tennessee newspaper publisher for false statements

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made eleven months earlier, then the New York defendant could argue that the fraudulent misjoinder doctrine should apply. The fraudulent joinder doctrine would likely not apply because the Tennessee singer-songwriter had a cause of action against the Tennessee newspaper publisher. However, joining the defamation claim with the unrelated breach of contract claim in order to defeat diversity jurisdiction would be inappropriate under the fraudulent misjoinder doctrine because it did not arise from the same transaction or occurrence and did not involve a common question of law or fact. Cf. Murriel-Don Coal Co., Inc. v. Aspen Ins. UK Ltd., 790 F. Supp. 2d 590, 599 (E.D. Ky. 2011) (providing another illustration of the distinction between fraudulent joinder and fraudulent misjoinder).

In responding to plaintiffs' motion to remand, the Manufacturer Defendants assert that the Provider Defendants were not properly joined and so their consent to removal was not necessary. To determine whether a party was properly joined, the Court must consider the doctrine of fraudulent joinder. While the Manufacturer Defendants do not...