West Virginia ex rel. McGraw v. Bristol Myers Squibb Co.

• Decision Date: 26 February 2014
• Docket Number: Civil Action No.: 13-1603 (FLW)
• Parties: STATE OF WEST VIRGINIA, ex rel. DARRELL V. MCGRAW, JR., ATTONREY GENERAL, Plaintiff, v. BRISTOL MYERS SQUIBB CO., et al., Defendants.
• Court: U.S. District Court — District of New Jersey

STATE OF WEST VIRGINIA, ex rel. DARRELL V. MCGRAW, JR.,ATTONREY GENERAL, Plaintiff, v. BRISTOL MYERS SQUIBB CO., et al., Defendants.

Civil Action No.: 13-1603 (FLW)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

Dated: February 26, 2014

*NOT FOR PUBLICATION*

OPINION

WOLFSON, District Judge:

In this parents patriae¹ action, the State of West Virginia, by its Attorney General, Darrell V. McGraw, Jr. ("Plaintiff" or the "State"), alleges that Bristol-Meyers Squibb Company ("BMS"), Sanofi-Aventis U.S., LLC, Sanofi US Services, Inc. and Sanofi-Synthelabo, Inc. (collectively, "Defendants"), engaged in unfair and deceptive marketing practices relating to the efficacy of Plavix, an anti-clotting prescription drug. Initially, Plaintiff brought suit in West Virginia State Court; however, upon removal by Defendants to the United States District Court for the Northern District of West Virginia, this case wastransferred to this Court by the Multi-District Litigation ("MDL") Panel as a part of the In re Plavix MDL. In the instant matter, the State moves for remand. For the reasons set forth below, the Court GRANTS the State's request, and accordingly, this matter is transferred to the District Court in the Northern District of West Virginia for the purpose of remanding this case to the Circuit Court of Marshall County, West Virginia.

BACKGROUND

The underlying facts of this case are largely not relevant to the issues presented in the present motion. Suffice to say, the State accuses Defendants of deceptively marketing Plavix by wrongfully asserting that Plavix is a superior drug to aspirin for certain indicated usages and charging approximately one hundred times more for Plavix than aspirin despite knowing that Plavix have no such superior efficacy. The State filed the Complaint against Defendants in the Circuit Court of Marshall County, West Virginia on December 28, 2012. The Complaint only asserts West Virginia state law claims, which include: 1) violations of the West Virginia Consumer Credit Protection Act ("CCPA"), W. Va. Code §§ 46Al7l101, et seq.; 2) misrepresentations to the Public Employees Insurance Agency ("PEIA") in violation of W. Va. Code § 5-16-12; 3) violations of the Insurance Fraud Act, W. Va. Code § 33-41-11; 4) unjust enrichment; and 5) common law fraud. The State seeks, inter alia, insurance payment reimbursement on behalf of its agency, West Virginia Public Employees Insurance Agency ("PEIA"), for excessive payments for Plavix for its member employees.

Invoking diversity jurisdiction, Defendants removed the matter on February 1, 2013, to the United States District Court for the Northern District of West Virginia. In March 2013, the case was transferred to this Court by the MDL Panel, after a determination by the Panel to centralize all suits, subject to its consideration, filed against Defendants related to Plavix. Pending before me is the Plaintiff's motion for remand. The State argues that because this is a parens patriae action, this Court lacks diversity jurisdiction. Defendants, on the other hand, maintain that diversity jurisdiction exists because the State of West Virginia is only a nominal party in suit, and the real party is PEIA, a citizen of West Virginia. Defendants also contend that even if the State is the real party, this case is nevertheless removable because it is a "class action" pursuant to the Class Action Fairness Act ("CAFA"), and moreover, substantial and disputed federal issues exist for this Court to exercise its federal question jurisdiction.

I held oral argument on this motion, wherein the parties presented additional arguments and certain concessions on the record. I will cite to the portions of the hearing transcript where appropriate.

DISCUSSION

I. Standard of Review

At the outset, because this is a MDL-related proceeding that originated from West Virginia, I must be clear on applicable choice of law rules. The parties, here, agree that under the MDL rules, in transferred diversity-of-citizenship cases, the transferee federal district court is required to apply thesubstantive state law of the transferor court, including its choice-of-law rules. See Paul v. Intel Corp., No. 05-1717, 2010 U.S. Dist. LEXIS 144511, at *163 (D. Del. Jul. 28, 2010). And, on issues of federal law or federal procedure, the transferee court applies the law of the circuit in which it sits (here, the Third Circuit). See Various Plaintiffs v. Various Defendants ("Oil Field Cases"), 673 F. Supp. 2d 358, 363 (E.D. Pa. 2009) (citing In re Korean Air Lines Disaster, 829 F.2d 1171, 1178 (D.C. Cir. 1987)); see also Transcript of Hearing Dated August 21, 2013 ("Tr."), T5:11-22.

In a removal matter, the defendant seeking to remove bears the burden of showing that federal subject matter jurisdiction exists; that removal was timely filed; and that the removal was proper. Boyer v. Snap-on Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990), cert. denied, 498 U.S. 1085 (1991). Removal statutes are to be strictly construed against removal, and all doubts are to be resolved in favor of remand. Shamrock Oil and Gas Corp. v. Sheets, 313 U.S. 100, 104 (1941); Brown v. Francis, 75 F.3d 860, 865, 33 V.I. 385 (3d Cir. 1996).

II. CAFA Jurisdiction

As a preliminary issue, Defendants conceded during oral argument that parens patriae suits brought by state attorney generals are generally not removable as "class actions" under CAFA. See Tr., T46:1-9. In fact, during the pendency of this motion, the Supreme Court addressed this issue in Mississippi ex rel. Hood v. AU Optronics Corp., 134 S. Ct. 736 (2014). The Court essentially held that when a state brings suit on behalf of its citizens and it isthe only named plaintiff, the suit is not removable under CAFA. Various other circuits have reached the same conclusion. See, e.g., Purdue Phrama L.P. v. Kentucky, 704 F.3d 208 (2d Cir. 2013); LG Display Co., LTD. v. Madigan, 665 F.3d 768, 774 (7^th Cir. 2011); Washington v. Chimei Innolux Corp., 659 F3d 842, 848-49 (9^th Cir. 2011). Accordingly, this Court lacks jurisdiction under CAFA in this case.

III. West Virginia is the Real Party in Interest

Plaintiff posits that this Court lacks diversity jurisdiction because the State is the real party in interest. The State reasons that the CCPA -- the State's consumer fraud statute -- expressly authorizes the Attorney General to bring suit on behalf of citizens of West Virginia to vindicate its quasi-sovereign interest. Here, in addition to seeking disgorgement of insurance payments on behalf of PEIA, the State claims that it has a substantial pecuniary stake in the outcome of this litigation as it seeks civil penalties, pursuant to W. Va. Code § 46A-7-111(2), against Defendants up to $5,000 for each willful violation of the CCPA, which occurred during the four year period prior to suit being filed. Plaintiff also seeks an injunction to enjoin Defendants from engaging in unfair or deceptive acts or practices in the future relating to the marketing of Plavix.

On the other hand, Defendants submit that despite the CCPA claims brought by the State, this case is essentially an insurance reimbursement action seeking recovery of prescription drug costs expended by PEIA, and consequently, diversity exists because PEIA, a citizen of West Virginia, is the real party. Regarding the State's CCPA claims, Defendants argue that theCCPA does not apply to promotions of prescription drugs because the "learned intermediary" doctrine exempts Defendants from liability. In other words, Defendants insist that because doctors, rather than consumers, decide which drugs to prescribe, the CCPA does contemplate actions involving prescription drugs.

The parties' dispute centers on whether the State of West Virginia is the real party in interest. Rule 17 of the Federal Rules of Civil Procedure provides that:

[e]very action shall be prosecuted in the name of the real party in interest. . . . No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest.

Fed R. Civ. P. 17(a). According to this Rule, it is clear that diversity jurisdiction is based on the citizenship of the real party in interest. Navarro Savings Ass'n v. Lee, 446 U.S. 458, 460-61 (1980); Choi v. Kim, 50 F.3d 244, 246 (3d Cir. 1995) (in determining whether diversity jurisdiction exists, the district court is "required to decide who was the real party in interest under Rule 17(a) of the Federal Rules of Civil Procedure"). Thus, the initial step is to examine if West Virginia, the only plaintiff named in this action, is also the real party in interest. See Ramada Inns, Inc. v. Rosemount Memorial Park Asso., 598 F.2d 1303, 1306 (3d Cir. 1979) (when a state is a party to an action and that "particular case involves a question of diversity jurisdiction, the initial inquiry is [always] the same: is the state the real party in interest to the litigation?"). Ifit is, then there is no diversity jurisdiction here. See Harris v. Pa. Tpk. Comm'n, 410 F.2d 1332, 1333 n. 1 (3d Cir. 1969) (explaining that a state is not considered a citizen for purposes of diversity jurisdiction).

That a state, a state agency, or its officers may have been named as parties in an action is not dispositive of whether that state is the real party in interest, because such a determination can only be derived from the "essential nature and effect of the proceeding." Ford Motor Co. v. Department of Treasury, 323 U.S. 459, 464 (1945); Ramada Inns, Inc. v. Rosemount Memorial Park Asso., 598 F.2d 1303, 1306 (3d Cir. 1979). Another relevant factor is the stake, if any, which the state has in the outcome of the litigation beyond a general desire...