Wisconsin v. Abbott Laboratories, 04-C-0477-C.

• Decision Date: 05 October 2004
• Docket Number: No. 04-C-0477-C.,04-C-0477-C.
• Citation: 341 F.Supp.2d 1057
• Parties: State of WISCONSIN, Plaintiff, v. ABBOTT LABORATORIES, AMGEN, INC., Astrazeneca Pharmaceuticals, LP, Astrazeneca, LP, Aventis Pharmaceuticals, Inc., Aventis Behring, LLC., Baxter International, Inc., Bayer Corporation, Boehringer Ingelheim Corporation, Bristol-Myers Squibb Co., Dey, Inc., Fujisawa Healthcare, Inc., Gensia Sicor Pharmaceuticals, Inc., Glaxosmithkline, Inc., Johnson & Johnson, Inc., Pfizer, Inc., Pharmacia, Schering-Plough Corporation, Tap Pharmaceutical Products, Inc., Watson Pharmaceuticals, Inc., Defendants.
• Court: U.S. District Court — Western District of Wisconsin

341 F.Supp.2d 1057

State of WISCONSIN, Plaintiff, v. ABBOTT LABORATORIES, AMGEN, INC., Astrazeneca Pharmaceuticals, LP, Astrazeneca, LP, Aventis Pharmaceuticals, Inc., Aventis Behring, LLC., Baxter International, Inc., Bayer Corporation, Boehringer Ingelheim Corporation, Bristol-Myers Squibb Co., Dey, Inc., Fujisawa Healthcare, Inc., Gensia Sicor Pharmaceuticals, Inc., Glaxosmithkline, Inc., Johnson & Johnson, Inc., Pfizer, Inc., Pharmacia, Schering-Plough Corporation, Tap Pharmaceutical Products, Inc., Watson Pharmaceuticals, Inc., Defendants.

No. 04-C-0477-C.

United States District Court, W.D. Wisconsin.

October 5, 2004.

Charles Barnhill and Cynthia R. Hirsch, for Plaintiff.

James R. Daly, Attorney at Law, Chicago, IL, R. Christopher Cook, Jones Day, Washington, DC, William M. Conley, Foley & Lardner, Madison, WI, Steven F. Barley, Hogan & Hartson L.L.P., Baltimore, MD, Brian E. Butler, Stafford Rosenbaum, LLP, Madison, WI, Carlos M. Pelayo, Davis Polk and Wardwell, New York, NY, Paul Schliefman, Shook, Hardy & Bacon, Washington, DC, Michael L. Koon, Kansas City, MO, Stephen P. Hurley, Hurley, Burish & Milliken, S.C., Madison, WI, Bill Nussbaum, Hogan & Hartson LLP, Washington, DC, Merle M. Delancey, Dickstein, Shapiro, Morion & Oshinsky, Washington, DC, Kevin J. O'Connor, Lafollette, Godfrey & Kahn, Madison, WI, Allen S. Kinzer, Vorys, Sater, Seymour and Pease LLP, Columbus, OH, Roberta F. Howell, Foley & Lardner, Madison, WI, Steven M. Edwards, Hogan & Hartson LLP, New York, NY, John M. Moore, Bell, Gierhart & Moore, S.C., Madison, WI, Christopher Palermo, Kelley, Drye & Warren LLP, New York, NY, Bruce A. Schultz, Coyne, Niess, Schultz, Becker & Bauer, Madison, WI, Kathleen H. McGuan, Attorney at Law, Washington, DC, Lester A. Pines, Cullen, Weston, Pines & Bach, Madison, WI, T. Reed Stephens, Sonnenschein, Nath & Rosenthal, LLP, Washington, DC, Daniel W. Hildebrand, Dewitt, Ross & Stevens, Madison, WI, Waltraud A. Arts, Quarles & Brady, Madison, WI, Andrew Schau, Patterson, Belknap, Webb & Tyler LLP, New York, NY, John C. Dodds, Morgan, Lewis & Bockius, LLP, Philadelphia, PA, Timothy W. Feeley, Von Briesen & Roper, S.C., Milwaukee, WI, Earl H. Munson, Boardman, Suhr, Curry & Field, Madison, WI, Brien T. O'Connor, Ropes & Gray LLP, Boston, MA, Lynn M. Stathas, Reinhart, Boerner, Van Deuren, Madison, WI, Allen C. Schlinsog, Jr., Reinhart, Boerner, Van Deuren, Milwaukee WI, Daniel E. Reidy, Attorney at Law, Chicago, IL, Douglas B. Farquhar, Hyman, Phelps & McNamara, Washington, DC, Ralph A. Weber, Gass Weber Mullins, LLC, Milwaukee, WI, for Defendants.

OPINION and ORDER

CRABB, District Judge.

This is a suit for monetary and injunctive relief filed by the State of Wisconsin against twenty pharmaceutical manufacturers. Plaintiff alleges that defendants inflated the average wholesale prices of their drugs, thereby violating several provisions of Wisconsin law. The case was originally filed in the Circuit Court for Dane County. On July 14, 2004, defendant Bayer Corporation filed a notice of removal with this court, asserting that this court had jurisdiction over this case under the diversity statute, 28 U.S.C. § 1332. All of the other defendants filed consents to the removal, with the exception of defendant Gensia Sicor Pharmaceuticals, Inc., which did not file its consent until July 27, 2004, one day after plaintiff filed its motion to remand. In its motion, plaintiff also requested an award of costs and attorney fees incurred as a result of the removal. In an order dated September 9, 2004, I lifted a previously entered stay on the briefing regarding plaintiff's motion to remand. Defendants have submitted a brief in opposition and I am ready to rule on plaintiff's motion. After reviewing the arguments submitted by the parties, I conclude that removal of this case was improper because this court lacks subject matter jurisdiction over the case. Therefore, I will grant plaintiff's motion to remand. In addition, I will grant plaintiff's request for costs and attorney fees.

FACTS

Plaintiff State of Wisconsin, through its Attorney General Peggy A. Lautenschlager, filed its complaint in the Circuit Court for Dane County, Wisconsin, on June 3, 2004. Plaintiff's complaint consists of five counts arising from defendants' alleged practice of "publishing false and inflated prices for their drugs." Cpt. ¶ 1. Plaintiff brought this action "on behalf of itself, its citizens, and Wisconsin organizations (those that pay the prescription drug costs of their members, hereinafter `private payers'), who have paid inflated prices for defendants' prescription drugs as a result of defendants' unlawful conduct." Cpt. ¶ 2.

Plaintiff alleges that defendants' alleged inflation of drug prices caused harm to the state, Wisconsin citizens, and certain private, Wisconsin-based organizations. First, plaintiff alleges that defendants' conduct caused the state to overpay for the drugs it purchases through its Medicaid program. Second, plaintiff alleges that Wisconsin Medicare Part B participants, primarily disabled and elderly citizens, were forced to pay higher co-pays for their prescription drugs than they would if defendants had published the actual drug prices. Third, plaintiff alleges that private, Wisconsin-based organizations that pay the prescription drug costs of their members overpaid for prescription drugs. Cpt. ¶ 52.

The complaint consists of five counts, all arising under Wisconsin law. Counts I and II allege violations of Wis. Stat. §§ 100.18(1) and 100.18(10)(b), which prohibit making false representations with the intent to sell merchandise. Count III alleges a violation of the Wisconsin Trust and Monopolies Act, Wis. Stat. § 133.05. Count IV alleges a claim for fraud on the Wisconsin Medicaid Program, Wis. Stat. § 49.49(4m)(a)(2). Count V states a common law claim for unjust enrichment.

Plaintiff seeks several forms of relief. With respect to Counts I and II, plaintiff seeks injunctive relief, civil forfeitures and restitution to the state programs, private citizens, and other private payers harmed by defendants' actions. On Count III, plaintiff seeks injunctive relief, civil forfeitures and treble damages for the state and those injured by defendants' conduct. With respect to Count IV, plaintiff seeks civil forfeitures and remedial damages. For Count V, plaintiff seeks injunctive relief and disgorgement of all profits realized as a result of defendants' unlawful conduct.

DISCUSSION

A. Jurisdiction

Initially, I note that on August 3, 2004, the Clerk of the Judicial Panel on Multidistrict Litigation issued a conditional transfer order transferring this case to the District of Massachusetts for consolidated pre-trial proceedings pursuant to 28 U.S.C. § 1407. However, Rule 1.5 of the Rules of Procedure of the Judicial Panel on Multidistrict Litigation states that the existence of a conditional transfer order "does not affect or suspend orders and pretrial proceedings in the district court in which the action is pending and does not in any way limit the pretrial jurisdiction of that court." Thus, the court has jurisdiction to rule on plaintiff's motion.

B. Standard of Review

Although plaintiff has requested this court to remand the case, defendants bear the burden of proving that this court has subject matter jurisdiction because they removed the case to federal court. Tylka v. Gerber Products Co., 211 F.3d 445, 448 (7th Cir.2000). To meet this burden, defendants must support their allegations of jurisdiction with evidence indicating a "reasonable probability that jurisdiction exists." Chase v. Shop `N Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir.1997). The existence of jurisdiction is determined as of the date of removal. Sirotzky v. New York Stock Exchange, 347 F.3d 985, 988 (7th Cir.2003). Also, in determining whether removal was proper, a district court must construe the removal statute, 28 U.S.C. § 1441, narrowly and resolve any doubts regarding subject matter jurisdiction in favor of remand. See Doe v. Allied-Signal, Inc., 985 F.2d 908, 911 (7th Cir.1993); People of the State of Illinois v. Kerr-McGee Corp., 677 F.2d 571, 576 (7th Cir.1982).

Plaintiff argues that removal of this case was improper for three reasons. First, there is no diversity jurisdiction in this case because the state of Wisconsin is the real party in interest. Second, the Eleventh Amendment bars removal of this case. Third, removal was improper because one of the defendants, Gensia Sicor Pharmaceuticals, did not file a timely consent to the notice of removal. I agree that the state of Wisconsin is the real party in interest and that this court does not have diversity jurisdiction over the case. Because my agreement with plaintiff's first argument is sufficient to decide this motion, I express no opinion on plaintiff's arguments regarding the Eleventh Amendment and failure to file a timely consent.

C. Real Party in Interest

The removal statute, 28 U.S.C. § 1441, states that "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." In its notice of removal, defendant Bayer Corporation alleged that this court had original jurisdiction over this case by way of diversity. Diversity jurisdiction requires that the parties be citizens of different states and the dispute between them exceed $75,000. 28 U.S.C. § 1332.

It is well settled that a state is not a citizen for diversity purposes. Indiana Port Comm'n v. Bethlehem Steel Corp., 702 F.2d 107, 109 (7th Cir.1983) (citing Postal Telegraph Cable Co. v. Alabama, 155 U.S. 482, 15 S.Ct. 192, 39 L.Ed. 231 (1894)). However, in determining whether diversity jurisdiction exists, courts must look beyond the named parties and consider the citizenship of the...