City of Las Vegas v. Purdue Pharma, L.P.

[3] 4 UNITED STATES DISTRICT COURT 5 DISTRICT OF NEVADA 6 * * * 7 CITY OF LAS VEGAS, Case No. 2:19-CV-2128 JCM (DJA) 8 Plaintiff(s), ORDER 9 v. 10 PURDUE PHARMA, L.P., et al., 11 Defendant(s). [12] 13 Presently before the court is plaintiff City of Las Vegas’s (“city”) motion to remand to 14 state court. (ECF No. 6). Defendants CVS Health Corporation, CVS Pharmacy, Inc., CVS 15 Indiana, L.L.C., CVS Rx Services, Inc. and CVS Tennessee Distribution, L.L.C. (collectively, 16 “defendants”) filed a response (ECF No. 21), to which the city replied (ECF No. 24). 17 Also before the court is defendants’ motion to stay case pending likely transfer to 18 multidistrict litigation. (ECF No. 20). The city filed a response (ECF No. 23), to which 19 defendants replied (ECF No. 25). 20 I. Background 21 The instant action arises from the national and widely publicized opioid crisis. The city 22 sued a variety of entities and individuals responsible for manufacturing, marketing, and selling 23 prescription opioids, including Oxycontin, Vicodin, and Percocet and their generic counterparts. 24 (ECF No. 1-2). The city groups the defendants into drug manufacturers (including the individual 25 “Sackler defendants”), wholesale distributors, detailers, pharmacies, and health care providers. 26 Id. at 9–22. 27 The city filed suit in the Eighth Judicial District Court, alleging public nuisance under 28 Nevada and common law, negligent misrepresentation, and unjust enrichment against all 1 defendants. Id. at 46–57, 60–61. It also alleges negligence against the distributors, pharmacies, 2 and health care providers. Id. at 58–60. Finally, it brings a claim against certain defendants for 3 alleged violations of Nevada’s Racketeering Act. Id. at 61–88. Defendants timely removed this 4 action on December 11, 2019. (ECF No. 1). 5 This case is unextraordinary. In fact, more than 2,600 similar cases have been filed by 6 government entities throughout the country. Many of those cases have been transferred to the 7 Northern District of Ohio as part of the multidistrict litigation In re National Prescription Opiate 8 Litig., MDL No. 2804, (“Opiate MDL”).1 9 On December 23, 2019, the Judicial Panel on Multidistrict Litigation (“JPML”) entered a 10 conditional transfer order (“CTO”), finding that this action appears to “involve questions of fact 11 that are common to the actions previously transferred to the Northern District of Ohio and 12 assigned to Judge Polster.” CTO-127, JPML Dkt. No. 6566. Defendants moved to stay the case 13 until the JPML renders a final decision on whether to transfer this action to the Opiate MDL. 14 (ECF No. 20). 15 II. Legal Standard 16 A. Remand 17 “‘Federal courts are courts of limited jurisdiction,’ possessing ‘only that power 18 authorized by Constitution and statute.’” Gunn v. Minton, 568 U.S. 251, 256 (2013) (quoting 19 Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994)). Pursuant to 28 20 U.S.C. § 1441 (a), “any civil action brought in a State court of which the district courts of the 21 United States have original jurisdiction, may be removed by the defendant or the defendants, to 22 the district court of the United States for the district and division embracing the place where such 23 action is pending.” 28 U.S.C. § 1441 (a). [25] 26 1 The Judicial Panel on Multidistrict Litigation created the Opiate MDL on December 5, 2017 to handle cases in which “cities, counties and states . . . allege that: (1) manufacturers of 27 prescription opioid medications overstated the benefits and downplayed the risks of the use of their opioids and aggressively marketed . . . these drugs to physicians, and/or (2) distributors 28 failed to monitor . . . and report suspicious orders of prescription opiates.” In re Nat’l Prescription Opiate Litig., 290 F. Supp. 3d 1375, 1378 (J.P.M.L. 2017). 1 Because the court’s jurisdiction is limited by the Constitution and 28 U.S.C. §§ 1331 , 2 1332, “[t]he threshold requirement for removal under 28 U.S.C. § 1441 is a finding that the 3 complaint contains a cause of action that is within the original jurisdiction of the district 4 court.” Ansley v. Ameriquest Mortg. Co., 340 F.3d 858, 861 (9th Cir. 2003) (quoting Toumajian 5 v. Frailey, 135 F.3d 648, 653 (9th Cir. 1998)). Thus, “it is to be presumed that a cause lies 6 outside the limited jurisdiction of the federal courts and the burden of establishing the contrary 7 rests upon the party asserting jurisdiction.” Hunter v. Philip Morris USA, 582 F.3d 1039 , 1042 8 (9th Cir. 2009). 9 A plaintiff may challenge removal by timely filing a motion to remand. 28 U.S.C. 10 § 1447(c). On a motion to remand, the removing defendant must overcome the “strong 11 presumption against removal jurisdiction” and establish that removal is proper. Hunter, 582 F.3d 12 at 1042 (quoting Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992) (per curiam)). Due to this 13 strong presumption against removal jurisdiction, the court resolves all ambiguity in favor of 14 remand to state court. Id. 15 B. Stay 16 Courts have broad discretion in managing their dockets. See, e.g., Landis v. N. American 17 Co., 299 U.S. 248, 254 (1936) (courts have the inherent power to “control the disposition of the 18 causes on its docket with economy of time and effort for itself, for counsel and for litigants”). In 19 exercising that discretion, courts are guided by the goals of securing the just, speedy, and 20 inexpensive resolution of actions. See Fed. R. Civ. P. 1. 21 III. Discussion 22 The first—and virtually dispositive—issue before the court is which motion it should 23 consider first: the motion to remand or the motion to stay.2 Other federal courts presiding over 24 state-law opioid cases have grappled with these dueling motions to remand or stay. [26] 2 And, to be sure, this court maintains jurisdiction over both motions, the JPML’s 27 conditional transfer order notwithstanding. The Rules of Procedure of the United States Judicial Panel on Multidistrict Litigation expressly provide that a conditional transfer order “does not 28 affect or suspend orders and pretrial proceedings in any pending federal district court action and does not limit the pretrial jurisdiction of that court.” R. P. JPML 2.1(d). 1 Some courts consider and grant the motion to remand without addressing the motion to 2 stay. See, e.g., Dinwiddie Cty., Virginia v. Purdue Pharma, L.P., No. 3:19-CV-242, 2019 WL 3 2518130 (E.D. Va. June 18, 2019); City of Reno v. Purdue Pharma, L.P., No. 3:18-cv-004544 MMD-WGC, 2018 WL 5730158 (D. Nev. Nov. 2, 2018); Mayor and City Council of Baltimore 5 v. Purdue Pharma, L.P, No. 18-800, 2018 WL 1963816 , at *3 (D. Md. April 25, 2018) 6 (collecting cases); Cty. of Falls v. Purdue Pharma, LP, No. 6:18-CV-47-RP-JCM, 2018 WL 7 1518849, at *1 (W.D. Tex. Mar. 28, 2018); Cty. of Delta v. Purdue Pharma, L.P., No. 4:18-CV8 095, 2018 WL 1440485 (E.D. Tex. Mar. 22, 2018). 9 Other courts do just the opposite, and rule on the motion to stay without reaching the 10 merits of the motion to remand. See, e.g., Bd. of Cty. Commissioners of Seminole Cty., 11 Oklahoma v. Purdue Pharma L.P., No. CIV-18-372-JWL, 2019 WL 1474397 , at *2 (E.D. Okla. 12 Apr. 3, 2019); Bd. of Cty. Commissioners of Pawnee Cty., Oklahoma v. Purdue Pharma L.P., 13 No. 18-CV-459-GKF-FHM, 2018 WL 5973752 , at *2 (N.D. Okla. Nov. 14, 2018); Bd. of Cty. 14 Commissioners of Delaware Cty., Oklahoma v. Purdue Pharma L.P., No. 18-CV-0460-CVE-JFJ, [15] 2018 WL 5307623 (N.D. Okla. Oct. 26, 2018); St. Bernard Parish Gov't v. Purdue Pharma LP, 16 et al., 2:18-cv-02717-NJB-DEK, 2018 U.S. Dist. LEXIS 53054 (E.D. La. Mar. 29, 2018). 17 Very few courts have addressed both motions. In Dunaway v. Purdue Pharma L.P., 18 however, Judge Aleta Trauger, from the Middle District of Tennessee, held as follows: [19] [I]f this case is not properly in the federal courts (either because we 20 lack jurisdiction or because the removal was defective), then the case should be on a different track. Different litigation under 21 different laws in different states is inherent to the federal system embraced by the limited jurisdiction of the federal courts. [22] 23 Dunaway v. Purdue Pharma L.P., 391 F. Supp. 3d 802, 809 (M.D. Tenn. 2019) (emphasis in 24 original). Judge Trauger’s analysis in Dunaway is persuasive. When considering a pending 25 motion to stay, Judge Trauger explained as follows: 26 The interests of judicial economy are furthered by putting a case, as expeditiously as possible, in a court that has the jurisdiction to 27 resolve it. It would not be a good use of judicial resources for the JPML to devote its time and attention to a transfer from one federal 28 court to another, if the ultimate legal reality is that neither court has or can have jurisdiction. Nor would it be a good use of the 1 transferee court's resources for that court to have to deal with the intake and processing of a case only to realize, later, that the case 2 should be in state court. It would be a waste of judicial resources for a case to proceed in the federal courts if, ultimately, a federal 3 court is not the appropriate court to consider plaintiffs’ claims. This court can imagine few greater wastes of a court's 4 resources than consideration of a case that the court has no jurisdiction to decide. [6] Id. at 809 (internal citation, quotation marks, and alteration omitted). 7 This court agrees with that analysis. Thus, the court finds it appropriate in this case to 8 determine whether the court has jurisdiction before entertaining the motion to stay. 9 Defendants bear the burden of proving that the city’s complaint contains a cause of action 10 within this court’s jurisdiction. “In scrutinizing a complaint in search of a federal question, a 11 court applies the well-pleaded complaint rule.” Ansley, 340 F.3d at 861 (citing Caterpillar Inc. 12 v. Williams, 482 U.S. 386, 392 (1987)). “For removal to be appropriate under the well-pleaded 13 complaint rule, a federal question must appear on the face of a properly pleaded complaint.” Id. 14 (citing Rivet v. Regions Bank of La., 522 U.S. 470, 475 (1998)). Federal question jurisdiction is 15 present when a state-law claim “necessarily raises a stated federal issue, actually disputed and 16 substantial, which a federal forum may entertain without disturbing any congressionally 17 approved balance of federal and state judicial responsibilities.” Potter v. Hughes, 546 F.3d 1051 , 18 1064 (9th Cir. 2008) (quoting Williston Basin Interstate Pipeline Co. v. An Exclusive Gas 19 Storage Leasehold & Easement in the Cloverly Subterranean Geological Formation, 524 F.3d 20 1090, 1100 (9th Cir. 2008)) (alteration and internal quotation marks omitted). 21 Defendants removed this case on the basis of federal question jurisdiction. (ECF No. 1). 22 Defendants contends that the complaint raises issues under the Controlled Substances Act 23 (“CSA”) such that the city’s state-law claims are subject to federal jurisdiction. Id. Defendants 24 also argue that this case is otherwise removable pursuant to the Class Action Fairness Act 25 (“CAFA”). Id. The court will address each in turn. 26 A. Removal pursuant to CSA 27 Defendants argue that “[a]ll the alleged causes of action against the [d]istributor 28 [d]efendants arise from, and are dependent upon, purported violations of duties arising from the 1 federal Controlled Substances Act (‘CSA’).” (ECF No. 1 at 4). The city contends that reference 2 to the CSA merely “help[s] elucidate the standard of care that [d]efendants must meet under state 3 law.” (ECF No. 6 at 11). The city also points out that its complaint alleges several common4 and state-law duties that defendants violated, including that they: 5 knew or should have known that opioids were unreasonably dangerous and could cause addiction; knew or should have known 6 that their marketing of opioid use would create a public nuisance; and as such they owe a nondelegable duty to the City of North Las 7 Vegas to conform their behavior to the legal standard of reasonable conduct under the circumstances. [9] Id. 10 In order for a state law claim to raise a federal question, the federal issue must be “(1) 11 necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal 12 court without disrupting the federal-state balance approved by Congress.” Gunn v. Minton, 568 13 U.S. 251 , 258 (2013) (citing Grable & Sons Metal Prod., Inc. v. Darue Eng'g & Mfg., 545 U.S. 14 308, 314 (2005)). 15 Even if a complaint relies only on federal law to establish a defendant’s duty and 16 standard of care—as elements of a common law negligence claim—it does not necessarily create 17 a federal question. As the Supreme Court held in Merrell Dow Pharm. Inc. v. Thompson: 18 A complaint alleging a violation of a federal statute as an element of a state cause of action, when Congress has determined that there 19 should be no private, federal cause of action for the violation, does not state a claim “arising under the Constitution, laws, or treaties 20 of the United States.” 28 U.S.C. § 1331 . [21] Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 817 (1986). The Supreme Court reasoned [22] that Congress’s choice to provide “no federal remedy for the violation of this federal statute is [23] tantamount to a congressional conclusion that the presence of a claimed violation of the statute [24] as an element of a state cause of action is insufficiently ‘substantial’ to confer federal25 question jurisdiction.” Id. at 814 (emphasis added). [26] To be sure, defendants can argue that they owed no duty to the city. But such an [27] argument does not create a federal question. Judge Trauger considered a similar argument under [28] Tennessee law: 1 McKesson argues that the state-law grounds for finding liability under the TDDLA are insufficient because none of the cited 2 provisions specifically includes a duty to report and refuse to fill “suspicious orders.” The precise boundaries of the cited 3 Tennessee law, however, present an issue of merits, not jurisdiction. See Uintah Cty., Utah v. Purdue Pharma, L.P., No. 4 2:18-CV-00585-RJS, 2018 WL 3747847 , at *6 (D. Utah Aug. 7, 2018) (rejecting same argument, regarding Utah law, because the 5 validity of the independent state sources of the duties alleged were merits issues). [6] 7 Dunaway, 391 F. Supp. 3d at 813 (emphasis added). Judge Du considered the same argument 8 and remanded a nearly-identical case brought against defendants by the city of Reno. City of 9 Reno v. Purdue Pharma, L.P., No. 3:18-cv-00454-MMD-WGC, 2018 WL 5730158 (D. Nev. 10 Nov. 2, 2018). Judge Du held “that a federal issue is not necessarily raised because Reno can 11 prevail on each of its claims by reference to the broad duty imposed by NAC § 453.400 . . . .” 12 Id. at *2. Alternatively, Judge Du noted that “Reno could succeed on this claim by showing that 13 Defendants breached a general duty of reasonable care as opposed to the specific duties imposed 14 by either the CSA or NAC § 453.400.” Id. 15 First, the parties do not argue that the CSA provides a private, federal cause of action for 16 violations thereof. (See ECF Nos. 1, 6, 21). Thus, invoking violations of the CSA as an element 17 of a state-law claim—e.g., duty and standard of care in a negligence action—does not invoke 18 federal question jurisdiction because it is “insufficiently ‘substantial’ to confer federal-question 19 jurisdiction.” Merrell Dow, 478 U.S. at 814 . 20 Even to the extent that reference to the CSA may raise a possible federal question, it 21 would not be “necessarily raised.” The city in this case—like Reno did in its suit against 22 defendants—alleges that defendants breached duties imposed by state statutes and regulations, 23 specifically NAC § 453.400. The city may also successfully argue that defendants breached the 24 general duty of reasonable care. Thus, defendants’ arguments go to the merits of the city’s 25 claims, not to this court’s jurisdiction. 26 Accordingly, the CSA is not proper grounds for the removal of this action. Unless 27 removal was appropriate pursuant to CAFA, remand is warranted. 28 . . . 1 B. Removal pursuant to CAFA 2 Defendants contend that this case “is also removable under the Class Action Fairness Act 3 (‘CAFA’) . . . .” (ECF No. 1 at 15). Congress passed CAFA—and intended it to be broadly 4 interpreted—“specifically to permit a defendant to remove certain class or mass actions into 5 federal court.” Ibarra v. Manheim Investments, Inc., 775 F.3d 1193, 1197 (9th Cir. 2015). 6 “[T]he term ‘class action’ means any civil action filed under rule 23 of the Federal Rules of Civil 7 Procedure or similar [s]tate statute or rule of judicial procedure authorizing an action to be 8 brought by 1 or more representative persons as a class action.” 28 U.S.C. § 1332 . 9 When the aggregated amount in controversy in a class action exceeds $5 million, there is 10 “minimum diversity (any member of the class is a citizen of a state different from any 11 defendant),” and when the class size is over 100, subject matter jurisdiction exists under CAFA. 12 Arias v. Residence Inn by Marriott, 936 F.3d 920 , 922 (9th Cir. 2019). 13 Unlike removal of ordinary diversity cases, “no antiremoval presumption attends cases 14 invoking CAFA.” Id. (quoting Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81 15 (2014)). Nonetheless, a defendant removing a case under CAFA “has the burden to put forward 16 evidence showing that the amount in controversy exceeds $5 million, to satisfy other 17 requirements of CAFA, and to persuade the court that the estimate of damages in controversy is 18 a reasonable one.” Ibarra, 775 F.3d at 1197 . 19 Defendants summarily argue that the city’s “claims and damages cannot be determined 20 without a class of injured residents.” (ECF No. 21 at 15). The city argues that defendants 21 “ha[ve] failed to satisfy CAFA’s most fundamental requirement—i.e., showing that this case 22 falls within CAFA’s definition of a class action and that the [city] is not the real party in 23 interest.” (ECF No. 6 at 17). The city represents that it “is not trying to collect personal 24 damages on behalf of Las Vegas residents for the residents’ injuries . . . .” Id. at 18. Instead, the 25 city “is a single, municipal plaintiff seeking damages it incurred as a result of [d]efendants’ 26 misconduct, and the [c]ity has alleged no claims under Rule 23.” Id. at 3. [28] 1 Because the city is pursuing—and will only be able to recover*-—its own damages, this 2 case is not a class action and does not fall within the purview of CAFA. 3| IV. Conclusion 4 Accordingly, 5 IT IS HEREBY ORDERED, ADJUDGED, and DECREED that the city’s motion to 6 | remand (ECF No. 6) be, and the same hereby is, GRANTED. 7 IT IS FURTHER ORDERED that defendants’ motion to stay case pending likely transfer 8 | to multidistrict litigation (ECF No. 20) be, and the same hereby is, DENIED. 9 IT IS FURTHER ORDERED that the matter of City of Las Vegas v. Purdue Pharma, LP. et al., case number 2:19-cv-02128-JCM-DJA, be, and the same hereby is, REMANDED. 11 DATED January 15, 2020. 12 Ethos ¢ eta. au A B UNITE, STATES DISTRICT JUDGE [24] 25 3 “Sudicial estoppel is an equitable doctrine that precludes a party from gaining an advantage by asserting one position, and then later seeking an advantage by taking a clearly 26 | inconsistent position.” Hamilton v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir. 2001) (citing Rissetto v. Plumbers & Steamers Local 343, 94 F.3d 597, 600-601 (9th Cir. 27 1996); Russell v. Rolfs, 893 F.2d 1033, 1037 (9th Cir. 1990)). Thus, if defendants are concerned that the city will seek to recover damages on behalf of its citizens, the doctrine of judicial 28 estoppel prevents the city from taking two inconsistent positions—one for jurisdictional purposes, the other for damages—to gain an unfair advantage in this litigation. es C. Mahan District Judge -9-