United States District Court, E.D. New York
July 1, 2005.
In re: ZYPREXA PRODUCTS LIABILITY LITIGATION. STATE OF LOUISIANA, ex rel. CHARLES C. FOTI, JR., ATTORNEY GENERAL, Plaintiff,
ELI LILLY AND COMPANY, INC., et al., Defendants. CHARLES FOTI, ATTORNEY GENERAL, ex rel., STATE OF LOUISIANA, Plaintiff, v. ELI LILLY AND COMPANY, INC., et al., Defendants.
The opinion of the court was delivered by: JACK WEINSTEIN, Senior District Judge
MEMORANDUM & ORDER
These cases are brought by the state of Louisiana to obtain
reimbursement for payments made with its own funds and federal
funds in its Medicaid programs for Zyprexa, a drug manufactured by defendant, Eli Lilly and Company, Inc. ("Eli
Lilly"). The drug was allegedly prescribed and used for
"off-label" purposes i.e., to treat diseases for which it was
not primarily designed and authorized. Motions by the defendants
to dismiss and by the plaintiff to remand are denied.
II. Motion to Dismiss
Defendants move to dismiss on the following grounds:
1. Private Counsel did not have express or implied
authority to file these suits [on behalf of the State
2. Private Counsel's arrangement with the Attorney
General is a contingency fee agreement, . . .
prohibited under Louisiana law [since it] violates
the separation of powers provisions of the Louisiana
3. Even if a contingency fee arrangement were lawful,
the arrangement between private counsel and the
Attorney General does not meet the requirements of
Louisiana law for professional services contracts
between state agencies and outside counsel; and
4. The arrangement between Private Counsel and the
Attorney General has not been approved by the
Louisiana Office of Contractual Review, and is
Not. of Mot. to Dismiss at 2.
The capacity of the Attorney General to employ counsel is not
contestable. His authority to authorize payment of counsel is a
question of Louisiana law. Counsel, not defendants, bear the risk
of nonpayment of fees. If the cases result in a recovery this
court will consider authorizing fees, at which time it will
revisit the Louisiana law on fees.
The motion to dismiss is denied.
III. Motion to Remand to Federal Court
Defendants move to remand the cases to the United States
District Court for the Western District of Louisiana. Discovery
and settlement negotiations are in progress. A remand would be premature. It would frustrate the purpose of the MDL
procedures which are designed to prevent unnecessary duplicative
discovery work by transferor courts.
The motion to remand to the federal district court in Louisiana
is denied, with leave to renew.
IV. Motion to Remand to State Court
A. Federal Question Jurisdiction
Plaintiff claims that this court is without jurisdiction to
hear the cases because the complaints do not present a federal
question. It moves to remand the cases to the state court from
which they were removed by defendants.
Defendants suggest that a recent Supreme Court case has
resolved the question against plaintiff. See Grable & Sons Metal
Prods., Inc. v. Darue Eng'g & Mfg., 125 S.Ct. 2363, 2366 (2005)
("We granted certiorari . . . to resolve a split within the
Courts of Appeals on whether Merrell Dow Pharmaceuticals v.
Thompson, 478 U.S. 804 (1986), always requires a federal cause
of action as a condition for exercising federal question
jurisdiction."). Without deciding the question now posed, the
Court in Grable intimated a tilt towards defendants' view.
[T]his Court [has] recognized for nearly 100 years
that in certain cases federal question jurisdiction
will lie over state-law claims that implicate
significant federal issues. The doctrine captures the
commonsense notion that a federal court ought to be
able to hear claims recognized under state law that
nonetheless turn on substantial questions of federal
law, and thus justify resort to the experience,
solicitude, and hope of uniformity that a federal
forum offers on federal issues. . . .
Id. at 2367.
In opposition to the motion, defendants contend that: (1)
plaintiff's two petitions contain numerous references to alleged violations of federal law; (2)
plaintiff is in essence arguing that Eli Lilly violated federal
regulations by marketing Zyprexa for pediatric and other
off-label uses; and (3) plaintiff's state law claims also raise
important federal questions relating to Medicaid.
Grable did not explicitly overrule Merrell Dow's holding
that a state court action against a drug manufacturer, based in
part on a theory implicating the Food and Drug Administration,
did not present a federal question, so that removal of the action
to federal court was improper. See 478 U.S. at 815-817. Instead
it stated that Merrell Dow was "not to the contrary" of its
holding in Grable. 125 S.Ct. at 2365.
Justice Thomas rightly suggested in his concurrence that
Grable did not set clear jurisdictional boundaries. See id.
at 2372. As an exemplar, Merrell Dow must now, under Grable,
be reviewed to determine whether it should be distinguished on
its facts. The specific allegations and subtle distinctions in
pleadings among pharmaceutical cases may require exercise of
jurisdiction in cases which appear close to, but jurisdictionally
different from, Merrell Dow. In the instant cases, the
substantial federal funding provisions involved and the
allegations about the violation of federal law through improper
off-label use present a core of substantial issues more federally
oriented than those in Merrell Dow.
Federal jurisdiction lies under Grable.
B. Diversity Jurisdiction
Louisiana district court cases have held that the Louisiana
Department of Health and Human Resources, to which the Louisiana
Department of Health and Hospitals is the immediate successor,
was essentially an alter ego of the State. See, e.g., Kurkiewicz
v. State of Louisiana through the Dep't of Health and Human
Res., 560 F. Supp. 911 (M.D. La. 1983) (holding that a suit against the Department of Health and Human Resources was in
reality a suit against the State and was barred by the Eleventh
Amendment). If the alter ego rule applied, diversity jurisdiction
would not lie.
In view of the decision on federal question jurisdiction in
Part IV.A., supra, the issue of diversity jurisdiction need not
now be resolved.
The motion to dismiss is denied. The motion to remand to the
United States District Court for the Western District of
Louisiana is denied. The motion to remand to a Louisiana State
court is denied. No costs or disbursements.
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