29 F.4th 792
6th Cir.2022Background
- Cardinal Health purchased umbrella liability policies from National Union covering June 30, 1999–June 30, 2004 and sought coverage/defense costs for thousands of pending opioid-related suits consolidated in an MDL.
- National Union consistently reserved its right to deny coverage and removed Cardinal Health’s Ohio declaratory-judgment action to federal court on diversity grounds.
- Cardinal Health moved to remand, asking the district court to decline to exercise its discretion under the Declaratory Judgment Act; the district court granted remand.
- The district court applied the Fifth Circuit/Grand Trunk framework (the five Grand Trunk factors) and found the first two factors favored jurisdiction but weighed the fourth and fifth factors—comity/federalism and availability of an adequate state remedy—against exercising jurisdiction; it deemed the third factor (procedural fencing) neutral.
- National Union appealed, arguing the district court abused its discretion and urging a rule that removal favors exercising jurisdiction when no procedural fencing is shown; the Sixth Circuit reviewed for abuse of discretion and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court should exercise jurisdiction under the Declaratory Judgment Act (Grand Trunk balancing) | Cardinal: federal court should decline and remand to state court because state law issues predominate and comity favors Ohio courts | National Union: removal is proper and federal court should exercise jurisdiction to resolve coverage questions | Affirmed remand; district court did a reasoned Grand Trunk analysis and did not abuse discretion |
| Procedural fencing (Grand Trunk factor 3) | Cardinal: no evidence of procedural fencing; factor is neutral | National Union: absence of fencing should weigh in favor of exercising jurisdiction | Court: factor was properly treated as neutral; district court did not err |
| Comity / federalism concerns (Grand Trunk factor 4) | Cardinal: state courts are better suited to resolve unsettled Ohio insurance-law questions related to opioid litigation | National Union: federal court can and should decide under diversity; state-court decisions (e.g., Acuity) will simply guide federal courts | Fourth factor weighed heavily against exercising jurisdiction because issues involve novel, unsettled Ohio insurance law and ongoing state-court proceedings |
| Availability of superior alternative remedy (Grand Trunk factor 5) | Cardinal: Ohio declaratory-judgment statute is adequate and preferable for state-law coverage disputes | National Union: federal declaratory remedy is appropriate and efficient | Fifth factor favored remand—Ohio declaratory remedy is adequate and state court is better positioned |
Key Cases Cited
- Wilton v. Seven Falls Co., 515 U.S. 277 (1995) (Declaratory Judgment Act confers discretion on courts rather than an absolute right on litigants)
- Grand Trunk W. R.R. Co. v. Consol. Rail Corp., 746 F.2d 323 (6th Cir. 1984) (articulating five-factor test for evaluating exercise of declaratory jurisdiction)
- Scottsdale Ins. Co. v. Flowers, 513 F.3d 546 (6th Cir. 2008) (abuse-of-discretion standard and discussion of comity subfactors)
- Travelers Indem. Co. v. Bowling Green Pro. Assoc., PLC, 495 F.3d 266 (6th Cir. 2007) (treatment of procedural-fencing factor)
- Bituminous Cas. Corp. v. J & L Lumber Co., Inc., 373 F.3d 807 (6th Cir. 2004) (state courts are preferred to resolve unsettled insurance-law questions)
- United Specialty Ins. Co. v. Cole’s Place, Inc., 936 F.3d 386 (6th Cir. 2019) (Grand Trunk factors applied; third factor often neutral)
- DiAnoia’s Eatery, LLC v. Motorists Mut. Ins. Co., 10 F.4th 192 (3d Cir. 2021) (Third Circuit decision reversing some declinations of jurisdiction in COVID-19 coverage cases; cited by appellant as contrasting authority)