821 F. Supp. 2d 591
S.D.N.Y.2011Background
- Commonwealth of Kentucky and Pike County sued Purdue in Pike County Circuit Court alleging Kentucky law violations for misleading about OxyContin addiction risks.
- Purdue removed to federal court claiming federal-question jurisdiction and CAFA removal; action was transferred to this Court for the In re OxyContin MDL.
- Amended complaint alleges Purdue marketed OxyContin as less addictive and more safe from 1995–2001, causing inflated prescriptions and Medicaid costs.
- Kentucky Medicaid and related programs pay for prescriptions and treatment; Pike County cites costs from investigations and prosecutions linked to OxyContin addiction.
- Commonwealth seeks Medicaid-related damages, equitable relief, injunctive relief, and other remedies; claims include Medicaid Fraud statute, false advertising, public nuisance, unjust enrichment, negligence, strict liability, conspiracy, and punitive damages.
- Court later grants remand, finding lack of federal jurisdiction under Grable and CAFA; action remains properly in state court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal-question jurisdiction exists under Grable. | Purdue asserts Commonwealth’s fraud theories raise a federal issue. | Purdue argues a substantial federal question is implicated by Medicaid constraints. | No federal-question jurisdiction; indirect fraud theory does not raise a necessary or substantial federal issue. |
| Whether CAFA permits removal as a class action. | The action is not a CAFA-class action; Commonwealth and Pike are real parties in interest. | The action should be removable under CAFA as a class/mass action. | CAFA does not apply; not a class action; only two real parties in interest (Commonwealth and Pike). |
| Whether the case involves a proper forum and jurisdiction under Grable/CAFA analysis. | State forum is proper; no need for federal resolution of Medicaid issues. | Federal forum required due to potential federal issues and population-wide impact. | State court is proper; federal forum not required. |
Key Cases Cited
- Grable & Sons Metal Prods. Co. v. Darue Eng’g & Mfg., 545 U.S. 308 (U.S. 2005) (established three-part test for federal-question jurisdiction (slim Grable category))
- Empire HealthChoice Assur., Inc. v. McVeigh, 547 U.S. 677 (U.S. 2006) (grants narrow scope for federal jurisdiction over state-law claims with federal elements)
- Merrell Dow Pharms., Inc. v. Thompson, 478 U.S. 804 (U.S. 1986) (mere presence of a federal issue in a state claim is not enough for removal)
- Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust, 463 U.S. 1 (U.S. 1983) (federal defenses do not confer removal absent substantial federal question; only narrow exceptions)
- In re Agent Orange Prod. Liab. Litig., 996 F.2d 1425 (2d Cir. 1993) (notable for narrow federal-question removal exception)