323 F. Supp. 3d 1242
D.N.M.2018Background
- New Mexico, by its Attorney General, sued opioid manufacturers and wholesale distributors (including McKesson) in state court, alleging they failed to monitor, report, investigate, and refuse "suspicious" orders, causing diversion and imposing fiscal burdens on the State.
- The Complaint asserts only state-law claims (public nuisance, unfair practices, Medicare fraud, racketeering, conspiracy, fraud against taxpayers, negligence, negligence per se) and expressly disavows invoking federal-question jurisdiction.
- Complaint cites federal Controlled Substances Act (CSA), DEA letters (2006, 2007), and New Mexico regulations that incorporate or parallel federal requirements to show duties and industry standards.
- McKesson removed to federal court, arguing the defendants’ duties (reporting and refusing suspicious orders) arise solely under the FCSA and its regulations (21 C.F.R. § 1301.74(b)) and related DEA guidance, so federal-question jurisdiction exists under 28 U.S.C. § 1331 via Grable.
- Plaintiff moved to remand; distributors sought a stay pending potential MDL transfer to the Northern District of Ohio.
- The district court analyzed the Grable factors and concluded federal jurisdiction was lacking; it granted remand and denied the stay and expedite motions as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the case "facially" arises under federal law | New Mexico asserts only state-law claims; federal statutes cited only to define duties under state law | McKesson contends duties to report/refuse suspicious orders arise solely from the FCSA/DEA guidance, so claims implicate federal law | Held: Complaint does not plead a federal cause of action; federal law is not necessarily raised because state-law duties provide alternate bases for liability |
| Whether Grable's "necessarily raised" prong is met | Plaintiff: state-law duties and regulations (incorporating federal standards) provide independent bases; federal law is not essential | McKesson: liability depends on whether defendants violated the federal suspicious-order reporting and shipping requirements | Held: Not necessarily raised; Complaint includes separate state-law duties and alternative theories so federal law is not essential |
| Whether the federal issue is "substantial" to the federal system | Plaintiff: embedded federal references are not substantial federal interests | McKesson: interpretation of CSA/regulations and DEA letters is a substantial federal question | Held: Not substantial — unlike Grable (tax context), resolving CSA/DEA issues here would be fact-bound and would not vindicate a broader federal interest |
| Whether federal adjudication would disrupt the federal-state balance | Plaintiff: allowing removal would upset balance and permit any state claim referencing federal standards to be removed | McKesson: federal forum appropriate to resolve federal regulatory meaning | Held: Remanding preserves federal-state balance; permitting removal would open federal courts to many state claims citing federal standards |
Key Cases Cited
- Gunn v. Minton, 568 U.S. 251 (federal-question Grable framework applied to state-law claims)
- Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308 (state claim with embedded federal issue may give federal jurisdiction when issue is necessarily raised and substantial)
- Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804 (presence of federal element in state tort claim insufficient for federal jurisdiction when federal law is only one possible basis for liability)
- Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (scope of Grable is narrow; fact-bound state claims disfavors federal jurisdiction)
- Rivet v. Regions Bank, 522 U.S. 470 (plaintiff may not avoid federal jurisdiction by omitting necessary federal questions)
- Fajen v. Foundation Reserve Ins. Co., 683 F.2d 331 (removal statutes construed narrowly; doubts resolved against removal)
- Dutcher v. Matheson, 733 F.3d 980 (party invoking federal jurisdiction bears burden of proof)
- Gilmore v. Weatherford, 694 F.3d 1160 (necessariness prong—federal issue must be an essential element)
- Nicodemus v. Union Pac. Corp., 440 F.3d 1227 (absence of private federal right of action is relevant to substantiality analysis)