Rx. Com, Inc. v. O'Quinn
2011 U.S. Dist. LEXIS 11024
| S.D. Tex. | 2011Background
- RX.COM, Inc. and Joe Rosson filed a petition in the 80th Judicial District Court of Harris County, Texas on October 11, 2010, alleging legal malpractice against attorneys who previously represented them in a federal Sherman Act suit.
- Plaintiffs allege defendants' negligence, negligent misrepresentations, or breach of fiduciary duty caused the underlying federal case to be decided on statute of limitations grounds.
- Defendants removed the case to federal court on November 10, 2010, asserting federal-question jurisdiction under 28 U.S.C. § 1331.
- Defendants rely on the embedded-federal-question theory (Franchise Tax Bd. v. Construction Laborers Vacation Trust) to argue plaintiffs’ right to relief depends on federal law.
- The case focuses on whether the state-law malpractice claims require resolution of a substantial federal issue, triggering federal-question jurisdiction under Singh v. Duane Morris LLP.
- The court grants plaintiffs’ motion to remand to state court and declines to award fees to defendants under 28 U.S.C. § 1447(c).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal-question jurisdiction exists under the substantial federal question doctrine. | RX.COM argues the case is purely state law and invokes Singh to show no substantial federal issue. | O'Quinn argues embedded federal standards exist and a substantial federal question is presented. | No federal-question jurisdiction; embedded issue not substantial. |
| Whether the federal issue in the state-law malpractice claim is actually disputed. | RX.COM contends the underlying Sherman Act issue is a federal question but not a dispute actionable in this context. | O'Quinn contends there is an actual dispute over whether a viable Sherman Act claim existed and damages occurred. | There is an actual dispute, but insufficient to create jurisdiction. |
| Whether the embedded federal issue is substantial for jurisdictional purposes. | RX.COM maintains the federal issue is not substantial beyond the case-specific context. | O'Quinn asserts the federal issue has substantial importance and warrants federal forum consideration. | Federal issue is not substantial; not a Grable-type case. |
| Whether exercising jurisdiction would disturb the balance of federal and state judicial responsibilities. | RX.COM argues legal malpractice claims should remain in state court to preserve state control over such claims. | O'Quinn argues removal would not disturb federal-state balance. | Balance would be disturbed; jurisdiction not proper. |
| Whether costs and fees should be awarded to plaintiffs upon remand. | RX.COM seeks costs/fees under § 1447(c) if removal is improper. | O'Quinn contends no fee award is warranted given reasonable basis for removal. | Fees denied; remand granted. |
Key Cases Cited
- Franchise Tax Bd. v. Construction Laborers Vacation Trust, 463 U.S. 1 (U.S. 1983) (established embedded federal-question framework)
- Grable & Sons Metal Prod. Co. v. Darue Eng'g & Mfg, 545 U.S. 308 (U.S. 2005) (test for substantial federal issue in removal cases)
- Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677 (U.S. 2006) (substantial federal-interest analysis in embedded issues)
- Singh v. Duane Morris LLP, 538 F.3d 334 (5th Cir. 2008) (four-part test for substantial federal question in legal malpractice)
- Merrell Dow Pharmaceuticals v. Thompson, 478 U.S. 804 (U.S. 1986) (mere presence of federal issue does not create jurisdiction)
- Roof Tech. Servs., Inc. v. Hill, 649 F. Supp. 2d 749 (N.D. Tex. 2010) (no federal-question jurisdiction where issues are fact-bound and case-specific)
- Air Measurement Technologies, Inc. v. Akin Gump Strauss Hauer & Feld, LLP, 504 F.3d 1262 (Fed. Cir. 2007) (federal circuit's approach to Air Measurement rejected by Fifth Circuit here)
- New Orleans & Gulf Coast Ry. Co. v. Barrois, 533 F.3d 321 (5th Cir. 2008) (complete preemption doctrine)