Cardenas v. Anzai

311 F.3d 929, 2002 Daily Journal DAR 13005, 2002 Cal. Daily Op. Serv. 11191, 2002 U.S. App. LEXIS 23704, 2002 WL 31545380
CourtCourt of Appeals for the Ninth Circuit
DecidedNovember 18, 2002
DocketNo. 01-15297
StatusPublished
Cited by71 cases

This text of 311 F.3d 929 (Cardenas v. Anzai) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cardenas v. Anzai, 311 F.3d 929, 2002 Daily Journal DAR 13005, 2002 Cal. Daily Op. Serv. 11191, 2002 U.S. App. LEXIS 23704, 2002 WL 31545380 (9th Cir. 2002).

Opinions

Opinion by Judge THOMPSON; Concurrence by Judge O’SCANNLAIN.

OPINION

DAVID R. THOMPSON, Circuit Judge.

This case arises from the comprehensive settlement agreement reached in 1998 among major American tobacco companies and 46 states, including Hawaii, that sued them for reimbursement of Medicaid and other costs attributable to smoking. Pursuant to the settlement agreement, Hawaii will receive approximately $1.38 billion over the next 25 years. The plaintiffs are Medicaid recipients1 who suffer from smoking-related illnesses. The plaintiffs assert that to the extent the settlement funds to be received by the State of Hawaii exceed the State’s actual expendi[932]*932tures for tobacco-related illnesses on behalf of Medicaid recipients (hereafter the “overage”), the State of Hawaii is required by 42 U.S.C. § 1396k(b) to distribute that “overage” to Medicaid recipients. Although the plaintiffs sued Hawaii state officials in their official capacities, not the State of Hawaii directly, the district court dismissed the lawsuit, determining it was barred by sovereign immunity under the Eleventh Amendment.

We conclude, pursuant to the doctrine of Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), that the suit is not barred by sovereign immunity. We further conclude, however, that the claims the plaintiffs allege are precluded by Congress’s 1999 amendment to the Medicaid statute, which provides that tobacco settlement funds received by a state may be used “for any expenditures deemed appropriate by the State.” See 42 U.S.C. § 1396b(d)(3)(B)(ii). Thus, we affirm the district court’s dismissal on that basis.

I.

On January 31, 1997, Hawaii sued the major domestic tobacco companies, seeking damages for costs related to tobacco-related injuries suffered by its Medicaid recipients. Hawaii’s lawsuit was based upon a variety of theories including false advertising, fraudulent and negligent misrepresentation, civil conspiracy, negligence, products liability, and restitution for health care costs for recipients of public assistance. On November 23, 1998, Hawaii, along with 45 other states that had filed similar actions against the tobacco companies, entered into a “global” settlement. Under the Master Settlement Agreement (“MSA”), which memorialized the “global” settlement, the tobacco companies agreed to take steps aimed at reducing or eliminating tobacco use by minors and educating the public at large about the dangers of tobacco use. MSA, at 18-47, available at http://www.li-brary.ucsf.edu/ tobacco/litigation (Nov. 1998). The tobacco companies also agreed to pay various sums to the settling states over 25 years, in amounts to be calculated based upon a complex formula. Id. at 112-114. It is estimated that at the end of the 25-year payout, the State of Hawaii will have received as much as $1.38 billion.

Hawaii has established the Hawaii Tobacco Settlement Special Fund, into which its share of the tobacco settlement proceeds will be deposited. Under related state legislation, effective July 1, 2002, the settlement funds received by Hawaii will be allocated as follows: (1) twenty-four and one-half percent to the emergency and budget reserve fund; (2) thirty-five percent to the Department of Health for funding the children’s health insurance program and the department’s health promotion and disease prevention programs; (3) twelve and one-half percent to the Hawaii Tobacco Prevention and Control Trust Fund; and (4) twenty-eight percent to the university revenue-undertakings fund for the payment, as may be necessary, of principal and interest on revenue bonds issued to finance construction of a health and wellness center, including a new medical school facility, at the University of Hawaii on the Island of Oahu. Haw.Rev.Stat. § 328L-2 (2001).

The plaintiffs are Hawaii Medicaid recipients who suffer from tobacco-related illnesses. They filed this lawsuit against officials of the State of Hawaii, alleging that the officials violated, and continue to violate, the federal disbursement rules for Medicaid recovery set forth in 42 U.S.C. § 1396k(b). Specifically, the plaintiffs assert that a portion of M.S.A. funds received by the State of Hawaii constitute amounts previously assigned to the State by them and other recipients of public [933]*933assistance upon receipt of medical benefits for their tobacco-related illnesses. They allege that the state officials are thus required to: (1) determine what portion of the M.S.A. funds are attributable to their Medicaid assigned claims; (2) ascertain how much money the State has spent for treatment of tobacco-related illnesses on behalf of recipients of public assistance; and (3) distribute the “overage”, if- any, to eligible Medicaid recipients. The plaintiffs seek declaratory and injunctive relief requiring the state officials to comply with the federal Medicaid distribution rules set forth in 42 U.S.C. § 1396k(b).

The defendants moved to dismiss the complaint solely on the ground of sovereign immunity under the Eleventh Amendment. The district court granted that motion, and did not consider the merits of the plaintiffs’ claims. This appeal followed.

II.

The defendants argue that the district court lacked subject matter jurisdiction because the plaintiffs lack standing and their claims are not ripe for adjudication. Because standing and ripeness are threshold requirements, without which neither the district court nor this court has jurisdiction, we address these issues first. See Pritikin v. Dep’t of Energy, 254 F.3d 791, 796 (9th Cir.2001).

“[T]o satisfy Article Ill’s standing requirements, a plaintiff must show (l)[he] has suffered an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81, 120 S.Ct. 693, 145 L.Ed.2d 610 (2000) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992)). The defendants contend that the plaintiffs’ injuries are not concrete and particularized because the 1999 amendment to the Medicaid statute, codified at 42 U.S.C. § 1396b(d)(3)(B)(ii), removed any stake the plaintiffs might have had in the settlement funds. Additionally, the defendants argue that because the settlement funds resulting from the M.S.A. will be paid out over 25 years, the plaintiffs’ asserted injuries are too speculative.

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311 F.3d 929, 2002 Daily Journal DAR 13005, 2002 Cal. Daily Op. Serv. 11191, 2002 U.S. App. LEXIS 23704, 2002 WL 31545380, Counsel Stack Legal Research, https://law.counselstack.com/opinion/cardenas-v-anzai-ca9-2002.