State of New Hampshire v. Purdue Pharma, et al.

2018 DNH 006

• Court: District Court, D. New Hampshire
• Decided: January 9, 2018
• Docket: 17-cv-427-PB
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

State of New Hampshire

v. Case No. 17-cv-427-PB Opinion No. 2018 DNH 006 Purdue Pharma, et al.

MEMORANDUM AND ORDER

The State of New Hampshire has sued Purdue Pharma 1 based on

misrepresentations Purdue allegedly made to the state’s

consumers concerning the risks and benefits of the company’s

opioid pain medications. The State filed its complaint in

Merrimack County Superior Court and Purdue later removed the

case to this court. Purdue argues that the court has subject

matter jurisdiction pursuant to the Class Action Fairness Act

(“CAFA”), but the State has challenged Purdue’s jurisdictional

argument in a motion to remand. The current dispute turns on

whether the case is removable under CAFA as a “class action.”

1 The complaint names Purdue Pharma L.P., Purdue Pharma Inc., and The Purdue Frederick Company, Inc. as defendants. For purposes of this motion, both the plaintiff and defendants have treated these three corporations as one entity, and I will do the same. I. BACKGROUND

For at least 20 years, Purdue has manufactured, marketed,

and sold opioid pain medications in New Hampshire and elsewhere. 2

During this period, Purdue spent hundreds of millions of dollars

promoting its medications in ways that falsely and misleadingly

minimized the risks of opioid addiction and overstated the

benefits Purdue’s medications could provide. As a direct

result, opioid addiction, overdoses, and deaths have exploded,

to the point where the Center for Disease Control has described

the current situation as a “public health epidemic.” Doc. No. 4

at 8.

The State contends that Purdue’s false and misleading

marketing campaign has injured the State, its municipalities,

and its consumers. It asserts claims for violations of New

Hampshire’s Consumer Protection Act (“CPA”), N.H. Rev. Stat. §

358-A; violations of the New Hampshire Medicaid Fraud and False

Claims Act, N.H. Rev. Stat. § 167:61-b, Public Nuisance, Unjust

Enrichment, and Fraudulent or Negligent Misrepresentation. The

State seeks to recover damages for its own injuries as well as

injunctive relief, civil penalties, restitution, abatement, and

2 I draw the allegations in this paragraph from the complaint and assume the allegations to be true for purposes of analysis.

2 attorneys’ fees on behalf of itself, its municipalities, and its

consumers.

II. STANDARD OF REVIEW

The State bases its remand motion on 28 U.S.C. § 1447(c),

which requires a federal court to remand a removed case if the

court lacks subject matter jurisdiction.

Purdue has responded by claiming that CAFA gives the court

jurisdiction to consider the State’s complaint. A defendant who

removes a case under CAFA must plausibly allege that each of

CAFA’s jurisdictional requirements have been satisfied. See

Dart Cherokee Basin Operating Co. v. Owens, 135 S.Ct. 547, 554

(2014). If the plaintiff disputes the evidentiary basis for the

defendant’s assertion of jurisdiction, the defendant must also

establish a “reasonable probability” that the facts support the

defendant’s jurisdictional claim. See Pazul v. Tough Mudder,

819 F.3d 548, 552 (1st Cir. 2016) (amount in controversy

requirement). At that point, the burden shifts to the plaintiff

to demonstrate that the case is subject to one of CAFA’s

exceptions. See Dutcher v. Matteson, 840 F.3d 1183, 1190 (10th

Cir. 2016).

Both parties rely exclusively on the complaint to support

3 their jurisdictional arguments. Thus, the issue I must decide

is whether the complaint alleges claims that CAFA grants the

court jurisdiction to consider. In resolving this issue, I

construe the complaint generously in favor of jurisdiction and

do not employ any presumption against removability. See Dart,

135 S.Ct. at 554 (rejecting presumption against removability in

CAFA cases).

III. ANALYSIS

CAFA authorizes federal courts to exercise subject matter

jurisdiction over certain “class actions” that would not

otherwise meet the requirements of the diversity jurisdiction

statute. Mississippi ex rel. Hood v. AU Optronics Corp., 134

S.Ct. 736, 739 (2014). A CAFA class action is “any civil action

filed under [R]ule 23 of the Federal Rules of Civil Procedure or

similar State statute or rule of judicial procedure authorizing

an action to be brought by [one] or more representative persons

as a class action.” 3 28 U.S.C. § 1332(d)(1)(B).

The State does not base its complaint on Rule 23.

3 CAFA also treats “mass action[s] as class actions,” 28 U.S.C. § 1332(d)(11)(A). This provision is not relevant here because Purdue does not claim that this case is a mass action.

4 Accordingly, Purdue’s jurisdictional argument turns on whether

the complaint is premised on a “similar” state statute or rule

of judicial procedure that authorizes the State to bring the

case as a class action. I answer this question by first

reviewing the requirements for a Rule 23 class action and then

examining the complaint to determine whether it is sufficiently

similar to a Rule 23 class action to be removable under CAFA.

A. Rule 23

A Rule 23 class action is an action in which “[o]ne or more

members of a class” are authorized to sue “as representative

parties on behalf of all [class] members . . . .” Fed. R. Civ.

P. 23. Although all Rule 23 class actions are representative

actions, the converse proposition is not also true. Instead, to

qualify as a class action under Rule 23, a representative action

must have at least the following additional characteristics:

(1) too many plaintiffs to join through a typical joinder motion

(“numerosity”), (2) certain common factual or legal issues

shared by each member of the class (“commonality”), (3) a named

plaintiff whose claim is typical of the claims of the unnamed

plaintiffs (“typicality”), and (4) a named plaintiff who is an

adequate representative of the unnamed plaintiffs’ interests

(“adequacy”). Fed. R. Civ. P. 23(a); Amchem Products Inc. v.

5 Windsor, 521 U.S. 591, 613 (1997) (“Rule 23(a) states [the] four

threshold requirements applicable to all class actions . . .

.“).

Rule 23 class actions also differ from other representative

actions in that they are subject to greater supervision by the

court. A case cannot proceed as a class action under Rule 23

unless it is certified as such by the court. Fed. R. Civ. P.

23(c)(1). The court ordinarily must appoint class counsel.

Fed. R. Civ. P. 23(g). A class action also cannot be

voluntarily dismissed, settled, or compromised without the

court’s approval. Fed. R. Civ. P. 23(e).

B. The Complaint

The State asserts that it has sued Purdue to vindicate its

own proprietary and quasi-sovereign interests rather than the

specific interests of individual consumers. Thus, to the extent

that the complaint seeks relief that will also benefit its

municipalities and citizens, the State claims that it is

pursuing a straightforward parens patriae action that bears no

resemblance to a Rule 23 class action. I agree.

A parens patriae action is unlike a Rule 23 class action in

that a state may sue on behalf of its citizens without proof of

numerosity, commonality, typicality, or adequacy. It also

6 differs from a class action because the court has no power to

prevent a state from proceeding with a parens patriae action by

refusing to certify a class. Nor does the court have the power

in such an action to appoint plaintiff’s counsel or prevent the

state from dismissing, settling, or compromising its claims.

These important differences leave Purdue with an unpersuasive

claim that the two types of actions are in any way similar.

More fundamentally, a parens patriae action is unlike a

class action because a state’s power to sue on behalf of others

derives from its sovereign power to protect its citizens rather

than its status as a member of a class of injured plaintiffs.

As the Supreme Court has long recognized, “[t]his prerogative of

parens patriae is inherent in the supreme power of every State,

whether that power is lodged in a royal person or the

legislature and is a most beneficent function often necessary to

be exercised in the interests of humanity, and for the

protection of those who cannot protect themselves.” Alfred L.

Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592, 600 (1982)

(quoting Mormon Church v. United States, 136 U.S. 1, 57 (1890)).

CAFA does not clearly signal an intention by congress to deprive

states of their sovereign power to litigate their parens patriae

claims in their own courts and I am unwilling to read such an

7 intent into statutory language that appears on its face to cover

only traditional class action claims. Accordingly, I agree with

those courts that have concluded that a parens patriae action

ordinarily is not removable under CAFA as a class action. See,

e.g., Purdue Pharma L.P v. Kentucky, 704 F.3d 208, 216 (2d Cir.

2013); Mississippi ex rel. Hood v. Av Optronica Corp., 701 F.3d

796, 798-99 (5th Cir. 2012), rev’d on other grounds, 134 S.Ct.

736, 739 (2014); LG Display Co. v. Madigan, 665 F.3d 768, 774

(7th Cir. 2011); Washington v. Chimei Innolux Corp., 659 F.3d

842, 848-49 (9th Cir. 2011); West Virginia ex rel. McGraw v. CVS

Pharmacy, Inc., 646 F.3d 169, 172 (4th Cir. 2011).

Purdue acknowledges the precedent favoring the State’s

argument, but contends that this case is different because the

State has exceeded the limits of a traditional parens patriae

action by seeking restitution on behalf of specific individuals

rather than attempting to promote only the general health and

welfare of its citizens. 4 Because the State seeks individualized

4 Purdue also argues that this case is not a true parens patriae action because the State is attempting to recover damages on behalf of its municipalities and citizens in addition to equitable relief. This argument is based on a misreading of the complaint. Although the State seeks damages for its own injuries, it has limited its request for relief on behalf of others to traditional forms of equitable relief, such as injunctive relief, an order of abatement, and restitution. 8 relief on behalf of injured consumers, Purdue argues, the case

is more properly viewed as a class action than a parens patriae

action. I am unpersuaded by this argument even if I accept

Purdue’s characterization of the complaint. A state’s action on

behalf of its citizens does not become a class action merely

because it seeks injunctive relief that benefits individual

class members. The Fourth Circuit forcefully made this point in

West Virginia ex rel McGraw, 646 F.3d 169 (4th Cir. 2011) by

drawing an analogy to the Supreme Court’s decision in General

Telephone Co. v. EEOC, 446 U.S. 318 (1980), which concluded that

an EEOC action under Title VII did not have to comply with Rule

23 even though the EEOC was authorized to seek specific relief

on behalf of individual employees. West Virginia ex rel McGraw,

646 F.3d at 177 (citing General Telephone Co., 446 U.S. at 334 &

n.16; see also In re Edmond, 934 F.2d 1304, 1310-13 (4th Cir.

1991) (Attorney General’s claim in bankruptcy proceeding on

behalf of state’s consumers need not comply with Rule 23 even

though action sought specific relief on behalf of individual

consumers). Accordingly, this action is not similar to a Rule

23 action merely because it seeks restitution on behalf of its

citizens along with other forms of equitable relief.

Purdue also argues that the complaint is similar to a Rule

9 23 class action because the State has based its CPA claims on

N.H. Rev. Stat. Ann. § 358-A:10-a, which authorizes a person

injured by a CPA violation to bring a class action on behalf of

other injured parties. This argument fails because it

attributes a claim to the State that it does not make.

In addition to authorizing injured persons to bring class

actions, the CPA specifically empowers New Hampshire’s Attorney

General to bring parens patriae claims in the name of the State

to obtain injunctive relief and restitution on behalf of private

parties for CPA violations. N.H. Rev. Stat. Ann. § 358-A:4.

The State has based its CPA claims on this provision rather than

the Act’s class action provision. Because the State is the

master of its complaint, see Purdue Pharma, 704 F.3d at 216 n.7,

that ends the matter.

IV. CONCLUSION

Purdue argues that the State’s complaint should be treated

under CAFA just like any other representative action in which

one or more members of a class sue on behalf of others who have

suffered similar injuries. This argument fails to sufficiently

account for both the State’s sovereign power to sue on behalf of

its citizens and its governmental duty to protect the health and

10 welfare of its citizens. Opioid addiction costs the lives of

hundreds of the State’s citizens each year. It has flooded the

State’s prisons, demanded a vast commitment of law enforcement

resources, and strained the capacity of the State’s first

responders. Deaths from overdoses continue to occur at an

alarming rate. When the State sues to protect its citizens from

such ongoing injuries, it is not acting merely as a member of a

class of injured persons seeking to obtain compensation on

behalf of others. It is acting in a sovereign capacity to

protect its citizens. CAFA does not deprive states of the power

to litigate such claims in their own courts. For the

aforementioned reasons, I grant the State’s motion to remand the

case to state court.

SO ORDERED.

/s/Paul Barbadoro ____ Paul Barbadoro United States District Judge

January 9, 2018

cc: James T. Boffetti, Esq. Mark Cheffo, Esq. W. Daniel Deane, Esq. Mara Cusker Gonzalez, Esq. Linda Singer, Esq. David A. Vicinanzo, Esq.