Mobile County Board of Health v. Sackler

          ORDER

          KRISTI K. DuBOSE CHIEF UNITED STATES DISTRICT JUDGE.

         This matter is before the Court on sixteen Defendants' motions to stay (Docs. 7, 23); Plaintiffs' motion to remand (Doc. 3); and certain Defendants notice of bankruptcy (Doc. 20). Specifically, the Manufacturer Defendants' (Johnson & Johnson; Janssen Pharmaceuticals, Inc.; Allergan Sales, LLC; Allergan USA, Inc.; Endo Health Solutions, Inc.; Endo Pharmaceuticals, Inc.; Par Pharmaceutical, Inc.; Par Pharmaceuticals Companies, Inc.; Teva Pharmaceuticals USA, Inc.; Cephalon, Inc; Actavis LLC; Actavis Pharma, Inc.; Mallinckrodt LLC; and SpecGx LLC) motion to stay (Doc. 7), Plaintiffs' opposition (Doc. 11), Defendants' Reply (Doc. 15), and Plaintiffs' sur-reply (Doc. 16-1). Separately, the Distributer Defendants (McKesson Corporation, Cardinal Health, Inc., H.D. Smith, LLC f/k/a H.D. Smith Wholesale Drug Co., and AmerisourceBergen Drug Corporation) filed a motion to stay. (Doc. 23). Also before the Court are Plaintiffs' motion to remand (Doc. 3); Defendant McKesson Corporation's Opposition (Doc. 24); and Plaintiffs response (Doc. 26).

         The Sackler Defendants (Ilene Sackler Lefcourt, David Sackler, Jonathan Sackler, Kathe Sackler, Mortimer D.A. Sackler, Richard Sackler and Theresa Sackler) filed a “Notice of Fourth Amended Bankruptcy Court Order Enjoining the Continuation of this Proceeding as to the Individual Former Directors.” (Doc. 20). The Court ordered briefing on the impact of this injunction on the pending motions. (Doc. 22). Parties submitted briefs in response (Docs. 29, 30).

         I. Background

         On October 15, 2019, Plaintiffs Mobile County Board of Health and Family Oriented Primary Health Care Clinic filed an action in the Circuit Court of Mobile County, Alabama against eight groups of defendants (Circuit Court of Mobile County 02-CV-2019-902806.00).^[1] Plaintiffs contend “Defendants engaged in a wide variety of unlawful conduct that caused, exacerbated, and perpetuated the opioid epidemic in the three counties in which they provide services.” The complaint asserts six (6) causes of action against all defendants based on Alabama law: (1) negligence; (2) nuisance; (3) unjust enrichment; (4) fraud and deceit; (5) wantonness; (6) deceptive trade practices. (Doc. 1-2 at 164-179). The complaint asserts a separate claim of civil conspiracy against the Marketing Defendants, Distributor Defendants, and National Retail Pharmacy Defendants. (Id. at 176).

         On November 20, 2019, Defendant McKesson Corporation (McKesson) filed a notice of removal, removing this case from the Circuit Court of Mobile County to this Court pursuant to federal question jurisdiction. (Doc. 1). McKesson contends that the bases of Plaintiffs' complaint “arise from the federal Controlled Substances Act (“CSA”) and its implementing regulations…” and Plaintiffs therefore allege violations of federal law. (Id. at 5).

         On November 11, 2019, Plaintiffs moved to remand the case to the Circuit Court of Mobile County. (Doc. 3). Plaintiffs contend removal was improper stating:

All of [their] claims arise under and are based upon Alabama law; there is no assertion in the Complaint that Plaintiffs are proceeding under any right of action created or authorized by Congress or otherwise created or authorized by any federal law or regulation.

(Doc. 3 at 4). McKesson opposes Plaintiffs' motion to remand essentially reasserting its removal arguments. (Doc. 24). To date, no other defendants have responded to Plaintiffs motion to remand.

         On November 27, 2019, the Manufacturer Defendants moved “for a temporary stay of all proceedings in this case until the Judicial Panel on Multidistrict Litigation (JPML) renders a final decision on whether to transfer this action to the Multidistrict Litigation in the Northern District of Ohio, In re National Prescription Opiate Litig., No. 1:17-md-2804 (Opiate MDL).” (Doc. 7). On December 27, 2019, McKesson, Cardinal Health, Inc., H.D. Smith, LLC f/k/a H.D. Smith Wholesale Drug Co., and AmerisourceBergen Drug Corporation also filed a motion to stay these proceedings “offer[ing] further grounds for this Court to stay proceedings and defer consideration of Plaintiffs' remand motion.” (Doc. 23 at 5, n.2). To date, the remaining defendants have not filed like motions to stay, consent to the pending motions to stay, or any other responses to these pending motions.

         On December 18, 2019, the Sackler Defendants filed a “Notice of Fourth Amended Bankruptcy Court Order Enjoining the Continuation of this Proceeding to the Individual Former Directors.” (Doc. 20). This filing was to notify the Court of the injunction issued by the U.S. Bankruptcy Court for the Southern District of New York's order (last amended December 9, 2019), encompassing this proceeding as to the Sackler Defendants. (Id.). On December 23, 2019, the Court ordered the parties to submit briefings as to the impact of the injunction on the Court's authority to rule on the pending motions to stay and remand. The parties submitted their briefings and contend that the Court may decide the motion to remand without violating the Fourth Amended Bankruptcy Injunction. (Doc. 29 at 1-2; Doc. 30 at 1).

         II. Discussion

         A district court has the inherent authority to stay proceedings in the cases pending before it. Landis v. North American Co., 299 U.S. 248 (1936); CTI-Container Leasing Corp v. Uiterwyk, 685 F.2d 1284 (11th Cir. 1982). “[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.” Landis, 299 U.S. at 254. When a district court has before it both a motion to remand and motion to stay, as is the case here, the Court “possesses the jurisdiction to resolve the motion to remand prior to a transfer of a case by the JPML.” Wood v. Merck & Co., Inc., 2008 WL 4642615 (M.D. Fla. 2008); Rule 1.5 of the Rules of Procedure of the Judicial Panel on Multidistrict Litigation. A district court may also grant the motion to stay without ruling on the motion to remand because the transferee MDL judge can also rule on the pending motion to remand. In re Vioxx Products Liability Litigation, 360 F.Supp.2d 1352, 1354 (2005).

         Fortunately, the undersigned is not without guidance for how to proceed in these unique circumstances. Last year, the Southern District of Alabama handled a similar situation in DCH Health Care Authority, et al., v. Purdue Pharma L.P., et al., 2019 WL 6493932 (S.D. Ala. Dec. 3, 2019).^[2] The Court finds this case helpful to the resolution of the motions before it in light of factual and legal similarities. The DCH case thoroughly addressed pending motions to stay and a motion to remand in a similar, complex opioid case. In that case, plaintiffs asserted six state law claims, identical to six of the seven claims asserted here.^[3] Defendants in DCH removed the case from state court on the same legal grounds as the Defendants removed this case to this court. Additionally, the defendants in DCH and the Defendants in this case raise virtually identical claims and arguments, resulting in significant overlap of issues and analyses.

         A. Bankruptcy Injunction

         On December 18, 2019, the Sackler Defendants filed a notice of an injunction from the United States Bankruptcy Court for the Southern District of New York. (Doc. 20). The Sackler Defendants filed this notice in order to stop the continuation of these proceedings as against them. (Id. at 2). On December 23, 2019, the Court ordered the parties to submit briefing as to the impact of this injunction on the Court's authority to decide the pending motions to stay and remand. The parties responded that this injunction did not alter the Court's authority to rule on the motion to remand. (Docs. 29, 30). The Courts review of case law reveals the same. See Diebel v. S.B. Trucking Co., 262 F.Supp.2d 1319, 1333 (S.D. Fla. 2003) (finding the automatic stay did not prevent the court from remanding an improperly removed action); Gallaher v. Waving Leaves, Inc., 2006 WL 898130 at *2 (N.D. W.Va. 2006) (the automatic stay does not bar consideration of a motion to remand an improperly removed case); Verizon Communications, Inc. v. Northpoint Communications Group, Inc., 262 B.R. 891, 892-93 (D. Del. 2001) (same); Baxter Healthcare Corp. v. Hemex Liquidation Trust, 132 B.R. 863, 867 (N.D. Ill. 1991) (same); Liljeberg Enterprises International, LLC v. Vista Hospital, Inc., 2004 WL 2725965 at *1 (E.D. La. 2004) (the automatic stay does prohibit considering such motions); Ayati-Ghaffari v. J.P. Morgan Chase Bank, N.A., 2018 WL 6737415 (E.D. Tex. 2018) (same).

         B. Mo ...