Westchester County v. Mylan Pharmaceuticals, Inc.

Background

Thirty-four New York counties and municipalities brought opioid-related lawsuits in New York state courts. The cases were consolidated in New York’s coordinated opioid litigation. The plaintiffs later amended their complaints to add pharmacy benefit managers Express Scripts, Inc. and OptumRx, Inc. as defendants. The complaints asserted seven New York state-law claims: deceptive practices, false advertising, public nuisance, violation of New York Social Services Law § 145-B, fraud, unjust enrichment, and negligence.

OptumRx removed the first case to federal court under the federal-officer removal statute, 28 U.S.C. § 1442(a)(1), arguing that its work under contracts with federal agencies supported federal jurisdiction. Express Scripts later filed a supplemental notice of removal based on its work for the Department of Defense’s TRICARE program and its participation in the Federal Employees Health Benefits Program. The other related cases were also removed, and the federal court consolidated all 34 cases for pretrial purposes, designating this case as the lead case.

After removal, the plaintiffs amended their complaints and expressly disclaimed claims seeking recovery for conduct connected to federal programs, federal contracts, federal plans, federal employees, military personnel, veterans, and federal beneficiaries. They also disclaimed claims that could create federal-question or federal-officer jurisdiction. The plaintiffs then moved to remand, meaning to return the cases to state court.

Legal standard

A nonfederal defendant seeking removal under § 1442(a)(1) generally must show that it acted under a federal officer, that the conduct at issue was performed under federal authority, and that it has a plausible federal defense. The court also explained that, even if removal was proper initially, later events may justify remand. When only state-law claims remain, a federal court may decide whether to exercise supplemental jurisdiction—the authority to hear related state-law claims alongside federal claims—by considering judicial economy, convenience, fairness, and respect for state courts.

Court’s analysis

The court held that the plaintiffs’ disclaimers were sufficiently specific. They expressly abandoned claims and recovery connected to Express Scripts’ and OptumRx’s work for TRICARE, the Federal Employees Health Benefits Program, the Veterans Health Administration, and other federal programs. Because those claims were no longer being pursued, the defendants could not rely on a federal defense concerning conduct that the plaintiffs had disclaimed.

The court rejected the defendants’ argument that the alleged opioid-related harm was indivisible and that the plaintiffs could not separate harm connected to federal plans from harm connected to private plans. The court stated that it was not persuaded that separating the work performed for federal entities from work performed for other clients was impossible. It also said that any difficulty proving damages resulting from the disclaimers was not a reason to disregard them.

The court did not decide whether the cases were originally removable under the federal-officer statute. It also disregarded arguments based on federal-question jurisdiction, the Controlled Substances Act, and the Employee Retirement Income Security Act because those grounds were not asserted in the notices of removal and were raised too late.

After determining that the disclaimers were effective, the court declined to exercise supplemental jurisdiction over the remaining state-law claims. Judicial economy and convenience favored remand because the state court had coordinated dozens of similar opioid cases, conducted a prior bellwether trial, and was already handling related cases. Respect for state courts also favored remand because the plaintiffs were pursuing only state-law claims. Fairness favored remand because the litigation was at an early stage, before substantial discovery or trial.

Stay request and disposition

The defendants asked the court to stay enforcement of the remand order for at least 30 days while preserving their ability to appeal. The court denied that request because the defendants had not meaningfully addressed the factors required for a stay, including likely success on appeal, irreparable harm, injury to other parties, and the public interest.

The court granted the plaintiffs’ motion to remand. It directed the Clerk of Court to terminate the pending motions, docket the order in the lead case and the 33 related cases, and remand all 34 cases to the Supreme Court of the State of New York, Westchester County.