Westchester County v. Mylan Pharmaceuticals, Inc.

Background

The court considered plaintiffs’ motions for attorney’s fees in this case and 33 related cases. The plaintiffs sought fees under 28 U.S.C. § 1447(c) for expenses caused by removal to federal court by Express Scripts, Inc. and OptumRx, Inc., referred to together as the Removing Defendants.

The court had previously granted plaintiffs’ motion to remand on June 18, 2024. After removal, plaintiffs amended their complaints on September 29, 2023, to disclaim claims that could support removal under the federal-officer removal statute, 28 U.S.C. § 1442(a). The current opinion addressed only whether plaintiffs should receive attorney’s fees; it did not revisit the earlier remand ruling.

Plaintiffs had not requested the pre-motion conference required by the court’s individual practices. The court waived that requirement because the parties had fully briefed the motions and proceeding on the merits would avoid delay.

Legal standard

Under § 1447(c), a remand order may require payment of costs and actual expenses, including attorney’s fees, caused by removal. The usual rule is that fees are available only when the removing party lacked an objectively reasonable basis for removal. A basis is objectively reasonable when the party had a colorable argument that removal was proper. The court evaluates reasonableness based on the circumstances existing when the case was removed.

Even when removal was objectively reasonable, a court may award fees in unusual circumstances. The purposes of such an award include discouraging removals intended to delay litigation, impose costs, or waste judicial resources.

Discussion

The plaintiffs argued that the Removing Defendants lacked an objectively reasonable basis for removal because the plaintiffs had amended their pleadings to disclaim federal claims and because the defendants did not agree to remand afterward. The court rejected that approach to evaluating the initial removal. Because the disclaimer occurred two months after removal, the relevant question was whether the defendants had a reasonable basis to remove before the disclaimer.

The Removing Defendants relied on two opioid-related cases holding that pharmacy benefit manager defendants, including Express Scripts, could remove under the federal-officer removal statute. Those cases involved similar allegations that Express Scripts contributed to the opioid epidemic through drug formularies and similar reliance on contracts to provide pharmacy services for the Department of Defense. The courts in those cases found that the contracts supplied a sufficient basis for federal-officer removal.

The court held that these similar decisions gave the Removing Defendants an objectively reasonable basis to believe removal was proper. The court also rejected plaintiffs’ argument that removal was unreasonable because it relied on a federal defense. The court explained that federal-officer removal necessarily requires a colorable federal defense, unlike ordinary federal-question jurisdiction.

The court also rejected the argument that unusual circumstances justified fees. The Removing Defendants were not required to agree to remand after plaintiffs’ disclaimer. They had made nonfrivolous arguments opposing remand, including that the disclaimer was ineffective because damages connected to commercial health plans could not be separated from damages connected to federal plans. Although the court had rejected that argument in the earlier remand decision, it was not frivolous because there was no binding precedent on the issue at the relevant time.

The Removing Defendants also had been entitled to argue that the court should retain supplemental jurisdiction over the remaining claims even if the disclaimer was effective. The court therefore concluded that the defendants’ failure to agree to remand did not constitute an unusual circumstance warranting fees.

Disposition

Judge Cathy Seibel denied plaintiffs’ motions for attorney’s fees. The Clerk was directed to docket the order in this case and the 33 related cases and to terminate the pending attorney-fee motions in those cases.