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Humana Inc. v. Celgene Corporation

United States District Court, E.D. Kentucky, Southern Division, at Pikeville

March 29, 2019

HUMANA INC., Plaintiff,



         This matter is before the Court on Humana Inc.'s Motion to Remand to the Pike County Circuit Court. (DE 16). For the reasons stated below, the Motion is GRANTED.

         I. BACKGROUND

         Humana Inc. (“Humana”) filed its Complaint in state court against Celgene Corporation (“Celgene”) asserting six causes of action-(1) fraud, (2) breach of contract, (3) negligent misrepresentation, (4) unjust enrichment, (5) violations of New Jersey's RICO statute (“NJ RICO”), and (6) conspiracy to violate N.J. RICO. (DE 1-1 at 29-38.) Humana's claims ultimately stem from insurance benefits it paid on behalf of its insured for two drugs produced by Celgene, Thalomid and Revlimid. (DE 1-1.) Humana's first three claims are premised on a breach of contractual representations and warranties. (DE 1-1 at 29-32.) Humana asserts that Celgene fraudulently or negligently induced it to enter into contracts which required it to provide coverage for Thalomid and Revlimid prescribed for ineffective and unsafe purposes in contravention of local, state, and federal law. (DE 1-1 at 29-32.) Humana further asserts that Celgene was unjustly enriched through its actions. (DE 1-1 at 33.) In its final two claims, Humana asserts that Celgene is liable under New Jersey's RICO Act, N. J. Stat. Ann. § 2C:41-2(c) and (d), because it deliberately misrepresented the uses for which Thalomid and Revlimid have been proven to be effective; provided or caused to be provided written materials to physicians containing false and misleading information on which physicians were intended to rely; and actively concealed information about Celgene's off-label marketing activities. (DE 1-1 at 34-37.)

         Celgene removed the case to the Eastern District of Kentucky on the basis of federal question jurisdiction. (DE 1 at 1.) Celgene asserts that this action is replete with federal questions because in order to prevail, Humana must prove violations of the Food Drug and Cosmetics Act (“FDCA”) or violations of regulations promulgated by the Food and Drug Administration (“FDA”). (DE 1 at 2-5.) Humana now moves for remand under 28 U.S.C. § 1447(c), asserting that this case was improperly removed because it does not arise under federal law. (DE 16-1 at 1). Accordingly, Humana claims that this Court does not have subject matter jurisdiction.

         II. ANALYSIS

         Although there are several motions pending in this matter, the Court must first determine whether removal from the Pike County Circuit Court was proper. On a motion to remand, the defendant bears the burden to show that this Court has original jurisdiction. Eastman v. Marine Mech. Corp., 438 F.3d 544, 549 (6th Cir. 2006). Original jurisdiction exists through either diversity of citizenship, see 28 U.S.C. §§ 1332(a) and 1441(b), or federal question jurisdiction, see 28 U.S.C. §§ 1331 and 1441(a). When there are any doubts as to the propriety of removal, “the removal statute should be strictly construed and all doubts resolved in favor of remand.” Eastman, 438 F.3d at 550. It is uncontested that there is no diversity of citizenship among the parties because Humana and Celgene are both citizens of Delaware. (DE 1-1 at 6-8.) The Court considers the parties' arguments on federal question jurisdiction below.

         A. Federal question jurisdiction.

         Courts have consistently applied the well-pleaded complaint rule when reviewing federal question jurisdiction on a motion to remand. “To determine whether the claim arises under federal law, we examine the ‘well pleaded' allegations of the complaint and ignore potential defenses.” Mikulski v. Centerior Energy Corp., 501 F.3d 555, 560 (6th Cir. 2007) (quoting Beneficial Nat'l Bank v. Anderson, 539 U.S. 1, 6 (2003)). As a result of the rule, “federal questions presented by defenses-or even by the plaintiff's anticipatory rebuttal of an expected defense-cannot support jurisdiction.” Dillon v. Medtronic, Inc., 992 F.Supp.2d 751, 755 (2014) (citing Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 10 (1983)).

         In its Complaint, Humana does not rely on a federal cause of action. Instead, it asserts several state-law causes of action against the defendant. (DE 1-1 at 29-38.) Consequently, the claims within the well-pleaded complaint do not directly arise under federal law or jurisdiction.

         However, the United States Court of Appeals for the Sixth Circuit recognizes three exceptions to the well-pleaded complaint rule, by which the defendants could still show that federal jurisdiction is proper. See Mikulski, 501 F.3d at 560. The first two exceptions, artful-pleading and complete preemption, are not applicable to this case. Only the third exception, the substantial federal question doctrine, is at issue.

         1. The substantial federal question doctrine.

         Celgene relies on the substantial federal question doctrine in removing this case to federal court. (DE 1.) The United States Supreme Court has held that federal courts have federal question jurisdiction over state-law claims that raise a substantial federal issue, but only when the exercise of such jurisdiction will not upset the balance of state and federal judicial responsibilities. See Grable & Sons Metal Prod., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308, 314 (2005).

         The substantial federal question doctrine only applies to a “special and small category of cases.” Gunn v. Minton, 568 U.S. 251, 258 (2013). The Sixth Circuit, relying on Grable, has adopted a three-part test to determine whether state-law claims implicate federal question jurisdiction-(1) The state-law claim must necessarily raise a disputed federal issue; (2) the federal interest in issue must be substantial; and (3) the exercise of jurisdiction must not disturb any congressionally approved balance of federal and state judicial responsibilities. Mikulski, 501 F.3d at 568. For federal jurisdiction to lie under the substantial federal question doctrine, the removing defendant must show that all factors are fulfilled. See id.

         Celgene asserts that Humana's claims for fraud, breach of contract, violations of N.J. RICO, and conspiracy to violate N.J. RICO all raise substantial federal questions which give this Court subject matter jurisdiction. (DE 1.) Celgene concedes that Humana's claims for negligent misrepresentation and unjust enrichment raise no federal issues. (See DE 45 at 8.) Accordingly, this Court will consider only whether Humana's remaining claims raise substantial federal questions. For the reasons stated below, the Court does not have subject matter jurisdiction over the claims in this case.

         a. Whether Humana's state-law claims necessarily raise a ...

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