Yet another appeals court has rejected the idea that so-called parens patriae lawsuits–in which a state government sues on behalf of its citizens–are just class actions in disguise.
In a 19-page decision issued on Wednesday, the U.S. Court of Appeals for the Second Circuit refused to hear an appeal by Purdue Pharma LP in a case that the Kentucky attorney general brought against the Purdue over its marketing of the painkiller Oxycontin. The appeals court rejected arguments by Purdue’s lawyers at Covington & Burling and King & Spalding that the case is effectively a class action, and that it therefore must be removed from state court to federal court under the Class Action Fairness Act–the 2005 statute that grants federal courts exclusive jurisdiction over most lawsuits involving 100 or more plaintiffs.
Purdue brought Oxycontin to the market in 1996, pitching it as less likely to be abused than traditional painkillers. By 2001, Oxycontin sales topped $1 billion a year. But Purdue came under scrutiny as Oxycontin addiction rates soared across the country, particularly in rural areas (Oxycontin has earned the moniker “hillbilly heroine”). In 2007, Purdue and three of its top executives pleaded guilty to criminal misbranding charges, and the company agreed to pay a $600 million fine. The Kentucky AG brought suit in state court the same year, alleging that Purdue violated a slew of Kentucky laws by misleading health care providers, consumers, and government officials about the drug’s risks.
Purdue soon removed the AG’s case to federal court in Kentucky, and in 2008 it was transferred and consolidated in multidistrict litigation over Oxycontin in U.S. district court in Manhattan. When the AG moved for remand back to Kentucky, Purdue’s lawyers argued that the case falls within the definition of class actions under CAFA: “any civil action filed under rule 23 of the Federal Rules of Civil Procedure or similar State statute.” The Kentucky AG’s complaint doesn’t mention FRCP Rule 23 or its Kentucky state-law analog, but Purdue argued that Kentucky’s desired remedy–restitution for individual citizens–looks a lot like class relief. Purdue also asserted that the real parties in interest in the AG’s case are Kentucky’s citizens, not the state government.
Purdue faced an uphill battle making that removal argument. Four federal appeals courts–the Fourth, Fifth, Seventh, and Ninth Circuits– have already in recent years rejected the idea that parens patriae suits are subject to removal as class actions under CAFA. The Fifth Circuit did, however, rule in 2008 that a similar suit brought by Louisiana against Allstate Insurance Co. could be removed under a separate CAFA clause dealing with “mass actions.” Based on that ruling, the Fifth Circuit recently removed to federal court a price-fixing case Mississippi brought against LCD makers including Toshiba Corporation.
Unfortunately for Purdue, the Second Circuit ultimately sided with the Kentucky AG and its outside counsel, Pikesville, Ky-based solo practitioner Gary Johnson. “We are hard pressed to understand how a suit may be ‘filed under’ a statute or rule that does not even appear on the face of the complaint,” the panel noted in Wednesday’s ruling. “Plaintiffs, as masters of their complaint, are always free to choose the statutory provisions under which they will bring their claims. Purdue’s arguments are therefore unavailing.”
Perdue’s defense team in the AG’s case includes Timothy Hester of Covington and Chilton Varner and Stephen Devereaux of King & Spalding. A spokesperson at Covington didn’t immediately respond to a request for comment on Wednesday.