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Hood v. F. Hoffman-Laroche

August 4, 2009


The opinion of the court was delivered by: Thomas F. Hogan United States District Judge


Pending before the Court is a Motion to Remand filed by Mississippi Attorney General Jim Hood, who seeks to have this lawsuit remanded back to the Chancery Court of Rankin County, Mississippi, where it originally was filed. The Mississippi Attorney General's motion is opposed by three of the ten named defendants in this lawsuit -- F. Hoffman-La Roche Ltd., Hoffman-La Roche Inc., and Aventis Pharmaceuticals, Inc. -- which jointly assert that they are the only defendants the Mississippi Attorney General properly served with a copy of the Complaint.*fn1 (Defs.' Opp'n Br. 4 n.2.) For the reasons set forth below, the Court will grant the Mississippi Attorney General's Motion to Remand.


On January 24, 2006, Mississippi Attorney General Jim Hood filed a Complaint in the Chancery Court of Rankin County, Mississippi, that purported to allege an antitrust conspiracy among the named defendants.*fn2 With the consent of all defendants, Hoffman-La Roche Inc. removed the case to the United States District Court for the Southern District of Mississippi, Jackson Division. The Mississippi Attorney General immediately moved to remand the case back to the Chancery Court of Rankin County where a separate, but related, case was pending against BASF Corporation.*fn3 Before the Mississippi Attorney General's motion was resolved, however, the Judicial Panel on Multidistrict Litigation ordered the case transferred to this Court for inclusion in the coordinated and consolidated pretrial proceedings for actions that involve alleged antitrust violations related to vitamins and vitamin products. Consequently, the Mississippi Attorney General's motion seeking remand is now pending before this Court.


28 U.S.C. § 1441(a) permits defendants to remove civil actions from a state court to a federal district court if the federal district court otherwise would have original jurisdiction. Martin v. Franklin Capital Corp., 546 U.S. 132, 134 (2005) ("A civil case commenced in state court may, as a general matter, be removed by the defendant to federal district court, if the case could have been brought there originally."). When considering whether removal was proper, courts must construe the removal statute narrowly to avoid federalism concerns. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941). Moreover, any doubts about the exercise of subject matter jurisdiction will be resolved in favor of remand. Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281-82 (5th Cir. 2007). Ultimately, it is the defendant who bears the burden of proving that removal was soundly taken and, if the defendant fails to do so, the case must be remanded. Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921); 28 U.S.C. § 1447(c).

The jurisdictional statute the defendants invoked to remove this case provides that federal courts have original jurisdiction over "all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interests and costs, and is between . . . citizens of different States . . . ." 28 U.S.C. § 1332. Accordingly, if this case involves citizens of different states and an amount in controversy exceeding $75,000, then the Court may exercise subject matter jurisdiction over it and removal will be deemed proper. If, however, "at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).

The Mississippi Attorney General asserts that remand is warranted because this Court lacks subject matter jurisdiction over the case. Although the parties agree that the amount in controversy meets the requirement imposed by 28 U.S.C. § 1332, the Mississippi Attorney General contends that this lawsuit was filed as a parens patriae action on behalf the State of Mississippi, which is not a citizen for the purpose of establishing the diversity of citizenship necessary to exercise subject matter jurisdiction. Consequently, so the Mississippi Attorney General argues, removal was improper notwithstanding that the defendants are citizens of other states. The Mississippi Attorney General also asserts that the Eleventh Amendment to the Constitution bars removal because a state cannot be sued in a federal court.

The defendants oppose remand on the ground that the State of Mississippi is not the real party in interest for the claims that seek compensatory damages on behalf of Mississippi corporations and citizens (referred to collectively as "Mississippi citizens"). The defendants assert that Mississippi citizens are the real parties in interest for those claims. Thus, according to the defendants, the real parties in interest to the lawsuit are (1) Mississippi citizens, (2) the State of Mississippi, and (3) the defendants. The defendants argue that, because Mississippi citizens also are real parties in interest and complete diversity exists between Mississippi citizens and the defendants, the Court properly may exercise subject matter jurisdiction pursuant to 28 U.S.C. § 1332. The defendants further argue that, regardless, the Eleventh Amendment is no bar to jurisdiction because it does not afford immunity from lawsuits commenced by states, versus lawsuits commenced against them.

Because there is no dispute that the amount in controversy is met for the purpose of exercising federal diversity jurisdiction pursuant to 28 U.S.C. § 1332, the Court will focus its attention on determining whether this lawsuit involves citizens of different states. In recognition of the defendants' burden to prove that remand was appropriate, the Court will turn to the contentions raised by them first. To assess the merits of the defendants' contentions, the Court will consider (1) the identity of the real parties to the controversy, (2) whether complete diversity exists among the real parties to the controversy, and (3) if so, whether the Eleventh Amendment bars the Court's exercise of subject matter jurisdiction in any event.

I. The Real Parties In Interest

The Supreme Court has made clear that "the 'citizens' upon whose diversity a plaintiff grounds jurisdiction must be real and substantial parties to the controversy." Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 461 (1980). Accordingly, this Court "must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy." Id. The crux of the defendants' argument is that some of the plaintiff's claims involve compensatory damages asserted on behalf of Mississippi citizens who are the real parties in interest for those claims. The defendants point to the Mississippi statutes cited in the plaintiff's Complaint and argue that only individual citizens and corporations are authorized to recover compensatory damages under the statutes. The defendants also argue that the parens patriae authority cannot be used to vindicate injuries suffered by individuals.

Last year, the United States Court of Appeals for the Fifth Circuit decided a case that this Court views as instructive with respect to determining the identity of the real parties in interest for this lawsuit.*fn4 In Louisiana ex rel. Caldwell v. Allstate Ins. Co., 536 F.3d 418 (5th Cir. 2008), the Louisiana Attorney General "filed a lawsuit which it styled as a parens patriae action" against multiple corporations for alleged violations of Louisiana's antitrust statute. 536 F.3d at 421-22. The Louisiana Attorney General alleged that the defendants combined to suppress competition in the insurance industry by fixing the value of insurance policy holders' claims and raising insurance premiums to cover their losses. Id. at 422. The lawsuit was filed in a Louisiana state court but the defending insurance companies removed the case to the federal district court pursuant to the Class Action Fairness Act, 28 U.S.C. § 1332(d)(2), which provides federal district courts with original jurisdiction over qualifying class action lawsuits. In response to the removal, the Louisiana Attorney General moved to remand the case back to the state court where it originally was filed. Id. at 422-423. After the district court determined that "the real parties in interest were the citizen policyholders" and denied the Louisiana Attorney General's motion to remand, the Louisiana Attorney General appealed to the Fifth Circuit. Id. at 423.

On review, the Fifth Circuit first considered the Supreme Court's decisions in Hawaii v. Standard Oil Co. of Cal., 405 U.S. 251 (1972), and Alfred L. Snapp & Son, Inc. v. Puerto Rico, 458 U.S. 592 (1982), which it viewed as "useful in illustrating both the limitations and reach of parens patriae actions." Id. at 426. The Fifth Circuit observed that "based on these two cases it is clear that while parens patriae actions are not restricted to their common law roots, there are some limitations, particularly when a state is seeking to recover damages for alleged injuries to its economy." Id. at 427. Although the Fifth Circuit agreed that Louisiana's Attorney General had the "statutory and constitutional authority to bring parens patriae antitrust actions," the court distinguished the question of authority to bring such actions from the ultimate issue of whether the Louisiana Attorney General was the real party in interest, stating ...

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