United States District Court, District of Columbia
In re LORAZEPAM & CLORAZEPATE ANTITRUST LITIG.
Mylan Labs., Inc., et al., Defendants. Health Care Serv. Corp., Plaintiff, Blue Cross Blue Shield of Minn., Blue Cross Blue Shield of Mass., and Federated Mut. Ins. Co., Plaintiffs,
Mylan Labs., Inc., et al., Defendants. Misc. No. 99-276(TFH). Civ. Nos. 01-2646 (TFH), 02-1299(TFH).
[Copyrighted Material Omitted]
David T. Fischer, Porter, Wright, Morris & Arthur, Robert T. Rhoad, Crowell & Moring LLP, Eric S. Jackson, Robins, Kaplan, Miller & Ciresi LLP, Washington, DC, Thomas Joseph Poulin, Robins, Kaplan, Miller & Ciresi, LLP, Boston, MA, for Plaintiffs.
Brian S. Roman, George H. Crompton, Ryan James, DKW Law Group, PC, Pittsburgh, PA, Joseph Anthony Hynds, Rothwell, Figg, Ernst & Manbeck, PC, Peter M. Todaro, King & Spalding, Jonathan R. Tuttle, Debevoise & Plimpton LLP, Lisa R. Fine, Weil, Gotshal & Manges LLP, Washington, DC, for Defendants.
THOMAS F. HOGAN, District Judge.
These proceedings arise from the D.C. Circuit's remand of this action on jurisdictional grounds. On appeal, Defendants challenged, for the first time, the only basis for subject matter jurisdiction over the action— diversity jurisdiction. Defendants were able to demonstrate that at least one plaintiff was not diverse to all of the defendants. Because the pleadings lacked jurisdictional allegations for most of the plaintiffs in this case, the D.C. Circuit remanded the matter for a determination of: (1) the citizenship of plaintiffs for whom the pleadings lacked citizenship allegations and (2) whether— in order to preserve
jurisdiction— nondiverse plaintiffs could be dismissed from the action pursuant to Federal Rule of Civil Procedure 21.
This Court has already answered the latter question in the affirmative. See Order, June 1, 2012 [Dkt. No. 1028]. Heretofore unresolved is the citizenship inquiry. Following the remand Plaintiffs submitted jurisdictional allegations for the allegedly diverse plaintiffs whose citizenship had not yet been plead and moved to dismiss nondiverse plaintiffs. After carefully considering Plaintiffs' motion and the oppositions and replies thereto; the oral arguments before the Court; and the entire record of this case, the Court denies Plaintiffs' motion without prejudice.
The Court assumes familiarity with this case's long and complex factual background and procedural history and so here will dispense with a detailed recounting. Briefly, however, this action arises from alleged antitrust violations resulting from exclusive licensing agreements among the defendant pharmaceutical drug manufacturers and pharmaceutical drug ingredient manufacturers— Mylan, Inc.; Mylan Pharmaceuticals; Gyma Laboratories of America, Inc.; and Cambrex Corporation. The named plaintiffs in this action— Blue Cross Blue Shield of Minnesota (" BCBS-MN" ), Blue Cross Blue Shield of Massachusetts (" BCBS-MA" ), Health Care Service Corporation (" HCSC" ), and Federated Mutual Insurance Company (" Federated" )— are four health insurance companies. In addition to bringing suit on their own behalf, the named plaintiffs sued " as claims administrators for their self-funded customers." 
Prior to trial, a dispute arose over the propriety of permitting the named plaintiffs to sue on behalf of their self-funded customers. In an order dated March 2, 2005, 2005 WL 6202342, this Court concluded the named plaintiffs " lack[ed] authority to bring claims on behalf of their self-funded customers." Id. However, the Court permitted the name plaintiffs to proceed under Fed.R.Civ.P. 17(a)(3) by seeking ratification from the self-funded customers to prosecute the claims in their name. Five of the approximately 1,400 self-funded customers opted out of ratification. The remaining claims proceeded to trial. Following a jury trial, judgment was entered for Plaintiffs in the amount of $76,823,943. Defendants appealed.
Days prior to oral argument on Defendants' appeal, Defendants alleged jurisdictional infirmities. They argued that the Court lacked subject matter jurisdiction because at least one self-funded customer shared a state of citizenship with a defendant. The Circuit rejected Plaintiffs' argument that the Court had supplemental jurisdiction over the self-funded customers' claims. As the real parties of interest to the ratified claims, the Circuit further concluded, the " self-funded customers must be counted as parties for diversity of citizenship purposes." In re Lorazepam, 631 F.3d 537, 540 (D.C.Cir.2011). Because the pleadings in this matter lacked citizenship allegations for the self-funded customers, the case was remanded to this Court for an inquiry into the citizenship of the self-funded customers and a determination of
whether any nondiverse self-funded customers could be dismissed pursuant to Federal Rule of Civil Procedure 21 (" Rule 21" ). See id. at 542.
Through an order dated June 1, 2012, this Court concluded nondiverse self-funded customers could be dismissed under Rule 21 and denied Defendants' motion to dismiss this case for lack of subject matter jurisdiction. Still pending before the Court is Plaintiffs' Motion to Dismiss Claims and for Remittitur [Dkt. No. 1006]. Plaintiffs seek the dismissal of all nondiverse self-funded customers and remittitur of damages attributable to those customers. Defendants argue Plaintiffs' jurisdictional allegations are insufficient to establish diversity jurisdiction over the allegedly diverse self-funded customers. As detailed below, the Court denies Plaintiffs' motion without prejudice and instructs the parties to engage in further jurisdictional inquiry consistent with the framework outlined in this memorandum opinion.
II. Indispensability of self-funded customers
The D.C. Circuit remanded this case, in part, for a determination of whether the nondiverse self-funded customers could be dismissed from the action under Rule 21. Defendants argue the self-funded customers are " necessary" and " indispensable" parties to this action under Federal Rule of Civil Procedure 19 (" Rule 19" ) and, therefore, no self-funded customer may be dismissed under Rule 21. The Court disagrees.
A. Legal analysis
Rule 21 provides, inter alia, " [o]n motion or on its own, the court may at any time, on just terms, add or drop a party ..." FED.R.CIV.P. 21. " This Rule allows the district court to dismiss so called ‘ jurisdictional spoilers'— parties whose presence in the litigation destroys jurisdiction— if those parties are not indispensable and there would be no prejudice to the parties." In re Lorazepam, 631 F.3d at 542 (citing Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830-32, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989)). " [I]t is well settled that Rule 21 invests district courts with authority to allow a dispensable nondiverse party to be dropped at any time, even after judgment has been rendered." Newman-Green, 490 U.S. at 832, 109 S.Ct. 2218.
However, a court may not dismiss under Rule 21 an otherwise indispensable party under Rule 19. See In re Lorazepam, 631 F.3d at 542; CP Solutions PTE, Ltd. v. GE, 553 F.3d 156, 159 (2d Cir.2009) ( " Federal Rule of Civil Procedure 21 allows a court to drop a nondiverse party at any time to preserve diversity jurisdiction, provided the nondiverse party is not ‘ indispensable’ under Rule 19(b)" ). Before the court determines whether a party is " indispensable" under Rule 19(b), it must first determine under Rule 19(a) whether the party is " necessary" to the action. See Kickapoo Tribe of Indians v. Babbitt, 43 F.3d 1491, 1494-95 (D.C.Cir.1995).
Rule 19(a) reads as follows in applicable parts:
(a) Person Required to Be Joined if Feasible.
(1) Required Party. A person who is subject to service of process and whose joinder will not deprive the court of subject-matter jurisdiction must be joined as a party if:
(A) in that person's absence, the court cannot accord complete relief among existing parties; or
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the ...