UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
COMMONWEALTH OF MASSACHUSETTS,
Plaintiff,
v.
PHILIP MORRIS INC., R.J. REYNOLDS TOBACCO COMPANY, BROWN
& WILLIAMSON TOBACCO CORPORATION, B.A.T. INDUSTRIES P.L.C., LORILLARD
TOBACCO COMPANY, LIGGETT GROUP, INC., NEW ENGLAND WHOLESALE TOBACCO CO.,
INC., THE COUNCIL FOR TOBACCO RESEARCH - U.S.A., INC., and THE TOBACCO
INSTITUTE, INC.,
Defendants.
Case No. 96-10014 (GAO)
February 1, 1996
MEMORANDUM OF LAW IN SUPPORT OF COMMONWEALTH OF MASSACHUSETTS'
MOTION TO REMAND
INTRODUCTION
This is an action brought exclusively under Massachusetts state law
to recover health-care expenses and other costs incurred by the Commonwealth
of Massachusetts as a result of the wrongful conduct of the defendants.
The Commonwealth seeks monetary damages, as well as injunctive relief against
certain defendants to require, inter alia, the disclosure of their
long-suppressed research on smoking, health and addiction. Complaint, pp.
73-74.
All five counts in the complaint -- alleging liability for negligent
performance of a special duty, breach of warranty, conspiracy, restitution
and unjust enrichment -- arise under Massachusetts law. No claim under
federal law is alleged in the complaint, no federal issue is raised, and
no federal issue needs to be decided to establish the defendants' liability
under state law. Indeed, there is not a single reference to any federal
law in the Commonwealth's 74-page complaint in this case.
Nevertheless, the defendants seek to remove this action to federal court.
As grounds for removal, the defendants argue, first, that the Commonwealth's
state-law claims actually arise under the federal Medicaid Act, 42 U.S.C.
§ 1396 et seq. Second, they argue that this case is removable
because it is "in the nature of an action brought by or on behalf
of the United States." Notice of Removal at 6.
These arguments are fundamentally wrong. Under bedrock principles of
federal jurisdiction, this action arises exclusively under the principles
of state law set forth in the Commonwealth's complaint. The provisions
of federal Medicaid law cited by defendants in the Notice of Removal merely
establish conditions on the States for the receipt of federal Medicaid
funds. They do not create the purely state-law claims asserted in the complaint,
nor do they supply any necessary element of any of these state-law claims.
For that reason, this action could not have been brought originally in
federal court, and it cannot be removed to this Court. As to defendants'
second argument, this is an action by the Commonwealth of Massachusetts,
a sovereign state, to vindicate state law, protect its fiscal integrity,
and provide for the general welfare of its citizens.
The Commonwealth is in no sense acting as an instrumentality of the
federal government, and defendants' assertion to the contrary is insupportable.
Indeed, defendants' arguments in this case are identical to the
arguments asserted by the cigarette manufacturers in support of removal
to federal court of a similar action filed against them by the Attorney
General of Mississippi. The arguments were flatly rejected by the United
States District Court for the District of Mississippi, which found no subject-matter
jurisdiction over the action and remanded the case to Mississippi state
court. See Moore v. American Tobacco Co., et al., No. 94-293GR (Order
dated August 17, 1994). [ Copies of the Notice of Removal and the Remand
Order in the Mississippi action are attached as Exhibits 1 and 2, respectively.]
The arguments for removal are equally meritless in this action and should
be rejected here as well.
Because the Commonwealth's claims in this case arise entirely and exclusively
under state law, there is no federal subject-matter jurisdiction over this
action, and it must be remanded to Middlesex Superior Court. Retention
of this action in federal court would contravene not only well-established
principles of subject-matter jurisdiction, but also principles of federalism
and comity that protect the States from interference by the federal courts.
STATEMENT OF THE CASE
On December 19, 1995, the Commonwealth filed this action in Middlesex
Superior Court against five cigarette manufacturers (the "cigarette
manufacturers"), two cigarette manufacturer trade associations, and
two cigarette distributors (all defendants, collectively, "defendants"
or "the cigarette companies"). In its complaint, the Commonwealth
seeks both monetary damages and injunctive relief under five state-law
theories of liability. These state-law claims are based upon, inter
alia, the Commonwealth's allegations that the cigarette manufacturers
and their trade associations misled the Commonwealth and the public through
(i) affirmative misrepresentations about the health consequences of smoking,
(ii) false promises to provide the public with objective information about
smoking and health, (iii) suppression and concealment of critical information
about the health effects of smoking and the addictiveness of nicotine in
cigarettes, and (iv) continuing false claims that nicotine in cigarettes
is not addictive and that the cigarette manufacturers do not independently
control and manipulate the nicotine in cigarettes.
The complaint also alleges that these defendants engaged in such wrongful
and illegal conduct as part of a conspiracy that was intended to protect
cigarette sales, and that they continue to use marketing and advertising
techniques that have a particular appeal to children and teenagers. The
complaint further alleges that all defendants are liable for the sale and/or
distribution of defective and unreasonably dangerous products in the Commonwealth.
This is a direct action by the Commonwealth against the defendants under
state law to recover the substantial costs the Commonwealth has incurred,
including increased health care expenditures in its Medicaid program, as
a result of the defendants' wrongful conduct. [ The Commonwealth also seeks
injunctive relief to require the defendants to disclose their research
on smoking, addiction and health, to fund a remedial public education campaign
on the health consequences of smoking, and to fund smoking cessation programs
for nicotine-dependent smokers. See Complaint, pp. 73-74.] This action
is not brought on behalf of individual cigarette smokers, nor are the Commonwealth's
claims premised upon an "assignment" to the State of the rights
of individual smokers, or upon any theory under which the State is subrogated
to rights of individual smokers.
The Commonwealth's complaint alleges causes of action under well-established
principles of state law. Specifically, the complaint asserts that the cigarette
manufacturers have acted in breach of a special duty they undertook to
the citizens of Massachusetts and to the Commonwealth (Count I); breached
express and implied warranties (Count II); engaged in an unlawful conspiracy
in violation of state law (Count III); and are liable for restitution (Count
IV) and unjust enrichment (Count V) under state common law. [ In addition,
on December 19, 1995, the Attorney General sent written notice to certain
defendants of his intention to assert claims under the Massachusetts Consumer
Protection Act, Mass. G.L. c. 93A, § 2(a), and, absent an out-of-court
resolution of those claims, the Attorney General intends to amend the complaint
to add state Consumer Protection Act claims.] The Commonwealth's complaint
does not rely on, and indeed makes no mention of, any provision of federal
law. [ On December 19, 1995, the Commonwealth filed a motion to dismiss
a suit for declaratory and injunctive relief filed against the Attorney
General of Massachusetts in this Court by the five cigarette manufacturer
defendants in this action. Philip Morris Inc., et al. v. Harshbarger ,
Civil Action No. 95-12574-GAO. The declaratory judgment action seeks a
declaration that a "threatened Lawsuit" against them by the Commonwealth
of Massachusetts to recover health-care expenditures -- i.e. , this lawsuit
-- would violate certain alleged rights under federal and state law. In
the memorandum in support of its motion to dismiss, the Commonwealth argues
that, for many of the same reasons set forth in this motion to remand,
the declaratory judgment action is not properly within the jurisdiction
of the federal courts.]
On January 2, 1996, the cigarette companies filed a notice of removal
of the Commonwealth's state-court action to this Court. The bases for federal
subject-matter jurisdiction set forth in the notice of removal are (1)
that the Commonwealth's state-law action actually arises under the federal
Medicaid Act, 42 U.S.C. § 1396 et seq., and (2) that the Commonwealth's
action is "in the nature of an action brought by or on behalf of the
United States,"
ARGUMENT
I.
THIS ACTION DOES NOT ARISE UNDER FEDERAL LAW
Despite the Commonwealth's exclusive reliance on state law in its complaint,
the cigarette companies nevertheless claim that removal is proper under
28 U.S.C. § 1441(a) because the Commonwealth's claims "arise
under" the laws of the United States within the meaning of 28 U.S.C.
§ 1331. [ There can be no jurisdiction based on diversity of citizenship,
because the Commonwealth of Massachusetts is not a "citizen[] if [a]
State" under 28 U.S.C. § 1332. See Moor v. County of Alameda
, 411 U.S. 693, 717 (1973); State Highway Comm'n of Wyoming v. Utah Constr.
Co. , 278 U.S. 194, 199-200 (1929).] The cigarette companies' arguments
run contrary to settled law governing the subject-matter jurisdiction of
the federal courts. Under the "well-pleaded complaint" rule,
an action arises under federal law only if a federal issue affirmatively
appears on the face of the plaintiff's complaint. The Commonwealth's complaint
does not affirmatively rely upon or raise any issue of federal law, and
this action is therefore not within the federal subject-matter jurisdiction
of this Court.
A. The Well-Pleaded Complaint Rule Determines the Existence of Federal
Subject-Matter Jurisdiction.
The removal statute on which defendants rely, 28 U.S.C. § 1441,
provides that "any civil action brought in a State court of which
the district courts of the United States have original jurisdiction, may
be removed" to federal district court. Id. § 1441 (a)
(emphasis added). Thus, the question whether this action was properly removed
turns upon whether the Commonwealth's complaint could have been brought
originally in federal court. See Caterpillar Inc. v. Williams, 482
U.S. 386, 392 (1987) ("Only state-court actions that originally could
have been filed in federal court may be removed to federal court by the
defendant.'' (footnote omitted)); C.A. Wright, A.R. Miller, & E.H.
Cooper, 14A Federal Practice & Procedure § 3721 at 189 (1985 ed.).
The burden of establishing federal subject-matter jurisdiction is, of course,
on the party seeking removal -- here, the defendant cigarette companies.
See Id. § 3721 at 209-210; Hunneman Real Estate Corp. v. Eastern
Middlesex Ass'n of Realtors, Inc., 860 F. Supp 906, 911 (D. Mass. 1994).
[ In addition, the Supreme Court has long emphasized that the removal statute
should be strictly construed, in deference to principles of federalism
and state autonomy: Not only does the language of the [removal statute]
evidence the Congressional purpose to restrict the jurisdiction of the
federal courts on removal, but the policy of the successive acts of Congress
regulating the jurisdiction of federal courts is one calling for the strict
construction of such legislation… Due regard for the rightful independence
of state governments, which should actuate federal courts, requires that
they scrupulously confine their own jurisdiction to the precise limits
which the statute has defined. Shamrock Oil & Gas Corp. v. Sheets ,
313 U.S. 100, 108-09 (1941) (internal quotation omitted).]
The cigarette companies contend that this action is within the original
federal jurisdiction of this Court under 28 U.S.C. § 1331, which provides
that "[t]he district courts shall have original jurisdiction of all
civil actions arising under the Constitution, laws or treaties of the
United States." Id. (emphasis added). The teat for determining
whether an action ''arises under" the laws of the United States is
the "well-pleaded complaint" rule: "It is long settled law
that a cause of action arises under federal law only when the plaintiff's
well-pleaded complaint raises issues of federal law." Metropolitan
Life Ins. Co. v. Taylor, 481 U.S. 58, 63 (1983); See also American
Policyholders Ins. Co. v. Nyacol Products, Inc., 989 F.2d 1256, 1262
(1st Cir. 1993) ("a claim arises under federal law . . . if a federal
cause of action appears on the face of a well-pleaded complaint"),
cert. denied, 114 S. Ct. 682 (1994). The federal issue ''must be
disclosed upon the face of the complaint, unaided by the answer or by the
petition for removal." Gully v. First Nat'1 Bank, 299 U.S.
109, 113 (1936); See also Caterpillar Inc., 482 U.S. at 392; American
Policyholders, 989 F.2d at 1262; Nashoba Communications Ltd. Partnership
No. 7 v. Town of Danvers, 893 F. 2d 435, 437 (1st Cir. 1990).
Under the well-pleaded complaint rule, "the plaintiff [is] the
master of the claim; he or she may avoid federal jurisdiction by exclusive
reliance on state law." Caterpillar Inc., 482 U.S. at 392 (footnote
omitted). The plaintiff "can choose to keep its nun' in state court
if its well-pleaded complaint does not affirmatively rely on federal law."
Hunneman Real Estate, 860 F. Supp. at 909 (quoting Allstate Ins.
Co. v. 65 Sec. Plan, 879 F.2d 90, 93 (3d Cir. 1989)). If the plaintiff
elects not to assert a federal claim, the action is not removable, regardless
of whether there is a federal claim that could have been asserted based
on the same facts. See id.; Anderson v. American Airlines, Inc.,
2 F.3d 590, 593-94 (5th Cir. 1993)
By the same token, federal defenses to state-claims do not
give rise to federal jurisdiction and therefore do not make those state-law
claims removable to federal court. "[I]t is now settled law that a
case may not be removed to federal court on the basis of a federal
defense, including the defense of preemption, even if the defense is anticipated
in the plaintiff's complaint, and even if both parties concede that the
federal defense is the only question truly at issue." Caterpillar
Inc., 482 U.S. at 393 (emphasis in original); See also American
Policyholders, 989 F.2d at 1262 n.10.
Thus, "the mere existence of a disputed question of federal law
does not confer federal question jurisdiction." Greenfield and
Montague Trans. Area v. Donovan, 758 F.2d 22, 26 (let Cir. 1985);
See also Nashoba Communications, 893 F.2d at 438. "It is only
if that question also is a necessary element of one of the well-pleaded
state claims that federal jurisdiction can be found." United Jersey
Banks v. Parell, 78 3 F.2d 360, 366 (3d Cir.) (emphasis added),
cert. denied 476 U.S. 1170 (1986); See also Gully, 299 U.S.
at 112 ("a right or immunity created by the Constitution or laws of
the United States must be an element, and an essential one, of the plaintiff's
cause of action"). Similarly, the mere presence of a federal program
as a backdrop to a claim arising under state law does not "federalize"
that claim and bring it within the jurisdiction of the federal courts.
See Id. at 115-18; Greenfield and Montague Trans. Area, 758
F. 2d at 27 (no federal jurisdiction over contract dispute related to federally
funded transportation program); Inter-American university of Puerto
Rico. Inc. v. Concepcion, 716 F. 2d 933, 934-35 (1st Cir. 1983) (federal
jurisdiction lacking in suit to collect loans made under federal student
loan program).
The only exception to the well-pleaded complaint rule is the "artful
pleading" doctrine: A plaintiff cannot disguise as a state claim a
cause of action that is necessarily federal in nature. That is, if state
law in a particular field is completely preempted by federal law, so that
the plaintiff's cause of action is exclusively federal, then the
plaintiff's "artful" attempt to characterize that claim as one
arising under state law will not defeat federal jurisdiction See Goepel
v National Postal Mail Handlers Union, 36 F. 3d 306, 310 (3d Cir. 3994),
cert. denied, 115 S. Ct. 1691 (1995); Hunneman Real Estate,
860 F. Supp. at 909. In such cases, even though the suit "purports
to raise only state law claims," it is "necessarily federal in
character by virtue of the clearly manifested intent of Congress n to preempt
all state law. Metropolitan Life Ins. Co., 481 U.S. at 67.
The artful pleading exception is "necessarily a narrow one,"
however ''[b]ecause state and federal laws have many overlapping or even
identical remedies and because generally [courts] respect a plaintiff's
choice between state and federal forums." Hunneman Real Estate,
860 F. Supp. at 909 (quoting In re Agent Orange Product Liability Litigation,
996 F.2d 1425, 1430-31 (2d Cir. 1993), cert. denied, 114 U.S. 1125
(1994)). State law must be completely preempted, so that the plaintiff
in fact has no state law claims to assert. Only then are the plaintiff's
claims necessarily federal. If federal and state law co-exist, then the
plaintiff's selection of state law must be respected and the action cannot
be removed to federal court. See Hunneman Real Estate, 860 F. Supp
at 909-11 (holding that claims brought under Massachusetts' Antitrust Act
did not "necessarily" arise under federal law, even though no
such claim had ever been asserted under state law and the state statute
incorporated federal standards of liability). [ The Supreme Court has found
complete preemption, and resulting automatic federal jurisdiction, in only
two contexts: under section 301 of the Labor Management Relations Act (LMRA),
29 U.S.C., § 185, Avco Corp. v. International Ass'n of Machinists
and Aerospace Workers , 390 U.S. 557 (1968); and under the broad preemption
provision found in ERISA, 29 U.S.C. §§ 1001 et seq. , which was
modelled after section 301 of the LMRA, Metropolitan Life Ins. Co. , 481
U.S. at 65-66. See American Policyholders , 989 F.2d at 1262 n.10 (discussing
the "rare case" in which state law is completely preempted).]
B. The Commonwealth' s Claims Arise Under State Law, Not the Federal
Medicaid Act.
These principles of federal jurisdiction demonstrate unequivocally that
the Commonwealth's action arises under state law and must be remanded to
state court. All five claims for relief set forth in the Commonwealth's
complaint arise exclusively out of state law. The first count asserts that
the cigarette manufacturers are liable under state law because they breached
a special duty and responsibility they undertook to provide the public
truthful and objective information about smoking and health. Count two
alleges that the defendants are liable for breach of warranty. The third
count asserts that defendants have engaged in an unlawful conspiracy in
violation of state law. Count four alleges liability under the state common
law of restitution, and count five asserts common-law liability for unjust
enrichment. [ In addition, as noted above, the Attorney General sent demand
letters to certain defendants under Mass. G.L. c. 93A on December 19, 1995.
See supra n.3.]
State law, therefore, supplies the basis for each claim asserted in
this case. The Commonwealth can establish the liability of the defendants
based entirely on the principles of state law asserted in the complaint.
This fact, alone, establishes that the Commonwealth's claims fall outside
the subject-matter jurisdiction of this Court. As the First Circuit has
matter-of-factly stated:
A suit is customarily deemed to arise under the law that gives birth
to the cause of action. Applying that approach, this suit is based upon,
and, therefore, arises under, state law.
American Policyholders, 989 F.2d at 1262 (footnote and citations
omitted); See also Franchise Tax Bd. v. Construction Laborers Vacation
Trust, 463 U.S. 1, 13 (1983) ("straightforward application of
the well-pleaded complaint rule precludes original federal-court jurisdiction"
where state law supplies all elements necessary to establish defendant's
liability); Hunneman Real Estate, 660 F. Supp. at 911 (remanding
for lack of jurisdiction where, "[i]n order for the plaintiffs to
prevail, they do not have to prove or rely on any proposition of federal
law'').
Nevertheless, the cigarette companies argue that the Commonwealth's
state-law claims actually arise under the laws of the United States, because,
they say, those claims are based in the federal Medicaid Act. See Notice
of Removal at 5-6. To create the illusion of federal jurisdiction, they
cite several provisions of federal Medicaid law setting forth conditions
the State must meet in order to be eligible for federal funding. First,
the defendants refer to a provision in the Act by which the State must
condition eligibility for Medicaid benefits upon the recipient assigning
to the State his or her right to payment for medical care from any third
party. 42 U.S.C. § 1396a(a)(45), § 1396k; 42 C.F.R. §§
433.145-148. Second, the defendants refer to a provision requiring the
State to take ''all reasonable measures to ascertain the legal liability
of third parties . . . to pay for care and services under the [State Medicaid]
plan . . .'' and to "seek reimbursement for such assistance"
where the amount the State can reasonably expect to recover exceeds the
costs of recovery. 42 U.S.C. § 1396a(a)(25)(A) and (B); 42 C.F.R.
§§ 433.135-148. And, third, the defendants refer to a provision
requiring that, if a State recovers payments from a liable third party,
"the State must pay the Federal government a portion of the reimbursement"
based on the amount of the federal contribution to the State program. 42
U.S.C. § 1396b(d); 42 C.F.R. §§ 433.140(c), 433.154.
The relevance of these funding conditions to the Court's subject-matter
jurisdiction over the Commonwealth's state-law claims in this case is not
apparent from the Notice of Removal. In fact, these provisions are irrelevant
to the only jurisdictional issue in this case -- whether the claims in
the Commonwealth's complaint .'arise under" state or federal law.
The defendants, attempt to manufacture federal jurisdiction under the Medicaid
Act is frivolous and should be rejected.
First, to the extent defendants are arguing that these Medicaid provisions
create a federal cause of action that the Commonwealth is
asserting in this action, that myth is easily dispelled. Under the federal
Medicaid statute, 42 U. S. C §§ 1396-1396q, each State seeking
federal financial participation in its medical assistance program must
submit to the United States Department of Health and Human Services a "state
plan" containing certain statutorily required features. 42 U.S.C.
§§ 1396a(a). See Atkins v. Rivera, 477 U.S. 154, 156-57
(1986). The provisions invoked by defendants merely set forth certain features
the State plan must contain as a condition to the State's eligibility for
federal Medicaid funds. The provisions do not create a new federal cause
of action against third parties who may be liable to the State for Medicaid
expenditures. [ The defendants' argument is wrong on another level as well.
As noted above, the Commonwealth, as master of its complaint, "can
choose to keep its suit in state court if its well-pleaded complaint does
not affirmatively rely on federal law." Hunneman Real Estate , 860
F. Supp. at 909. Therefore, even if the Medicaid Act created a federal
cause of action -- which it very clearly does not -- the Commonwealth has
not relied on any such cause of action, and it may not serve a basis for
federal jurisdiction.]
The third-party reimbursement provision in 42 U.S.C. § 1396a (a)
(25), for example, simply imposes an obligation on the State to "take
all reasonable measures" to ascertain the liability of third parties
to pay "for care and services." This statutory provision neither
expressly creates, nor indirectly furnishes any basis for creating by judicial
implication, a federal cause of action in favor of the States against
such third parties. [ Indeed, given the Supreme Court's jurisprudence all
but forbidding the judicial creation of "implied" federal causes
of action, See Suter v. Artist M. , 503 U.S. 347 (1992); Cort v. Ash ,
422 U.S. 66 (1975), it would be astonishing if these provisions were found
to establish a new federal cause of action against potentially liable third
parties. Cf. Merrell Dow Pharmaceuticals, Inc. v. Thompson , 478 U.S. 804,
805-12 (1986) (where Congress did not create federal cause of action, federal
jurisdiction is lacking and removal is improper even where plaintiffs expressly
alleged the violation of a federal statute as an element of their claim).]
The only legal basis for the "liability of third parties"
referred to by section 1396a(a)(25) must therefore be supplied by State
law. [ Section 1336a(a) (25) and the corresponding regulations merely outline
what, at a minimum, must be included in the State plan to insure that States
seek to recover Medicaid expenditures from liable third parties. 42 C.F.R.
§§ 433.138(a) (" At a minimum , such [third party reimbursement]
measures must include the requirements specified in paragraphs (b) through
(k) of this section…" (emphasis added)). Section 1396a(a) (25) and
its regulations in no way limit how the State may proceed; they certainly
do not suggest that the State must proceed by invoking some unspecified
federal source of substantive liability.]
Similarly, whether and how a portion of the Commonwealth's recovery
in this action will be paid to the federal government is a matter between
the United States and Commonwealth. It is not an element of the
State's claim against the cigarette companies.
It is well settled that the mere fact that the federal government has
an interest in a portion of a plaintiff's state-law recovery does not
"federalize" the underlying state-law claim. See Becote v.
South Carolina State Highway Dep't, 308 F. Supp. 1266, 1268 (D.S.C.
1970) (mere fact that United States has right under federal statute to
recover against liable third party the value of medical treatment furnished
to plaintiff does not create federal jurisdiction over plaintiff's state-law
claim). Indeed, under defendants' expansive view of jurisdiction, whenever
the recovery in a state-law suit is potentially subject to federal taxation,
giving the United States a pecuniary interest in the judgment, the state-law
action could be removed to federal court. [ Finally, the provisions cited
by defendants requiring States to obtain assignments from Medicaid beneficiaries
are in no way implicated in this action. This is a direct action by the
Commonwealth; it is not an action brought to recover damages suffered by
any one or more individual Medicaid recipients under an "assignment"
of rights from those individual recipients. The assignment provisions relied
upon by the cigarette companies are therefore wholly inapposite. Moreover,
even if the Commonwealth were proceeding by assignment, the rights that
the Commonwealth would have received via such assignment, and would be
asserting here, would be recipients' state-law claims against parties potentially
liable to them for their injuries. It is absurd to suggest that these Medicaid
recipients possessed federal claims against the cigarette companies under
the Medicaid Act, which they then assigned to the State.]
Second, to the extent defendants seek to invoke these Medicaid provisions
in defense to the Commonwealth's state-law claims -- the provisions
in fact afford them no defenses, but to the extent they argue otherwise
-- they fundamentally misunderstand the law of federal jurisdiction. Issues
of federal law raised in defense of state-law claims do not create
federal jurisdiction. As the Supreme Court has forcefully stated:
[T] he presence of a federal question . . . in a defensive argument
does not overcome the paramount policies embodied in the well-pleaded complaint
rule -- that the plaintiff is the master of the complaint, that a federal
question must appear on the face of the complaint, and that a plaintiff
may, by eschewing claims based on federal law, choose to have the cause
heard in state court. . . . [A] defendant cannot, merely by injecting
a federal question into an action that asserts what is plainly a state-law
claim, transform the action into one arising under federal law, thereby
selecting the forum in which the claim shall be litigated.
Caterpillar, Inc., 482 U.S. at 398-99 (emphasis added; footnote
omitted); see also Oklahoma Tax Comm'n v. Graham, 489 U.S. B3B,
841 (1389) (possible federal immunity defense "did not convert Oklahoma
tax claims into federal questions"); Franchise Tax Bd., 463
U.S. at 14; Greenfield and Montague Trans. Area, 758 F.2d at 27.
Third, it is well-established that the mere presence of a federal statute
as a backdrop to what is decidedly a state-law cause of action is not
sufficient to confer subject-matter jurisdiction on the federal courts.
Thus, the fact that the Commonwealth' e state-law causes of action are
consistent with the State's satisfaction of funding conditions in the federal
Medicaid statute does not alter their essential character as state-law
claims. As the Supreme Court has recognized, there are few state claims
that do not bear some attenuated connection to a provision of federal law:
[C]ountless claims of right can be discovered to have their source or
their operative limits in the provisions of a federal statute or in the
Constitution itself with its circumambient restrictions upon legislative
power. To set bounds to the pursuit, the courts have formulated the distinction
between controversies that are . . . necessary and those that are merely
possible. We shall be lost in a maze if we put that compass by.
Gully, 299 U.S. at 118 (Cardozo, J.). Indeed, this case is much
like Inter-American University of Puerto Rico, Inc. v. Concepcion
716 F.2d 933 (1st Cir. 1983), in which the First Circuit held that a suit
to collect a student loan does not arise under federal law merely
because the loan we. made pursuant to the National Direct Student Loan
Program, 20 U.S.C. § 1087aa-1087ii, even though the federal government
made a capital contribution to the loan fund and federal regulations "prescrib[ed]
the procedures for making and collecting the loans." Id. at
934. As the First Circuit stated:
It is the nature of the action before the court [i.e., a state-law
claim to collect a debt], not the nature of the loan program, that establishes
the existence or absence of federal jurisdiction.
Id.; See also Greenfield and Montague Trans. Area, 758
F. 2d at 27 (dispute over provision in transportation contract does not
arise under federal law even though disputed provision was inserted to
meet eligibility requirements for federal funding under Surface Transportation
Assistance Act, 49 U.S.C. § 1614).
Once it is apparent that the provisions of Medicaid law raised in the
Notice of Removal neither create nor are necessary elements of any of the
Commonwealth's state-law claims, the only remaining argument available
to the cigarette manufacturers is that, by artful pleading, the Commonwealth
has disguised claims that are exclusively federal. For such an argument
to prevail, the cigarette companies must establish that this is the ''rare
case'' in which federal law ''so completely displaces state causes
of action in a particular area that all such claims are "necessarily
federal in character.'" American Policyholders, 989 F. 2d at
1262 n. 10 (emphases added) (quoting Metropolitan Life Ins. Co.,
481 U.S. at 63-64). In other word" the cigarette companies' premise
must be that all claims seeking payments made under a state Medicaid
program as an element of damages arise exclusively under the Medicaid
Act and are therefore within the jurisdiction of the federal courts.
Defendants cite no authority for the extraordinary proposition that
the Commonwealth is preempted by the federal Medicaid Act from bringing
an action under state law for damages, and that argument is clearly wrong.
The Medicaid program is "a cooperative federal-state program through
which the Federal Government provides financial assistance to State"
so that they may furnish medical care to needy individuals." Wilder
v. Virginia Hospital Ass'n, 496 U.S. 498, 502 (1990). "The Medicaid
program exemplifies what is often referred to as 'cooperative federalism.'"
State of Washington v. Bowen, 815 F. 2d 549, 557 (9th Cir. 1987)
(quoting Harris v. McRae, 44B U.S. 297, 308 (1980)).
Far from completely preempting state law, the federal statute
and its implementing regulations plainly contemplate the continued vitality
of complementary state law in many areas, including the pursuit of claims
under state law against potentially liable third parties. See 42
U.S.C. § 1396a(a) (25); 42 C.F.R §§ 433.135-148. Indeed,
as noted above, the federal provisions expressly set forth only the "minimum"
a State must do to maintain its eligibility for federal funds, See supra
n.11, and do not themselves supply the substantive legal basis for any
reimbursement claim, which therefore must be supplied entirely by state
law. Nowhere in the federal provisions cited by the defendants, or in any
other federal statute of which the Commonwealth is aware, is there the
slightest suggestion that the States are required to locate some federal
as opposed to state cause of action through which to pursue parties potentially
liable for Medicaid expenditures.
If defendants' argument were correct, a wide array of ordinary state-law
claims would suddenly fall within the jurisdiction of the federal courts.
For example, in many tort actions, the damages sought by the injured plaintiff
include medical expenses for which the state Medicaid program initially
provided compensation. In all of these cases, the State and, ultimately,
the federal government have potential interests in the recovery. See,
e g., Miller v. Lankenau Hosp., 61B A 2d 1197 (Pa. Comm. Ct. 1992)
(medical malpractice case in which Commonwealth of Pennsylvania intervened
to assert interest in Medicaid reimbursement). Similarly, the States seek
third-party reimbursement of Medicaid benefits in actions under state law
to collect child support from an absent father. [ See 42 U.S.C. §
1396a(a) (25) (F) (requiring that State Medicaid plan provide that State
will seek reimbursement from third party who has failed to pay child support).]
See, e.g., Steuben County Dep't of Social Servs. v. Deats, 560 N.Y.S.2d
404, 560 N.E.2d 760 (N.Y. 1990) (action in state Family Court, under state
law, to collect from unwed father Medicaid payments made in connection
with the birth of his child). Under defendants' theory, these and other
garden-variety state-law actions would "arise under" the federal
Medicaid Act and would be within the subject-matter jurisdiction of the
federal courts.
It is therefore obvious that the cigarette companies cannot meet their
heavy burden of demonstrating that the Medicaid statute completely preempts
state law, so as to convert the Commonwealth's state-law claims into causes
of action that are necessarily federal in character. [ Indeed, there is
no case holding that the Medicaid Act completely preempts state law and
converts all claims touching upon Medicaid benefits into federal causes
of action. In State of Washington v. Bowen , 815 F.2d 549 (8 th Cir. 1987),
the court expressly held that the federal Medicaid Program did not preempt
the State of Washington from calculating payment levels based on state
community properly law. Id. at 557; cf. Vang v. Healy , 804 F. Supp. 79,
82 (E.D. Cal. 1992) (broad delegation to States in federal food stamp regulations
of authority to collect food stamp over-issuance "cuts squarely against
the view that the federal act was intended to preempt any and all state
law claims that relate to it").] The Commonwealth's claims, therefore,
are precisely what they purport to be -- state claims based on the state-law
causes of action set forth in the complaint -- and are not within the jurisdiction
of this Court. See Moore v. American Tobacco Co., C.A. No. 94cv293GR
(S.D. Miss. 1994) (copy attached as Exhibit 2) (rejecting argument that
State of Mississippi's state-law claims against cigarette companies arose
under Medicaid Act, and remanding to state court). [ See also American
Policyholders , 989 F.2d at 1264 (finding no subject matter jurisdiction
and remanding to state court even though action would be dispositive of
plaintiffs' potential liability to the United States under the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. §
9601 et seq. ); United Jersey Banks , 783 F.2d at 367 (holding that complaint
alleging that merger of national banks violated state statutes arose under
state law and was not removable, notwithstanding possibility that state
statutes conflicted with federal banking laws); Inter-American Univ. of
Puerto Rico, Inc. , 716 F.2d at 934 (holding that suit to collect student
loan issued pursuant to federal loan program arises under state, not federal,
law); Hunneman Real Estate , 860 F. Supp. at 909-911 (holding that claims
of violation of state antitrust laws are not removable to federal court
even though the state statutes incorporate federal standards of liability).]
The weakness of the cigarette companies' argument is further demonstrated
by their reliance on Harlow v. Chin, 405 Mass. 697, 545 N. E 2d
602 (1989), which is in fact irrelevant to the jurisdictional analysis.
Harlow was a medical malpractice case in state court; the issue
of federal jurisdiction was never raised or discussed. [ A state court,
of course, has no occasion to determine whether claims arise under federal
law so as to give rise to federal subject-matter jurisdiction, and the
court in Harlow was doing no such thing. Moreover, the fact that Harlow
is a Massachusetts decision is as irrelevant as the substance of the decision
itself, because the question of whether the Commonwealth's claims in this
case "arise under" the laws of the United States is a question
of federal , not state, law.] Rather, the court was called upon to interpret
a provision of the Massachusetts medical malpractice statute allowing the
trial judge to deduct from a damage award certain payments received by
the plaintiff from collateral sources. Mass. G.L. c. 231, § 60G. The
statute excluded from this set-off any compensation from any collateral
source "whose right of subrogation is based in any federal law."
Mass. G.L. c. 231, § 60G(c) The issue was whether Medicaid payments
received by the plaintiff fell within this exclusion.
In construing the state-law phrase "based in any federal
law'' a6 it is used in Mass. G.L. c. 231, § 60G, the Harlow
court appropriately looked to factors altogether different from those that
determine whether an action "arises under" federal law as that
phrase is used in 28 U.S.C. § 1331. See 545 N.E.2d at 609-11.
The court observed that, in order to receive federal Medicaid funding,
the Commonwealth is required under 42 U.S.C. 1396a(25) to "pursue
recovery of the [Medicaid] funds [expended for plaintiff's care] from legally
liable third parties." Id. at 610. The court explained that
if these amounts were deducted from a malpractice plaintiff's award under
Mass. G.L. c. 231, § 60G, then "the entity which provided the
benefit cannot collect that amount from the plaintiff.'' Id. The
court therefore recognized that a narrow construction of subsection 60G(c)
-- requiring that Medicaid payments be deducted from an award -- would
potentially frustrate compliance with the federal funding condition mandating
pursuit of third-party reimbursement of Medicaid expenditures. [ Where
a Medicaid recipient recovers amounts for Medicaid-funded medical treatment
from a liable third party, Massachusetts law provides the Commonwealth
with an efficient means to then obtain these amounts from the recipient,
including a lien directly against the judgment. See Mass. G.L. c. 18, §
5G; c. 118E, § 22 (requiring Medicaid recipient to pay third-party
payments to the Medicaid agency, and creating a lien in favor of the Commonwealth
for such amounts). If, however, these amounts were deducted from the plaintiff's
recovery under section 60G, the Commonwealth would be left only with the
more cumbersome option of pursuing recovery against the third party.] The
court determined that the State Legislature's objective in creating the
exception in subsection 60G(c) was "to prevent conflicts between G.L.
c. 231, § 60G, and any Federal law, which of course must be supreme."
Id. The court found that the State Legislature "chose to use the
expansive term 'based in any federal law' rather than the more stringent
. . . 'provided for by federal law'" in subsection 60G(c) to achieve
this purpose. Id. For these reasons, the court, after carefully
delineating that it is Massachusetts' state law that provides the mechanism
for recovery of Medicaid expenditures from liable third parties, Id.
at 610 and n. 17, held that ''[a] provision that a State receiving
Federal money must pursue reimbursement suffices to make the consequent
right of subrogation 'based in' Federal law'' within the meaning of Masc.
G.L. c. 231, § 60G(c). Id. at 610.
The holding of Harlow v. Chin, therefore, does not in any way
indicate that the Commonwealth's state-law claims in this case "arise
under" the laws of the United States within the meaning of 28 U.S.C.
§ 1331. The phrase "based in federal law," which defendants
borrow from this state statute, is not part of "[t]he century-old
jurisdictional framework governing removal of federal question cases from
state into federal courts." Metropolitan Life Ins. Co. v. Taylor,
481 U.S. at 63. The only question in this case is whether the action ''arises
under'' federal law under section 1331, and the narrow meaning of that
statutory phrase, set forth in this Memorandum, has been carefully developed
by the federal courts over the last century. For the reasons discussed
above, the Commonwealth's claims arise under the state law creating the
causes of action set forth in the complaint, and nothing in the Massachusetts
court's holding in Harlow v. Chin indicates otherwise. [ Defendants
also rely in their Notice of Removal on Maine Association of Independent
Neighborhoods v. Commissioner of Maine Dep't of Human Services ("
M.A.I.N. "), 876 F.2d 1051 (1 st Cir. 1989), a case in which an organization
representing low income persons alleged that the State of Maine was administering
its welfare program in violation of federal law. Obviously, a suit alleging
that the State is administering a public assistance program in violation
of a federal statute "arises under" federal law -- indeed, in
M.A.I.N. , "[a]ll parties… agree[d] that [the] action 'arises under'
federal law." Id. at 1053. M.A.I.N. does not in any way support the
assertion of subject-matter jurisdiction over this case, in which the Commonwealth
alleges that defendants have violated state law.]
II.
THIS ACTION IS NOT "IN THE NATURE OF AN ACTION BROUGHT
BY OR ON BEHALF OF THE UNITED STATES."
As an alternative basis for removal under section 1441(a), the cigarette
companies make the astonishing claim that this action is ''in the nature
of an action by or on behalf of the United States." and that original
federal jurisdiction therefore lies under 28 U.S.C. § 1345, [ Section
1345 provides: Except as otherwise provided by Act of Congress, the district
courts shall have original jurisdiction of all civil actions, suits or
proceedings commenced by the United States, or by any agency or officer
thereof expressly authorized by Act of Congress.] because the United States
may be entitled to a portion of any recovery by the Commonwealth. See
Notice of Removal at 6-7.
Not surprisingly, given the nature of the proposition that this is an
action by the United States, the authority cited by the cigarette companies
in the notice of removal is utterly unsupportive. The cigarette companies
rely primarily on the concurring opinion in Kuehner v. Schmeiker,
717 F. 2d 813 (3d Cir. 1983), cert. granted and judgment vacated,
469 U.S. 977 (1984). Kuehner was a suit against federal and state
officials, challenging policies of the Social Security Administration that
were adopted by federal authorities and merely implemented by the States;
the United States Department of Justice appeared in the case on behalf
of all defendants. The single concurring judge found that state officials
were merely the "alter egos" of the Social Security officers,
implementing policies imposed by the federal authorities, so that mandamus
jurisdiction could be invoked against the state defendants under 28 U.S.C.
§ 1361. Id. at 826 (Becker, J., concurring). [ The majority
concluded that the action arose under the Social Security Act and that
federal-question jurisdiction existed under 28 U.S.C. § 1331, and
therefore did not rely in any way on the concurring judge's "alter
ego" theory. See 717 F.2d at 816.]
This action, in stark contrast, is brought by the Attorney General of
the Commonwealth of Massachusetts, pursuant to his authority under, inter
alia, Massachusetts common law, Mass. G.L. c. 12, § 3, 5 and 10,
Mass. G.L. c. 118E, § 22, and Mass. St. 1994, c. 60, § 276; it
is brought exclusively under principles of state law, to recover losses
suffered by the Commonwealth. Federal officials played no role whatsoever
in the initiation of this litigation, and will play no role in its continued
progress. The Commonwealth is no sense acting as an instrumentality of
the United States. [ Cf. M.A.I.N. , 876 F.2d at 1054-55 (rejecting argument
that Commissioner of Maine Department of Social Services, in administering
AFDC rules and regulations, is, for purposes of removal under 28 U.S.C.
§ 1442(a)(1), an "officer of the United States or any agency
thereof, or person acting under him,… act[ing] under color of such office…,"
because "[t]he promulgation of state regulations… is clearly an act
taken under color of the Commissioner's state office, not under color of
federal office" (emphasis in original)); Vang v. Healy , 804 F. Supp.
at 82 (rejecting contention that State of California is an agent of the
federal government in administering the food stamp program in California).]
Nor is the commencement of this action a ministerial act that the Commonwealth
was required to undertake by federal law. Indeed, defendants' suggestion
that the Commonwealth is merely carrying out a federal mandate by filing
this suit flatly contradicts their assertion in their declaratory Judgment
action that federal law in fact bars the Commonwealth's suit. See Complaint
for Declaratory Relief at ¶¶ 65-68. Carried to its logical conclusion,
defendants' argument would mean that the forty-five states that have not
commenced actions against the cigarette manufacturers to recover Medicaid
losses stand in defiant violation of federal law.
Second, defendants rely upon two criminal cases for the proposition
that the criminal jurisdiction of the United States under 18 U.S.C. §
1001 extends to false statements made to state agencies, if federal funds
are involved. E.g., United States v. Baker, 626 F.2d 512,
514 (5th Cir. 1980). of course, the reach of federal laws enacted by Congress
to proscribe criminal conduct touching upon federal interests has nothing
whatever to do with the subject-matter jurisdiction of the federal courts
over civil actions brought by state officials under state law. More to
the point than the authorities cited in the Notice of Removal, this Court
has specifically held that the existence of federal funding does not convert
a state-law action into one within the subject-matter jurisdiction of the
federal courts. In Evans v. Sentry Property Management Co., 852
F. Supp. 71 (D. Mass. 1994), the plaintiff, a tenant of a property managed
by defendant Sentry Property and owned by the United States Department
of Housing and Urban Development (HUD), brought an action against Sentry
in state court alleging violations of state landlord/tenant law. The defendant
attempted to remove the action to federal court, on the theory that Sentry
was an agent of HUD. The Court rejected the theory and remanded to state
court:
Federal courts should not expand their jurisdiction by federalizing
matters which are, in essence, state claims. . . . It would be a dangerous
precedent to hold that federal funding alone can transform that which is
strictly a state cause of action into a federal case, for the consequence
would be that federal courts would then become inundated by the minutiae
of state litigation.
Id. at 72; See also District of Columbia v.. Owens-Corning
Fiberglass Corp., 604 F. Supp. 1459, 1461-62 (D.D.C. 1985) (rejecting
the "novel" and "unrealistic" argument that the District
of Columbia is an agency of the United States under 28 U.S.C. § 1345,
and remanding to District of Columbia Superior Court). More fundamentally,
defendants' argument that the Commonwealth, in bringing this suit, is a
mere instrumentality of the federal government, flies in the face of established
principles of federalism and state autonomy. As the Supreme Court recently
reiterated:
States are not mere political subdivisions of the United States. State
governments are neither regional offices nor administrative agencies of
the Federal Government. The positions occupied by state officials appear
nowhere on the Federal Government's most detailed organizational chart.
New York v. United States, 505 U.S. 144, 188 (1992); See also
FERC v. Mississippi, 456 U.S. 742, 777 (1982) (O'Connor, J., concurring
in part and dissenting in part) ("State legislative and administrative
bodies are not field offices of the national bureaucracy…. Instead, each
state is sovereign within its domain, governing its citizens and providing
for their general welfare. ") .
In bringing this action under state law to recover state losses, the
Commonwealth is exercising its authority as a sovereign state. It is in
no sense acting as an agent or "alter ego" of the United States,
and defendants' baseless argument to the contrary should be rejected.
III.
HOLDING THIS CASE REMOVABLE ON THE GROUNDS URGED BY THE CIGARETTE
COMPANIES WOULD CONTRAVENE ESTABLISHED PRINCIPLES OF FEDERALISM THAT PROTECT
THE STATES AND THEIR JUDICIAL PROCESSES FROM INTERFERENCE BY THE FEDERAL
COURTS
The principles discussed above suffice to establish beyond doubt that
this action arises under state, not federal, law, and is therefore not
within the subject-matter jurisdiction of the federal courts. If further
support for that conclusion were sought, however, it is readily supplied
by established principles of judicial federalism that protect state courts,
and the enforcement therein of important state interests, from interference
by federal courts. By allowing the removal of this action, the Court would
thwart these principles and exercise jurisdiction over a purely state-law
action that should be heard and decided by the Massachusetts courts.
See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941)
(removal statute must be strictly construed in deference to principles
of federalism). These principles constitute additional grounds for remand
here.
Fundamental principles of federalism require "a proper respect
for state functions, a recognition of the fact that the entire country
is made up of a Union of separate state governments, and a continuance
of the belief that the National Government will fare best if the States
and their institutions are left free to perform their separate functions
in their separate ways." Pennzoil Co. v. Texaco, Inc., 481
U.S. 1, 10 (1987) (quoting Younger v. Harris, 401 U.S. 37, 44 (1971));
see also Bettencourt v. Board of Registration in Medicine, 904 F. 2d
772, 776 (1st Cir. 1990) (comity "counsels federal courts
to be sensitive to the existence of a parallel system of state governance"
and requires "respect for both enforcement of state laws and the ability
of state courts to give proper attention to federal law defenses")
(quoting Marcal Paper Mills, Inc. v. Ewing, 790 F.2d 195, 196 (1st
Cir. 1986)).
These principles are embodied in the Constitution, federal statutes,
and established judicial doctrines. For example, the ''well-pleaded complaint
rule" excludes from federal jurisdiction claims that merely anticipate
federal defenses to state-law actions. See Argument I, supra.
Federal courts likewise lack subject matter jurisdiction where the party
invoking jurisdiction seeks relief that would effectively "reverse
or modify the judgment" of a state court, and thereby assert federal
appellate jurisdiction that lies exclusively in the United States Supreme
Court. See Rooker v. Fidelity Trust Co., 263 U.S. 413, 416 (1923);
District of Columbia Court of Appea1 v. Feldman, 460 U.S. 462, 476
(1983). [ In their own federal complaint, the cigarette manufacturers seek
a federal judicial determination that any judgment against them in the
Commonwealth's state court action would contravene their federal rights.
The only way that they can hope to avoid the Rooker/Feldman barrier to
such an attempt to have a lower federal court pass upon a state court judgment
is to suggest that such a forbidden intrusion on the United States Supreme
Court's exclusive appellate jurisdiction may be excused if a lower federal
tribunal jumps the gun and enters a preemptive ruling on an anticipated
state court judgment, before the state court has even had the opportunity
to consider the tobacco manufacturers' federal defenses. Thus, Rooker/Feldman
may be avoided only by an equally intrusive, but preemptive, federal judicial
interference with the state courts. To accept that position would be to
exalt form (and timing) over substance and to turn judicial federalism
on its head.]
Other jurisdictional bars appear in the federal Anti-injunction Act,
28 U. S. C. § 2283, which generally prohibits injunctions that would
stay proceedings in state courts, in order to ''prevent needless friction
between state and federal courts," Mitchum v. Foster, 407 U.S.
225, 233 (1972), and the Eleventh Amendment, which bars claims against
the States for monetary relief or for alleged violations of state law.
Pennhurst State School v Halderman, 465 U.S. 89, 103, 106 (1984)
Abstention doctrines likewise rest on these important principles of
judicial federalism. See Younger v. Harris, 401 U.S. at 44; Railroad
Commission v. Pullman Co., 312 U.S. 496 (1941); Bettencourt,
904 F.2d at 776. The policy underlying abstention under Younger,
for example, is to "permit state courts to try state cases free from
interference by federal courts." 401 U.S. at 43. Under Pullman,
federal courts should abstain from deciding a case where "difficult
and unsettled questions of state law must be resolved before a substantial
federal constitutional question can be decided." Hawaii Housing
Authority v. Midkiff, 467 U.S. 229, 236 (1984); See also Pustell
v. Lynn Public Schools, 18 F.3d 50, 53-55 (1st Cir. 1994).
[ In what are actually anticipated defenses to the Commonwealth's suit,
the cigarette manufacturers have already asserted in their declaratory
judgment action that the Attorney General has misconstrued recently enacted
Massachusetts statutes under which he is, in part, proceeding in this action,
and that as a result, rights they claim under the federal Constitution
will be abridged. See Decl. Judg. Comp. ¶¶ 10, 12, 22, 43, and
60 (citing Mass. G.L. c. 118E, § 22 (as amended by Mass. St. 1995,
c. 38, § 131) and Mass. St. 1994, c. 60, § 276). Indeed, if the
Court decides not to remand this case, it is certain to face a series of
requests for certification of issues of state law to the Massachusetts
Supreme Judicial Court.] These policies would be defeated if, via removal,
the defendants could derail this state-court proceeding in which the Commonwealth
seeks only to vindicate State law, and re-route this litigation into federal
court. For these reasons, this Court and other federal courts have repeatedly
held that abstention is a proper ground for remand of a case removed to
federal court. [ See Doughty v. Underwriter's at Lloyd's, London , 812
F. Supp. 13, 14 (D. Mass.), aff'd , 6 F.3d 856, 860-64 (1 st Cir. 1993)
(refusing to review by appeal or mandamus district court's decision to
remand under Burford abstention); See also Garcia v. Island Program Design,
Inc. , 4 F.3d 57, 62 (1 st Cir. 1993) (remanding based on Burford abstention);
Corcoran v. Ardra Ins. Co. , 842 F.2d 31, 36-37 (2d Cir. 1988) ("If
a district court has the power to dismiss an action on grounds of abstention,
it has the power to remand to the state court on these grounds.");
Melahn v. Pennock Ins. , 965 F.2d 1497, 1501-1502 (8 th Cir. 1992) ("abstention"
proper ground for remand, though Burford abstention not applicable under
facts of case); Rodriques v. County of Hawaii , 823 F. Supp. 798, 801-03
(D. Haw. 1993) (remanding based on Pullman and Younger ); Administaff,
Inc. v. Kasten , 799 F. Supp. 685, 690 and n. 12 (W.D. Tex. 1992) (remanding
based on Pullman abstention); Ganz v. City of Belvedere , 739 F. Supp.
507, 509-10 (N.D. Cal. 1990) (same); City of Chesapeake v. Sutton Enterprises,
Inc. , 138 F.R.D. 468, 473-75 (E.D. Va. 1990) (the argument that removal
defeats Younger abstention "exalts form over substance," because
"but for [the] removal,… state court proceedings would be ongoing").
The Court should reject the contrary conclusion reached by the Eighth Circuit
in In Re Burns & Wilcox, Ltd. , 54 F.3d 475, 478 (8 th Cir. 1995).
In Burns , the Court held that a district court abused its discretion in
remanding an action to state court. In a single sentence, the court stated
that " Younger abstention is inapplicable in the absence of an ongoing
state proceeding." Burns , 54 F.3d at 478 (citing Ankenbrandt v. Richards
, 504 U.S. 689, 705-06 (1992)). Burns does not address the arguments discussed
above -- arguments that were accepted in City of Chesapeake v. Sutton ,
138 F.R.D. at 474. Furthermore, the Ankenbrandt case cited by Burns states
only the general rule that Younger applies where there is an "ongoing
state proceeding." Ankenbrandt did not involve a removal; indeed,
the federal plaintiff alleged in support of his complaint that "[state]
proceedings ended prior to her filing th[e] lawsuit." Id. For these
reasons, Burns does not undercut the application of abstention principles
to the Commonwealth's motion to remand here.]
Each of these constitutional principles, statutes, and judicial doctrines
is implicated in the cigarette companies' attempt to remove the Commonwealth's
purely state-law action from state to federal court. The exercise of federal
jurisdiction over the removed action in this case would impose the very
harms to federalism that these doctrines were developed to protect -- and,
indeed, the very same harms to state judicial processes that would flow
from the exercise of federal jurisdiction over the cigarette manufacturers'
original federal action to enjoin the state case. In both cases, the result
of the exercise of federal jurisdiction would be to "disrupt substantially,"
if not "immobilize," the state proceeding. See Bettencourt,
904 F. 2d at 777. In both cases, the State by motion (to dismiss and remand)
has asserted its right to prosecute and adjudicate in its own courts its
claims that the cigarette companies have violated state law.
If, as the cigarette companies apparently assert, these doctrines of
comity and federalism may be evaded simply by filing a notice of removal,
then the doctrines would become irrelevant in every civil case in which
a defendant to a state civil enforcement action argues that his federal
rights are implicated by the state action. Under the companies' theory,
each such case could simply be removed to federal court. The result would
be to destroy comity between the federal and state courts.
The concerns for federalism and comity are particularly grave here,
because of the strong public interests advanced by the Commonwealth's state-law
suit. The case filed by the Attorney General implicates the Commonwealth's
vital interest in the health and safety of Massachusetts citizens, their
protection against fraud and deception, and the economic well-being of
the Commonwealth. See Cipollone v. Liggett Group, Inc., 505
U.S. 504, 528-29 (1992); Head v. New Mexico Bd. of Examiners, 374
U.S. 424, 445 (1963) (Brennan, J., concurring). The Supreme Court has expressly
held that a state "civil enforcement action . . . brought by the State
in its sovereign capacity" to "vindicate . . . the fiscal integrity"
of "its public-assistance programs" is protected by the doctrines
of federalism and comity. Trainor v. Hernandez, 431 U.S. 434, 444
(1977). The Commonwealth's suit here seeks to vindicate, among other things,
precisely these interests. Removal here would interfere with the powers
of the Massachusetts courts (1) to decide the state-law claims asserted
in the complaint; (2) to impose liability under state law; and (3) to enforce
their own judgments. The Supreme Court has repeatedly recognized that concerns
for federalism are at their peak when the operation of the state judiciary
is at stake. Pennzoil Co. v. Texaco, Inc. 481 U.S. at 13); Pulliam
v. Allen, 466 U.S. 522, 539 (1974); Atlantic Coastline Railroad
Co. v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 297 (1970);
cf. Gregory v. Ashcroft, 501 U.S. 452, 460 (1991) (Age Discrimination
in Employment Act does not apply to state judges).
"Since the beginning of this country's history Congress has, subject
to few exceptions, manifested a desire to permit state courts to try state
cases free from interference by federal courts." Younger v. Harris,
401 U.S. at 43. Interference with the Commonwealth's state-court suit would
destroy comity between federal and state courts. "[P]roper respect
for state functions," Younger v. Harris, 401 U.S. at 44, requires
this Court to remand this case to state court.
CONCLUSION
For the reasons stated above, the Court should grant the plaintiff Commonwealth
of Massachusetts' Motion to Remand.
Respectfully submitted,
COMMONWEALTH OF MASSACHUSETTS
SCOTT HARSHBARGER,
ATTORNEY GENERAL
Thomas A. Barnico
William W. Porter
Assistant Attorneys General
One Ashburton Place
Boston, MA 02108
(617) 727-2200
On the brief:
J Leib Dodell
Assistant Attorney General
One Ashburton Place
Boston, MA 02108
(617) 727-2200
Laurence H. Tribe
Special Assistant Attorney General
Hauser Hall 420
1575 Massachusetts Avenue
Cambridge, MA 02138
(617) 495-4621
Brian Stuart Koukoutchos
Special Assistant Attorney General
9 Avon Road
Bedford, MA 01730
(617) 275-4900
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