Jon Campisi Apr. 10, 2012, 7:17am

A federal judge sitting in Philadelphia has remanded two consumer protection lawsuits filed against drug maker GlaxoSmithKline to their respective state court jurisdictions.

The pharmaceutical giant had been sued by the attorneys general of Utah and Louisiana, who alleged that GlaxoSmithKline engaged in fraudulent and deceptive practices when it misrepresented the safety of its diabetes drug Avandia.

The attorneys general allege that Medicaid funds were improperly dispersed to Utah and Louisiana Medicaid participants and suppliers for the non-medically appropriate use of Avandia because of the drug company’s allegedly deceptive practices.

The two cases were originally filed in the plaintiffs’ respective state court jurisdictions, but were later removed to federal court by GlaxoSmithKline.

The civil actions were eventually transferred to the U.S. District Court for the Eastern District of Pennsylvania by the Judicial Panel on Multidistrict Litigation.

GlaxoSmithKline had argued that removal to federal court was proper in these two cases because federal-question jurisdiction existed.

In the Louisiana case, the defendant also argued that removal was proper because diversity in citizenship existed between the parties and because the amount in controversy exceeded state court jurisdiction.

In her ruling, which was filed at the Eastern District of Pennsylvania on April 4, U.S. District Judge Cynthia Rufe wrote that the cases must be heard in their respective state courts because the federal court lacked subject-matter jurisdiction.

Rufe wrote that GlaxoSmithKline has “not established that legal interpretations of the [Food, Drug, and Cosmetic Act] or the federal Medicaid statute predominate over the state-law issues to be determined in these cases, or that the parties are of diverse citizenship.”

As for the diversity issue, Rufe wrote that despite GlaxoSmithKline’s assertions to the contrary, the courts have held that states are not considered citizens for the purposes of diversity jurisdiction.

The defendant had argued that in the Louisiana case, the real party in interest wasn’t the state, but rather the Louisiana Department of Health and Hospitals, which can be viewed simply as a citizen of Louisiana for diversity jurisdiction purposes.

Rufe, however, ruled that the LDHH is a state agency for purposes of diversity jurisdiction.

“GSK has given this Court no reason to conclude that LDHH should be treated differently for purposes of removal jurisdiction here,” the ruling states.

In the two cases, the states asserted only state-law causes of action. GlaxoSmithKline had argued that the cases involve “embedded federal questions” because the states’ obligation to pay for Avandia is rooted in the federal Medicaid statutes and whether or not the company misrepresented Avandia requires interpretation of decisions by the federal Food and Drug Administration.

The company also argued that the states repeatedly invoked the federal Food, Drug, and Cosmetic Act in the complaints, including allegations that the FDA cited the company of violations of the law in connection with its marketing of Avandia.

“Although Plaintiffs indeed so allege, ‘[t]he mere presence of a federal standard embedded in a state law cause of action is not sufficient to warrant federal subject matter jurisdiction where there is no federal remedy for a violation of the federal statute,’” the ruling states. “These allegations will not establish the States’ ability to recover under their state-law claims; instead, these allegations relate to possible evidence to support the state-law claims.”

Rufe wrote that the court determined that these two cases brought by the states do not fall within “that narrow class of cases in which federal jurisdiction may be found when only state-law causes of action are asserted.”

Rufe ordered the Utah case transferred to the Third Judicial District Court of Salt Lake County and the Louisiana case to the 19th Judicial District Court for the Parish of East Baton Rouge.


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