Drug-pricing suit sent back to skeptical judge

John O'Brien Mar. 15, 2011, 2:51pm

Brian Glasser

ST. LOUIS (Legal Newsline) - A federal appeals court has remanded a lawsuit over generic drug-pricing to a federal judge who once called the allegations made in it "laughable."

U.S. District Judge James Rosenbaum also told Charleston, W.Va., firm Bailey & Glasser that it was "absolutely reprehensible" to ask him to sustain the complaint, which alleged a group of drug stores did not pass on savings on generic drugs to consumers. After the complaint was amended, he remanded the case to a Minnesota state court, and the drug stores appealed to the U.S. Court of Appeals for the Eighth Circuit.

A three-judge panel on the Eighth Circuit ruled Thursday that Rosenbaum's court has jurisdiction over the case and sent it back to him. Rosenbaym had ruled the local controversy provision of the Class Action Fairness Act required the case be moved to state court.

The Eighth Circuit ruled "the local controversy provision operates as an abstention doctrine, which does not divest the district court of subject matter jurisdiction."

In November 2009, Rosenbaum was annoyed that the complaint, filed against 13 defendants on behalf of unions that provide health care for their members, contained specific pricing information about only two of them.

"(T)his Complaint utterly fails to state a cause of action on any basis. There are no, none, factual allegations touching any defendant other than CVS and Walgreen's," Rosenbaum said Nov. 20.

"There being no facts from which a fact finder could infer any liability concerning (the other defendants), and you asked me to sustain a complaint based upon that. It's not only laughable, it's absolutely reprehensible."

Rosenbaum, however, decided to allow the attorneys to amend their complaint. He then remanded the case, brought on behalf of unions that provide health care for their members, to a Minnesota state court.

He had told the plaintiffs attorneys, "There's not a lawsuit here. There is not a claim. There is not an allegation. I've got words on a page."

Among the defendants are Kmart, CVS, Sears, Walgreen, Target and Wal-Mart.

"After a second amendment, faced with the potential of a final dismissal, Plaintiffs alleged for the first time (based on information available to them at the time of removal) that the local controversy provision required remand," their brief says.

The drug stores say any motion to remand must be made within 30 days of a lawsuit's removal to federal court. It was more than 100 days after removal that the plaintiffs asked for remand. They did so one day after they learned the defendants were filing another motion to dismiss, the drug stores say.

The Eighth Circuit told Rosenbaum to determine if the more than 100 days it took to file a motion to remand constituted a "reasonable" time frame.

Bailey & Glasser is representing West Virginia Attorney General Darrell McGraw's office in a similar case. Whether to remand that lawsuit is also an issue, with many of the same defendants from the Minnesota case claiming it belongs in federal court because it is a class action lawsuit.

Bailey & Glasser brought other pricing lawsuits in Michigan. They were dismissed by a state judge because the only specific pricing information was obtained by a West Virginia whistleblower who worked at Kroger.

From Legal Newsline: Reach John O'Brien by e-mail at jobrienwv@gmail.com.

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