LEGAL NEWSLINE

FRANKFORT, Ky. (Legal Newsline) -- A federal court has denied Kentucky Attorney General Jack Conway's renewed motion to dismiss a challenge by Merck & Co. over the state's contract with private attorneys.

In a memorandum opinion and order filed last month, the U.S. District Court for the Eastern District of Kentucky Central Division said because the state proceeding was not "ongoing," abstention is not appropriate under the principles of Younger v. Harris.

The abstention doctrine in the 1971 U.S. Supreme Court ruling provides that when a state proceeding is pending, principles of federalism dictate that any federal constitutional claims should be raised and decided in state court without interference by the federal courts.

If a federal district court concludes that its resolution of the case before it would "directly interfere with ongoing state proceedings," then it must determine whether to abstain from hearing the case altogether.

Merck is challenging the contingency fee contract Conway entered into with private attorneys to sue the pharmaceutical company over the anti-inflammatory drug Vioxx. That case is before a state court.

Conway's original motion to dismiss was filed April 10. It argued that the Younger doctrine initially prevented federal courts with interfering with state criminal proceedings and now extends to state civil litigation.

"The AG's motion should first be denied because the instant suit does not pose any threat of direct interference with state-court proceedings," Merck wrote in a response.

"Simply put: the relief sought by Merck is an injunction barring 'the AG from pursuing his lawsuit against Merck with contingency-fee counsel.' Merck is not asking the court to enjoin the AG from suit it at all."

Merck added that Conway never defined how its suit would "grossly interfere" with Kentucky's efforts to punish the company.

"The AG's argument, even if accurate, does not demonstrate sufficient interference to implicate abstention," according to the company's response. "As noted above, a federal court is compelled to abstain only where federal action would 'unduly interfere' with a state proceeding.

"Moreover, the law is clear that undue interference only occurs when the federal action would bar the parallel state action..."

In September 2009, Conway filed a lawsuit against Merck over alleged violations of the state's Consumer Protection Act.

The drugmaker was charged with violating the law by marketing their anti-inflammatory drug Vioxx without revealing all the facts.

The suit, Commonwealth ex rel. Conway v. Merck & Co. Inc., alleged that in May 1999 Merck began an aggressive and deceptive promotional campaign of the drug directed at both consumers and health care professionals, without mentioning warnings of increased risk of cardiovascular events listed as a side effect.

Conway alleged that Merck was aware of the dangers through internal studies that were not disclosed to the FDA or the public.

The lawsuit also accused Merck of engaging in an elaborate scheme to create or publish scholarly articles under fake or ghost authors in order to drum up support for Vioxx.

In 2004, Merck admitted that Vioxx caused serious side effects and pulled the product from the market.

A year after filing his case, Conway hired Garmer and Prather PLLC, a plaintiffs firm in Lexington, Ky.

Merck alleges that, in entering into such a contract with private lawyers, Conway has granted them a stake in the outcome of the lawsuit.

The company also alleges that Conway's outside counsel has since assumed the lead role in the prosecution of the suit and has "made or influenced myriad decisions about the prosecution, large and small."

Conway says the company's gripes should be heard in state court now, after the March 20 remand of his case. He contends the Younger abstention doctrine requires it.

"As initially developed, the Younger doctrine limited the power of the federal courts to interfere with state criminal proceedings," Conway wrote in his original motion to dismiss.

"Subsequently, however, the court applied Younger to civil cases in state courts by extending the doctrine to civil litigation where the state government is a party -- exactly the situation currently underway in Merck I. When vital state interests are implicated in the ongoing state judicial proceeding, as they are in Merck I, federal courts should abstain unless exceptional circumstances exist."

U.S. District Judge Danny C. Reeves wrote in the court's Dec. 19 opinion that "several factors" weigh in favor of a conclusion that "proceedings of substance" had taken place in the federal court before Merck I was pending in state court.

"(1) The federal action had been pending for over seven months when the state court proceeding was remanded on March 20, 2012; (2) on the date of the remand, there were two important motions that were fully briefed and ripe for adjudication; and (3) the (federal) court held a scheduling conference on Oct. 6, 2011, during which the parties advised the court about their positions on those two motions," Reeves wrote in the 13-page opinion.

"Based on these facts, the court concludes that the federal action, Merck II, was well beyond an 'embryonic stage' by the time the state action was pending. The fact that the court's actual opinions on the motion for preliminary injunction and motion to dismiss were entered a few days after the state court proceeding was remanded -- meaning, of course, that the court had spent considerable time on those opinions prior to the date Merck I was remanded to Franklin Circuit Court -- does not defeat this conclusion."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.