FRANKFORT, Ky. (Legal Newsline) -- The Washington Legal Foundation urged a federal court Wednesday not to allow Kentucky Attorney General Jack Conway to deprive an out-of-state business defendant of its right to a federal forum by filing a parens patriae suit in state court.
In a brief filed in Commonwealth of Kentucky ex rel. Conway v. GlaxoSmithKline in the U.S. District Court for the Eastern District of Kentucky, the foundation argues that out-of-state defendants in interstate cases of national importance ought to be permitted to remove those cases from state to federal court.
Congress adopted the Class Action Fairness Act in 2005 to ensure that the right of removal is protected for most such defendants, particularly in cases seeking significant damages and in which the plaintiff is suing to collect for alleged injuries on behalf of numerous individuals, as in the case at issue.
CAFA gives federal courts jurisdiction to certain class actions in which the amount in controversy exceeds $5 million, and in which any of the members of a class of plaintiffs is a citizen of a state different from any defendant, unless at least two-thirds or more of the members of all proposed plaintiff classes in the aggregate and the primary defendants are citizens of the state in which the action was originally filed.
Business groups and tort reform supporters lobbied for the legislation, arguing that it was needed to prevent class-action lawsuit abuse.
In its brief, WLF said it is concerned that remanding such cases to state court will only allow plaintiffs' lawyers to "game the system and avoid removal" -- the very thing that Congress sought to avoid when it adopted the federal statute, it says.
"Kentucky's remand motion seeks to frustrate the desire of Congress that cases of this sort be removable to federal court as a means of ensuring that out-of-state defendants can have their cases heard in an impartial forum," WLF Senior Litigation Counsel Cory Andrews said in a statement, after filing the foundation's brief.
"Under these circumstances, an order remanding the case back to state court would only serve as a road map for plaintiffs' lawyers seeking to keep their lawsuits out of federal court."
The suit was filed in state court by Conway against GlaxoSmithKline, a leading national pharmaceutical company.
The complaint alleges that GSK improperly promoted Avandia, a Type-2 diabetes drug, by making misleading and deceptive claims "in Kentucky and nationwide" about Avandia's efficacy and safety.
The attorney general's complaint further alleges that GSK's allegedly improper promotion of Avandia "caused the Commonwealth and its citizens to spend substantial sums for the purchase of and/or reimbursement for Avandia."
The lawsuit asks that GSK be required to refund the substantial costs borne by the state and its citizens in purchasing Avandia.
GSK invoked CAFA to remove the case from state court to federal court, but the state promptly moved to remand the case back to state court.
The suit is not considered a conventional "mass action," as that term is commonly used: Conway, suing on behalf of the state, is the only named plaintiff in the lawsuit.
But WLF argues that the suit is functionally equivalent to a standard mass action in that the attorney general seeks to obtain a recovery for hundreds of Kentucky consumers, identical to the recovery that would be available in a standard mass action.
"The mere fact that the Commonwealth is suing in a parens patriae capacity does not divest this court of jurisdiction under CAFA," the foundation wrote in its 21-page memorandum.
WLF emphasized that Congress intended CAFA to be interpreted broadly and to be applied to cases of this sort so as to permit removal to federal court.
In its brief, WLF also noted that the suit satisfies the requirements under CAFA of a mass action for purposes of removal: it is a civil action where the monetary claims of 100 or more persons are proposed to be tried jointly on the grounds that the claims involve common questions of law or fact; the aggregate amount in controversy is at least $5 million; the claims arise from more than 100 Kentucky citizens who are minimally diverse from GSK.
Those claims, WLF also reminded the federal court, are being brought by the state in a representative capacity on behalf of those citizens who allegedly suffered the harm.
In its memorandum, filed in opposition to Conway's motion to remand, the foundation pointed to the U.S. Court of Appeals for the Fifth Circuit's ruling in Mississippi ex rel Hood v. AU Optronics Corp.
The Fifth Circuit, in its Nov. 21 opinion, ruled that the removal of a lawsuit involving liquid crystal display panels to a federal district court was proper.
The court found that the suit qualified as a "mass action" under CAFA.
Mississippi Attorney General Jim Hood, who sued several major suppliers of the LCD panels in Hinds County Chancery Court in March 2011, is now arguing that the suit should remain in a state court. The attorney general says he filed the suit under his parens patriae powers -- to protect the physical and economic well-being of the residents of his state.
According to its website, the Washington Legal Foundation works with its allies in government and the legal system to maintain balance in the courts and help the government strengthen America's free enterprise system. The foundation champions free market principles, limited and accountable government, individual rights, business civil liberties and legal ethics, it says.
The foundation notes that it devotes a "substantial" portion of its resources to defending the right of class-action defendants to have their disputes resolved in a federal forum.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.