Second Circuit Agrees No Removal For Parens Patriae Actions

Contributed by Jesse Morris

In a decision this week in the case of Purdue Pharma L.P. v. Commonwealth of Kentucky, The Second Circuit joined the Fourth, Seventh, Fifth, and Ninth circuits in ruling that a suit brought in parens patriae by a State Attorney General does not qualify as a class action suit under the Class Action Fairness Act of 2005  (CAFA) and therefore does not qualify for removal from state to federal court.  To date, no federal circuit has held to the contrary.

A parens patriae suit is one in which the State sues to uphold its own interests, rather than suing on behalf of any or all of its citizens.  While injury to its citizens might give rise to the suit, the damages sought by the State in a parens patriae action are not aimed at making whole these individuals, but instead at allowing the State to recover its own costs arising from tending to and dealing with these mass injuries.  CAFA generally allows for class actions filed in State court to be removed to federal court if the following requirements are met: there are at least 100 members in the proposed class; any one of those class members is a citizen of a different state from any defendant; and the amount in controversy exceeds $5 million.  Parens patriae suits, however, are not eligible for removal under CAFA because they are not considered class action suits in the first place.

In Purdue, the Attorney General for Pike County, Kentucky filed suit against the defendant pharmaceutical company for allegedly misleading consumers, the medical community, and government officials about the addiction risks associated with its product OcyContin.  Damages sought included the costs accrued by the State of Kentucky in providing Oxycontin to citizens eligible for the State’s subsidized medication benefits as well as the costs associated with the adverse consequences to the State of having an allegedly unreasonably addicitive medication available by prescription.  Damages for private Kentucky residents were not specifically included in the relief sought.  Injunctive relief  was also requested.

The defendant in Purdue raised a novel argument that the court must “pierce the complaint” in order to the reveal that the real parties in interest to this case include private citizens and not the State alone.  In particular, the defendant cited languge in the complaint suggesting that certain claims were premised on costs incurred by individual consumers and insinuated that damages recovered for these costs might be passed on by the State to these private injured parties.  The defendant went on to accuse the State of filing this action oustide of the class action framework for the purpose of avoiding removal to federal court, urging the Second Circuit to use this as grounds to reconsider the nature of the case and its CAFA eligibility.  The court rejected this argument, holding that the plain language of CAFA does not allow for this type of analysis.

This case amplifies the current majority rule that defendants of claims brought by state Attorney Generals in parens patriae actions must defend these lawsuits in State court.  For defendants, this limits the strategic approaches available and forces cases to be tried under state rules of procedure, an outcome that could both increase defense costs and have adverse consequences on the final verdict.