Opioid Case Against Wal-Mart Remanded to Jefferson County Circuit Court

Entities from all over the country have filed lawsuits against numerous companies for their alleged role in causing the current opioid epidemic. Generally, these cases allege that companies improperly pushed opioids onto people, causing states, local governments, and medical providers to have to expend money dealing with the health consequences and financial fallout of those actions.

On July 21, 2020, Jefferson County and Pulaski County joined the fray, filing a 68-page complaint against Wal-Mart and several associated corporate entities (for simplicity’s sake, “Wal-Mart”) alleging that Wal-Mart contributed to a substantial increase in opioid use and addiction in those counties. Stated broadly, the lawsuit claims that Wal-Mart violated state and federal statutory and regulatory law that impose certain requirements upon those who distribute and dispense opioids. Despite several references to federal drug law, the complaint’s causes of action are all based in state law. The complaint is quite lengthy, with a factual background that goes as far back as the early 19th century and allegations that cite the Controlled Substances Act, several Arkansas statutes, and related state and federal regulations. It also cites and several federal administrative enforcement actions taken against controlled substance licensees for regulatory violations. The thrust of the allegation is that

[i]n sum, Walmart facilitated the supply of far more opioids than could have been justified to serve a legitimate market. The failure of Walmart to maintain effective controls, and to investigate, report, and take steps to halt orders that it knew or should have known were suspicious, as well as to maintain effective policies and procedures to guard against diversion from its retail stores, breached both its statutory and common law duties.

Complaint at 15 ¶ 49.

The suit lists seven counts:

1.      Negligence/Gross Negligence;

2.      Public Nuisance;

3.      Violations of the Arkansas Uniform Narcotic Drug Act and Civil Action by Crime Victim

4.      Accomplice Liability under the Arkansas Uniform Narcotic Drug Act and Civil Action by Crime Victim;

5.      Possessing, Delivering, and Trafficking Controlled Substances in Violation of the Arkansas Controlled Substances Act and Civil Action by Crime Victim;

6.      Accomplice :iability for Possessing, Delivering, and Trafficking Controlled Substances in Violation of the Arkansas Controlled Substances Act and Civil Action by Crime Victim; and

7.      Violations of the Arkansas Drug Dealer Liability Act.

In August 2020, Wal-Mart filed a Notice of Removal. Removal is a process by which a defendant in a case that was originally filed in state court can have it transferred to a federal court. Defendants may prefer federal court for any number of reasons, but generally, the most common motivations are concerns that a state-court jury will be more sympathetic to a local plaintiff than a federal jury and that federal rules on such issues as discovery and admission of expert testimony are more defendant-friendly.

There are two bases for removing a case. Either 1) the plaintiff(s) must be from a different state than the defendants (“diversity jurisdiction”), or 2) the case must “aris[e] under the Constitution, laws, or treaties of the United States” (“federal question jurisdiction”). 28 U.S.C. § 1331. As most readers know, Wal-Mart is based in Northwest Arkansas. Therefore, removal of this case would have to rest on federal question jurisdiction.

To meet the federal question burden, Wal-Mart’s Notice of Removal asserted that even though the Counties’ suit cited Arkansas state law, those laws were rooted in federal law. Therefore, according to Wal-Mart, the federal court had jurisdiction. Once the case was removed, Wal-Mart also attempted to get it stayed and transferred to the ongoing opioid multidistrict litigation pending in an Ohio federal court. In Pulaski Cty. et al. v. Wal-Mart et al., Judge James Moody of the Eastern District of Arkansas rejected Wal-Mart’s contention of federal court jurisdiction in a court order entered on September 25th.

The court’s analysis began by recognizing that this was not the standard federal question case in which the causes of action were created by federal law. For example, this is not a case brought under a provision in the United States Constitution or a statute, such as Title VII in an employment discrimination case,  that allows those harmed by a violation to file a lawsuit to enforce it. Therefore, pursuant to Supreme Court precedent, it was guided by four elements. They are whether “a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and (4) capable of resolution in federal court without disrupting the federal state balance approved by Congress.” Order at 3 (citing Gunn v. Minton, 568 U.S. 251 (2013); Grable & Sons Metal Prods., Inc. v. Darue Eng’g and Mfg., 545 U.S. 308 (2005)). The court held that neither the first nor fourth elements were satisfied.

With respect to whether federal issues were necessarily raised, the court stated that the counties “expressly plead only state law claims”, and though the complaint alleged violation of the Controlled Substances Act and violations of that statute “would provide evidence of a breach of Defendants’ duties. . . ., it is possible for the claims to be resolved without resolution of the [Controlled Substances Act] issues.” Id. at 3. Bolstering the court’s conclusion is the fact that the Controlled Substances Act does not provide a right to sue. See Id. at 4 (“A ‘congressional determination that there should be no federal remedy for the violation of [a] federal statute is tantamount to a congressional conclusion that the presence of a claimed violation of the statute as an element of a state cause of action is insufficiently ‘substantial’ to confer federal-question jurisdiction.’” (citing Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 814 (1986)).

Relatedly, the court held that “requiring this action and others like it to be tried in federal court because they involve a federal element, regardless of the complaint’s clear intent to seek a remedy based on violations of state law, would be disruptive to the federal-state balance approved by Congress.” Id. at 4.

This decision comes on the heels of (and cites) an opioid case remand in the Western District of Arkansas. Though the plaintiffs in that case, Fayetteville Ark. Hosp. Co., LLC v. Amneal Pharm., LLC, are several Arkansas hospitals and the defendants are a collection of manufacturers and pharmacies, the principles are the same.  As Judge Timothy Brooks stated:

Moving Defendants assert that the amended complaint necessarily raises substantial federal issues because Plaintiffs rely on duties arising out of the federal Controlled Substances Act (“CSA”) as the basis for at least some of their state-law claims. Specifically, moving Defendants point to Plaintiffs' allegations that Defendants failed to report and halt suspicious orders as relying on duties that only arise out of the CSA and related federal regulations and agency guidance. Looking at the complaint as pleaded, however, the Court cannot conclude that the CSA is necessarily raised nor substantially implicated by the pleadings. Plaintiffs have relied on state statutory and common law theories for each of their claims. Ultimately, a court may conclude that Plaintiffs have not pled an adequate basis for the duties they ascribe to Defendants, but that will be a matter of state law and will not require any interpretation or application of the CSA. Therefore, there is no federal question jurisdiction.

The conclusion that there is no federal subject-matter jurisdiction is further strengthened by the fact that the CSA itself does not provide a private right of action. See Zink v. Lombardi, 783 F.3d 1089, 1113 (8th Cir. 2015) (noting that there is no private right of action under federal law to enforce violations of the Controlled Substances Act). “Given the significance of the assumed congressional determination to preclude federal private remedies, the presence of the federal issue as an element of the state tort is not the kind of adjudication for which jurisdiction would serve congressional purposes and the federal system.” Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 814 (1986). In other words, federal courts cannot permit parties to create federal question jurisdiction by implicating a federal statute in a state-law tort claim and thereby circumvent Congress's decision not to create a federal right of action.

Fayetteville Arkansas Hosp. Co., LLC v. Amneal Pharm., LLC, No. 5:20-CV-5036, 2020 WL 2521515, at *2-3 (W.D. Ark. May 18, 2020).

These rulings are welcome news for plaintiffs who bring opioid lawsuits in state court. Though they are not likely, in and of themselves, to dissuade future defendants in these cases from seeking removal, they are still encouraging rulings that future Arkansas federal courts in these sorts of cases might find persuasive.

Pulaski County v. Wal-Mart, Inc. returns to Jefferson County Circuit Court, where it is being presided over by Judge Rob Wyatt. Given the effect it could have on the resources available to Jefferson County and Pulaski County to deal with problems created by opioid, it bears watching.