                              UNITED STATES DISTRICT COURT
                              FOR THE DISTRICT OF COLUMBIA


IN RE LORAZEPAM & CLORAZEPAT E           )                MDL Docket No. 1290 (TFH/JMF)
ANTITRUST LITIG.                         )                Misc. No. 99-276 (TFH)
                                         )
                                         )
HEALTH CARE SERV. CORP.,                 )
                Plaintiff,               )
                                         )
          v.                             )                Civ. No. 01-2646 (TFH)
                                         )
MYLAN LABS., INC., et al.,               )
                Defendants.              )
                                         )
                                        )
BLUE CROSS BLUE SHIELD OF MINN., )
BLUE CROSS BLUE SHIELD OF MASS., )
and FEDERATED MUT. INS. CO.             )
                Plaintiffs,             )
                                        )
         v.                             )                 Civ. No. 02-1299 (TFH)
                                        )
MYLAN LABS., INC., et al.,              )
                Defendants.             )
_______________________________________)

                                      MEMORANDUM OPINION


       The D.C. Circuit remanded this matter for a determination as to whether nondiverse plaintiffs

could be dismissed under Rule 21 of the Federal Rules of Civil Procedure, and if so, for a

determination as to the citizenship of plaintiffs for whom the record lacked jurisdictional allegations.

Through its October 24, 2012 Order and accompanying Memorandum Opinion, the Court decided

that the nondiverse plaintiffs in this action are dismissible under Rule 21 and addressed evidentiary

issues related to citizenship. See In re Lorazepam, 900 F. Supp. 2d 8 (D.D.C. 2012). Presently

pending before the Court are (1) Plaintiffs’ Joint Motion for Leave to File Amended Complaints

(“Pls. Mot. for Leave”) [ECF. No. 1049], and (2) Plaintiffs’ Joint Motion to Dismiss Claims and for
Order for Remittitur (“Pls. Mot. to Dismiss and for Remittitur”) [ECF No. 1051]. For the reasons that

follow, together with the reasons set forth in the Court’s October 24, 2012 Memorandum Opinion,

the Court grants Plaintiffs’ Joint Motion for Leave to File Amended Complaints and grants Plaintiffs’

Joint Motion to Dismiss Claims. The Court will not address Plaintiffs’ Motion for Remittitur at this

time.


           I.    Background


        The Court assumes familiarity with the long and complex factual background and procedural

history of this case, and so here will dispense with a detailed recounting.1 In the instant motion,

Plaintiffs contend that they have averred the factual predicates necessary for this court’s exercise of

subject matter jurisdiction over 612 of the 1387 corporate and municipal self-funded customers

included in the proposed damages award presented by plaintiffs’ damages expert, Dr. Saha, and

adopted by the jury at trial.2 See Pls. Mot. for Leave 5. As a corollary, plaintiffs seek dismissal and

remittitur for the claims of 775 self-funded customers who are either non-diverse from defendants or

for whom plaintiffs cannot establish citizenship. Pls.’ Mot. To Dismiss and for Remittitur at 4.




1
 For an account of this case’s extensive procedural history and factual background see, e.g., In re Lorazepam &
Clorazepate Antitrust Litig. Opinions: 631 F.3d 537 (D.C. Cir. 2011); 900 F. Supp. 2d 8 (D.D.C. 2012); 295 F. Supp. 2d
30 (D.D.C. 2003); and 467 F. Supp. 2d 74 (D.D.C. 2006).
2
 Plaintiffs assert that this Court has jurisdiction over: 419 of BCBS-MN’s self-funded customers (70 corporate and 349
municipal/political subdivision), See Pls. Mot. for Leave Ex. A1; 153 of BCBS-MA’s self-funded customers (58
corporate and 95 municipal/political subdivision), See id. at Ex. A2, and 40 of HCSC’s self-funded customer (2 corporate
and 38 municipal/political subdivision) id. at Ex. B1.

                                                          -2-
        Defendants, through their responsive brief, raise challenges to plaintiffs’ jurisdictional

allegations with respect to certain entities plaintiffs have not voluntarily dismissed from the case. See

Defendants’ Response to Plaintiffs’ Motions for Leave to File an Amended Complaint, to Dismiss

Claims, and for an Order for Remittitur 8-14 (“Defs.’ Resp.”) [ECF. No. 1052].3 In addition to

raising factual challenges, defendants raise challenges based on plaintiffs’ inconsistent jurisdictional

allegations and alleged failure to comply with the discovery order issued by this Court in its October

24, 2012 Memorandum Opinion. See In re Lorazepam, 900 F. Supp. 2d 8, 20 (D.D.C. 2012). Thus,

in analyzing defendants’ challenges, the Court divides them into two categories: (1) factual

challenges to jurisdiction and (2) challenges based on plaintiffs’ alleged failure to consistently plead

and prove citizenship or to comply with the discovery order. For the reasons that follow, the Court

finds that plaintiffs have met their burden to establish diversity jurisdiction over all of the self-funded

customers in dispute.


         II.     Legal Standards


        Rule 15 of the Federal Rules of Civil Procedure provides that a party “may move—at any

time, even after judgment—to amend the pleadings.” Fed. R. Civ. P. 15(b). “Whether to grant leave

to amend a pleading is a matter left to the district court’s sound discretion.” Abdullah v. Washington,

530 F. Supp. 2d 112, 114 (D.D.C. 2008) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). “While




3
  Defendants, in their responsive brief, also request that the Court dismiss the case in its entirety or dismiss all
of the self-funded customers from the case. The Court has already denied defendants’ motion to dismiss for
lack of subject matter jurisdiction, see In re Lorazepam, 900 F. Supp. 2d 8 (D.D.C. 2012), so does not address
those requests in this opinion.

                                                        -3-
the Supreme Court has instructed that leave to amend should be ‘freely given,’ it has also provided

examples of when leave may be denied, ‘including undue delay, bad faith or dilatory motive on the

part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue

prejudice to the opposing party, and futility of amendment.’” Lewis-Burke Associates, LLC v.

Widder, 725 F. Supp. 2d 187, 195 (D.D.C. 2010). “[A] district court may properly deny a motion to

amend if the amended pleading would not survive a motion to dismiss.” In re Interbank Funding

Corp. Sec. Litig., 629 F.3d 213, 218 (D.C. Cir. 2010).

       The Court construes defendants’ response challenging the diversity of specific plaintiffs as a

motion to dismiss for lack of subject matter jurisdiction. Because defendants challenge the underlying

facts contained in the complaint, Keli v. Rice, 571 F. Supp. 2d 127, 130 (D.D.C. 2008), “the plaintiff

bears the burden of establishing the factual predicates of jurisdiction by a preponderance of the

evidence.” Keli, 571 F. Supp. 2d at 131 (quoting Al-Owhali v. Ashcroft, 279 F. Supp. 2d 13, 20

(D.D.C. 2003) (internal quotations marks omitted)). When resolving a factual challenge the court

may turn to evidence outside of the pleadings to determine whether it has subject matter jurisdiction

over the challenged claim. Id. (citing Jerome Stevens Pharm., Inc. v. FDA, 402 F.3d 1249, 1253

(D.C. Cir. 2005)). “The district court retains ‘considerable latitude in devising the procedures it will

follow to ferret out the facts pertinent to jurisdiction,’ but it must give the plaintiff ‘ample opportunity

to secure and present evidence relevant to the existence of jurisdiction.’” Phoenix Consulting Inc. v.

Republic of Angola, 216 F.3d 36, 40 (D.C. Cir. 2000) (quoting Prakash v. American University, 727

F.2d 1174, 1179-80 (D.C. Cir. 1984)).




                                                   -4-
        III.   Plaintiffs Have Established a Sufficient Factual Predicate for this Court’s
               Exercise of Subject Matter Jurisdiction
       A. Factual Challenges
                   Diocese of Duluth

       Defendants argue that because Diocese of Duluth is listed as a “general entity” with the

Minnesota Secretary of State’s website, plaintiffs must establish its citizenship under the rules for

unincorporated associations. Defs.’ Resp. 13. BCBS-MN alleges that the Diocese of Duluth was a

diocesan corporation at the time the complaint was filed, BCBS Am. Compl. Ex. A1 ¶ 20, and thus is

treated as a corporation for diversity purposes. See Plaintiffs’ Responsive Brief to Defendants’

Challenges to Plaintiffs’ Jurisdictional Allegations 10-11 (“Pls.’ Responsive Brief”) [ECF No. 1055].

Plaintiffs argue that federal courts universally treat non-business corporations as corporations for

diversity purposes. Id. Defendants, in response, argue that the Diocese of Duluth is a “general entity,”

and plaintiffs have failed to establish that a “general entity” is a “non-business corporation.” See

Reply Memorandum in Further Support of Defendants’ Jurisdictional Objections 6 (“Defs.’ Reply”)

[ECF No. 1056].


       Plaintiffs have submitted a sworn declaration stating that the Diocese of Duluth was a

diocesan corporation incorporated in Minnesota under Minnesota state statute 315.16. Pls.’ Mot. for

Leave Ex. 1, at 66 ¶ 2 [ECF. No. 1049-6]. Section 16 of Chapter 315 of the Minnesota Statutes

provides that the bishop of a diocese, the vicar general, and the chancellor of the diocese may join

with two other members of the denomination to adopt, sign, and acknowledge a certificate of

incorporation to be filed in accordance with section 315.15. See Minn. Stat. § 315.16 (2014). Section

315.15 provides that “[w]hen they have recorded the certificate with the county recorder of the

                                                  -5-
county where the corporation is located, they and their successors become a corporation, subject to

the requirement, and with the rights, powers, and privileges of a religious corporation.” Minn. Stat. §

315.15. Thus, diocesan corporations are corporations incorporated under Minnesota law. The fact

that the Diocese of Duluth is listed as a “general entity” with the Minnesota Secretary of State’s

website does not establish, or even suggest, that it is an unincorporated association. Defendants fail to

explain the significance of this categorization under the Minnesota Secretary of State’s organizational

scheme.

        Thus, plaintiffs have established that the Diocese of Duluth is a corporation incorporated

under Minnesota law for purposes of diversity jurisdiction. Having alleged that its state of

incorporation and principal place of business are in Minnesota, a state that is diverse to all of the

defendants, plaintiffs have established by a preponderance of the evidence that the Diocese of Duluth

is a diverse party subject to this Court’s jurisdiction.

        Great River Energy

        In a similar type of argument as defendants’ challenge to the Diocese of Duluth, defendants

argue that because Great River Energy is listed as a “Cooperative (Domestic)” with the Minnesota

Secretary of State’s website, plaintiffs must establish the citizenship of Great River Energy’s

members under the rules for unincorporated associations. Defs.’ Resp. 13. Plaintiffs argue that they

have provided evidence that Great River Energy is a cooperative corporation under Minnesota law in

a declaration in support of principal place of business. Pls.’ Responsive Brief 14. Furthermore,

plaintiffs argue, under Minn. Stat. § 308A.201, cooperative corporations are full corporations. Id.

Defendants counter that the Minnesota statute does not provide that cooperative corporations are

corporations under Minnesota law, and furthermore, that plaintiffs have failed to establish that a
                                                    -6-
domestic cooperative is jurisdictionally equivalent to corporations for diversity purposes, the

presumption being to the contrary under Carden v. Arkoma Associates., 494 U.S. 185, 195-96. Id.

       As plaintiffs note, a Minnesota federal court has found that cooperative corporation is treated

as a corporation for purposes of diversity jurisdiction. Zosel v. Minn-Dak Farmers’ Co-Op., Inc., 463

F. Supp. 2d 960, 961 n.2. (D. Minn. 2006). Defendants have not cited any contrary authority. In

addition, plaintiffs have submitted a sworn declaration that states that Great River Energy is

incorporated under state law. See Pls. Mot. for Leave Ex. 1, at 101-03. Thus, plaintiffs have shown by

a preponderance of the evidence that Great River Energy is a corporation under Minnesota law for

the purpose of diversity jurisdiction.

       Massachusetts Bay Transportation Authority (“MBTA”)

       Defendants argue that the Massachusetts Bay Transportation Authority (“MBTA”). one of

BCBS-MA’s self-funded customers, should be considered an “arm of the state” (and thus not a

citizen of any state for diversity purposes) because all of the directors are appointed by the governor.

Defs.’ Resp. at 9. BCBS-MA alleges that the MBTA was a Massachusetts political subdivision

located in Massachusetts and organized under Mass. Gen. Laws, ch. 161A at the time the original

complaint was filed. Id. Plaintiffs contend that the MBTA is not an “arm” of the Commonwealth of

Massachusetts, and thus is a citizen of Massachusetts. See Pls.’ Responsive Brief 17.

       Plaintiffs point out that the MBTA has been a party to cases in federal court based on

diversity jurisdiction. See, e.g, Cournoyer v. Massachusetts Bay Transp. Authority, 744 F.2d 208, 209

(1st Cir. 1984); CSX Transportation, Inc. v. Massachusetts Bay Transp. Authority., 697 F. Supp. 2d

213, 216 (D. Mass. 2010). Defendants do not cite any contrary authority, nor do they give this Court

any reason to believe that these courts were incorrect. Thus, plaintiffs have shown by a
                                                  -7-
preponderance of the evidence that the MBTA is a political subdivision of Massachusetts that is not

an “arm or alter ego” of the state for purposes of diversity jurisdiction. Because the MBTA is a

citizen of a state that is diverse to all of the defendants, plaintiffs have established by a preponderance

of the evidence that the MBTA is subject to this Court’s jurisdiction.


       Tighe & Bond, Inc.

       BCBS-MA alleges that Tighe & Bond, Inc. was a Massachusetts corporation incorporated in

the State of Massachusetts with its principal place of business in Westfield, Massachusetts when the

original complaint was filed. BCBS Am. Comp. Ex. A2 ¶ 53. The declaration in support of Tighe &

Bond’s principal place of business states the same. Pls.’ Joint Mot. for Leave Ex. 2 at 180-82. The

declaration also provides that “[i]n 2002, Tighe & Bond was registered as a corporation in New York

and New Jersey, but did a very small percentage of its business in those states, and no executive-level

corporate activity took place in those states.” Id. at 182 ¶ 3.

       Defendants argue that because the declarant failed to define what he meant by “registered as a

corporation,” plaintiffs have failed to eliminate the possibility that Tighe & Bond is nondiverse, as

defendants are citizens of New York and New Jersey. Defs.’ Resp. 12. Plaintiffs counter that

defendants’ argument “incorrectly conflates the legal concept of incorporation and corporate

registration” and that “[w]here a corporation has registered in order to conduct business has no

bearing on its citizenship[.]” Pls.’ Responsive Brief 8-9. Plaintiffs also point out that this Court has

taken judicial notice of the fact that Tighe & Bond is incorporated in Massachusetts. Id. Furthermore,

plaintiffs argue, the declaration in support of Tighe & Bond’s principal place of business expressly

states that Tighe & Bond was incorporated in Massachusetts. Id. at 8. Defendants respond that

                                                    -8-
“[p]laintiffs incorrectly assume that Defendants were only concerned with Tighe & Bond’s place of

incorporation, but without explanation there is also no way to be confident that Tighe & Bond’s

principal place of business was not in New York or New Jersey.” Defs.’ Reply 5.

       Although defendants challenge the proof tendered in support of principal place of business

rather than the allegations made on the face of the complaint, defendants do not challenge the factual

predicate in any meaningful way, for example by proffering facts to suggest that the entity was

actually a citizen of New York or New Jersey. See McNutt v. General Motors Acceptance Corp., 298

U.S. 178, 189 (1936) (party asserting jurisdiction must support allegations with competent proof if

allegations “are challenged by his adversary in any appropriate manner.”) Plaintiffs have already

provided competent proof that Tighe & Bond’s principal place of business was in Westfield,

Massachusetts, not New York or New Jersey. Plaintiffs submit a sworn declaration by David Croney,

who was employed by Tighe & Bond as a Controller when the original complaint was filed. Pls.’

Joint Mot. for Leave Ex. 2, 180 ¶ 1. The declaration provides predicate facts to support the allegation

of principal place of business. The “principal place of business” refers to the “place where a

corporations’s officers direct, control, and coordinate the corporation’s activities. Hertz Corp. v.

Friend, 559 U.S. 77, 93 (U.S. 2010). In applying the “nerve center” test elucidated in Hertz, the

Fourth Circuit looked to the location where the corporate officers control policies and high-level

decisions. See, e.g., Cent. W. Va. Energy Co. v. Mt. State Carbon, LLC, 636 F.3d 101 (4th Cir. 2011)

(finding that corporation’s principal place of business was where seven of eight high level officers set

policies and oversaw significant corporate decisions). The declaration by David Croney states that

       all executive-level operational and administrative departments and/or functions were
       based at and/or performed from the company’s corporate headquarters in Westfield,
       Massachusetts including: day to day managerial functions; creation and approval of
                                                   -9-
       corporate policies; budgeting, accounting and related financial functions and
       decisions; strategic planning; human resources, including key employment decisions
       and payroll; marketing and sales, and banking.
Pls.’ Joint Mot. for Leave Ex. 2, 181 ¶ 4. The sworn declaration, the veracity of which defendants do

not challenge, establishes by a preponderance of the evidence that Tighe & Bond is a citizen of

Massachusetts.


       B. Challenges Based on Inconsistent Allegations & Alleged Failure to Comply with
          the Discovery Order
       Pierce County, WI
       In their amended complaint, Plaintiffs erroneously alleged that Pierce County is a county

located in Minnesota, BCBS Am. Comp. Ex. Al ¶ 161, when it in fact is a county located in

Wisconsin. Plaintiffs, in their responsive brief, concede that Pierce County is indeed a county located

in Wisconsin and file a revised amended complaint correcting the error. See Pls.’ Responsive Brief 3-

4. Defendants request that this Court disallow plaintiffs “belated claim to represent Pierce County,

WI because it contradicts their prior discovery representations and comes almost two months after the

date when Plaintiffs were ordered to bring forward their final jurisdictional evidence and averments.”

Defs.’ Reply 8-9.


       As a citizen of either Minnesota or Wisconsin, Pierce County is diverse from defendants.

Defendants do not argue that Pierce County is nondiverse, but merely argue that this Court should

prohibit plaintiffs from correcting their error. However, as long as the Court gives plaintiffs “ample

opportunity to secure and present evidence relevant to the existence of jurisdiction,” the Court

“retains ‘considerable latitude in devising the procedures it will follow to ferret out the facts pertinent

to jurisdiction.’” Phoenix Consulting Inc. v. Republic of Angola, 216 F.3d 36, 40 (D.C. Cir. 2000)
                                                   - 10 -
(quoting Prakash v. American University, 727 F.2d 1174, 1179-80 (D.C. Cir. 1984)). Because

plaintiffs allege adequate facts to establish that Pierce County, Wisconsin is diverse from defendants

in their Revised Amended Complaint, there is no basis for dismissing Pierce County as a nondiverse

self-funded customer.


           Texas School Districts


   Defendants contend that all of the Texas School Districts should be dismissed because plaintiffs

failed to confirm, pursuant to the method of proof the parties agreed to follow in the Discovery Order,

that the schools were organized under the appropriate statute by the termination of jurisdictional

discovery. Defs.’ Resp. 10-11. However, the type of documents defendants demand do not exist for

the Texas schools. The parties agreed that plaintiffs would produce the charter or other organizing

document establishing and governing each municipal/political subdivision self-funded customer in

exchange for defendants’ deferral of all discovery requests related to those customers. See Defs.’

Resp. Ex. B, at 3 [ECF. No. 1053-2]. On December 21, 2012, HCSC sent defendants charters,

organizing documents, and other materials related to HCSC’s self-funded customers. See Defs.’

Resp. Ex. D [ECF No. 1053-4]. In correspondence between the parties, HCSC explained that three of

the four categories of self-funded customers (including the school districts) were organized under

Texas law, and submitted copies of the acts, constitutional provisions, or sections of the Texas Code

in lieu of organizing charters. See id. The Court finds that HCSC did not violate the discovery order

by providing defendants with the relevant statutory code in lieu of charters that do not exist.




                                                  - 11 -
        Beth Israel Deaconess Medical Center (BIDMIC), Great River Energy, Diocese of
        Duluth, Minnesota Annual Conference of the United Methodist Church (MACUMC),
        and BCBSM Inc.
        Defendants argue that the Beth Israel Deaconess Medical Center (BIDMIC), Great River

Energy, Diocese of Duluth, Minnesota Annual Conference of the United Methodist Church

(MACUMC), and BCBSM Inc. should be dismissed due to inconsistency between plaintiffs’

jurisdictional allegations, proof, and representations in submissions before and after this Court’s

October 24, 2012 Order. Defs.’ Resp.12-14. However, defendants were instructed to submit a

responsive brief outlining their challenges within 30 days of Plaintiffs’ Motion to File Amended

Complaints. See In re Lorazepam, 900 F. Supp. 2d 8, 20 (D.D.C. 2012). Thus, Plaintiffs’ Joint

Motion to Dismiss Claims and for Remittitur, which set forth the jurisdictional allegations defendants

now rely on in raising these challenges, was dismissed without prejudice. Plaintiffs were instructed

to aver jurisdictional facts sufficient for this Court’s exercise of subject matter jurisdiction in the

proposed amended complaint now before the Court. Therefore, defendants were not expected to rely

on plaintiffs’ prior representations in raising challenges, and plaintiffs were permitted to alter the

allegations previously made.


        IV.     Conclusion


        The Court has already concluded that self-funded customers are not indispensable parties

under Rule 19 of the Federal Rules of Civil Procedure, and thus may be dismissed pursuant to Rule

21. In re Lorazepam, 900 F. Supp. 2d 8, 14 (D.D.C. 2012). In light of this holding, and because the

Court finds that plaintiffs have met their burden to establish diversity jurisdiction for the self-funded

customers referenced in their amended complaints, the Court GRANTS Plaintiffs’ Joint Motion for

                                                   - 12 -
Leave to File Amended Complaints [ECF No. 1049]4 and GRANTS Plaintiffs’ Joint Motion to

Dismiss Claims [ECF No. 1051], thereby dismissing without prejudice the self-funded customers

listed in Exhibits 1-3 to the January 14, 2013 Declaration of Justin Mclean [ECF No. 1051-4]. The

Court will rule on Plaintiffs’ Motion for Remittitur in a separate order.

          An appropriate order accompanies this memorandum opinion.




July 29, 2014                                         _________________________
                                                             Thomas F. Hogan
                                                     Senior United States District Judge




4
    As amended by the BCBS Revised Fourth Amended Complaint.

                                                  - 13 -
