People of The State of California v. Eli Lilly and Company

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

IN RE: INSULIN PRICING LITIGATION Case No. 2:23-md-03080 (BRM)(RLS)

MDL No. 3080

THIS DOCUMENT RELATES TO: OPINION

People of the State of California v. Eli Lilly

and Co., et al.,

Case No. 2:24-cv-11488

MARTINOTTI, DISTRICT JUDGE

Before the Court is Plaintiff the People of the State of California’s (the “People”) Renewed

Motion for Remand of this matter back to Los Angeles County Superior Court (the “Motion”).

(ECF Nos. 486-1–2.) Defendants Express Scripts, Inc. (“Express Scripts”) and CaremarkPCS

Health, LLC (“Caremark”) (collectively, “Defendants”) each filed their own oppositions to the

Motion (ECF Nos. 486-3; 486-4–10), and the People filed a reply (ECF No. 486-11). Following

the filing of Defendants’ Notice of Update in a Related Case regarding Defendants’ Motion to Stay

and Oppositions to the People’s Renewed Motion to Remand, the People filed a Statement

Addressing Defendants’ Notice of Update in a Related Case (ECF No. 486-12), and Defendants

filed their own Statement Addressing Notice of Update in a Related Case (ECF Nos. 486-13; 486-

14). After this matter was transferred to this Court, the People filed a Supplemental Brief in

Support of its Renewed Motion to Remand (ECF No. 486-15), and Express Scripts and Caremark

each filed supplemental responsive briefs (ECF Nos. 486-16; 486-17). Having reviewed and

considered the submissions filed in connection with the Motion, for the reasons set forth below

and for good cause having been shown, the People’s Motion to Remand (ECF Nos. 486-1–2) is

DENIED.

I. BACKGROUND

A. Factual History

The People bring this suit against three manufacturers of insulin: Eli Lilly and Company,

Novo Nordisk Inc., and Sanofi-Aventis U.S. LLC (together, the “Manufacturer Defendants”); and

three pharmacy benefit managers (“PBMs”), who manage the relationships between insurance

providers and Manufacturer Defendants: Caremark, Express Scripts, and OptumRx, Inc. (together,

the “PBM Defendants”). (ECF No. 486-10 ¶¶ 4–5.) Generally, the People allege the PBM

Defendants conspired with the Manufacturer Defendants to artificially and unconscionably raise

the price of insulin paid by California diabetics. (Id. ¶¶ 1–10.) Specifically, the Manufacturer

Defendants—“who make nearly all of the insulin sold in the United States”—“aggressively raised

the list price of insulin in lockstep with each other” so they may offer “secret rebates and fees . . .

in exchange for favorable placement on the PBMs’ standard formularies.” (Id. ¶¶ 4, 7–8.) Based

on these allegations, the People bring claims under the California Unfair Competition Law, CAL.

BUS. & PROF. CODE § 17200, and for unjust enrichment. (Id. ¶¶ 261–74.)

B. Procedural History

On January 12, 2023, the People filed its Complaint in this matter in Los Angeles County

Superior Court. (Dkt. No. 2:24-cv-11488, ECF No. 1-1.) On March 15, 2023, Express Scripts

removed the action to the Central District of California, invoking the federal officer removal

statute, 28 U.S.C. § 1442. (Dkt. No. 2:24-cv-11488, ECF No. 1 (Notice of Removal).) That same

day, Caremark filed a Supplemental Notice of Removal under the federal officer removal statute.

(Dkt. No. 2:24-cv-11488, ECF No. 5.) The People filed their Motion to Remand the action back

to Los Angeles County Superior Court on April 14, 2023. (Dkt. No. 2:24-cv-11488, ECF No. 78.)

On June 28, 2023, the Central District of California granted the People’s Motion to Remand. (Dkt.

No. 2:24-cv-11488, ECF No. 109.)

Caremark filed its Notice of Appeal to the Ninth Circuit Court of Appeals on July 5, 2023

(Dkt. No. 2:24-cv-11488, ECF No. 113), and Express Scripts filed its Notice of Appeal on July 6,

2023 (Dkt. No. 2:24-cv-11488, ECF No. 118). On August 13, 2024, the United States Court of

Appeals for the Ninth Circuit issued a Memorandum “revers[ing] and remand[ing] to the district

court to analyze California’s remaining arguments for remanding to state court.” (Dkt. No. 2:24-

cv-11488, ECF No. 133 at 4.) The Ninth Circuit found that the People’s Complaint “fail[ed] to

explicitly release claims or possible recovery from rebate practices as they relate to [the Federal

Employees Health Benefits Act (“FEHBA”)] and TRICARE.” California v. CaremarkPCS Health

LLC, Civ. A. No. 23-55597, 2024 WL 3770326, at *1 (9th Cir. Aug. 13, 2024). The Ninth Circuit

issued its Mandate on September 4, 2024.1 (Dkt. No. 2:24-cv-11488, ECF Nos. 134–35.)

Also on September 4, 2024, Caremark filed a Notice of Potential Tag Along Action in the

JPML identifying the case as a potential tag-along action for inclusion in the In re Insulin Pricing

MDL. (Dkt. No. 2:24-cv-11488, ECF No. 137.) On September 11, 2024, the JPML entered a

Conditional Transfer Order conditionally transferring the case to the In re Insulin Pricing MDL.

(Id.) The People filed their Renewed Motion to Remand the Case to Los Angeles Superior Court

on September 18, 2024. (Dkt. No. 2:24-cv-11488, ECF No. 138.) The JPML issued its Transfer

Order transferring this action from the Central District of California to the In re Insulin Pricing

1 Approximately one year prior, on August 3, 2023, the Judicial Panel on Multidistrict Litigation

(“JPML”) centralized the then-pending alleged insulin pricing scheme actions and transferred the

multidistrict litigation (“MDL”) to this Court in the District of New Jersey. In re Insulin Pricing

Litig., 688 F. Supp. 3d 1372, 1376 (J.P.M.L. 2023).

MDL No. 3080 on December 17, 2024. (Dkt. No. 2:23-md-03080, ECF No. 347; Dkt. No. 2:24-

cv-11488, ECF No. 161.)

On February 13, 2025, this Court entered Case Management Order (“CMO”) No. 18 (Order

Governing Motions to Remand), which required the parties to refile the Renewed Motion to

Remand “and all related exhibits, responses, replies, notices of supplemental authority, and

responses thereto.” (Dkt. No. 2:23-md-03080, ECF No. 427.) CMO No. 18 also granted the People

leave to file a supplemental brief and for the Defendants to file supplemental responses thereto.

(Id.) On March 31, 2025, the People filed their fully briefed Renewed Motion to Remand as an

omnibus packet pursuant to CMO No. 18. (Dkt. No. 2:23-md-03080, ECF No. 486.)

II. LEGAL STANDARD

The federal officer removal statute, 28 U.S.C. § 1442(a)(1), allows certain officers of the

United States and “private persons who lawfully assist [a] federal officer in the performance of his

official duty” to remove state court actions against them to federal court. Mohr v. Trs. of Univ. of

Pa., 93 F.4th 100, 104 (3d Cir. 2024) (alteration in original) (quoting Watson v. Philip Morris

Cos., Inc., 551 U.S. 142, 151 (2007)). “Its central aim is protecting officers of the federal

government from interference by litigation in state court while those officers are trying to carry

out their duties.” Papp v. Fore-Kast Sales Co., Inc., 842 F.3d 805, 811 (3d Cir. 2016). To remove

a case under the statute, a defendant must establish: (1) it is “‘person’ within the meaning of the

statute”; (2) “plaintiff’s claims must be based upon the defendant ‘acting under’ the United States,

its agencies, or its officers”; (3) “plaintiff’s claims against the defendant must be ‘for or relating

to’ an act under color of federal office”; and (4) it has “a colorable federal defense to the plaintiff’s

claims.” Mohr, 93 F.4th at 104 (quoting Maglioli v. All. HC Holdings LLC, 16 F.4th 393, 404 (3d

Cir. 2021)).

“The burden is upon a defendant to show that removal is proper, and the federal court is

obligated to ‘strictly construe the removal statutes against removal and resolve any doubts in favor

of remand.’” N.J. Dep’t of Env’t Prot. v. Exxon Mobil Corp., 381 F. Supp. 2d 398, 402–03 (D.N.J.

2005) (quoting Entrekin v. Fisher Sci. Inc., 146 F. Supp. 2d 594, 604 (3d Cir. 2001)). “[P]rivate

actors seeking to assert the right of federal officer removal ‘bear a special burden of establishing

the official nature of their activities.’” Id. at 403 n.5 (quoting Frieberg v. Swinerton & Walberg

Prop. Servs., Inc., 245 F. Supp. 2d 1144, 1150 (D. Colo. 2002)).

III. DECISION

The People raise several arguments as to why this matter should be remanded back to Los

Angeles County Superior Court. First, the People contend that their post-removal disclaimer

statements should be given effect, eliminating any original jurisdiction claim and requiring

remand. (ECF No. 486-1 at 3–5.) The People further contend this Court should reject any

opposition arguments by Caremark or Express Scripts that they pleaded sufficient facts for removal

under the federal officer removal statute despite the People’s post-removal disclaimers. (Id. at 5–

21.) The People next contend this Court should reject any opposition argument by Defendants that

the post-removal disclaimers are illusory since remand is required absent the disclaimers. (Id. at

21–24.) Finally, the People argue this Court should grant their motion for remand, regardless of

any post-removal disclaimers, pursuant to the Court’s discretionary authority. (Id. at 24–25.)

A. The People’s Post-Removal Disclaimers

The People contend this Court lacks jurisdiction because the People’s post-removal

disclaimers were effective to confirm they are not suing over TRICARE and FEHBA2. (ECF No.

486-1 at 3.) They state:

The People disclaimed and are disclaiming the recovery of moneys

(via restitution, disgorgement, or other form of monetary relief)

from any Defendant paid by the federal government for FEHBA or

TRICARE plan beneficiaries, enrollees, insureds, or members, or by

such beneficiaries, enrollees, insureds, or members, or by such

beneficiaries, enrollees, insureds, or members themselves pursuant

to a FEHBA or TRICARE plan.

(Id. at 3, n.1) The People maintain their post-removal disclaimer statements demonstrate there is

“no government-directed conduct left in the wake of Plaintiff’s express disclaimer.”3 (Id. at 3–5.)

“To prevent a defendant from removing under the federal officer removal statute, plaintiffs

often disclaim in their complaint claims that would serve as the basis for removal.” Gov’t of P.R.

v. Express Scripts, Inc., 119 F.4th 174, 186 (1st Cir. 2024). Federal district courts considering such

disclaimers generally distinguish between two categories of § 1442(a)(1) disclaimers: (1) “express

disclaimers of the claims that serve as the grounds for removal”; and (2) “artful pleading for

purposes of circumventing federal officer jurisdiction.” Dougherty v. A O Smith Corp., Civ. A.

No. 13-1972, 2014 WL 3542243, at *10 (D. Del. July 16, 2014); see St. Charles Surgical Hosp. v.

La. Health Serv. & Indem. Co., 990 F.3d 447, 451 (5th Cir. 2021) (“Generally, courts respect

2 FEHBA establishes a comprehensive health insurance program for federal employees. 5 U.S.C.

§§ 8901 et seq. FEHBA authorizes the Office of Personnel Management (“OPM”) to contract with

private carriers to provide federal employees with a variety of healthcare plans. 5 U.S.C. § 8902(a).

“FEHBA assigns to OPM responsibility for negotiating and regulating health-benefits plans for

federal employees.” Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 683–84

(2006) (citing 5 U.S.C. § 8902(a)).

3 See ECF No. 486-2 (collecting the People’s disclaimer statements made in their prior motion to

remand).

express disclaimers . . . so long as they are not merely artful pleading designed to circumvent

federal officer jurisdiction.” (internal quotation marks and citation omitted)).

“To defeat removal, an express disclaimer must ‘explicitly renounce[] claims’ ‘upon which

federal officer removal was based.’” Gov’t of P.R., 119 F.4th at 187 (alteration in original) (quoting

Batchelor v. Am. Optical Corp., 185 F. Supp. 3d 1358, 1363–64 (S.D. Fla. 2016)). “If a plaintiff

renounces such claims, then a defendant is not entitled to ‘a federal forum’ in which ‘to raise a

defense arising out of his official duties,’ ‘because such a defense pertains to claims that simply

do not exist.’” Id. (first quoting Arizona v. Manypenny, 451 U.S. 232, 241 (1981); then quoting

Batchelor, 185 F. Supp. 3d at 1364). “Accordingly, a valid disclaimer must eliminate any basis for

federal officer removal so that, upon remand, there is no possibility that a state court would have

to determine whether a defendant acted under a federal officer’s authority.” Id. (citing Batchelor,

185 F. Supp. 3d at 1364). “Thus, disclaimers that ‘clearly carve[] out certain factual bases, whether

by time span or location, such that any alleged injury could not have happened under the direction

of a federal officer’ will prevent removal.” Id. (quoting Hawai’i ex rel. Lopez v. CaremarkPCS

Health, LLC, Civ. A. No. 23-464, 2024 WL 1907396, at *11 (D. Haw. May 1, 2024)).

On the other hand, disclaimers amounting to “artful pleading” “are never credited and come

in a few varieties.” Id. The first are disclaimers in which “the ‘applicability [of the waiver] turns

on the core question of whether a defendants’ alleged tort was required or caused by their

relationship with the federal government.’” Healthcare Venture Partners, LLC v. Anthem Blue

Cross & Blue Shield, Civ. A. No. 21-29, 2021 WL 5194662, at *7 (S.D. Oh. Nov. 8, 2021)

(alteration in original) (quoting Martincic v. A.O. Smith Corp., Civ. A. No. 20-958, 2020 WL

5850317, at *3 (W.D. Pa. Oct. 1, 2020)). These disclaimers are ineffective because they “require[]

a state court to determine the nexus ‘between the charged conduct and federal authority.’” Gov’t

of P.R., 119 F.4th at 188 (quoting Willingham v. Morgan, 395 U.S. 402, 409 (1969)). The second,

equally ineffective, type of disclaimers “disavow[] claims based on a defendant’s acts or omissions

carried out under color of office, but the plaintiff, nonetheless s[eeks] to recover based on a

defendant’s official acts.” Batchelor, 185 F. Supp. 3d at 1363. “Recognizing this disclaimer would

deprive the federal officer of the right to have the adequacy of the threshold determination, whether

there is federal subject matter jurisdiction under the federal officer removal statute, made by a

federal court.” In re Asbestos Prods. Liab. Litig., 770 F. Supp. 2d 736, 742–43 (E.D. Pa. 2011).

“Therefore, courts must determine whether, despite the disclaimer, the facts of the case make it

likely that the plaintiff will hold a defendant liable for its official acts for which it possesses a

colorable federal defense.” Gov’t of P.R., 119 F.4th at 188.

The People’s Complaint disclaimed any “challenge [to] the creation of custom formularies

for a federal officer, such as for any [FEHBA] or TRICARE governed health benefits plan.” (ECF

No. 486-10 ¶ 42 n.1.) The People further clarified they “do[] not seek to recover moneys paid by

the federal government pursuant to such plans, nor do[] [they] seek the recovery of federally

mandated co-pays that were paid by such plans’ patients.” (Id.) However, the Ninth Circuit

previously considered this disclaimer, finding that it “fail[ed] to explicitly release claims or

possible recovery from rebate practices as they relate to FEHBA and TRICARE.” California, 2024

WL 3770326, at *1. The Ninth Circuit held the People’s “disclaimer does not necessarily defeat

removal, because the rebate negotiations remain ‘casually connected to the dispute.’” Id. (quoting

Goncalves v. Rady Children’s Hosp. San Diego, 865 F.3d 1237, 1244 (9th Cir. 2017)).

In support of its renewed Motion for Remand, the People submitted an appendix collecting

the People’s disclaimer statements in their prior motion to remand. (See ECF No. 486-2.) The

People contend the appendix “contain[s] their statements confirming they are not suing over

TRICARE and FEHBA.” (ECF No. 486-1 at 3 n.1.) The People point to their prior statement

indicating:

The Complaint does not challenge the Department of Defense’s

(DoD) operation of TRICARE, which provides civilian healthcare

to certain persons associated with the military. Nor does the

Complaint challenge the federal Office of Personnel Management’s

(OPM) operation of the Federal Employees Health Benefits Act

(FEHBA) program, which provides healthcare to federal employees.

(ECF No. 486-2 at 1.) The People further elaborate “[i]n order to clarify any confusion on the part

of Express Scripts or Caremark, the People specifically waived [in the Complaint] any relief

against Express Scripts or Caremark relating to or arising out of TRICARE and FEHBA plans and

reaffirm that waiver in this Motion.”4 (Id. (alteration in original).)

Caremark contends these post-removal statements should be disregarded because its

FEHBA-rebate “negotiations were inextricably intertwined with negotiations for non-FEHBA

clients,” and thus, “the [People] cannot disclaim Caremark’s federal conduct while challenging

rebate negotiations.” (ECF No. 486-4 at 11.)5 Caremark asserts it “has instead shown that it

negotiated with manufacturers for FEHBA and non-FEHBA rebates at the same time to create

negotiating leverage (which benefits FEHBA Carriers).” (Id.) Caremark urges the People’s “entire

argument about Caremark’s federal defense collapses” “[b]ecause the [People]’s disclaimer does

4 “If, for instance, a person has health insurance through their private employer, again, we are

seeking relief for such persons, for instance, if they have a high deductible health plan and they

are paying in their deductible phase the full cash price of insulin, we are seeking relief on behalf

of such individuals. If an individual has insurance directly, so they are not going through their

employer, we are seeking relief on behalf of such individuals. That person does not have health

insurance through TRICARE or health insurance through FEHBA. We are also seeking relief on

[behalf of] persons on Medicare as pled in our Complaint. Such people, again, do not have health

insurance through TRICARE or FEHBA.” (ECF No. 486-2 at 3.)

5 Express Scripts raises arguments similar to Caremark, and further relies on the fact “[t]he Ninth

Circuit heard and rejected the [People]’s argument that [their] post-removal arguments were

sufficient to defeat removal.” (ECF No. 486-3 at 4.)

not actually remove Caremark’s FEHBA negotiations from the case.” (Id. at 12.) Caremark cites

to Judge Ikuta’s concurring opinion, explaining “in targeting Caremark’s rebate negotiations for

private clients, [the People] necessarily also target[] Caremark’s rebate negotiations for the federal

government (since they are the same negotiations).” (Id. at 9 (quoting California, 2024 WL

3770326, at *2 (Ikuta, J., concurring) (determining it would be an “err[or] [to] conclud[e] that a

more carefully drafted disclaimer would defeat removal”).) The Court agrees.

The First Circuit recently considered a substantially similar issue in Government of Puerto

Rico, wherein Puerto Rico sued PBMs—including Caremark and Express Scripts—for unlawfully

inflating insulin prices through rebate negotiations and price setting. 119 F.4th at 179. Caremark

removed the matter to federal court “on its theory that its PBM services for FEHBA were

indivisible from its PBM services for private entities.” Id. at 189. The First Circuit “credit[ed]

Caremark’s theory of the case—that its work for private clients was indivisible from its work for

the federal government due to the structure of its rebate negotiations[.]” Id. Similar to the People

here, Puerto Rico disclaimed “relief relating to any federal program, including FEHBA,” and

argued Caremark could not satisfy the “acting under” and “colorable federal defense” elements.

Id. at 190. However, the court relied on Caremark’s allegations “that it negotiates for rebates jointly

for its FEHBA-based and non-FEHBA carriers,” “[a]nd those negotiations lead to rebate

agreements, which do not distinguish between FEHBA and non-FEHBA plans.” Id. The First

Circuit found:

Considering the level of OPM’s involvement in what provisions

these rebate agreements must contain, holding Caremark liable for

its role in the scheme to inflate insulin prices necessarily includes

holding Caremark liable for its negotiations—negotiations that are

at least in part for FEHBA plans, carried out pursuant to OPM’s

detailed requirements.

Id. Despite Puerto Rico disclaiming any “relief relating to any federal program (e.g., Medicaid,

Medicare) or any contract related to a federal program,” the court found “the disclaimer did not

eliminate the possibility that the Commonwealth would recover for Caremark’s official acts.” Id.

at 181–82, 194.

Here, the People’s disclaimer and post-removal disclaimer statements are not sufficient to

foreclose the possibility that the People would seek to recover for Defendants’ actions to assist the

federal government with administering FEHBA and TRICARE.6 See id. at 183. Caremark

maintains “it negotiated with manufacturers for FEHBA and non-FEHBA rebates at the same time

to create negotiating leverage (which benefits FEHBA carriers).”7 (ECF No. 486-4 at 11.) Express

Scripts asserts that “under the [People]’s complaint, the [People] could recover penalties tied to a

Manufacturer’s increase in list prices and Express Scripts could be responsible for that through

joint and several liability.”8 (ECF No. 486-3 at 14.) As the Ninth Circuit also found, Defendants

sufficiently contend the work done on behalf of their private clients is too commingled with that

done on behalf of their federal client. See California, 2024 WL 3770326, at *2 (Ikuta, J.,

6 The Court acknowledges the People’s argument that this matter is distinguishable from that of

Gov’t of P.R. because the plaintiff “did not argue the lack of an OPM-Caremark contract was

relevant.” (ECF No. 486-12 at 1.) However, this Court disagrees, as the court in Gov’t of P.R.

acknowledged that Caremark did not directly contract with OPM and specifically noted that “the

absence of a direct contractual relationship with the federal government is not a bar to removing

an action under § 1442(a)(1).” Gov’t of P.R., 119 F.4th at 182 n.2 (quoting Cnty. Bd. of Arlington

Cnty. v. Express Scripts Pharmacy, Inc., 996 F.3d 243, 254 (4th Cir. 2021)).

7 Caremark further asserts: “Although the exact mix of clients covered by each Rebate Agreement

negotiated by Caremark[] has changed over time, the agreements cover clients that offer health

plans through the FEHBA clients, and are not exclusively limited to FEHBA clients. For most of

the time period during which the [People] allege[] insulin prices increased, the same Rebate

Agreements that covered FEHBA clients also covered most or all of Caremark[]’s commercial

clients.” (ECF No. 486-5 ¶ 6.)

8 Express Scripts further elaborates: “Liability tied to an increase in list prices is connected or

associated with Express Scripts’ work for TRICARE because Express Scripts’ compensation under

the TRICARE Contract is directly impacted by changes to the WAC.” (ECF No. 486-3 at 14.)

concurring) (“[I]f Caremark were liable for negotiating rebates on behalf of private clients, it

would necessarily also be liable for negotiating rebates on behalf of the federal government—

because it is the same negotiation.”) (“Caremark’s work for private clients cannot be disaggregated

from its work for the federal government.”); see also Maryland v. 3M Co., 130 F.4th 380, 391 (4th

Cir. 2025) (finding defendant satisfied nexus requirement where it “plausibly alleged” that the

manufacturing of synthetical chemicals in their production of consumer (private) and industrial

(government) products “intermingled to the point that it is impossible to identify their source”);

Gov’t of P.R., 119 F.4th at 183 (finding a disclaimer invalid where it was “impossible to sever”

federal and non-federal work based on defendant’s simultaneous negotiation of rebates for federal

and private clients); cf. Connecticut v. EIDP, Inc., Civ. A. No. 24-239, 2024 WL 5135601, at *6–

7 (D. Conn. Dec. 17, 2024) (remanding to state court because plaintiff completely disclaimed any

relief from the federal government because defendant’s production of federal and non-federal

goods was not “indivisible”); cf. Holste v. 3M Co., Civ. A. No. 24-9814, 2025 WL 100806, at *3

(C.D. Cal. Jan. 10, 2025) (granting plaintiff’s remand motion where plaintiff’s claims were not

based on indivisible federal and non-federal work, rather, “[p]laintiff’s disclaimer of any liability

against [defendant] relating to military equipment resolves the casual nexus and colorable defense

prongs of the federal officer removal test against removal”). Because the People have not

foreclosed “any basis for federal officer removal,” the People’s renewed Motion for Remand on

the basis of their disclaimer is DENIED. See Gov’t of P.R., 119 F.4th at 187.

B. The Federal Officer Removal Statute

The People argue generally that Caremark and Express Scripts cannot satisfy the

requirements under the federal officer removal statute, asserting Defendants are not acting under

a federal officer, their claims are not “for or relating to” an act under federal office, and they do

not have a colorable federal defense to the People’s claims. (ECF No. 486-1 at 5–21; see Mohr, 93

F.4th at 104.) Caremark and Express Scripts dispute the People’s position, arguing that they have

met all elements under the federal office removal statute, implying federal court is the correct

venue for this matter, and thus this Court should deny the People’s motion for remand. (ECF Nos.

486-3 at 6–17, 486-4 at 17–25.)9

1. “Acting Under” Prong

The People argue this Court should “reject any opposition argument by the PBMs that they

pleaded sufficient facts for the ‘acting under’ prong despite the post-removal disclaimers.” (ECF

No. 486-1 at 5–10.) The People contend: (1) the Defendants were not acting under a federal officer

but were “merely compl[ying] with federal directives” (id. at 6 (citing Riggs v. Airbus Helicopters,

Inc., 939 F.3d 981, 989 (9th Cir. 2019)); and (2) “a defendant being sued for its private conduct

cannot meet the ‘acting under’ requirement by reference to work performed for the federal

government where its federal acts are not ‘the subject of the [plaintiff’s] complaint” (id. (quoting

Watson, 551 U.S. at 147 (alteration in original))).

To satisfy the “acting under” prong, a defendant must show that the plaintiff’s allegations

“involve conduct that occurred when [the defendant] was ‘acting under’ the direction of a federal

officer or agency.” Papp, 842 F.3d at 813. “When . . . ‘the federal government uses a private

corporation to achieve an end it would have otherwise used its own agents to complete,’ that

9 The People do not challenge the status of Caremark and Express Scripts as “persons” under the

federal officer removal statute. (See generally, ECF No. 486-1.) As such, this Court will assume

Caremark and Express Scripts qualify as “persons” under the statute. See Orthopedic Specialists

of N.J. PA v. Horizon Blue Cross/Blue Shield of N.J., 518 F. Supp. 2d 128, 134 (D.N.J. 2007)

(“Most courts, it appears, have held that a corporation qualifies as a ‘person’ for purposes of the

federal officer removal statute.” (cleaned up) (citing Exxon Mobil Corp., 381 F. Supp. 2d at 403));

see also Reg’l Med. Transp., Inc. v. Highmark, Inc., 541 F. Supp. 2d 718, 723 (E.D. Pa. 2008)

(finding corporation acting as Medicare Part B carrier qualified as “person” for purposes of federal

officer removal statute).

contractor is ‘acting under’ the authority of a federal officer.” Id. at 812 (quoting Ruppel v. CBS

Corp., 701 F.3d 1176, 1181 (7th Cir. 2012)). “In other words, ‘[t]he [private] party does the

business of the federal government and not merely its own.’” Mohr, 93 F.4th at 105 (alterations in

original) (quoting Doe v. BJC Health Sys., 89 F.4th 1037, 1043 (8th Cir. 2023)).

“The ‘acting under’ requirement, like the federal removal statute overall, is to be ‘liberally

construe[d]’ to cover actions that involve ‘an effort to assist, or to help carry out, the federal

supervisor’s duties or tasks.’” Papp, 842 F.3d at 812 (alteration in original) (quoting Ruppel, 701

F.3d at 1181). The defendant is not “required to [demonstrate] that the complained-of conduct

itself was at the behest of a federal agency.” In re Commonwealth’s Motion to Appoint Couns.

Against or Directed to Defender Ass’n of Phila., 790 F.3d 457, 470 (3d Cir. 2015); see also Mohr,

93 F.4th at 105 (“This ‘special relationship’ arises when the federal government ‘delegat[es] . . .

legal authority’ to the private party to ‘undertake’ a duty or task ‘on the Government[‘s] . . .

behalf.” (alterations in original) (quoting Watson, 551 U.S. at 156–57)). “[I]t is sufficient for the

‘acting under’ inquiry that the allegations are directed at the relationship between the [defendant]

and the [federal officer or agency].” Papp, 842 F.3d at 813 (second and third alterations in original)

(quoting Defender, 790 F.3d at 470). This relationship “typically involves subjection, guidance, or

control.” Watson, 551 U.S. at 151 (internal citations omitted).

“Merely complying with federal laws and regulations is not ‘acting under’ a federal officer

for purposes of federal-officer removal.” Maglioli, 16 F.4th at 404. “That includes private parties

who are ‘subject to detailed regulations and whose activities are highly supervised and

monitored[.]’” Mohr, 93 F.4th at 105 (alteration in original) (quoting Maglioli, 16 F.4th at 404).

“Defendants must demonstrate something beyond regulation or compliance. They must show ‘that

their actions “involve an effort to assist, or to help carry out, the duties or tasks of the federal

superior.”’” Moor v. Alliance HC 11 LLC, Civ. A. No. 22-04472, 2023 WL 2744022, at *6

(internal citations omitted) (quoting Maglioli, 16 F.4th at 404).

a. Caremark

As to Caremark, the People contend they properly disclaimed Caremark’s conduct for

FEHBA plans because Caremark has not pled facts showing that it was subject to OPM’s

“subjection, guidance, or control” or is helping OPM carry out its duties by servicing non-FEHBA

plans. (ECF No. 486-1 at 7–9 (quoting Watson, 551 U.S. at 151–52).) The People specifically

argue: (1) “Congress did not authorize OPM to act on matters unrelated to federal employees,”

and (2) “Caremark never alleged, nor pleaded facts showing, that OPM acted outside its

congressionally defined authority by dictating Caremark’s non-FEHBA conduct.”10 (Id. at 8.)

Caremark responds it is “act[ing] under the direction of a federal agency when it negotiates

for rebates OPM requires to be passed through to FEHBA Carriers to reduce the general

government’s FEHBA-related costs.” (ECF No. 486-4 at 17–23.) Caremark argues it is assisting

the government in fulfilling “basic governmental tasks” by negotiating prices of insulin under

FEHBA and non-FEHBA together, which helps ensure a lower costs of insulin under FEHBA

plans. (Id. at 19.) Caremark asserts, pursuant to its contract with the carrier, that OPM “sets forth

specific standards PBMs must follow, and subjects Caremark to ‘continued monitoring, oversight,

and supervision by OPM over [Caremark’s] performance of its PBM services . . . , including its

10 In their Supplemental Brief in Support of Renewed Motion to Remand, the People contend

Caremark meets none of the criteria the Third Circuit analyzes in determining whether a party is

“acting under” a federal officer, arguing: (1) “Caremark has no contract with OPM”; (2)

“Caremark is not providing a service that OPM would otherwise have to provide”; (3) removal is

improper because “Caremark provides FEHBA and private plans the same rebate service

simultaneously”; (4) “Congress did not grant legal authority to Caremark to act on behalf of OPM”;

and (5) Caremark’s claims fail to demonstrate sufficient “control and oversight” of rebate

negotiations by OPM. (ECF No. 486-15 at 2–3.)

practices regarding [rebates].’” (Id. (alterations in original) (quoting Declaration of Matthew

Osterle in Support of Caremark’s Opposition, ECF No. 486-6 ¶ 6).) In further support of its

argument, Caremark cites to OPM’s “regularly issue[d] guidance letters to FEHBA Carriers and

to PBMs clarifying the standards PBMs must follow.” (Id.)

A private party is not acting under a federal officer “simply because [that] party has a

contractual relationship with the federal government.” Mohr, 93 F.4th at 106 (citing City of

Hoboken v. Chevron Corp., 45 F.4th 699, 713 (3d Cir. 2022) (finding companies producing oil

pursuant to government leases were not acting under the government because the leases did not

“impose close federal control” and the oil was not specifically produced for the government)).

Instead, courts must “look to the nature of the relationship between the private party and the federal

government.” Id. (citing Watson, 551 U.S. at 152–54). “[I]n the absence of a contractual

relationship with the government, a removing party must provide evidence of a ‘special

relationship’ that is ‘distinct from the usual regulator/regulated relationship.’” Att’y Gen. v. Dow

Chem. Co., Civ. A. No. 23-2449, 2024 WL 3361395, at *4 (D.N.J. July 9, 2024) (quoting Cnty. of

Lehigh v. Atl. Richfield Co., Civ. A. No. 18-5140, 2019 WL 2371783, at *7 (E.D. Pa. June 5,

2019)). This relationship “typically involves subjection, guidance, or control.” Watson, 551 U.S.

at 151.

“Congress assigned to [OPM] ‘broad administrative and rulemaking authority over’ the

FEHBA program, including authorizing OPM to contract with private carriers for federal

employees’ health insurance.” Gov’t of P.R., 119 F.4th at 182 (quoting Coventry Health Care of

Mo., Inc. v. Nevils, 581 U.S. 87, 91 (2017)); Empire, 547 U.S. at 683 (“FEHBA assigns to OPM

responsibility for negotiating and regulating health-benefits plans for federal employees.”). OPM

contracts with private carriers “shall contain a detailed statement of benefits offered and shall

include such maximums, limitations, exclusions, and other definitions of benefits as [OPM]

considers necessary or desirable.” 5 U.S.C. § 8902(d). “OPM has direct and extensive control over

these benefits contracts under the FEHBA.” Gov’t of P.R., 119 F.4th at 182 (quoting Goncalves,

865 F.3d at 1246). “And OPM’s standard form contracts assume that PBMs will contract with

FEHBA carriers and receive rebates.” Id. (citing Off. of Pers. Mgmt., Federal Employees Health

Benefits Program Standard Contract for Experience-Related Health Maintenance Organization

Carriers I-18-I-20 (2019)).

As explained in Caremark’s Supplemental Notice of Removal, Caremark contracts with

FEHBA carriers to “provide[] delegated pharmacy benefit management services, including with

regard to formularies and rebate payments.” (Dkt. No. 2:24-cv-11488, ECF No. 5 at 3.) Caremark

then “negotiates with pharmaceutical drug manufacturers in order to obtain rebates that help offset

the cost of prescription drugs,” culminating in “Rebate Agreements.” (ECF No. 486-5 ¶ 4.)

However, Caremark “does not negotiate separate Rebate Agreements for each of its clients,”

rather, “Rebate Agreements are structured so as to cover a range of different clients and different

formulary possibilities, including standard and custom formularies. (Id. ¶ 5; see also id. ¶ 6 (“For

most of the time period during which the State alleges insulin prices increased, the same Rebate

Agreements that covered FEHBA clients also covered most or all of Caremark[]’s commercial

clients.”).)

Caremark claims “OPM imposes various requirements and exercises oversight regarding

PBMs’ formulary and rebate-payment practices for FEHBA plans.” (Dkt. No. 2:24-cv-11488, ECF

No. 5 at 3.) “Pursuant to OPM’s directives, the contracts between Caremark[] and its FEHBA

clients mandate pass-through transparent pricing.” (ECF No. 486-6 ¶ 5.) Pursuant to its contracts

with FEHBA carriers, Caremark “must agree to continued monitoring, oversight, and supervision”

by OPM. (Id. ¶ 6.) Indeed, the Standard Contract contains specific “Transparency Standards,”

which mandate “pass-through transparent pricing based on the PBM’s cost for drugs . . . in which

the Carrier receives the value of the PBM’s negotiated discounts, rebates, credits or other financial

benefits.” (ECF No. 486-8 at I-18.) With regard to this transparent pricing, PBMs are instructed

to: (1) charge the Carrier no more than the amount it pays pharmacies for drugs plus a dispensing

fee; (2) charge the Carrier the cost of drugs at mail order pharmacies based on the actual cost, plus

a dispensing fee11; and (3) credit the Carrier the value of all Manufacturer Payments properly

allocated to the Carrier. (Id.) Under these standards, PBMs are required to “identify sources of

profit to the Carrier and OPM as it relates to the FEHB[A] contract” and “to disclose each

administrative fee to the Carrier and OPM.” (Id.) PBMs are additionally required to provide the

Carrier with quarterly and annual Manufacturer Payment Reports (the requirements of which are

detailed in the Standard Contract) and with all financial and utilization information requested by

the Carrier at least annually. (Id.) Finally, “OPM reserves the right to review and receive any

information and/or documents the Carrier receives from the PBM[.]” (Id.)

This is a “‘classic case’ in which a private corporation acts under a federal officer for

purposes of removal ‘relates to government contractors’ that ‘help[]the government produce an

item that it need[s].’” Doe v. Redeemer Health, Civ. A. No. 23-2405, 2023 WL 6323089, at *3

(E.D. Pa. Sept. 28, 2023) (alterations in original) (quoting Papp, 842 F.3d at 812). Here, Caremark

is acting as a subcontractor in order to provide necessary PBM services to effectuate federal

employees’ healthcare plans under FEHBA. This is a basic government task which, “in the absence

of a contract with a private firm, the Government itself would have had to perform.” See Watson,

11 Of note, the Standard Contract requires the “[c]osts [of drugs at mail order pharmacies] shall not

be based on industry benchmarks; for example, Average Acquisition Cost (AAC) or Wholesale

Acquisition Cost (WAC).” (ECF No. 486-8 at I-18 (emphasis added).)

551 U.S. at 153; Gov’t of P.R., 119 F.4th at 190 (finding Caremark’s rebate negotiations for insulin

prices was “related to acts Caremark performed under OPM’s authority”); Defender, 790 F.3d at

469 (explaining nonprofit community defender acts under federal officer by representing indigent

federal defendants in part because it is delegated authority from the federal government and

provides service the federal government would otherwise have to provide itself).

The People contend their disclaimer establishes Caremark was not acting under Congress

with regard to private healthcare plans (ECF No. 486-1 at 8–9), but Caremark responds it does not

distinguish between FEHBA and non-FEHBA plans when negotiating rebates with manufacturers

(ECF No. 486-4 at 19). As the Court in Government of Puerto Rico concluded: “When Caremark

negotiates rebates on behalf of FEHBA carriers, it assists OPM in carrying out its official task of

administering federal health benefits.” 119 F.4th at 190 (citing Lopez, 2024 WL 1907396, at *9

(crediting “Caremark’s theory of the case—that its work for private clients was indivisible from

its work for the federal government due to the structure of its rebate negotiations” and concluding

Caremark acted under federal officer with respect to “its formulary and rebate practices”); cf.

Redeemer Health, 2023 WL 6323089, at *5 (explaining that “the contractor in Papp was never

specifically directed to use asbestos in its airplane designs [because] the Third Circuit rejected the

notion that ‘the complained-of conduct [must be] done at the specific behest of the federal officer

or agency.’” (second alteration in original) (citing Papp, 842 F.3d at 813)).12 The Court further

12 But see W. Va. ex rel. McCuskey v. Eli Lilly & Co., Civ. A. No. 24-143, 2024 WL 4357749, at

*4–5 (N.D. W. Va. Sept. 6, 2024) (finding Caremark was not acting under a federal officer with

respect to non-FEHBA plans because “Caremark chose to enter into some negotiations on behalf

of federal and non-federal health benefit programs”). However, in that case, the State’s claims

were “strictly limited to non-federal payments made by the State through its self-insured, statewide

WVPEIA plan, which ‘is a discrete and readily identifiable category whose membership does not

require the state court to consider the contours of the federal officer removal statute.’” Id. (quoting

Healthcare Venture Partners, 2021 WL 5194662, at *8). However, here, the People offer no

found “OPM dictates several contractual provisions that Caremark must adhere to in entering these

rebate agreements—requiring Caremark to file regular statements about whatever rebates its

received, credit carriers for rebates where appropriate, and provide OPM with information related

to its rebate agreements.” Id.; see also ECF No. 486-8 at I-18–19.

Moreover, “[t]hese contractual obligations demonstrate OPM exercised detailed

supervision and monitoring over Caremark’s provision of PBM services to FEHBA carriers, such

that Caremark was acting under federal authority when it negotiated rebates.” Id. (citing Lopez,

2024 WL 1907396, at *7–9). By agreeing to provide these services for the federal government,

Caremark agreed to: (1) provide the carrier with all financial and utilization information at least

annually; (2) allow OPM to review and receive any information and/or documents that Caremark

provides to the carrier; (3) provide information regarding its formularies; and (4) provide to OPM

upon request all Caremark records. (ECF No. 486-8 at I-19.) While it is true that “private entities

are not ‘acting under’ the supervision of a federal officer merely because they act in accordance

with federal regulations,” Redeemer Health, 2023 WL 6323089, at *3 (citing Maglioli, 16 F.4th at

404), these specific disclosure requirements enacted by OPM go far beyond mere compliance with

federal regulation. See Defender, 790 F.3d at 469–70 (finding the nonprofit community defender

was “acting under” the Administrative Office of the United States Courts (“AO”) where nonprofit

community defender was required to comply with AO guidelines, submit reports, and undergo

yearly audits, despite there being no indication the AO exercised any real control over nonprofit

community defender’s day-to-day operations); see also Lopez, 2024 WL 1907396, at *6–9

(concluding Caremark’s actions regarding its formulary and rebate practices were actions under

similar finite universe of claims that can be separated from Caremark’s rebate negotiations. (See

generally, 486-2.)

OPM where the formularies used by PBMs were subject to OPM reporting and disclosure

requirements and PBMs were subject to audits by OPM); see also Gov’t of P.R., 119 F.4th at 191

(“[I]f Caremark is liable for its conduct in negotiating rebates for private clients and FEHBA plans,

then it could be liable for its conduct under OPM’s direction—no matter what the disclaimer

says.”).

As such, this Court finds that Caremark was “acting under” OPM in negotiating rebates.

b. Express Scripts

The People similarly argue the DoD does not control Express Scripts’ non-TRICARE

conduct, meaning Express Scripts “failed to demonstrate it was ‘acting under’ a federal officer

when engaging in the conduct challenged in this action.” (ECF No. 486-1 at 9–10.) The People

contend their “post-removal disclaimers limit the scope of this action to [Express Scripts’] civilian

conduct,” which Express Scripts cannot argue it is “acting under” the DoD when servicing civilian

plans. (Id.)

Express Scripts responds the People’s disclaimers cannot impact Express Scripts’

allegations that it was “acting under” a federal officer, as Express Scripts has “easily demonstrated

that it assists and carries out the duties of the federal officers managing the DoD TRICARE health-

care program.” (ECF No. 486-3 at 7–10.) “As explained in Express Scripts’ Notice of Removal,

the DoD contracted with Express Scripts to provide [PBMs] to members of the DoD’s TRICARE

health-care program across the country, including in California.” (Id. at 7.) Express Scripts asserts

this contract “establishes the requirements applicable to Express Scripts and dictates nearly every

aspect of Express Scripts’ responsibilities in supporting TRICARE,” and “requires the use of a

‘DoD Uniform Formulary, a tiered cost sharing structure, and a preference for generic over

branded products.’” (Id. at 7–8 (quoting Dkt. No. 2:24-cv-11488, ECF No. 1-2 (TRICARE

Contract) at § C.1.4).) The contract also sets forth specific requirements regarding the collection

of copayments for prescription drugs. (Id. at 8.)

“TRICARE is a federal health insurance program administered by DoD to ‘provide[]

medical care to current and retired service members and their families . . . .’” Arlington, 996 F.3d

at 253 (alterations in original) (quoting U.S. ex rel. Lutz v. United States, 853 F.3d 131, 140 n.2

(4th Cir. 2017)). “DoD is required by law to enter into contracts for the provision of healthcare

services to TRICARE members.” Id. (citing 10 U.S.C. § 1073a). “[B]y operating various

TRICARE programs, . . . contractors and subcontractors are providing healthcare services that

DoD must, by law, provide.” Id. (citing 10 U.S.C. § 1073a). “In this way, the [Express Scripts]

Defendants are assisting DoD in fulfilling ‘basic governmental tasks’ that ‘the Government itself

would have had to perform’ if it had not contracted with the private firm.” Id. (citing Watson, 551

U.S. at 153–54).

Here, just as with Caremark, the Court finds Express Scripts was “acting under” the DoD

with regard to the actions at issue—rebate negotiations. See supra § III.B.1.a. See also Arlington,

996 F.3d at 251 (finding Express Scripts pharmacies, who contracted with DoD, were “acting

under” a federal officer because the pharmacies, through operation of its mail-order program,

provided services to members of the DoD’s healthcare program, and pharmacies were always

subject to the federal government’s guidance and control with regard to operation of the mail-order

program); In re Nat’l Prescription Opiate Litig., Case No. 17-md-2804, 2023 WL 166006, at *4–

5 (finding Express Scripts defendants were “acting under” the DoD because “[t]he DoD would

have to administer the TRICARE program itself if the task was not delegated to Defendants”);

Lombardi v. TriWest Healthcare All. Corp., Civ. A. No. 08-2381, 2009 WL 1212170, at *2 (D.

Ariz. May 4, 2009) (finding “[i]n administering TRICARE benefits, defendants do more than

operate in a regulated industry . . . . [and] are closely aligned with the government” and are

therefore “acting under federal control within the meaning of 28 U.S.C. § 1442(a)”).

2. “For or Relating to” Prong

The People next contend Caremark and Express Scripts cannot establish a causal

connection because the People’s post-removal disclaimers “are comprehensive enough to preclude

Caremark and [Express Scripts] from establishing that this lawsuit is ‘for or relating to any act

under color of such office.’” (ECF No. 486-1 at 12–14 (quoting 28 U.S.C. § 1442(a)).) The People

explain that Caremark and Express Scripts cannot establish this lawsuit is “relating to” acts taken

under OPM or the DoD because “[t]his lawsuit is not seeking to impose liability for Caremark’s

and [Express Scripts’] compliance with federal directives, impose any remedies, equitable or

monetary, for such compliance, or prevent Caremark and [Express Scripts] from complying with

such directives in the future.” (Id. at 12.) In other words, the causal connection prong fails because

Caremark and Express Scripts cannot assert they are “act[ing] under color of such office” when

negotiating rebates for their private clients. (Id. at 13.)

Caremark responds the People challenge “Caremark’s performance of PBM services,

including its rebate negotiation practices,” which are “precisely the duties Caremark performs

pursuant to OPM’s direction and control to help provide FEHBA benefits.” (ECF No. 486-4 at 23

(internal quotation marks and citation omitted).) Thus, the challenged conduct is connected or

associated with the federal office. (Id.; ECF No. 486-17 at 4).) Express Scripts raises a similar

argument, arguing that under the People’s theory of the case and refusal to abandon joint and

several liability, Express Scripts “faces potential exposure based solely on the Manufacturers’

decision to raise their list prices for insulin products.” (ECF No. 486-3 at 11–14; ECF No. 486-16

at 4–5.)

“The third requirement [under the federal officer removal statute] is that ‘the plaintiff’s

claims against the defendant [be] for, or relating to an act under color of federal office.’” Golden

v. N.J. Inst. of Tech., 934 F.3d 302, 310 (second alteration in original) (quoting Papp, 842 F.3d at

812). The Third Circuit has “taken a more permissive view of [the ‘for or relating to’]

requirement.” Papp, 842 F.3d at 813. Accordingly, it is “sufficient for there to be a connection or

association between the act in question and the federal office.” Id. (quoting Defender, 790 F.3d at

471); see also Spark Inspiration Lab’y, LLC v. UnitedHealthcare Ins. Co., Civ. A. No. 23-2890,

2024 WL 3541929, at *5 (D.N.J. May 17, 2024) (noting defendant “is not required to plead such

a ‘causal nexus’ to establish that its actions were ‘for or relating to’ a federal office”).

Caremark’s Supplemental Notice of Removal asserts it is a PBM acting under FEHBA,

and thereby OPM, with private carriers to provide federal employees’ health insurance. (Dkt. No.

2:24-cv-11488, ECF No. 5 at 5–11.) Express Scripts’ Notice of Removal states that it is a PBM

operating under and pursuant to a contract with the DoD “to provide pharmacy benefits to members

of the DoD’s TRICARE health care program,” for which “[t]he DoD is required by law to engage

companies like Express Scripts for the provision of healthcare services to TRICARE members.”

(Dkt. No. 2:24-cv-11488, ECF No. 1 ¶¶ 24–25.) Because the rebate negotiations were made

pursuant to Caremark’s and Express Scripts’ subcontracts and contracts under FEHBA and

TRICARE, the Court finds Caremark and Express Scripts have satisfied the third requirement

under § 1442(a)(1) by establishing a connection or association with OPM and DoD respectively.

See Spark Inspiration Lab’y, 2024 WL 3541929, at *5 (finding a connection or association with

the Center for Medicare Services for failure to pay claims not based on Medicare but made

pursuant to defendant’s contract with the government agency).

3. Colorable Federal Defense Prong

The final element the Court must consider under the federal officer removal statute is

whether a defendant has raised a colorable defense to the People’s claims. The People argue this

matter is not subject to federal jurisdiction because Caremark and Express Scripts cannot assert a

colorable federal defense given “the People’s lawsuit is not challenging [Defendants’] FEHBA or

TRICARE conduct due to the post-remand disclaimers.” (ECF No. 486-1 at 14.)

For a defense to be considered colorable, a defendant need only show “the defense was

‘legitimate and [could] reasonably be asserted, given the facts presented and the current law.’”

Papp, 842 F.3d at 815 (alteration in original) (citation omitted). The defendant does not need to

“demonstrate that the asserted defense will succeed on the merits; a finding that [the defendant]

‘may prevail’ is sufficient.” Spark Inspiration Lab’y, 2024 WL 3541929, at *6 (quoting Papp, 842

F.3d at 815); see also Hagen v. Benjamin Foster Co., 739 F. Supp. 2d 770, 782–83 (E.D. Pa. 2010)

(“[A] defense is colorable for purposes of determining jurisdiction under Section 1442(a)(1) if the

defendant asserting it identifies facts which, viewed in the light most favorable to the defendant,

would establish a complete defense at trial.”).

a. Caremark

The People contend Caremark cannot demonstrate a colorable federal defense because the

People are not challenging any FEHBA conduct. (ECF No. 486-1 at 15–19.) This precludes

Caremark from asserting either express preemption or obstacle preemption under FEHBA. (Id.)

Specifically, the People rely on the FEHBA Standard Contract, which “expressly excludes from

its scope non-FEHBA plans.” (Id. at 16.) The People contend Caremark cannot assert express

preemption under FEHBA because “the People expressly limited their lawsuit to Caremark’s non-

FEHBA conduct.” (Id.) The People further argue Caremark cannot employ an express preemption

defense under FEHBA because “[c]laims not premised on a health plan or its administration do

not ‘relate to’ that health plan.” (ECF No. 486-15 at 6 (citing Ahn v. Cigna Health & Life Ins. Co.,

Civ. A. No. 19-07141, 2019 WL 5304628, at *5 (D.N.J. Oct. 21, 2019)).)

Caremark responds the People’s claims are preempted by the FEHBA express preemption

provision, as its conduct “relate[s] to the nature, provision, or extent of coverage or benefits

(including payments with respect to benefits)” under FEHBA’s Standard Contract. (ECF No. 486-

4 at 24–25.) Caremark contends the term “relate to” “must be given an expansive definition,” and

thus, “Caremark’s argument that the PBM provisions also are preemptive is at least colorable.”

(Id. at 24.)

“FEHBA concerns ‘benefits from a federal health insurance plan for federal employees

that arise from a federal law’ in an area with a ‘long history of federal involvement.’” Coventry

Health Care, 581 U.S. at 96 (quoting Bell v. Blue Cross & Blue Shield of Okla., 823 F.3d 1198,

1202 (8th Cir. 2016)). FEHBA contains an express preemption provision which states the “terms

of any contract under this chapter which relate to the nature, provision, or extent of coverage or

benefits (including payments with respect to benefits) shall supersede and preempt any State or

local law . . . which relates to health insurance or plans.” 5 U.S.C. § 8902(m)(1). The purpose of

this preemption provision is to ensure uniformity in the administration of FEHBA benefits

regardless of any dissimilar state provisions that may otherwise be applicable. See Coventry Health

Care, 581 U.S. at 96. “FEHBA contract terms have preemptive force only if they fall within

§ 8902(m)(1)’s preemptive scope.” Id. at 89.

“A FEHBA preemption analysis . . . requires determining whether the allegedly preemptive

portions of the OPM contract actually ‘relate to . . . coverage or benefits.’” Cal. Spine &

Neurosurgery Inst. v. Nat’l Ass’n of Letter Carriers Health Benefit Plan, 548 F. Supp. 3d 934, 944

(N.D. Cal. 2021) (second alteration in original). Federal courts have “‘repeatedly recognized’ that

the phrase ‘relate to’ in a preemption clause ‘express[es] a broad pre-emptive purpose.’” Coventry

Health Care, 581 U.S. at 95–96 (alteration in original) (quoting Morales v. Trans World Airlines,

Inc., 504 U.S. 374, 383 (1992)). “Congress characteristically employs the phrase to reach any

subject that has ‘a connection with, or reference to,’ the topics the statute enumerates.” Id. at 96

(quoting Morales, 504 U.S. at 384).

In its Supplemental Notice of Removal, Caremark contends it has colorable preemption-

based defenses, as “the contractual terms imposed by OPM authorize PBMs to negotiate for and

collect Manufacturer Payments” and “require PBMs to disclose Manufacturer Payments as

reductions to the costs associate with prescription drugs, including insulin.” (Dkt. No. 2:24-cv-

11488, ECF No. 5 at 12.) Caremark further states “the contractual terms imposed by OPM

authorize Manufacturer Payments in connection with formulary placement and/or access.” (Id.)

Caremark asserts the People’s requested relief would “interfere with the PBM Defendants’

obligations to comply with their responsibility to OPM pursuant to FEHBA contracts.” (Id. at 12.)

Construing the facts in a light most favorable to Caremark13, and considering FEHBA’s

broad preemptive purpose, Caremark’s allegations are sufficient to raise a colorable defense. See

Hagen, 739 F. Supp. 2d at 781 (“[A] colorable defense need not be proven at this stage of the

litigation due to the broad removal right the statute creates[.]”) Though the People contend FEHBA

preemption is limited to FEHBA-conduct, Caremark contends, and the Court acknowledges, the

rebate negotiations for FEHBA and non-FEHBA carriers undertaken by Caremark were done

together and cannot be separated or unwound. See Gov’t of P.R., 119 F.4th at 191 (finding

13 See Hagen, 739 F. Supp. 2d at 782–83 (finding, for purposes of determining jurisdiction under

§ 1442(a)(1), a defense colorable “if the defendant asserting it identifies facts which, viewed in the

light most favorable to the defendant, would establish a complete defense at trial”).

Caremark was entitled to have a federal court weigh in on the validity of its FEHBA preemption

defense because Caremark negotiates for rebates for its FEHBA-based and non-FEHBA carriers

jointly and “these negotiations allegedly cannot be disassembled”); see Lopez, 2024 WL 1907396,

at *13 (finding Caremark had a colorable federal defense where Caremark was contractually

obligated to pass along all rebates to their FEHBA carrier clients because “Caremark’s formulary

practices that are at issue in this case arguably relate to the coverage or benefits that the FEHBA

carrier clients provide to their insureds”). This Court finds Caremark has satisfied all necessary

requirements for removal under § 1442(a)(1).14

b. Express Scripts

Similarly, the People argue Express Scripts has not raised any colorable federal defenses.

(ECF No. 486-1 at 19–21.) The People first contend Express Scripts cannot assert a colorable

preemption defense under TRICARE because the People’s post-removal disclaimers limit the

challenged conduct to civilian conduct, whereas TRICARE pertains to military healthcare plans.

(Id. at 19–20.)15 The People further contend Express Scripts’ “government contractor defense is

14 By finding Caremark can invoke subject matter jurisdiction under the federal officer removal

statute (28 U.S.C. § 1442(a)), the Court has found removal is authorized. See Gov’t of P.R., 119

F.4th at 182 (“[T]he statute ‘authorizes removal of the entire action even if only one of the

controversies it raises involves a federal officer or agency.’” (quoting Moore v. Elec. Boat Corp.,

25 F.4th 30, 35 (1st Cir. 2022))). However, this Court finds Express Scripts has also established a

colorable federal defense, as discussed infra Section III.B.3.b.

15 The People’s moving papers additionally argued the government contractor defense is

unavailable to Express Scripts because the Ninth Circuit limits the government contractor defense

to “contractors who design and manufacture military equipment,” and Express Scripts is a PBM

who does not allege it designs or manufactures military equipment. (ECF No. 486-1 at 21 (quoting

Cabalce v. Thomas E. Blanchard & Assocs., Inc., 797 F.3d 720, 731 (9th Cir. 2015)).) However,

the People appear to have abandoned this argument, as it was not raised in the People’s

Supplemental Brief in Support of Renewed Motion to Remand, which pertains to Third Circuit

caselaw. (See generally ECF No. 486-15.)

also not colorable since [Express Scripts] has not pleaded the DoD participated in preparing

specifications for insulin rebate negotiations.” (ECF No. 486-15 at 4.)

Express Scripts responds by again arguing the People’s “disclaimers fail to remove the

connection between the [People]’s claims and Express Scripts’ work for TRICARE.” As this Court

has determined, supra §§ III.A, III.B.3.a, Express Scripts’ TRICARE and non-TRICARE rebate

negotiations cannot be extricated, hence Express Scripts has raised a colorable federal defense.

The Court therefore need not address the People’s argument regarding Express Scripts’

government contractor defense, as “[o]ne colorable defense is sufficient to satisfy this prong.” N.J.

Dep’t of Env’t Prot. v. E.I. Du Pont de Nemours & Co., Civ. A. No. 19-14765, 2020 WL 2611539,

at *6 (D.N.J. May 22, 2020).

C. Remand is Required Even Absent the Disclaimers

The People argue this Court should reject any opposition argument by Defendants on the

basis that remand is required regardless of the People’s post-removal disclaimers because: (1)

Caremark cannot establish it was “acting under” a federal officer by providing OPM a “normal

commercial product”; (2) “insulin rebates are not FEHBA benefits nor payments for FEHBA

benefits”; and (3) there are no insulin rebate negotiations under the TRICARE contract. (ECF No.

486-1 at 21–24.)

Express Scripts contend the People’s challenges to removal are premised on the sufficiency

and effectiveness of the People’s disclaimers “as they existed at the time of removal,” which did

not have the effect of eliminating Express Scripts’ federal defenses. (ECF No. 486-3 at 17–18.)

Caremark raises a similar argument, asserting the People’s “entire argument about Caremark’s

federal defense collapses” because “[t]he [People]’s disclaimer does not actually remove

Caremark’s FEHBA negotiations from the case.” (ECF No. 486-4 at 11–12.) Caremark argues it

is “different” than the typical party providing a good or service to the federal government “because

it helps OPM ‘deliver[] federal benefits to federal beneficiaries,’ subject to specific direction and

oversight.” (Id. at 12.)

However, this Court has already determined Caremark has established it was “acting

under” a federal officer in providing PBM services under FEHBA. See supra § III.B.1.a. While

the Court notes the People argue Caremark provides OPM a “normal commercial product” and

thereby “a normal commercial relationship between a defendant and a federal officer also fails to

demonstrate that the defendant is ‘acting under’ a federal officer,” (ECF No. 486-1 at 21–22 (citing

City & Cnty. of Honolulu v. Sunoco LP, 39 F.4th 1101, 1108 (9th Cir. 2022)), this Court has already

found there is a special relationship between Caremark and OPM whereby Caremark is subject to

the “subjection, guidance, or control” of OPM. Watson, 551 U.S. at 151; see supra § III.B.1.a.

Express Scripts was similarly acting under the DoD in carrying out its duties under TRICARE, as

“Express Scripts’ obligations are described in detail in the TRICARE Contract.” (ECF No. 486-3

at 7 (“Through the TRICARE Contract, the DoD establishes the requirements applicable to

Express Scripts and dictates nearly every aspect of Express Scripts’ responsibilities in supporting

TRICARE.”).) Moreover, this Court has found that Caremark’s rebate negotiations for FEHBA

and non-FEHBA conduct are inextricably linked, and Caremark has asserted a colorable federal

argument. See supra § III.B.3.a.

D. Remand Pursuant to this Court’s Discretionary Authority

Finally, the People contend this Court should use its discretionary authority to remand this

matter back to state court. (ECF Nos. 486-1 at 24–25; 486-11 at 14; 486-15 at 6.) In their

Supplemental Brief in support of Renewed Motion to Remand, the People additionally argue

remand is required in light of the decision in Royal Canin U.S.A., Inc. v. Wullschleger, 604 U.S.

22, 44 (2025). (ECF No. 486-15 at 6.) The People insist there is a strong interest in having this

case brought by the “state attorney general su[ing] under state law in state court to protect state

residents.” (ECF Nos. 486-1 at 25; 486-11 at 14.) They further assert it has been established that

there is “no evidence of judicial manipulation or forum shopping.” (Id. (citing Dkt. No. 2:24-cv-

11488, ECF No. 109 at 14).)

Express Scripts responds that remand is discretionary, not mandatory as the People suggest,

only if the defendant’s federal defenses are eliminated, which they have not been. (ECF No. 486-

3 at 18.) Even if this Court could remand this matter, Express Scripts argues this Court should not

use its discretionary authority to remand because “[t]he convenience and efficiencies gained by an

MDL proceeding support continuing to exercise supplemental jurisdiction even after the original

bases for federal jurisdiction are eliminated.” (Id. at 19.) Caremark raises a similar argument,

arguing judicial economy, convenience, fairness, and comity all weigh strongly in favor of

retaining jurisdiction because: (1) “retaining jurisdiction would allow this case to flow into the

MDL, where it could be heard in coordinated nationwide proceedings with the other related cases”;

(2) “the [People]’s stated desire to forum shop counsels strongly in favor of retaining the case”;

and (3) “any relief granted in this case would directly impact rebate payments that flow back to

FEHBA Carriers and effectively become federal funds.” (ECF No. 486-4 at 15–17.)

“A federal court may decline to exercise supplemental jurisdiction over state law claims

when it dismissed all claims over which it has original jurisdiction.” Doe v. Mercy Catholic Med.

Ctr., 850 F.3d 545, 567 (3d Cir. 2017); see Royal Canin, 604 U.S. at 44 (noting “the court’s

supplemental jurisdiction over the state claims dissolved” because plaintiff’s “deletion of all

federal claims deprived the [d]istrict [c]ourt of federal-question jurisdiction”)16. “Beyond

discretion, a court ‘must decline’ exercise of supplemental jurisdiction in cases in which all original

jurisdiction claims have been dismissed ‘unless considerations of judicial economy, convenience,

and fairness to the parties provide an affirmative justification for doing so.’” Appelgren v. Recovery

Ctrs. of Am., Civ. A. No. 24-8351, 2025 WL 360533, at *3 (D.N.J. Jan. 31, 2025) (quoting Stone

v. Martin, 720 F. App’x 132, 136 (3d Cir. 2017)).

As an initial matter, a district court may decline to exercise supplemental jurisdiction over

state law claims “if . . . the district court has dismissed all claims over which it has original

jurisdiction.” 28 U.S.C. § 1367(c) (emphasis added); see also New Rock Asset Partners, L.P. v.

Preferred Entity Advancements, Inc., 101 F.3d 1492, 1508 (3d Cir. 1996) (explaining dismissal of

federal jurisdiction-granting claim “triggers a discretionary decision on whether jurisdiction over

a state law claim should be declined pursuant to § 1367(c)(3)”). Since the Court has determined

the People’s post-removal disclaimer statements were not effective to foreclose the possibility that

the People would seek to recover for Defendants’ actions to assist the federal government with

administering FEHBA and TRICARE, there is still an original jurisdiction claim pending.

Even assuming this Court had the discretional authority to remand, it would decline to do

so in the interests of “judicial economy, convenience and fairness to litigants.” United Mine

16 The People contend the decision in Royal Canin requires remand because of the People’s post-

removal disclaimers. (ECF No. 486-15 at 6.) In Royal Canin, the Supreme Court made clear that

“[w]hen a plaintiff amends her complaint to delete the federal-law claims that enabled removal to

federal court, leaving only state-law claims behind, the federal court loses supplemental

jurisdiction over the state claims, and the case must be remanded to state court.” 604 U.S. at 22.

This holding does not apply to this matter because the People’s federal-law claims have not been

removed. Because the People’s post-removal disclaimers are not sufficient to foreclose the

possibility that the People would seek to recover for Defendants’ actions to assist the federal

government with administering FEHBA and TRICARE, this Court does not lose supplemental

jurisdiction over the state claims.

Workers v. Gibbs, 383 U.S. 715, 726 (1966). To further judicial economy and fairness, this Court

exercises jurisdiction over the People’s claims, as they are based on the same issues of fact as those

claims being litigated in this MDL. See In re Prudential Ins. Co. of Am. Sales Pracs. Litig., 962 F.

Supp. 450, 501–02 (D.N.J. 1997). Allowing this matter to proceed with the hundreds of other

similar claims proceeding in this MDL would promote both consistency in decision-making as

well as judicial efficiency. Otherwise, Defendants will need to litigate this issue in multiple forums,

wasting resources and duplicating litigation. Indeed, at this stage, this litigation is no longer in its

infancy—the parties are actively working through the discovery phase. (See ECF No. 315 (Case

Management Order #14) (setting forth detailed and uniform obligations and procedures for

plaintiffs’ fact sheets and other discovery).) The People would benefit from consolidated

discovery, and it would be unfair and inefficient to require Defendants to relitigate the same claims

in different courts on opposite sides of the country. See Cirulli v. Bausch & Lomb, Inc., Civ. A.

No. 08-4579, 2009 WL 545572, at *3 (E.D. Pa. Mar. 4, 2009) (“Proceeding on an individual basis

may inexplicably subject Bausch & Lomb to different discovery schedules and court orders when

the bases of each litigation are not remarkably distinguishable. . . . [T]his litigation would benefit

from the orderly, consolidated discovery and motions schedule to be provided in the [MDL.]”).17

17 To the extent the People assert Heilner v. Foster Wheeler LLC, Civ. A. No. 22-616, 2022 WL

3045838, at *4 (Aug. 2, 2022) demonstrates that discretionary remand is proper in this instance,

the Court finds it unavailing and inapplicable. In Heilner, the Middle District of Pennsylvania

accepted plaintiff’s decision to disclaim any claim against defendant for plaintiff’s alleged

exposure to asbestos while he served in the Navy. Id. at 4. The court particularly noted “[f]rom the

beginning of this action, there was never a clear claim against Foster Wheeler for Heilner’s alleged

exposure [to asbestos] in the Navy; Foster Wheeler itself provided the facts potentially tying its

conduct to Heilner’s injury.” Id. Since there were no federal claims, the court found “remand [wa]s

appropriate because there [we]re no factors that would weigh in favor of keeping this matter in

federal court.” Id. Here, finding it impossible to separate the federal and non-federal claims, this

Court has rejected the People’s claim disclaimers. There are still federal claims pending, making

federal court the proper venue for this case.

Furthermore, this Court is disquieted by the People’s reluctance to contribute to this MDL’s

common benefit fund. (See ECF No. 68 (Case Management Order #4 (Common Benefit Work

Product)) (providing for the formation of a common benefit fund for plaintiffs’ completed fact

discovery, expert reports, and class certification motion in the six years of litigation prior to the

entry of the order).) See also Visser v. Vitamin Shoppe, Inc., Civ. A. No. 19-20545, 2021 WL

6010349, at *3 (D.N.J. Dec. 17, 2021) (“Th[e] equitable ‘common benefit’ doctrine arises from

the notion that it would be unjust to allow others to obtain the benefit of plaintiff’s lawsuit without

contributing to the costs incurred.”). Therefore, the People’s Motion for Remand pursuant to this

Court’s discretionary authority is DENIED.

IV. CONCLUSION

For the reasons set forth above, and for good cause having been shown, the People’s

Motion to Remand (ECF Nos. 486-1–2, 486-11, 486-12, 486-15) is DENIED. An appropriate

order follows.

Date: June 4, 2025 /s/ Brian R. Martinotti

HON. BRIAN R. MARTINOTTI

UNITED STATES DISTRICT JUDGE