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Pericor Therapeutics, Inc. v. American Arbitration

February 20, 2013

PERICOR THERAPEUTICS, INC.
v.
AMERICAN ARBITRATION ASSOCIATION



The opinion of the court was delivered by: Honorable Gary Allen Feess

LINK: 1, 8, 11

CIVIL MINUTES - GENERAL

Present: The Honorable GARY ALLEN FEESS

Renee Fisher None N/A Deputy Clerk Court Reporter / Recorder Tape No. Attorneys Present for Plaintiffs: Attorneys Present for Defendants: None None Proceedings: (In Chambers)

ORDER REMANDING CASE

I. INTRODUCTION & BACKGROUND

Plaintiff PeriCor Therapeutics, Inc. ("Plaintiff") originally filed this action for declaratory and injunctive relief against Defendants American Arbitration Association ("AAA") and Merck & Co., Inc. ("Merck") in Los Angeles County Superior Court. (Docket No. 1 [Not. Of Removal ("Not.")], Ex. A [Compl.].) Plaintiff is currently the claimant in an arbitration pending before the AAA in which it alleges that Merck breached a licensing agreement to develop and commercialize a life-saving drug known as acadesine, which is used to treat high-risk patients undergoing open heart surgery. (Id. ¶ 11.)

Plaintiff appointed Judge Peter Lichtman (Ret.) as one of three arbitrators to preside over the matter, but Merck objected to this appointment on grounds of bias and lack of impartiality.

¶ 18.) Plaintiff contends that the AAA "has a conflict that precludes it from deciding whether to remove Judge Lichtman as an arbitrator in the matter." (Id. ¶ 12.) "Specifically, Plaintiff contends that the AAA has a conflict because it was previously involved in a very heated and highly publicized litigation in which Plaintiff's counsel obtained a high profile reversal of an arbitration award, and also successfully prosecuted a claim against the AAA for improprieties in connection with its arbitrator's appointment to a case known as O'Flaherty v. ." (Id.) Plaintiff therefore seeks a declaration that "the AAA is barred from deciding Merck's objection to Judge Lichtman's appointment," (id. ¶ 25), as well as an injunction "preliminar[ily] enjoin[ing] the AAA from making any such ruling and enjoin[ing] Merck from proceeding with the arbitration unless and until this Court determines whether the AAA is required to recuse itself." (Id. ¶ 27.)

Defendant Merck removed the action on January 3, 2013, asserting federal subject matter jurisdiction pursuant to 28 U.S.C. § 1332 (diversity jurisdiction). (Not. ¶¶ 8--11.) However, because the Court concludes that the amount in controversy in this matter is too speculative, Defendant has failed to establish this Court's subject matter jurisdiction. Accordingly, the Court REMANDS the case to Los Angeles County Superior Court.

II. DISCUSSION

LEGAL STANDARD

Under Federal Rule of Civil Procedure 12(h)(3), "[i]f the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action." Fed. R. Civ. P. 12(h)(3). "[A] court may raise the question of subject matter jurisdiction, sua sponte, at any time during the pendency of the action . . . ." Snell v. Cleveland, Inc., 316 F.3d 822, 826 (9th Cir. 2002); see also United Investors Life Ins. Co. v. Waddell & Reed, Inc., 360 F.3d 960, 966 (9th Cir. 2004) ("Here the district court had a duty to establish subject matter jurisdiction over the removed action sua sponte, whether the parties raised the issue or not."). The Ninth Circuit has held that courts must "strictly construe the removal statute against removal jurisdiction" and reject federal jurisdiction "if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citation omitted). "The strong presumption against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id. (quotations and citations omitted).

Generally speaking, the two ways a party may bring a case within the jurisdiction of the federal courts are: (1) diversity of citizenship under 28 U.S.C. § 1332; and (2) federal question under 28 U.S.C. § 1331. William W. Schwarzer, et al., California Practice Guide: Federal Civil Procedure Before Trial § 2:2, at 2A-1 (2006). Federal courts have jurisdiction on the basis of diversity of citizenship where the amount in controversy exceeds $75,000 and where the matter is between citizens of different states. 28 U.S.C. § 1332(a). Defendant Merck has removed this action on the basis of diversity jurisdiction. (Not.) Therefore, as the removing party, Merck "has the ...


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