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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

BCBSM, INC., ET AL.,

Plaintiffs/Counter-Defendants, 

v. 

WALGREEN CO. AND WALGREENS 

BOOTS ALLIANCE, INC.,

Defendants/Counter-Plaintiff.

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Case No. 1:20-cv-01853

Honorable Virginia M. Kendall

Honorable Sheila M. Finnegan

Consolidated with:

No. 1:20-cv-01929

No. 1:20-cv-03332

No. 1:20-cv-04940

No. 1:20-cv-04738

No. 1:22-cv-01362

DEFENDANTS’ MOTION TO DISMISS 

THE CAREFIRST PLAINTIFFS’ COMPLAINT PURSUANT TO 

FEDERAL RULE OF CIVIL PROCEDURE 12(B)(1)

Defendants Walgreen Co. (“Walgreens”) and Walgreens Boots Alliance, Inc. (“WBA,” 

and together with Walgreens, “Defendants”), by and through their undersigned attorneys, move 

this Court pursuant to Federal Rule of Civil Procedure 12(b)(1) to enter an Order dismissing the 

Complaint filed by Plaintiffs CareFirst of Maryland, Inc.; Group Hospitalization and Medical 

Services, Inc.; CareFirst BlueChoice, Inc.; Blue Cross and Blue Shield of South Carolina;

BlueChoice HealthPlan of South Carolina, Inc.; Louisiana Health Service & Indemnity Company, 

d/b/a/ Blue Cross and Blue Shield of Louisiana; and HMO Louisiana, Inc. (together, the “Carefirst 

Plaintiffs”) for lack of subject matter jurisdiction, because the Court lacks diversity jurisdiction 

here. 

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In support of this motion, Defendants rely upon the pleadings and papers of record to date 

and further state:

1. In this diversity action, the Carefirst Plaintiffs—a number of health plans that 

provide services to members in several states—have sued Defendants for an alleged fraud related 

to Walgreens’ submissions of usual and customary (“U&C”) drug prices to Plaintiffs’ pharmacy 

benefit managers (“PBMs”). The Complaint’s substantive allegations are well-known to the

Court, as they are copied almost word-for-word from the allegations in the second amended 

complaint in the related action BCBSM, Inc., et al. v. Walgreen Co., et al., Case No. 1:20-cv-01853 

(N.D. Ill.) (the “BCBSM Action”). See generally ECF No. 1 in Carefirst of Maryland, Inc., et al. 

v. Walgreen Co., et al., Case No. 1:22-cv-01362 (D. Md. Mar. 15, 2022) (the “Carefirst 

Complaint” in the “Carefirst Action”).

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2. But the Carefirst Complaint suffers a unique and fundamental jurisdictional flaw: 

one of these new Plaintiffs is “stateless” for diversity purposes, causing the entire case to fall 

beyond this Court’s Article III jurisdiction. Plaintiff Group Hospitalization and Medical Services, 

Inc. (“GHMSI”) is a federally charted corporation operating in multiple states. Absent specific 

statutory language dictating their citizenship (which does not exist in GHMSI’s case), such 

corporations are indisputably citizens of no state and thus their presence destroys complete 

diversity among the parties. See Bankers’ Trust Co. v. Texas & Pac. Ry. Co., 241 U.S. 295, 309–

10 (1916). Because the inclusion of GHMSI as a party defeats complete diversity, the Carefirst

Complaint must be dismissed for failing to plead the Court’s subject matter jurisdiction.

1 The Court consolidated the Carefirst Action with the BCBSM Action on April 11, 2022. See 

ECF No. 251 in Case No. 1:20-cv-01853. 

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3. Defendants are mindful of the fact that fundamental questions concerning the 

Court’s authority, such as questions related to subject matter jurisdiction, “should be decided early 

in the lawsuit.” Se. Lake View Neighbors v. Dep’t of Hous. & Urban Dev., 685 F. 2d 1027, 1040 

(7th Cir. 1987); see also Ware v. Best Buy Stores, L.P., 6 F.4th 726, 731 (7th Cir. 2021) (subject 

matter jurisdiction should be “the first issue in any case”). Defendants thus bring this motion and 

seek to resolve this patent jurisdictional defect at the earliest possible opportunity, rather than at a 

point in the case when the Parties have expended significant time, effort, and resources litigating 

the Carefirst Plaintiffs’ claims. 

A. Background

4. The Carefirst Plaintiffs filed their Complaint on March 15, 2022, asserting claims 

for common law fraud (Count I), fraudulent nondisclosure (Count II), unjust enrichment (Count 

III), and violations of various states’ consumer protection laws (Counts IV–VIII). As in the 

BCBSM Action, the Carefirst Complaint alleges that Walgreens submitted U&C drug prices to

Plaintiffs’ PBMs that did not reflect special prices available only to members of savings programs 

like Walgreens’ Prescription Savings Club (“PSC”), thereby supposedly inflating the amounts that

Plaintiffs reimbursed Walgreens for covered prescription drugs.

5. The Carefirst Complaint asserts that the Court possesses subject matter jurisdiction 

exclusively pursuant to the diversity statute, 28 U.S.C. § 1332, because Plaintiffs “are citizens of 

Maryland, Washington, D.C., South Carolina, and Louisiana”; Defendants are “citizens of 

Delaware and Illinois”; and “the amount in controversy exceeds $75,000.” Carefirst Compl. ¶ 29.

6. The Carefirst Complaint names GHMSI as a Plaintiff and describes it as a 

“congressionally chartered corporation” that “operates as a not for profit health services plan in 

two counties of Maryland, Northern Virginia, and the District of Columbia.” Id. ¶ 13. Thus, 

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GHMSI indisputably operates in at least two states and Washington, D.C.—a significant admitted 

fact, as explained below. 

B. Legal Standard

7. Rule 12(b)(1) of the Federal Rules of Civil Procedure allows defendants to press “a 

facial challenge” to the Court’s subject matter jurisdiction, which tests whether a complaint 

contains sufficient factual allegations to establish jurisdiction. Silha v. ACT, Inc., 807 F.3d 169, 

173–74 (7th Cir. 2015); see also Chiappetta v. Kellogg Sales Co., 2022 WL 602505, at *3 (N.D. 

Ill. Mar. 1, 2022). Where a defendant raises a facial challenge—such as the instant motion—“the 

plaintiff bears the burden of establishing that the court has jurisdiction over the matter.” 

Chiappetta, 2022 WL 602505, at *3, citing Silha, 807 F.3d at 173. Resolving a facial challenge 

requires the Court to “assume[] the truth of the operative complaint’s well-pleaded factual 

allegations, but not its legal conclusions.” Martin v. Haling, 2022 WL 1228233, at *1 (N.D. Ill. 

Apr. 26, 2022) (citing cases).

8. The Carefirst Complaint alleges only diversity under 28 U.S.C. § 1332 as the basis 

for the Court’s subject matter jurisdiction; no federal question jurisdiction exists over the Carefirst 

Plaintiffs’ state law claims.

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 See Carefirst Compl. ¶¶ 29–30. The diversity statute provides that 

federal district courts have “original jurisdiction of all civil actions where the matter in controversy 

2 The Carefirst Complaint also asserts that the Court has “supplemental jurisdiction” under 28 

U.S.C. § 1367, see Carefirst Compl. ¶ 29, but does not explain how or why, in the absence of 

diversity jurisdiction, the Court would possess supplemental jurisdiction over any of the 

Complaint’s purely state law claims. See Peacock v. Thomas, 516 U.S. 349, 355 (1996) 

(“[Supplemental] jurisdiction” requires “an independent basis for federal jurisdiction”). See also 

Wright & Miller, 13D Fed. Prac. & Proc. Juris. § 3567.3 (3d ed.) (“If [a] claim failed to invoke an 

independent basis of subject matter jurisdiction, then there was nothing to which supplemental 

jurisdiction could have attached.”). And, because of the complete diversity requirement, see supra

¶¶ 8–10, the Court may not take supplemental jurisdiction of GHMSI’s state law claims merely 

because the remainder of the parties to the Carefirst Complaint are diverse. 

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exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens

of different States.” 28 U.S.C. § 1332(a)(1) (emphasis added). The existence of diversity is 

determined “against the state of facts that existed at the time of filing.” KM LPTV of Chicago-13, 

LLC v. S.O.S. Media Holdings, Inc., 2015 WL 12834764, at *2 (N.D. Ill. Sept. 15, 2015) (citation 

omitted). 

9. Establishing jurisdiction under 28 U.S.C. § 1332 demands “complete diversity”

between all plaintiffs and defendants. See Strawbridge v. Curtiss, 7 U.S. 267 (1806). Where, as 

here, “more than one plaintiff sues more than one defendant and the jurisdiction rests on diversity 

of citizenship, each plaintiff must be capable of suing each defendant” under the diversity statute. 

Wright & Miller, 13E Fed. Prac. & Proc. Juris. § 3605 (3d ed.), quoting Soderstrom v. Kungsholm 

Baking Co., 189 F.2d 1008, 1014 (7th Cir. 1951) (emphasis added). That is, a suit lacks complete 

diversity where any “party cannot sue or be sued under one of the provisions of the diversity 

statute.” Page v. Democratic Nat’l Comm., 2 F.4th 630, 636 (7th Cir. 2021). 

10. The complete diversity rule requires that “no plaintiff [is] from the same state as 

any defendant.” Montgomery v. Markel Int’l Ins. Co., 259 F. Supp. 3d 857, 864 (N.D. Ill. 2017) 

(citations omitted). Relevant to the instant motion, however, some “individuals or entities are not 

considered to be citizens of any state.” Page, 2 F.4th at 635. Because such entities are “not (by 

definition) a citizen of any state as [28 U.S.C. § 1332(a)] requires,” they do not “fall within the 

jurisdiction created by the diversity statute” and thus “destroy complete diversity just as much as

a defendant who shares citizenship with a plaintiff.” Id. at 636. 

C. The Complaint Should Be Dismissed Because GHMSI Destroys Diversity

11. It is clear from the Carefirst Complaint’s face that the Court lacks subject matter 

jurisdiction. GHMSI is a federally chartered corporation—it is a “stateless” citizen, absent specific 

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statutory citizenship that does not exist here. As a result, GHMSI’s presence in the Carefirst 

Action destroys complete diversity among the parties and requires the Carefirst Complaint’s 

dismissal. 

12. The Carefirst Plaintiffs allege that GHMSI is “congressionally chartered” and 

operates in Maryland, Northern Virginia, and the District of Columbia. Carefirst Compl. ¶ 13. In 

1916, the Supreme Court held that such federally chartered corporations that operate across 

multiple states are by default stateless entities that destroy complete diversity. Bankers’ Trust, 241 

U.S. at 309–10. The Seventh Circuit recognized the Bankers’ Trust holding in Hukic v. Aurora 

Loan Servs., stating that, absent a statute that “dictate[s] otherwise,” courts have found that 

federally chartered corporations are “not [citizens] of any state,” and thus “not eligible for diversity 

jurisdiction.” 588 F.3d 420, 428 (7th Cir. 2009); see Fed. Home Loan Bank of Chi. v. Banc of Am. 

Funding Corp., 760 F. Supp. 2d 807, 808–09 (N.D. Ill. 2011) (emphasizing that Hukic

“reconfirmed” the holding of Bankers’ Trust). Courts across the Seventh Circuit—including in 

this District—have enforced this principle in diversity actions involving federally chartered entities

that operate across multiple states and lack statutorily-defined state citizenship. See, e.g., id.; Am.

Airlines Fed. Credit Union v. Eck, 2018 WL 2332065, at *4 (N.D. Ill. May 23, 2018); Fed. Home 

Loan Bank of Indianapolis v. Banc of Am. Mortg. Sec., Inc., 2011 WL 2133539, at *2 (S.D. Ind. 

May 25, 2011). 

13. Defendants have found no statute dictating GHMSI’s citizenship for diversity 

purposes. Thus, GHMSI is subject to the default rule that federally chartered corporations defeat 

diversity jurisdiction. Indeed, prior congressional acts specifically pertaining to GHMSI 

demonstrate that Congress has passed on the opportunity to define GHMSI as a state citizen for 

diversity purposes. In 1993, Congress amended GHMSI’s charter to establish Washington, D.C.,

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as the “legal domicile of the corporation.” See District of Columbia Appropriation Act, 1994, Pub. 

L. No. 103–127, tit. I, § 138, 107 Stat. 1349 (1993). In doing so, Congress notably declined to 

speak in the parlance of 28 U.S.C. § 1332—i.e. by referring to GHMSI’s “domicile,” it did not 

address, let alone fix, GHMSI’s citizenship, or even mention diversity jurisdiction at all.3 This 

stands in stark contrast to other congressional acts permitting diversity jurisdiction over other 

federally chartered corporations. See 12 U.S.C. § 1464(x) (“In determining . . . diversity 

jurisdiction . . . [,] [f]ederal savings associations shall be considered to be a citizen only of the 

State in which such savings association has its home office.”) (emphasis added). 

14. The charter amendment’s legislative history also demonstrates that Congress did 

not intend to establish GHMSI’s citizenship through the act. See Scipio v. Weinberger, 622 F. 

Supp. 47, 48 (N.D. Ill. 1985) (relying on legislative history to dismiss case for lack of subject 

matter jurisdiction). Congress did not reset GHMSI’s “domicile” to extend federal courts’ 

diversity jurisdiction to actions involving GHMSI. Rather, through the 1993 legislation, Congress 

subjected GHMSI to the oversight of D.C. insurance regulators due to the corporation’s 

“imprudent business practices and fiscal irresponsibility” that had “jeopardize[d] its solvency.” 

139 Cong. Rec. H8217 (1993) (statement of Rep. Stark). Congress was presumptively aware of 

the Supreme Court’s 1916 Bankers’ Trust decision and subsequent cases by the time of the 1993 

3 That Congress established Washington, D.C., as GHMSI’s “domicile” is irrelevant because “a 

corporation does not have a domicile” that impacts the diversity jurisdiction of federal courts. 

Moore v. General Motors Pension Plans, 91 F.3d 848, 850 (7th Cir. 1996). Only the citizenship 

of individuals is pegged to their “domicile”—defined by courts as the state they consider their 

“permanent home.” See Galva Foundry Co. v. Heiden, 924 F.2d 729, 729–30 (7th Cir. 1991). By 

contrast, corporate citizenship (and the citizenship of other business organizations, such as 

partnerships and limited liability companies), is statutorily defined. The diversity statute provides 

that corporations are citizens of both the state in which they are incorporated and the state in which 

they have their principal place of business. See 28 U.S.C. § 1332(c)(1). Under this standard, 

“domicile” is not relevant to corporate citizenship. GHMSI’s Washington, D.C., domicile 

establishes neither its state of incorporation nor its principal place of business. 

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legislation. See United States v. Uriarte, 975 F.3d 596, 601–02 (7th Cir. 2020) (“Congress writes 

statutes against the backdrop of the existing legal landscape,” and “know[s] the law”), quoting 

Cannon v. Univ. of Chi., 441 U.S. 677, 696–97 (1979). But the act’s legislative history tellingly 

contains no mention of federal subject matter jurisdiction whatsoever. Congress’s welldocumented decision to assign GHMSI a “domicile,” subjecting it to the District of Columbia’s 

insurance regulations, thus reflects no legislative intent to define GHMSI as a citizen of a particular 

state (or the District of Columbia) for diversity jurisdiction. Absent explicit statutory language 

addressing federal diversity jurisdiction, GHSMI remains stateless as a matter of law.

15. Where federally chartered multi-state corporations like GHMSI have no 

congressionally dictated citizenship, courts routinely recognize that their very presence in a 

diversity action precludes complete diversity and thus defeats federal subject matter jurisdiction. 

For example, in American Airlines Federal Credit Union v. Eck, Judge Guzmán dismissed the case 

after concluding, because the plaintiff federal credit union was a “national citizen and not a citizen 

of any state,” complete diversity “cannot be established.” See 2018 WL 2332065, at *4 (emphasis 

added). See also Fed. Home Loan Bank of Chi., 760 F. Supp. 2d at 808–09 (court lacked diversity 

jurisdiction over federal home loan bank operating in Illinois and Wisconsin because it had no 

citizenship); Jenkins v. Martin, 2006 WL 2852300, at *2 (7th Cir. Oct. 3, 2006) (emphasizing that 

complete diversity would be “impossible” when federal savings and loan association was a party)

(emphasis added); Phila. Indem. Ins. Co. v. U.S. Olympic Comm., 2020 WL 4783516, at *8, n.2 

(D. Colo. Aug. 18, 2020) (collecting cases). 

16. The fact that the non-GHMSI Plaintiffs named in the Carefirst Complaint are 

diverse does not change the result. “It is irrelevant whether complete diversity would otherwise 

exist when disregarding the [nondiverse entity’s] presence as a party” because complete diversity 

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requires each party to fall into the categories set forth by the diversity statute. Orchid Quay, LLC 

v. Suncor Bristol Bay, LLC, 178 F. Supp. 3d 1300, 1303 (S.D. Fla. 2016) (citing cases for the 

proposition that “the presence of a party who is not a citizen of any state...destroys a court’s 

diversity jurisdiction even when there are otherwise diverse parties on the same side of the lawsuit

as the ‘stateless’ party”). See also 13E Fed. Prac. & Proc. Juris. § 3605. GHMSI’s mere presence 

in any multi-plaintiff complaint that would otherwise satisfy the diversity statute infects the entire 

complaint and precludes the possibility of diversity jurisdiction. See Page, 2 F.4th at 636 (“If a

party cannot sue or be sued under one of the provisions of the diversity statute, the suit lacks 

complete diversity.”) (emphasis added). GHMSI cannot “piggy back” on the hypothetical 

diversity jurisdiction of plaintiffs who could have properly filed a federal case in diversity without 

including GHMSI.

17. Because diversity jurisdiction is determined “against the state of facts that existed 

at the time of filing,” KM LPTV of Chicago-13, LLC, 2015 WL 12834764, at *2, the jurisdictional 

defect discussed above has existed since the moment that the Carefirst Complaint was filed. This 

is a critical flaw that “affects the entire case,” and requires the dismissal of the “entire” Carefirst

Complaint. Ganjavi v. Smith, 2007 WL 2298375 (N.D. Ill. July 31, 2007). Because GHMSI is 

“not a citizen of any state, complete diversity among the parties cannot be established.” Eck, 2018 

WL 2332065, at *4 (emphasis added). Here, as in Eck, the Court should dismiss the Carefirst

Complaint in its entirety. 

* * *

18. In compliance with the Court’s Third Amended General Order 21-0027, which 

suspends Local Rule 5.3(b), Defendants have not noticed this motion for presentment.

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19. This motion is made in the interest of justice and not for the purpose of delay or 

obstruction.

WHEREFORE, Defendants respectfully request that the Court enter an Order:

a. Dismissing the Carefirst Plaintiffs’ Complaint (ECF No. 1 in Case No. 1:22-

cv-01362) in its entirety pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction; 

and

b. Granting such other and further relief as the Court deems just and proper.

Dated: May 16, 2022 Respectfully submitted,

/s/ Jeffrey J. Bushofsky

Jeffrey J. Bushofsky

Laura G. Hoey

Charles D. Zagnoli

ROPES & GRAY LLP

191 North Wacker Drive

32nd Floor

Chicago, Illinois 60606

Tel: (312) 845-1200

Fax: (312) 845-5562

Jeffrey.Bushofsky@ropesgray.com

Laura.Hoey@ropesgray.com

Charles.Zagnoli@ropesgray.com

Attorneys for Defendant/Counter-Plaintiff

Walgreen Co. & Defendant Walgreens Boots 

Alliance, Inc.

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CERTIFICATE OF SERVICE

I, Charles D. Zagnoli, hereby certify that the foregoing document was electronically filed 

on May 16, 2022, and will be served electronically via the Court’s ECF Notice system upon the 

registered parties of record.

/s/ Charles D. Zagnoli

Charles D. Zagnoli

ROPES & GRAY LLP

191 North Wacker Drive

32nd Floor

Chicago, Illinois 60606

Tel: (312) 845-1200

Fax: (312) 845-5562

Charles.Zagnoli@ropesgray.com

Attorney for Defendant/Counter-Plaintiff Walgreen 

Co. & Defendant Walgreens Boots Alliance, Inc.

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