Citations
- 172 F. Supp. 3d 724
Full opinion text
OPINION
Walls, Senior District Judge
This putative class action concerns the legality of a settlement between two pharmaceutical. companies. Plaintiffs are indirect purchasers of the drug lamotrigine, known by its brand name Lamictal, whieh was the subject of patent litigation between the Defendant pharmaceutical companies. Plaintiffs allege that the terms of the litigation settlement and the resulting sales of branded and generic versions of Lamictal violated federal and state antitrust and consumer protection laws. Defendants move ■ to dismiss on - various grounds, including that Plaintiffs’ state law claims are time-barred, Plaintiffs fail to adequately plead several causes of action, and Plaintiffs’ federal claims fail to allege a justiciable case or controversy. Decided without.oral argument under Federal Rule of Civil Procedure 78(b), Defendants’ joint motion is granted in part and denied in part.
FACTUAL AND PROCEDURAL BACKGROUND
This case arises out of the same set of circumstances as another case pending before this Court, In re: Lamictal Direct Purchaser Antitrust Litig., Civ. No. 12-995 (D.N.J.2012) (the “Direct Purchaser Class Action”), referenced by Plaintiffs in the amended complaint. Amended Complaint, ECF Ño. 38 at 1. The Court takes the following allegations from the amended complaint as true.
Defendant GlaxoSmithKline (“GSK”), a pharmaceutical company, manufactures and sells Lamictal Tablets and Lamictal Chewables, which treat epilepsy and bipolar disorder. ECF No. 38 ¶¶1-2. From Marph 2007 to March 2008, GSK’s domestic sales of Lamictal Tablets exceeded $2 billion. Id. ¶ 2. During the same period, the lower-dosage Lamictal Chewables had domestic sales of about $50 million. Id. GSK held a patent, U.S. Patent No. 4,602,017 (the “017 patent”), for the active ingredient in Lamictal products, lamotrigine, that gave GSK the exclusive right to sell Lam-ictal Tablets and Chewables until the patent expired on July 22, 2008. Id. ¶¶ 8, 59.
Defendant Téva Pharmaceutical Industries Ltd. and Teva Pharmaceuticals USA, Inc. (collectively, “Téva”) is a pharmaceutical company that wanted to market a generic version of Lamictal and filed applications with U.S. Food and Drug Administration (“FDA”) seeking to do so. Id. ¶ 3. GSK sued Tevá in 2002 for patent infringement under Hatch-Waxman Act procedures, Pub. L. No. 98-417, 98 Stat. 1585 (1984). Id. ¶¶4, 46-49, 65.
I, The Hatch-Waxman Act Procedures
The FDA must approve any. new drug a manufacturer seeks to introduce onto the market. 21 U.S.C. § 355(a). To apply for approval, the manufacturer files a New Drug Application (“NDA”) containing detailed information about the drug, its chemical composition, reports about its safety and effectiveness as shown through extensive clinical trials, and descriptions of its production and packaging processes. Id. § 355(b)(1). The application must also identify any patent associated with the drug and its expiration date. Id. If the FDA approves the drug, it publishes the drug and patent information in a book called “Approved Drug Products with Therapeutic Equivalence and Evaluations,” commonly referred to as the “Orange Book.” Id. § 355(j')(7)(A).
Generic drugs are therapeutically and pharmaceutically equivalent to corresponding brand name drugs and sold at lower prices. Congress passed the Hatch-Wax-man Act in 1984 to encourage the entry of generics onto the market. A generic manufacturer may file an Abbreviated New Drug Application (“ANDA”), which does not need to contain the same level of detail as is required for an NDA. 21 U.S.C. § 355(j). The ANDA must make one of four certifications:
(1) that no patent information for the brand name drug has been filed;
(2) that the patent for the brand name drug has expired;
(3) that the patent will expire on a specifically identified date;
(4) that the “patent is invalid or will not' be infringed by the manufacture, use, or sale of the new drug for which the application is submitted.”
21 . U.S.C. § 355(j)(2)(A)(vii) (emphasis added).
Filing a certification under paragraph IV frequently leads to litigation because it constitutes a technical act. of patent infringement. 35 U.S.C. § 271(e)(2)(A). If the applicant makes a certification under paragraph IV, the patent holder must be notified. .21 U.S.C. § 355(j)(2)(B). The patent holder then has 45 days to file an infringement lawsuit against the ANDA applicant. Id. § 355(j)(5)(B)(iii). When a suit is filed, the FDA stays the ANDA approval process until either (1) 30 months have run, or (2) the court decides that the patent is invalid or not infringed, whichever is earlier. Id.; ECF No. 38 ¶ 49.
Generic manufacturers are incentivized to be the first to file a paragraph IV certification because the first ANDA applicant to do so is granted a 180-day “exclusivity period.” During that time, the FDA will not grant final approval to any other ANDA for the same generic drug. 21 U.S.C. § 355(j)(5)(B)(iv); ECF No. 38 ¶ 50. For the first filer, the potential reward is half-a-year’s period when it is the only generic drug company on the market competing with the brand name drug company. This 180-day exclusivity period is triggered by either the generic manufacturer’s entry into the market with the drug or a court’s final decision that the patent subject to the paragraph IV certification is invalid or not infringed. 21 U.S.C. § 355(j)(5)(B)(iv)(I); 21 C.F.R. § 314,-107(c)(1); ECF No. 38 ¶ 50.
Another concept relevant to this case is pediatric exclusivity. Only a small fraction of drugs are tested on pediatric patients. To address this problem, the FDA will request that a drug company seeking to market drugs for pediatric use conduct pediatric trials. 21 U.S.C. § 355a. If the company successfully completes the trials and the FDA accepts the results, then the FDA will award the company six months of additional market exclusivity (the “Pediatric Exclusivity”)., In practical terms, this means that after a drug company’s patent expires, the FDA will delay approval of generic ANDAs for another six months, essentially protecting the market from the entry of generics. Id. § 355a(c)(2).
II. GSK’s Patent Litigation with Teva
Teva filed ANDAs with the FDA in 2002 seeking approval to manufacture and sell generic versions of lamotrigine tablets and chewables. ECF No. 38 ¶ 61. Teva was the first to file “substantially complete” AN-DAs containing paragraph IV certifications that the ’017 patent was invalid, unenforceable, and/or not infringed by Teva’s proposed generic products, id. ¶ 62, giving Teva the potential right to a 180-day exclusivity period for sales of generic lamotri-gine tablets and chewables. Id. ¶ 63. Teva gave notice to GSK of the paragraph TV certifications, and within 45 days GSK filed suit in the U.S. District Court for the District of New Jersey alleging that Teva’s two ANDAs infringed the ’017 patent. Id. ¶65. The FDA then automatically stayed the processing of Teva’s ANDAs for 30 months. Id.
After discovery, the patent litigation culminated in a bench trial in January 2005. Id. ¶ 66. On the final day of trial, the Hon. John W. Bissell ruled from the bench that claim I of the ’017 patent was invalid and indicated that a ruling On the validity of the three remaining claims would be issued. Id. ¶¶ 4, 67; In re Lamictal Direct Purchaser Litig., 2012 WL 6725580, at *2 (D.N.J. Dec. 6, 2012) (Walls, J.). Claim I involved the chemical compound 3,5-diami-no-6-(2,3-diocholorphenyl)-l, 2,4-triazine. This is lamotrigine, the'active ingredient in Lamictal products. Id.
III. The Settlement
Following Judge Bissell’s bench ruling, GSK and Teva quickly reached a settlement, formalized in a Settlement Agreement between GSK and Teva USA and a License and Supply Agreement between GSK and Teva Ltd. (collectively, “the settlement”) signed on February 16, 2005. ECF No. 38 ¶75. The key terms were:
1) Teva was permitted to begin selling a limited number of generic lamotrigine chewables by June 1, 2005. Id. ¶ 76. This was approximately 37 months before the expiration of the ’017 patent, and also before the FDA approved Teva’s ANDA for lamotrigine tablets. Id. ¶ 64, 76, 77. GSK supplied the chewables to Teva, and Teva began selling them on May 25, 2005. Id.
2) Teva was permitted to begin selling , generic lamotrigine tablets on July 21, 2008,- the expiration date of the ’017 patent. Id. ¶ 77.
3) GSK granted Teva an exclusive waiver of any Pediatric Exclusivity that might be granted to GSK, allowing Teva to begin selling generic lamotri-gine tablets on July 21, 2008 even if GSK eventually received the additional six-month period of exclusivity. Id.
4) GSK further agreed not to launch its ■ own authorized generic versions of Lamictal products until January 2009 by giving Teva an exclusive license until that time. Id. ¶ 81.
On April. 4, 2005, the parties filed a Stipulation and Order of Dismissal seeking the dismissal of all claims and counterclaims in the patent infringement lawsuit. Id. ¶ 87. The court, also entered an order withdrawing the bench ruling that invalidated claim I of the ’017 patent. Id,
In 2007, GSK received a six-month Pediatric Exclusivity. This did not extend the expiration date of the ’017 patent, but it did prevent any ANDA applicant from receiving final regulatory approval for a generic lamotrigine tablet, without invalidating or demonstrating that it did not infringe the ’017 patent, until January 22, 2009. Id. ¶ 60..
The FDA approved Teva’s ANDAs for lamotrigine-chewables and tablets on June 21 and August 30, 2006, respectively. Id. ¶64. This approval date was significant because Teva complied with the terms of the settlement: (1) Teva had already been selling GSK-supplied lamotrigine chewa-bles since May of 2005, id. ¶¶ 76. 78; and (2) Teva waited nearly two years after receiving FDA approval, until July 21, 2008, to launch its generic version of lamo-trigine tablets. Id. ¶¶90. As the first ANDA filer to declare a paragraph IV certification, Teva was guaranteed that no other generics could enter the market for 180 days after its own market entry for lamotrigine tablets. Id. ¶ 92. Because Teva delayed its entry into the market, rather than launching its generic lamotrigine tablets on August 30, 2006, GSK and other manufacturers did not launch their own generic lamotrigine tablets until January 2009. Id ¶ 91.
IV. The Indirect Purchaser Class Action
On February 17, 2012, plaintiffs in the Direct Purchaser Class Action filed a complaint in this Court, bringing five causes of action against GSK and Teva under the Sherman Antitrust Act. Civ. No. 12-995, ECF No. 1. On August 14, 2012, named Plaintiffs Carolyn McAnaney and the International Brotherhood of Electrical Workers Local 38, Health and Welfare Fund (“IBEW Local 38”) filed a complaint on behalf of indirect purchasers of lamotri-gine tablets,' éxplicitly incorporating the factual' allegations of the Direct Purchaser Class Action Complaint. ECF No. 1 ¶ 0. Plaintiffs filed an amended complaint in this action on February 5, 2013, adding the International Brotherhood of Electrical Workers Local 595, Health and Welfare Fund (“IBEW Local 595”) as a named Plaintiff. ECF No. 38 ¶ 0.
Plaintiff McAnaney is a citizen of Suffolk County, New York who was a participant, member, or beneficiary in a health plan that required her to pay higher co-payments for brand-name drugs than for generics. In 2008, during the Class Period, Plaintiff McAnaney allegedly began purchasing generic lamotrigine tablets for personal use. Id. ¶ 18. Plaintiff IBEW Local 38 is a health and welfare fund located in Cleveland, Ohio that allegedly reimbursed or paid for its members’ purchases of Lamictal tablets during the Class Period. Id: ¶ 19. Plaintiff IBEW Local 595 is a health and welfare fund located in Pleasan-ton, California that allegedly reimbursed or paid for its members’ purchases of Lamictal tablets during the Class Period. Id. ¶ 20.
Plaintiffs’ general claim is that Defendants’ settlement unlawfully prevented competition in the lamotrigine tablet market. In exchange for receiving “reverse payments” from GSK in the form of (a) the right to sell lamotrigine chewables beginning in'2005 and (b) an eventual six-month exclusivity period for the sale of generic lamotrigine tablets, Teva agreed to (a) abandon the ’017 patent litigation, which could have resulted in the invalidation of the patent, allowing competitors to enter the market earlier, and (b) postpone . the introduction of its generic lamotrigine tablets until 2008, also forestalling entry into the market by other competitors. Id. ¶¶ 80-81. Plaintiffs claim that the absence of competition in the lamotrigine tablet market led them to pay unlawfully high prices for the drug. Id. ¶ 84.
Plaintiffs assert ten causes of action under federal and state law on behalf of themselves, a national class of indirect purchasers, and separate classes of indirect purchasers harmed in New York, Michigan, and California. Id. ¶¶ 131-206. Plaintiffs allege that they and members of the indirect purcháser classes were harmed by Defendants’ actions “during the Class Period of August 30, 2006, until the effects of Defendants’ conduct .., ceased or ceases” (the “Class Period”). Id. ¶ 1.
A.The U.S. Indirect Purchaser Class claims
. In the first three causes of action, all three Plaintiffs seek declaratory judgments under the Declaratory Judgment Act, on behalf of themselves and a class of “[a]ll persons or entities in the United States and its territories who indirectly purchased” Lamictal tablets , from GSK or generic lamotrigine tablets from Teva during the Class Period (the “U.S. Indirect Purchaser Class”), that Defendants:
1) Engaged in price fixing of lamotrigine tablets, in violation of Section 1 of the Sherman Act, 16 U.S.C. § 1 (“Count One”), id. ¶¶ 131-37;
2) Allocated the markets for Lamictal tablets and generic lamotrigine tab- . lets, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 (“Count Two”), id. ¶¶ 138-46; and
3)Unlawfully restrained and monopo- ' lized trade and attempted to monopolize trade in the market for lamotri-gine tablets, in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2 (“Count Three”). Id. ¶¶ 147-51.
B. The New York Indirect Purchaser Class claims
In the fourth and fifth causes of action, Plaintiff McAnaney brings claims' under New York state law on behalf of herself and all persons or entities who indirectly purchased Lamictal tablets from GSK or generic lamotrigine tablets from Teva “produced, manufactured, marketed, sold, or purchased in the state of New York” during the' Class Period (the “New York Indirect Purchaser Class”). Id. ¶ 26. Plaintiff McAnaney alleges that:
1) Defendants entered into a “contract, agreement, arrangement, or combination to establish and maintain a monopoly in the conduct of trade or commerce [of lamotrigine tablets] in New York,” in . violation of New York’s Donnelly Act, New York GBL § 340, et seq. (“Count Four”). Id. ¶¶ 152-161; and ’
.2) Defendants’-, alleged anticompetitive conduct constituted “deceptive and misleading practices in the conduct of trade or commerce in New York,” in violation of New York’s consumer protection statute, New York GBL § 349, et seq. (“Count Five”). Id. ¶¶ 162-170..
C. The Michigan Indirect Purchaser Class Claims
In the sixth and seventh causes of action, Plaintiff IBEW Local 38 brings claims under Michigan state law on behalf .of itself and all persons or entities who indirectly purchased Lamictal tablets from GSK or generic lamotrigine tablets from Teva “produced, manufactured, marketed, sold, or purchased in the state of Michigan” during the Class Period (the “Michigan Indirect Purchaser Class”) Id. ¶27. Plaintiff IBEW Local 38 alleges that:
1) Defendants “engaged in a continuing illegal contract, combination, and conspiracy in restraint of trade” of lamo-trigine tablets, in violation of Mich. Comp. Laws. § 445.772 (“Count Six”). Id. ¶¶ 171-80; and
2) Defendant GSK “unlawfully restrained and monopolized trade and attempted to monopolize trade for the purpose of excluding or limiting competition or controlling, fixing, or maintaining prices in the market for Lamictal Tablets,” in violation of Mich. Comp. Laws § 445.773 (“Count Seven”). Id. ¶¶ 181-84.,/
D. The California Indirect Purchaser Class claims
In the eighth and ninth' causes of action, Plaintiff IBEW Local 595 brings claims under California law on behalf of itself and all persons or entities who indirectly purchased Lamictal tablets from GSK or generic lamotrigine tablets from,Teva “produced, manufactured, marketed, sold, or purchased in the state of California” during the Class Period (the “California Indirect Purchaser Class”) Id. ¶28. Plaintiff IBEW Local 595 alleges that:
1) Defendants engaged in a “combination to create or carry out restrictions in trade or commerce, and any agreement to fix the price of’ lamo-trigine tablets, in violation of California’s Cartwright Act, California Bus. & Prof. Code § 16700, et seq. (“Count Eight”). Id. ¶¶ 185-88; and
2) Defendants’ conduct constituted an “unlawful, unfair, or fraudulent business act or practice” in violation of California’s Unfair Competition Law (“UCL”), California Bus. & Prof. Code § 17200, et seq. (“Count Nine”). Id. ¶¶ 189-92.
E. The unjust enrichment claim
Finally, the three named Plaintiffs bring a claim on behalf of themselves and the U.S. Indirect Purchaser Class alleging that Defendants “violated the common law of unjust enrichment in New York, Michigan, California, and the laws of unjust enrichment across all the states and territories of the United States” (“Count Ten”). Id. ¶¶ 193-206.
V. The motion to dismiss and the Direct Purchaser Class Action appeal
On December 6, 2012, this Court dismissed the Direct Purchaser Class Action, holding that the complaint failed to allege that Defendants had made “reverse payments” and that Defendants’ actions were not subject to federal antitrust scrutiny. Direct Purchaser Class Action, Civ. No., ECF No. 105. The direct purchaser plaintiffs appealed, and on July 24, 2013, the case was remanded to this Court for reconsideration in light of the Supreme Court’s decision in FTC v. Actavis, — U.S. -, 133 S.Ct. 2223, 186 L.Ed.2d 343 (2013). Civ. No. 12-995, ECF No. 112. In Actavis, the Supreme Court rejected the “quick look” standard under which district courts in the Third Circuit had scrutinized “reverse payment settlements” under the Hatch-Waxman Act in favor of a more exacting “rule of reason” test. Actavis, 133 S.Ct. at 2237.
On September 6, 2013, Defendants GSK and Teva filed separate motions to dismiss the amended complaint in the Indirect Purchaser Class Action, arguing primarily that the complaint did not allege that Defendants made “reverse payments” and that Defendant’s actions were not subject to federal or state antitrust scrutiny under the Actavis “rule of reason” test. ECF No. 46 (GSK); ECF No. 47 (Teva). Defendants mentioned, but declined to argue, additional state-law grounds for dismissal, reserving the right to raise these arguments in a later motion for judgment on the pleadings under Fed. R. Civ. P. 12(c). ECF No. 46 at 2 n.2; ECF No. 47 at 3. The Court did not rule on the motion to dismiss, and the parties informally agreed to stay the Indirect Purchaser Class Action pending the resolution of the “reverse payment” stan-. dard of review issue in the Direct Purchaser Class Action. ECF No. 69 at 1.
On January 24, 2014, the Court affirmed its dismissal of the Direct Purchaser Class Action, Civ. No., ECF No. 129, and the direct purchaser plaintiffs appealed again. Civ. No. 12-995, ECF No. 130. On July 26, 2015, the Third Circuit vacated the Court’s dismissal and remanded the Direct Purchaser Class Action to this Court for further proceedings. Civ. No. 12-995, ECF No. 135-1. After considering a petition by Defendants for a rehearing, the Third Circuit amended its opinion, Civ. No. 12-995, ECF No. 135-2, and issued its mandate to the Court, vacating the dismissal and remanding the Direct Purchaser Class Ac-tion to this Court. Civ. No., ECF No. 135-2.
On October 26, 2015, the Court held a status conference between parties in both actions, ECF No. 75, and Defendant GSK withdrew its motion to dismiss the amended complaint in the Indirect Purchaser Class Action in light of the developments in the Direct Purchaser Class Action. See Letter from Douglas S. Eakeley, Esq., ECF No. 72 at 3 (requesting status conference in part to discuss a “schedule for Defendants to re-brief the currently pending motions to dismiss the Indirect Purchaser action” to raise “state-specific grounds for dismissal”).
VI. The motion for judgment on the pleadings
On December 28,2015, following a stipulated scheduling order signed by the Court on November 3, 2015, ECF No. 76, Defendants filed a joint motion for judgment on the pleadings under.Fed. R. Civ. P. 12(c) in the Indirect Purchaser Class Action. ECF No. 84. Defendants argue that (a) all of Plaintiffs’ state law claims are barred by the applicable statutes of limitations, id. at 9-27; (b) Count Five, alleging a violation of New York’s consumer protection statute, fails because Plaintiffs do not allege any deceptive, consumer-oriented acts that occurred in New York, id. at 27-31; (c) Counts Six, Seven, and the Michigan state portion of Count Ten fail because Plaintiffs do not have standing to assert Michigan state law claims, id. at 31-34; (d) Count Ten must be dismissed because the Michigan and New York unjust enrichment claims are time-barred, unjust enrichment is not a recognized cause of action in California, and Plaintiffs' lack standing to assert unjust enrichment claims in other states, id. at 34-37; and (e) Counts One, Two, and Three fail because Plaintiffs fail to allege a justiciable “case or controversy.” Id. at 37-38.
Plaintiffs filed a memorandum in opposition on February- 11, 2016, ECF No. 89, and Defendants filed a reply brief on February 26, 2016. ECF No. 91. The Court grants Defendants’ motion in part and denies it in part.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(c) allows a party to move for a judgment on the pleadings. A motion under Rule 12(c) is decided under the same standards which apply on a motion to dismiss for failure to state a claim under Rule 12(b)(6). Turbe v. Gov’t of Virgin Islands, 938 F.2d 427, 428 (3d Cir.1991).
Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, ‘to state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). A claim is plausible on its face “when the plaintiff pleads factual content that allows the court to- draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.