In re Effexor Antitrust Litig.
In re Effexor Antitrust Litig.
Opinion of the Court
Presently before the Court is Defendants Wyeth Inc., Wyeth Manufacturing Limited, Wyeth Ireland Pharmaceutical Products (collectively, "Wyeth"), Teva Pharmaceuticals USA, Inc. and Teva Pharmaceuticals Industries Limited's (collectively, "Teva") Motion for Judgment on the Pleadings pursuant Federal Rule of Civil Procedure 12(c), regarding End-Payer Plaintiffs' Third Amended Consolidated Complaint. (ECF No. 165).
BACKGROUND
I. Parties
Plaintiffs are a collection of organizations including insurance carriers, Taft-Hartley funds, municipalities, and individuals, who have been indirectly affected by Defendants' alleged schemes. For example, jointly administered Taft-Hartley fund and employee welfare benefit plaintiffs include: A.F.L.-A.G.C. Building Trades Welfare Plan and IBEW-NECA 505 Health & Welfare Plan, both of which are self-insured health and welfare benefit plans in Alabama and Florida, and Alabama, respectively (Id. at ¶¶ 20-21); Painters District Council No. 30 Health and Welfare Fund, a self-insured health and welfare benefit plan located in Illinois (Id. at ¶ 24); New Mexico United Food and Commercial Workers Union's and Employers' Health and Welfare Trust Fund and Plumbers and Pipefitters Local 572 Health and Welfare Fund, Taft-Hartley funds from New Mexico and Tennessee, respectively (Id. at ¶¶ 23, 25); Sergeants Benevolent Association Health and Welfare Fund, a New York health and welfare fund (Id. at ¶ 27). Health insurance carrier plaintiffs include Louisiana Health Services Indemnity Company d/b/a Bluecross/Blueshield of Louisiana, a corporation licensed to conduct business in Louisiana that provides health benefits to covered members. (Id. at ¶ 22). Municipality plaintiffs include the *375City of Providence, Rhode Island, a municipal corporation that operates a self-insured health and welfare benefit plan. (Id. at ¶ 26). Finally, there is one named individual Plaintiff, Patricia Sutter, who is a Maine citizen. (Id. at ¶ 28). All Plaintiffs purchased, paid, and/or provided reimbursement for Effexor XR or its generic equivalent. (Id. at ¶¶ 20-28). Plaintiffs contend that they were all injured as a result of Defendants' anticompetitive schemes, since they paid a premium for the medication. (Id. ).
Defendants in this case are Wyeth and Teva. (Id. at ¶¶ 29-38). Wyeth Inc., Wyeth Pharmaceuticals, Inc., Wyeth-Whitehall, and Wyeth Pharmaceuticals Company are referred to collectively as Wyeth. (Id. at ¶ 33). Wyeth is a wholly owned subsidiary of Pfizer with its principal place of business in New Jersey. (Id. at ¶ 29). Wyeth wholly owns Wyeth Pharmaceuticals, Inc., which is located in Pennsylvania. (Id. at ¶ 30). Wyeth-Whitehall Pharmaceuticals and Wyeth Pharmaceuticals Company are Puerto Rican corporations that are subsidiaries of Wyeth. (Id. at ¶¶ 31-32). The Complaint also identifies "Wyeth applicants," who are inventors and prosecuting attorneys that were responsible for purportedly fraudulently obtaining patents. (Id. at ¶ 34). Teva Pharmaceutical Industries Limited and Teva Pharmaceuticals USA, Inc. are referred to collectively as Teva. (Id. at ¶ 37). Teva Limited is an Israeli corporation that develops, manufactures, markets, and distributes pharmaceutical goods. (Id. at ¶ 36). Teva USA is a wholly owned subsidiary of Teva Limited that is located in Pennsylvania, which focuses its efforts primarily on the generic pharmaceuticals business. (Id. ).
II. Facts
In the Complaint, EPPs identify several anticompetitive schemes that purportedly give rise to the present lawsuit. Specifically, Plaintiffs allege that Defendants fraudulently obtained three separate, but related patents, from the United States Patent and Trademark Office (PTO); listed these patents in the book of Approved Drug Products with Therapeutic Equivalence Evaluations (the "Orange Book"); engaged in sham litigation relating to these patents; entered into an unlawful reverse payment agreement with Teva; and manipulated the 180 day first-to-file period
1. Walker Process and Fraudulent Procurement
EPPs first present a Walker Process
However, Effexor's instant release formulation had several significant drawbacks. First, the spike of venlafaxine into the patient's blood plasma levels could cause nausea and vomiting. (Id. at ¶ 75). Second, because the drug was rapidly absorbed into the body, patients were required to take the medication several times a day. (Id. ). In response, Wyeth sought to develop an extended release formulation of Effexor to address these drawbacks. (Id. ). According to the Complaint, "[b]y the early 1990s, methods for achieving sustained or extended release of the active ingredient in pharmaceuticals were well known in the drug industry." (Id. at ¶ 77). To create an extended release form of venlafaxine, Wyeth took two approaches: (1) they worked in-house and (2) entered into a business venture agreement with ALZA Corporation, a pharmaceutical formulation company that specialized in extended release technology. (Id. at ¶ 79).
Wyeth's in-house development team used a coated spheroid approach to create its extended release version of Effexor, which had been previously utilized in another patented drug, Inderal L.A. (Id. at ¶ 80). The coated spheroid approach used in Inderal LA was previously patented in the late 1970s and received Patent No. 7,138,475 ('475 Patent). (Id. at ¶ 82). As a result, Plaintiffs contend that Wyeth's approach to extending the release of Effexor was already considered a prior art, despite their subsequent effort to seek additional patent protections of the same. (Id. at ¶ 82).
Meanwhile, ALZA used its osmotic-controlled release oral delivery system (hereinafter, "OROS") to create an extended release version of Effexor. (Id. at ¶¶ 86-88). As such, by 1993, Wyeth had two formulations of extended release venlafaxine and ultimately chose to focus on developing its own encapsulated spheroid version of Effexor. (Id. at ¶¶ 89-90). According to the Complaint, clinical studies "failed to establish any statistically significant improvement of the extended release over the instant release with respect to side effects such as nausea." (Id. at ¶ 90). As such, Plaintiffs aver that "Wyeth could not truthfully claim there was any valid scientific basis for claiming that the extended release version reduced side effects when compared to the instant release." (Id. ).
In any event, in June 1993, Wyeth made its first attempt to receive additional patent protections for venlafaxine. (Id. at ¶ 91). The 1993 application sought a method-of-use patent for using venlafaxine for various medical conditions, including obesity, anxiety, and post-traumatic stress disorder, just to name a few. (Id. ). However, this application did not specify any particular venlafaxine formulation and was later abandoned. (Id. at ¶¶ 91-92). Less than two years later, January 1995, Wyeth sought another method-of-use patent for using venlafaxine to treat hypothalamic menopause in non-depressed women. (Id. at ¶ 94). Again, they did not identify a particular formulation for approval, but did mention a sustained release composition. (Id. at ¶¶ 94-95). The following year, April 1996, Wyeth received FDA approval of this composition and Patent No. 5,506,270 ('270 Patent). (Id. ).
*377As previously mentioned, ALZA had also developed an extended release formulation for venlafaxine, using its OROS technology; as such, in May 1993, ALZA also sought to secure patent protection for its formulation, which received FDA approval in August 2002 as Patent No. 6,440,457. (Id. at ¶ 96). In addition, the World Intellectual Property Organization published a patent application ('589 PCT application) that was assigned to ALZA in 1994, which claims priority to ALZA's patent application. (Id. at ¶ 97). The '589 patent specifies the extended release osmotic formulation that ALZA developed and explained that an extended release formulation in general reduces negative side effects because these side effects result from spikes in blood plasma levels that occur when taking medication multiple times a day. (Id. at ¶¶ 98, 101).
According to the Complaint, beginning in 1996, Wyeth made several attempts to receive additional patent protections for Effexor XR. (Id. at ¶ 103). By this time, Wyeth had already obtained a method-of-use patent for using venlafaxine to treat hypothalamic menopause in non-depressed women and ALZA's '589 patent had been published. (Id. ). This being said, according to the Complaint, "Wyeth submitted six sequential applications that led to three patents, the '171, '958, and '120 patents, each of which contained ostensibly independent method-of-use claims." (Id. at ¶ 104). Plaintiffs aver that Wyeth defrauded the PTO in obtaining these patents and, as a result, prevented generic extended release venlafaxine formulations from entering the market until June 2008. (Id. ).
In March 1996, Wyeth applied for a provisional utility patent
The following year, March 1997, Wyeth filed a non-provisional application (the '137 application) that was almost identical to the '006 application. (Id. at ¶ 108). In its application, Wyeth did not disclose the existence of the '270 Patent or the '589 PCT Application. (Id. ). However, the PTO Examiner discovered both and informed Wyeth that its claims about nausea and the spikes in blood plasma were not patentable as independent claims. (Id. at ¶ 136). Moreover, the Examiner noted that the '137 application could only be enforceable if Wyeth narrowed the description of the invention to the specific formulation *378that it created. (Id. ). Eventually, Wyeth abandoned the '137 application and, in November 1997, filed a continuation-in-part application (the '328 application), which included additional information not mentioned in the '006 and '137 applications. (Id. at ¶¶ 109-10). Plaintiffs contend the '328 application was identical to the '137 application; however, despite having an obligation to disclose the claims that were previously rejected, Wyeth failed to do so in hopes that another PTO Examiner would overlook the ambiguous language. (Id. at ¶¶ 143, 147). This being said, Wyeth eventually abandoned this application as well. (Id. at ¶ 152).
Shortly after abandoning the '328 application, Wyeth filed another continuation-in-part application (the '629 application), which claimed priority over all three previous applications. (Id. at ¶ 111). The '629 application eventually led to the issuance of Patent No. 6,274,171 (the '171 Patent) in August 2001. (Id. at ¶ 112). The '171 Patent was comprised of 25 claims, which included the extended release encapsulated spheroid version of venlafaxine. (Id. at ¶ 112). It also claimed to reduce the drug's concentration in patient's blood plasma and incidents of nausea and vomiting. (Id. ). Again, Plaintiffs contend Defendants did not disclose the rejection of the similar claims in the '137 application examined by the PTO Examiner. (Id. at ¶ 157). By failing to disclose the PTO's prior rejection and explain the meaning of the '270 Patent, Plaintiffs aver that Wyeth committed fraud on the PTO in obtaining the '171 Patent. (Id. at ¶¶ 157-58).
Two months before the '171 Patent was issued, Wyeth filed a divisional application in June 2001 (the '412 application), which sought another method-of-use patent based on reducing incidents of nausea and vomiting, the drug's concentrations in the patient's blood plasma, and daily drug use. (Id. at ¶ 165). According to Plaintiffs, "[t]he specifications and claims of the '412 application were identical to those in the '629 application." (Id. ¶ 161). However, unlike the other applications, the '412 referred to the formulation as "an extended release formulation" rather than "an encapsulated extended release formulation" as in the previous applications. (Id. at ¶¶ 161-62). Defendants again did not disclose that the '270 Patent"identified the existence of an extended release formulation of venlafaxine hydrochloride that rendered their method-of-use claims unpatentable." (Id. at ¶ 162). By failing to provide this information to the PTO Examiner, the '412 application eventually resulted in the issuance of the Patent No. 6,419,958 (the '958 Patent) in July 2002. (Id. at ¶ 164). However, as noted above, the '270 Patent previously procured included a once a day venlafaxine formulation that spread its dosage over time, so Wyeth filed a provisional application, including claims for nausea and vomiting, to avoid being precluded by the '270 Patent. (Id. at ¶ 117-18).
Finally, in September 2001, Wyeth filed the '965 application, another continuation in part application, that contained similar claims as the '412 application. (Id. at ¶ 166-67). By not disclosing the rejection of the prior applications, the '965 application resulted in the issuance of Patent No. 6,403,120 in June 2002 (the '120 Patent ). (Id. at ¶ 170).
According to the Complaint, "Wyeth's repeated pattern of nondisclosure and withholding highly material information in serial patent applications for virtually identical claims" evinces its intent to deceive the PTO. (Id. at ¶ 184). As such, "[b]ut for this fraud on the PTO," Plaintiffs aver that the '171, '120, and '958 Patents would never have been issued. (Id. at ¶ 185).
*3792. Wrongful Orange Book Listing and Sham Litigation
After procuring the '171, '120, and '958 Patents, Wyeth then listed all three in the Orange Book; all three patents expired on March 20, 2017. (Id. at ¶¶ 14, 112, 114 116). Thereafter, Plaintiffs claim that Wyeth engaged in sham litigation against seventeen generic manufacturers. (Id. at ¶ 262). Plaintiffs claim that at least seventeen generic manufacturers sent Wyeth certifications informing it that they intended to manufacture generic versions of Effexor XR, which would not infringe Wyeth's patents. (Id. at ¶ 265). In response, Wyeth sued each generic for infringing on the '171, '120, and '958 Patents. (Id. at ¶ 266). According to the Complaint, Wyeth was aware that its method-of-use patents were invalid or unenforceable; yet, nevertheless chose to seek its enforceability against generic manufacturers. (Id. at ¶ 267). The purposes of these "sham patent suits was to prevent, delay, and/or minimize the success of the entry of generic competitors, which would have sold generic equivalents of Effexor XR in the United States at prices significantly below Wyeth's prices ... and therefore would have taken most of Wyeth's market share." (Id. at ¶ 270). As such, by blocking the market entry of generic Effexor XR, Wyeth prevented the average market price of its brand name drug from declining dramatically. (Id. ).
3. Reverse Settlement Allegations
Finally, Plaintiffs challenge the validity of a reverse settlement agreement made between Wyeth and Teva, after Wyeth initially sued Teva for patent infringement of its three patents. (Id. at ¶¶ 272-304). On March 24, 2003, Wyeth sued Teva for infringing on its '171, '120, and '958 patent in the District of New Jersey. (Id. at ¶ 275). One of the key issues before the court was whether the term "extended release formulation" was to be construed broadly or limited to the spheroid formulation developed by Wyeth, which - as discussed above - would enable generic manufactures to design a different formulation that would not infringe on Wyeth's patents. (Id. at ¶ 276). At the Markman hearing, the court ultimately interpreted the phrase to mean the latter, explaining that "one of ordinary skill in the art would construe [extended release formulation] to include specific ingredients." (Id. ). According to the Complaint, such a finding was fatal to Wyeth's case; as such, Wyeth sought to settle the matter with Teva and, as a result, avoid other generic companies challenging Wyeth's patent. (Id. ).
On November 2, 2005, the two signed a joint settlement and release agreement. (Id. at ¶ 279). As part of the settlement, the parties agreed that the district court's prior Markman ruling would be vacated, thereby requiring other generic companies to relitigate the "extended release formulation" issue that the court had previously found in Teva's favor. (Id. at ¶ 280). As it pertained to instant release Effexor, Wyeth allowed Teva to sell its generic version prior to the expiration of the patent in June 2008; in addition, Wyeth agreed not to compete with Teva by releasing its own authorized generic during that same period. (Id. at ¶ 281). As a result, Teva had at least a year and a half market exclusivity of generic instant release Effexor. (Id. at ¶ 283). The agreement also included a delayed entry provision, wherein Teva agreed to delay market entry for its generic extended release Effexor until as late as July 2010. (Id. at ¶ 284). In return, "Wyeth promised Teva that Wyeth would not market an authorized generic version of extended release venlafaxine during at least Teva's six-month 'exclusivity' and possibly longer." (Id. ). According to the Complaint, by effectively *380blocking any other competing generic manufactures from entering the market, "the Wyeth-Teva agreement worked a huge, and devastating, impact on competition in the market for extended release venlafaxine." (Id. at ¶ 286).
Plaintiffs bring this case on behalf of themselves and all End-Payor class members to recover damages, calculated by the increased price they had to pay due to Wyeth's conduct in delaying the market entry of generic Effexor XR. (Id. at ¶ 411). The class contains individuals or entities who purchased or paid for Effexor XR and/or its generic version for consumption by themselves, their families, or members, employees, insureds, participants, or beneficiaries in Arizona, California, Florida, Illinois, Kansas, Maine, Massachusetts, Michigan, Minnesota, Mississippi, Montana, Nevada, New Hampshire, New Mexico, New York, North Carolina, Oregon, Rhode Island, South Dakota, Tennessee, Utah, West Virginia, Wisconsin, and the District of Columbia. The Class sues for overage damages occurred from June 14, 2008 until the effects of Defendants' conduct cease. (Id. ).
The Complaint outlines four different claims for relief in the class action. The first is for monopolization under state law against Wyeth. (Id. at ¶ 421). The conduct giving rise to this claim is the fraudulent obtainment of the '171, '958, and '120 Patents, its listing in the Orange Book, its sham litigation, and the unlawful reverse settlement agreement with Teva. (Id. at ¶ 424). The same factual allegations and theories asserted in Count I are again alleged in Count II against all Defendants. (Id. at ¶ 439). In Count III, Plaintiffs allege conspiracy to restrain of trade against all Defendants. (Id. at ¶¶ 448). Finally, Plaintiffs allege a claim unfair or deceptive trade practices against all Defendants. (Id. at ¶ 456). Plaintiffs contend that as a result of Wyeth's anticompetitive acts or practices, Plaintiffs and the Class were deprived of the opportunity to obtain a less expensive, generic equivalent to Effexor XR. As such, Plaintiffs seek compensation from Defendants in the form of damages.
LEGAL STANDARD
Federal Rule of Civil Procedure 12(c) permits a party to dismiss a suit "[a]fter the pleadings are closed ... but early enough not to delay trial." Fed. R. Civ. P. 12(c). "A Rule 12(c) motion for judgment on the pleadings is treated like a motion to dismiss under Rule 12(b)(6)." Syncsort Inc. v. Sequential Software, Inc. ,
ANALYSIS
Defendants presently challenge EPPs' Complaint on five separate bases. First, Defendants contend that EPPs' Complaint should be dismissed in its entirety based on federal preemption principles. Second, Defendants argue that several state law claims are time-barred. Third, Defendants contend that certain states require pre-filing notices, which Plaintiffs failed to comply with, and proscribe class actions *381under their respective consumer protection statutes. Fourth, Defendants aver that EPPs' state antitrust claims fail because they lack standing and fail to plead a concerted act. Finally, Defendants challenge EPPs' consumer protection claims for failing to comply with various state consumer protection law requirements. The Court addresses each challenge in turn.
I. Federal Law Preemption
Defendants first seek dismissal of Plaintiffs' state law claims in its entirety, since their state law claims are preempted by federal law. Plaintiffs respond, contending that because their claims are based on antitrust and consumer fraud theories, preemption is inapplicable.
"Federal patent law preempts state law claims to the extent that state law 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress' in enacting the patent laws." Wawrzynski v. H.J. Heinz Co. ,
Defendants present two theories supporting their position that Plaintiffs' state law claims are preempted. First, because Plaintiffs' claims are based on the purportedly fraudulent procurement and enforcement of the '171, '958, and '120 Patents, they must demonstrate that the patent is invalid or unenforceable, which is preempted under federal patent law. Second, to the extent that Plaintiffs' antitrust claims are based on the reverse settlement agreement, they are preempted since they must demonstrate the validity of the generic patents, which necessarily implicates patent law.
1. Fraudulent Patent Procurement and Enforcement
Turning first to Defendants' federal patent preemption argument, Defendants argue that Plaintiffs' state law claims require them to plead and prove that the patent is invalid or unenforceable under federal patent law. According to Defendants, the allegations in Plaintiffs' complaint that trigger federal patent law include: (1) the fraudulent procurement of the '171, '958, and '120 Patents ; (2) the fraudulent patent listing of the '171, '958, and '120 Patents in the FDA's Orange Book; and (3) the "sham" litigation against seventeen generic manufacturers, *382seeking to enforce the '171, '958, and '120 Patents. Defendants contend that these allegations require first knowing whether the patent at issue is invalid or unenforceable. If the patent was valid, then the obtainment and enforcement of same would be lawful. As such, Defendants argue that because federal patent law is necessary to support these theories, they are preempted by federal law.
However, Defendants' arguments are in direct contravention with the Third Circuit's recent holding in Lipitor ,
Moreover, federal patent law does not preempt a state law claim in which a patent law issue is implicated if "the state law cause of action [i.] includes additional elements not found in the federal patent law cause of action and [ii.] is not an impermissible attempt to offer patent-like protection to subject matter addressed by federal law." Dow Chem. Co. v. Exxon Corp. ,
Finding patent preemption inapplicable, the Federal Circuit explained that there are three objectives for patent law: (1) to provide an incentive to invent; (2) to promote the full disclosure of inventions; and (3) to ensure "that which is in the public domain cannot be removed therefrom by action of the states."
Here, as in Dow , the EPPs state antitrust and consumer protection claims require proof of elements not found in a patent cause of action. As discussed earlier, the purpose for patent protection is to *383provide an incentive to invent, to promote the full disclosure of inventions and to ensure "that which is in the public domain cannot be removed therefrom by action of the states." Antitrust and consumer protection law protect consumers from being overcharged for products, which is a wholly different goal than patent law.
This is also consistent with the Court's decision in In re Thalomid and Revlimid Antitrust Litig. , No. 14-6997,
Here, similar to Thalomid , the EPPs allege that the patents were obtained through fraud on the PTO, Wyeth improperly listed the '171, '958, and '120 Patents in the Orange Book, the generic drug was delayed entry because of sham litigation, and a reverse payment settlement agreement was negotiated to prolong a monopoly. As such, because EPPs claims are predicated on claims wholly separate from the federal patent law, they are not preempted.
2. Antitrust Allegations
Defendants next argue that because Plaintiffs' antitrust claims arise from the reverse settlement agreement, it implicates federal patent law and, therefore, must be preempted. Defendants rely principally on the Third Circuit's decision in In re Wellbutrin XL Antitrust Litig. ,
In Wellbutrin the defendant obtained FDA approval for bupropion hydrochloride, which was marketed as "Wellbutrin."
The Court rejects Defendants' expansive reading of Wellbutrin to hold that antitrust claims, based on reverse settlement agreements, are preempted by federal patent law. Wellbutrin simply sets forth considerations to be made when presented with an issue of antitrust standing, based on reverse settlement agreements. At no point in its decision did the Third Circuit mention that such an issue would trigger federal patent preemption. See Wellbutrin ,
In sum, the Court denies Defendants' motion for judgment based on preemption principles.
II. Statute of Limitations
Defendants argue that EPPs' antitrust claims in Kansas, Mississippi, Montana, and Tennessee, and consumer protection claims in Illinois, New York, and Tennessee should be dismissed since these statutes impose a statute of limitations of four years or less. Relying on the continuing-violation doctrine, EPPs contend that their claims are timely. The Court agrees.
"Under the continuing-violation doctrine, 'when a defendant's conduct is part of a continuing practice, an action is timely so long as the last act evidencing the continuing practice falls within the limitations period.' " In re Niaspan Antitrust Litig. ,
Antitrust law provides that, in the case of a "continuing violation," say a price fixing conspiracy that brings about a series of unlawfully high priced sales over a period of years, each overt act that is part of the violation and that injures the plaintiff, e.g., each sale to the plaintiff, starts the statutory period running again, regardless of the plaintiff's knowledge of the alleged illegality at much earlier times.
Klehr v. A.O. Smith Corp. ,
Here, Plaintiffs claim to have been overcharged for Effexor XR, as a result of Defendants' settlement agreement. Specifically, from June 2008 through July 2010, Defendants blocked generic extended release venlafaxine from entering the market, which forced consumers to pay a premium for the brand-named drug; thereby, constituting a continuing violation through July 2010. See Niaspan ,
III. Notice Challenges and Permissibility of Pursuing Class Claims
Defendants next make several challenges to EPPs' state antitrust and consumer protection claims. First, Defendants contend that EPPs failed to satisfy the pre-filing notice requirements mandated in states that require same. Second, Defendants argue that Illinois and Tennessee consumer protection statutes explicitly prohibit the use of class actions to enforce the rights created therein. The Court discusses each challenge in turn.
1. Pre-Filing Notice Requirements
Because the Arizona, Nevada, and Utah antitrust laws have notice requirements, Defendants contend that EPPs' antitrust claims in these states must be dismissed since EPPs failed to give proper notice. Defendants' argument is based on the language of the respective state statutes, requiring any antitrust plaintiff to serve that state attorney general a copy of the complaint. See
The Arizona Uniform Antitrust Act states that "[a] person filing a complaint, counterclaim or answer for any violation of the provisions of this article shall simultaneously with the filing of the pleading in the superior court or, in the case of pendent state law claims in the federal court, serve a copy of the complaint, counterclaim or answer on the attorney general. Proof of service on the attorney general shall be filed with the court."
Finally, Maine, Massachusetts, and West Virginia's consumer protection statutes all include pre-filing notice provisions. Specifically, the Massachusetts Consumer Protection Act requires that "[a]t least thirty days prior to the filing of any such action, a written demand for relief, identifying the claimant and reasonably describing the unfair or deceptive act or practice relied upon and the injury suffered, shall be mailed or delivered to any prospective respondent." Mass. Gen. Laws. Ch. 93A, § 9(3). Courts have recognized that "[t]he statutory notice requirement is not merely a procedural nicety, but, rather, 'a prerequisite to suit.' " Rodi v. S. New Eng. Sch. of Law ,
Unlike Massachusetts and West Virginia, while Maine's Unfair Trade Practices Act does include a pre-filing notice provision, the Maine Supreme Court has held that "the notice requirements of section 213(1-A) are not jurisdictional." Oceanside at Fine Point Condo. Owners Ass'n v. Peachtree Doors ,
2. State Consumer Protection Class Bar
Defendants next contend that EPPs' Tennessee
3. The Shady Grove Decision
To properly analyze Defendants' motion, the Court must determine whether the discussed notice requirements and class action bars are procedural or substantive. It is blackletter law that that federal courts sitting in diversity jurisdiction must utilize federal procedural law and state substantive law. See Erie R.R. v. Tompkins ,
In interpreting Erie , the Supreme Court explained that a federal law will only be procedural and, thus, applicable, if the case's outcome would be the same in both federal and state courts. Guaranty Trust Co. v. York ,
Most recently, the Supreme Court was presented with a similar issue that is before the Court. In Shady Grove , the Supreme Court was tasked with determining whether Federal Rule of Civil Procedure 23 or a New York law controlled if a class action may proceed in federal court.
However, in his concurring opinion, Justice Stevens criticized the plurality's categorical approach, at step two, that any federal rule that "really regulates procedure" is a sufficient basis for preempting a conflicting state law.
Although the Third Circuit has yet to decide whether Justice Stevens' concurrence controls, the Court is persuaded by the majority of district and circuit courts that have done so.
4. Application
Against this legal backdrop, the Court finds that Rule 23 is not "sufficiently broad" to cover the state statutory notice provisions. First, the conflicting rules do not attempt to answer the same question or subject. See Shady Grove ,
For these same reasons, the Court also finds that the class action bar incorporated in Tennessee's consumer protection law is not preempted by Rule 23. Here, EPPs deviate from the majority of district and circuits, which have followed Justice Steven's concurrence in Shady Grove , and, instead, endorse the approach taken in Lisk v. Lumber One Wood Preserving, LLC ,
*390Fejzulai v. Sam's West, Inc. ,
In sum, the Court finds that the three notice provisions under Arizona, Nevada, and Utah antitrust laws are applicable here and Plaintiffs failed to comply. Likewise, the notice provisions under Massachusetts and West Virginia's consumer protection laws control. As such, EPPs' claims under these five statutes are dismissed without prejudice; Plaintiffs may file an amended complaint that specifically pleads compliance with each state's notice requirement. Similarly, EPPs' class claims under Tennessee's consumer protection statute are dismissed without prejudice; Plaintiffs may amend their complaint to include only claims in their individual capacities. Lastly, because the failure to provide pre-file notice under Maine's Unfair Trade Practices Act does not bar pursuing a claim under the Act, Defendants' motion for judgment as it relates to this statute is denied.
IV. State Antitrust Claims
1. Article III Standing
Defendants first challenge EPPs' antitrust claims under the laws of the District of Columbia, since they lack Article III standing. Plaintiffs do not dispute the fact that the Complaint does not name a plaintiff that resides in the District of Columbia or that any named plaintiff made a purchase or reimbursement for Effexor XR; instead, they contend that since named plaintiffs have Article III standing to pursue their own antitrust claims, they have Article III standing to assert claims under the laws of the District of Columbia. The Court disagrees.
Article III standing is a threshold inquiry in every case and one in which "[t]he party invoking federal jurisdiction bears the burden of [proof]." Lujan v. Defenders of Wildlife ,
Here, EPPs Complaint fails to allege that any named plaintiff either resides in or made purchases and/or reimbursement for Effexor XR in the District of Columbia. Moreover, the Court is unpersuaded by EPPs' proposition that because they have Article III standing in some *391states, they can assert claims in any state; since this would effectively render the Article III inquiry obsolete. As such, because EPPs lack Article III standing to assert claims in the District of Columbia, the Court grants Defendants' motion as it pertains to this claim without prejudice. See Niaspan ,
2. Illinois Brick Challenges
Defendants next seek dismissal of EPP's Illinois, Rhode Island, and Utah state antitrust claims, since these states lack standing under Illinois Brick Co. v. Illinois ,
a. Illinois Antitrust Act
Relying on Illinois Brick , Defendants contend that EPPs' Illinois antitrust claim fails, since they lack standing. The plain language of the Illinois Antitrust Act ("IAA") states "no person shall be authorized to maintain a class action in any court of this State for indirect purchasers asserting claims under this Act, with the sole exception of this State's Attorney General, who may maintain an action parens patriae." 740 Ill. Comp. Stat. § 10/7(2). EPPs respond, contending that under Shady Grove , the Court should treat the Illinois Antitrust Act as a procedural law and, therefore, follow Rule 23.
District courts are divided on whether the Illinois Antitrust Act precludes indirect purchasers from filing class actions. However, a majority of courts have held that the Act is distinguishable from the New York law in Shady Grove and that it prohibits indirect purchaser class actions. See, e.g., In re Opana Er Antritrust Litig. ,
Several district courts have taken a less restrictive interpretation of the Illinois Antitrust Act and have allowed indirect purchasers to bring class actions under the Act. See, e.g., In re Broiler Chicken Antitrust Litig. ,
Although district courts have taken different approaches in interpreting the Illinois Antitrust Act, the Court finds the rationale of Digital Music persuasive. The language of the Act presents a substantive conflict with Rule 23 ; as such, since the Illinois Antitrust Act controls, the Court finds that EPPs lack standing to assert claims under the Act and, therefore, dismisses this claim with prejudice.
b. Rhode Island Antitrust Act
Defendants next move for dismissal of EPPs Rhode Island antitrust claims since they, too, lack standing to bring an antitrust claim under Illinois Brick . Since the Supreme Court's decision, multiple states have enacted Illinois Brick repealer statutes that allow indirect purchasers to recover under their state law. On July 15, 2013, Rhode Island passed such a repealer, which states "[t]he fact that a person or public body has not dealt directly with the defendant shall not bar or otherwise limit recovery." R.I. Gen. Laws § 6-36-7(d). As such, Plaintiffs argue the statute should be applied retroactively and, even if it cannot be applied retroactively, they nevertheless fall within the repealer's protection since Plaintiffs suffered damages past July 15, 2013.
Here, Defendants argue that the activity alleged in this claim predated July 15, 2013, since the alleged anticompetitive conduct that prevented the generic brands from entering the market occurred prior to July 2010. As such, since the conduct giving rise to the present cause of action occurred prior to the passing of Rhode Island's repealer, Defendants contend it does not apply and, under Illinois Brick , must be dismissed. In addition, Defendants aver that the statute cannot be applied retroactively.
Under Rhode Island law, it is well established that statutes cannot be applied retroactively, unless clearly stated. The Rhode Island Supreme Court has held that, "statutes and their amendments are construed to operate prospectively unless a specific contrary intent is expressed by the Legislature, or retroactivity must necessarily be inferred from the language employed by the law makers." State v. Jennings ,
*393Wilkinson v. State Crime Lab. Comm'n ,
c. Utah Antitrust Act
Lastly, in addition to failing to provide notice, Defendants contend that EPPs' Utah antitrust claims fail, since none of the named Plaintiffs are Utah residents, as required under Utah law. As such, Defendants contend that EPPs lack standing to assert claims under the Utah Antitrust Act. See Niaspan ,
Under the Utah Antitrust Act, "[a] person who is a citizen of this state or a resident of this state" can bring a claim.
In sum, EPPs' antitrust claims under Illinois and Rhode Island are dismissed and there is no right to amend due to futility. Under Utah, the claim is dismissed without prejudice; but Plaintiff may amend to name such plaintiff within thirty days.
3. States Requiring Concerted Action
Defendants next seek dismissal of Count I of EPPs' Kansas, New York, and Tennessee antitrust claims, which asserts a single claim of monopolization against Wyeth, based on committing fraud before the PTO and commencing baseless patent litigation. (TAC ¶¶ 420-37). Specifically, Defendants argue that because Kansas, New York, and Tennessee require unlawful behavior between two or more individuals, Count I must be dismissed since it alleges unilateral conduct by Wyeth.
It is clear from the Complaint that the allegations concerning Wyeth's conduct before the PTO, as well as its sham litigation, are unilateral. As such, since these allegations describe unilateral conduct, Defendants contend that Count I fails in Kansas, New York and Tennessee. See *394
The Kansas Monopolies and Unfair Trade Act proscribes "all arrangements, contracts, agreements, trusts, or combinations between persons made with a view or which tend to prevent full and free competition" and those "designed or which tend to advance, reduce or control the price or the cost to the producer or to the consumer of any such products or articles."
Like Kansas, the New York Donnelly Act defines an antitrust violation as "every contract, agreement, arrangement, or combination whereby a monopoly in the conduct of any business, trade, or commerce ... may be established or maintained, or whereby competition or the free exercise of any activity in the conduct of any business, trade, or commerce ... is or may be restrained."
Finally, like Kansas and New York, the Tennessee Trade Practices Act proscribes "[a]ll arrangements, contracts, agreements, trusts, or combinations between persons or corporations made with a view to lessen, or which tend to lessen, full and free competition ... and all arrangements, contracts, agreements, trusts, or combinations between persons or corporations designed, or which tend, to advance, reduce, or control the price or the cost to the producer or the consumer."
As established above, the case law as well as the plain language of the Kansas, New York, and Tennessee antitrust statutes require concerted action between two parties. As such, allegations relating to Wyeth's unilateral conduct fails to state a claim under these statutes. The Court is not persuaded by Plaintiffs' argument *395that all alleged conduct falls within a single cause of action. Therefore, Defendants' motion as it relates to Kansas, New York, and Tennessee are granted in part and denied in part. To the extent Count I is based on Wyeth committing fraud before the PTO and commencing baseless patent litigation, Defendants' motion is granted, since the conduct is unilateral. However, the Court denies Defendants' motion to the extent that they seek dismissal of Count I based on the reverse settlement agreement with Teva.
V. State Law Consumer Protection Claims
Defendants next challenge the sufficiency of EPPs' state consumer protection claims. The Court discusses each state individually.
1. California
Defendants first seek dismissal of EPPs' claims under the California Unfair Competition Law, since EPPs failed to plead reliance. The Unfair Competition Law proscribes "any unlawful, unfair or fraudulent business act or practice."
2. Illinois
Defendants next seek dismissal of EPPs' claims under the Illinois Consumer Fraud and Deceptive Business Practices Act since: (1) the Act does not provide additional relief beyond antitrust claims; (2) EPPs failed to plead deception or reliance; and (3) EPPs fail to demonstrate that the alleged conduct was consumer-oriented or had a consumer nexus. The Illinois Consumer Fraud and Deceptive Business Practices Act states that "[u]nfair methods of competition and unfair or deceptive acts or practices ... in the conduct of any trade or commerce are hereby declared unlawful whether any person has in fact been misled, deceived or damaged thereby." 815 Ill. Comp. Stat. Ann. 505/2. However, the state legislature did not intend for the Act to serve as an "additional antitrust enforcement mechanism." Laughlin v. Evanston Hosp. ,
As discussed above, the Illinois Antitrust Act prohibits indirect purchaser class actions. Moreover, when reviewing the Complaint, EPPs' claims are primarily focused on anticompetitive conduct and its "allegations of consumer fraud overlap entirely with the allegations of anticompetitive conduct." Wellbutrin XL ,
3. Maine
Defendants next seek dismissal of EPPs' claims under the Maine Unfair Trade Practices Act, since EPPs failed to allege deception and, alternatively, EPPs are not considered "consumers" under the Act. The Act proscribes "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." Me. Rev. Stat. tit. 5 § 207. "A business practice is 'unfair' if the injury it produces is (1) 'substantial,' (2) not 'outweighed by any countervailing benefits to consumers or competition that the practice produces,' and (3) not reasonably avoidable by consumers." In re Chocolate Confectionary Antitrust Litig. ,
It is worth briefly noting that the court is unpersuaded by Plaintiff's reliance on In re Motor Vehicles Canadian Exp. Antitrust Litig. ,
4. Nevada
Defendants argue that EPPs claims under the Nevada Deceptive Trade Practices Act should be dismissed, since EPPs failed to allege consumer reliance. Under Section 41.600 of Nevada's Revised Statutes, "any person who is a victim of ... [a] deceptive trade practice as defined in [the Nevada Deceptive Trade Practices Act]" may a bring an action thereunder.
Under Section 598.0923(3), the Nevada Deceptive Trade Practices Act does not require the plaintiff to plead reliance, nor do Defendants identify any case-law that would otherwise support this contention. See In re Pharm. Indus. Average Wholesale Price Litig. ,
6. New Mexico
Defendants next challenge EPPs' claims under the New Mexico Unfair Practices Act, since the Act does not provide relief for price fixing and, in any event, they fail to plead unconscionable conduct. The New Mexico Unfair Practices Act prohibits unfair, deceptive, and unconscionable trade practices. N.M. Rev. Stat. § 57-12-2. Given the remedial nature of the Act, "courts construe its provisions broadly to facilitate this purpose." Chocolate Confectionary ,
"Federal courts generally permit [New Mexico Unfair Practices Act] actions in price-fixing cases provided that the plaintiff alleges a 'gross disparity' between the price paid for a product and the value received." Chocolate Confectionary ,
*398Liquid Aluminum Sulfate,
7. New York
Defendants next challenge EPPs' claims under the New York Consumer Protection from Deceptive Acts and Practices Act, since EPPs fail to allege particular conduct directed specifically at them and, in the alternative, fail to allege consumer reliance. Section 349 of New York's Business Law states, "[d]eceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service in this state are hereby declared unlawful."
Here, contrary to Defendants' assertion, the Court is satisfied that EPPs have alleged sufficient facts to sustain a claim under Section 349. As discussed above, EPPs' claims focus on the anticompetitive conduct of Defendants, which prevented the earlier market entry of generic Effexor XR and, as a result, caused individuals to pay a premium. See MacQuarie Grp. Ltd. v. Pac. Corporate Grp., LLC , No. 08-cv-2113,
8. North Carolina
Defendants next contend that EPPs lack standing to assert claims under *399North Carolina's Unfair and Deceptive Trade Practices Act, since Plaintiffs are neither competitors nor in commercial dealings with Defendants. Section 75-1.1 of the Act proscribes "[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce" and provides "any person" or "business of any person, firm or corporation" the right to sue for injuries arising from unfair business practices.
9. Rhode Island
Finally, Defendants challenge EPPs' claims under the Rhode Island Unfair Trade Practices and Consumer Protection Act, since: (1) the misconduct alleged in the Complaint is not prohibited under the Act and (2) EPPs are not "consumers" as defined under the Act. The Rhode Island Unfair Trade Practices and Consumer Protection Act proscribes "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." R.I. Gen. Laws § 6-13.1-2. The Act goes on to list twenty "acts or practices" that are considered unfair or deceptive competition. R.I. Gen. Laws § 6-13.1-1(6)(i)-(xx). In determining whether a practice is "unfair" under the Act, courts must consider: "(1) whether the practice affronts public policy, as delineated by the common law, statutes, and 'other established concept[s] of unfairness; (2) whether it is immoral, unethical, oppressive, or unscrupulous; [and] (3) whether it causes substantial injury to consumers (or competitors or other businessmen).' " Chocolate Confectionary ,
The Court finds Defendants' first argument unconvincing. The majority of courts that have been presented with this issue have held that the three prong Ames standard "encompass price-fixing injuries, and [therefore] consumers subject to collusive pricing possess a cognizable claim under the [Act]." Chocolate Confectionary ,
*400Alternatively, Defendants seek dismissal of EPPs' Rhode Island Unfair Trade Practices and Consumer Protection Act claims since they are not "consumers" within the meaning of the Act. The Act limits claims to "[a]ny person who purchases or leases goods or services primarily for personal, family, or household purposes." R.I. Gen. Laws § 6-13.1-5.2(a). Citing no supporting case law, EPPs contend that the Act defines "person" to include entities such as corporations, trusts, and associations. However, contrary to EPPs' assertion, "the Rhode Island Supreme Court has construed the [Rhode Island Unfair Trade Practices and Consumer Protection Act]to require that only natural persons are permitted to bring private rights of actions under the statute." In re Dynamic Random Access Memory (DRAM I) Antitrust Litig. ,
To sum up, the Court declines to grant judgment as to EPPs' consumer protection claims in California, Nebraska, New Mexico, New York, and North Carolina. However, the Court grants Defendants' motion, without leave to amend as to EPPs' Illinois and Maine consumer protection claims; and with leave to amend with regards to EPPs' Rhode Island consumer protection claims.
ORDER
IT IS on this 18th day of September, 2018,
ORDERED that Defendants' Motion for Judgment on the Pleadings (ECF No. 755) is GRANTED IN PART and DENIED IN PART as follows:
• Defendants' Motion for Judgment on the Pleadings based on preemption principles is DENIED ;
• Defendants' Motion for Judgment on the Pleadings based on statute of limitations is DENIED ;
• Defendants' Motion for Judgment on the Pleadings as to EPPs' state consumer protection claims in California, Nevada, New Mexico, New York, and North Carolina is DENIED .
• Defendants' Motion for Judgment on the Pleadings as it pertains to EPPs' Arizona, Nevada, and Utah antitrust claims is GRANTED WITHOUT PREJUDICE ; EPPs are granted leave to amend their Complaint to plead compliance with these notice provisions and, with regards to Utah, include a named plaintiff from Utah;
• Defendants' Motion for Judgment on the Pleadings as it pertains to EPPs' antitrust claims under the laws of the District of Columbia is GRANTED WITHOUT PREJUDICE ;
• Defendants' Motion for Judgment on the Pleadings as it pertains to EPPs' Massachusetts, West Virginia, Rhode Island, and Tennessee consumer protection claims is GRANTED WITHOUT PREJUDICE ; EPPs are granted leave to amend their Complaint to plead compliance with Massachusetts and West Virginia's notice provisions, individual claims in Tennessee, *401and consumer claims under Rhode Island;
• Defendants' Motion for Judgment on the Pleadings as it pertains to EPPs' Illinois and Rhode Island antitrust claims, and EPPs' Illinois and Maine consumer protection claims is GRANTED WITH PREJUDICE ;
• Defendants' Motion for Judgment on the Pleadings as to Count I of EPPs' Complaint under Kansas, New York, and Tennessee is GRANTED to the extent these claims are predicated on unilateral activity by Wyeth.
• EPPs have thirty (30) days from the filing of this Memorandum and Order to file an Amended Complaint, consistent with this Memorandum.
Initially, Defendants also sought dismissal of opt-out indirect purchaser plaintiffs' complaint. However, being that both opt-out plaintiffs have since voluntarily dismissed their actions, these arguments are not considered. See Docket No. 11-cv-5590 (ECF Nos. 148, 158).
Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp. ,
According to the Complaint, "[t]he patent would have expired much earlier than 2008, but Wyeth received a significant extension to reflect the time it took the FDA to approve its NDA for Effexor." (Id. ).
A utility patent application seeks to protect a new, useful, or nonobvious process or composition and a provisional application only requires a brief written description of the subject matter that is sought to be protected. Essentially, a provisional application "allows an inventor to establish a date of invention one full year before the inventor actually submits evidence of [the] invention's patentability." (Id. at ¶ 108).
Defendants also make a similar argument for Plaintiff's Illinois consumer protection claims; however, being that the Illinois Consumer Fraud & Deceptive Business Practice Act does not explicitly bar class actions, the Court finds it more appropriate to consider the substantive arguments Defendants present later.
From the Court's perspective, in agreement with Justice Stevens, the state statutes at issue focus on various forms of deceptive practices. Rule 23 is more generic and applies to all class actions. As such, the narrower and more focused approach of the state should apply.
Both Alabama and Georgia's consumer protection statutes contain similar language to Tennessee, which prohibit the use of class actions to enforce the rights created therein. Ala. Code Ann. § 8-19-10(f) ("A consumer or other person bringing an action under this chapter may not bring an action on behalf of a class");
Because the Court has already dismissed EPPs' claims under Massachusetts, Tennessee and West Virginia's consumer protection statutes, it does not address the remaining arguments pertaining to these states.
Moreover, it should be noted that, at the pleading stage it is difficult to determine whether Plaintiff's claims under California law are even based on fraudulent conduct; as such, the Court also finds Defendants' motion to be premature.
Reference
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- IN RE EFFEXOR ANTITRUST LITIGATION
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