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District Court Of Connecticut Largely Denies Generic Drug Manufacturers’ “Unusual” Dismissal Motion Targeting Specific Types Of Relief
11/26/2024On November 12, 2024, Judge Michael P. Shea of the United States District Court for the District of Connecticut granted in part and denied in part a joint motion to dismiss submitted by thirty-six defendant drug manufacturers facing “sprawling” antitrust claims brought by the Attorneys General of almost all U.S. states and territories. State of Conn. et al. v. Sandoz, Inc. et al., 20-cv-820 (D. Conn. Nov. 12, 2024). Ruling on the “unusual” 12(b)(6) motion to dismiss that asked the Court to preclude specific types of relief, the Court determined that the majority of plaintiffs’ challenged claims could proceed.
Defendants, all makers of generic dermatological products, face numerous federal and state law claims alleging their participation in a years-long conspiracy involving price-fixing, market allocation, and bid-rigging in violation of Section 1 of the Sherman Act and state antitrust statutes. Defendants’ motion, raised under Rule 12(b)(6), challenged dozens of the state law claims brought by over twenty plaintiff states and territories but rather than arguing plaintiffs’ claims should be dismissed for failing to state a claim for relief (the typical standard), defendants’ motion asked the Court to preclude specific types of relief. Motions on the federal claims are being addressed separately.
While the Court noted that the motion was a “tall order” since decisions on relief are typically made only after a finding of liability, it determined that “clarifying the forms of relief available” under applicable state law would aid settlement negotiations and that the Court would only dismiss a type of relief where it found that the relevant state’s law forecloses it. Defendants’ motion raised, among others, arguments about jurisdiction, damages sought by the states on behalf of their injured citizens, and indirect purchaser claims. The Court analyzed each applicable statute to determine whether state law expressly precluded relief and granted the motion to dismiss only where relief was “foreclose[d] . . . in clear terms.” Defendants argued that Alaska, California, New York, and Rhode Island claims for relief were precluded, in whole or in part, because their respective state laws gave exclusive jurisdiction to state courts. In other words, defendants challenged the Court’s ability to exercise supplemental jurisdiction over the state law claims. The Court rejected defendants’ jurisdictional arguments and held that federal jurisdiction extended to the state law claims because the state and federal antitrust claims were sufficiently related to form part of the “same case or controversy.”
Defendants also characterized several state claims as impermissible indirect purchaser claims barred by the Illinois Brick rule, which permits only direct purchasers of goods or services tainted by an antitrust violation to sue for damages. The Court found Illinois Brick was inapplicable to some of these challenged claims, including Delaware’s which was limited to civil penalties, disgorgement, and injunctive relief. Regarding the claims brought by Ohio, Oklahoma, and Virginia, the Court inferred that at least some purchasers in each state were direct purchasers and denied the motions. The Court noted that plaintiffs had not explicitly stated whether they sought relief for direct or indirect purchasers and erred in favor of the nonmoving parties as required.
Defendants challenged several plaintiffs’ claims on behalf of their citizens that defendants’ conduct had harmed the general welfare of their respective states (“parens patriae” claims) with mixed results. For example, the Court rejected defendants’ claim that Maine required a “quasi-sovereign interest” distinct from its citizens’ interests after analyzing conflicting state court decisions. Conversely the Court granted the motion to dismiss parens patriae claims brought by New Jersey based on a textual analysis of the state’s antitrust statute. Parens patriae claims by Indiana, Missouri, New Mexico, and Washington were also dismissed, though those plaintiffs may seek other forms of relief. If, as in Mississippi, the state’s highest court had not provided “clear direction” on the claim, the Court declined to dismiss. Several other motions to dismiss were deemed to be premature or moot by the Court.
This case highlights that, although “unusual,” it is possible to seek decisions on specific types of relief prior to a final judgment and that such decisions may be helpful to narrow plaintiff’s case.
