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Hollander v. Ortho-McNeil-Janssen Pharmaceuticals

October 21, 2010

BENTLEY A. HOLLANDER, PLAINTIFF,
v.
ORTHO-MCNEIL-JANSSEN PHARMACEUTICALS, INC. DEFENDANT.



The opinion of the court was delivered by: Buckwalter, S. J.

MEMORANDUM

Presently before the Court is the Motion of Defendant Ortho-McNeil-Janssen Pharmaceuticals, Inc. ("Ortho") to Stay, or in the Alternative, Dismiss the Complaint of Plaintiff Bentley A. Hollander ("Hollander") pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the following reasons, the Court denies the Motion to Stay and grants the Motion to Dismiss.

I. FACTUAL AND PROCEDURAL BACKGROUND

On March 1, 2010, Plaintiff/Relator Bentley A. Hollander, a resident of Philadelphia, Pennsylvania, commenced this qui tam action on behalf of the United States against Defendant Ortho, a pharmaceutical company headquartered in New Jersey, for violations of the federal false marking statute, 35 U.S.C. § 292(a). According to the facts alleged in the Complaint, Ortho is a sophisticated global healthcare products business with annual sales of hundreds of millions of dollars. (Compl. ¶ 9, 11.) Defendant Ortho manufactures and sells many products throughout the United States and "claims to own or have licenses under a substantial number of patents or patent applications." (Id. ¶¶ 10, 13.)

According to Plaintiff, Defendant Ortho has "repeatedly and knowingly . . . . injured the sovereign interests of the United States" and "discouraged or deterred honest competition and innovation" by marking units of its prescription drug products with expired patents.*fn1 (Id. ¶¶ 2, 39.) Plaintiff further alleges that Defendant is falsely marking its products with "the purpose of deceiving the public into believing that the products were covered by valid patents when, in fact, such patents had expired." (Id. ¶¶ 2, 38.) Plaintiff's Complaint brings thirty-nine counts of false marking against Defendant (id. ¶¶ 41-274) and seeks up to a $500 fine per violation, one half of which is to be paid to the United States pursuant 25 U.S.C. § 292(b). (Id. at Prayer for Relief.) On May 18, 2010, Defendant moved to stay the case pending resolution of two cases in the Federal Circuit, or in the alternative, to dismiss based on Plaintiff's insufficient standing and inadequate pleadings. Plaintiff filed a Response on June 1, 2010. Defendant submitted a Reply Brief on June 8, 2010, and Plaintiff filed a Sur-Reply on June 11, 2010. Defendant filed a Response on June 16, 2010, and a Notice of Supplemental Authority on August 12, 2010. The Court now turns to a discussion of the Motion to Stay, or in the Alternative, Dismiss.

II. MOTION TO STAY

As an initial matter, the Court denies Defendant's Motion to Stay. Defendant requested the stay pending the Federal Circuit's rulings in Pequignot v. Solo Cup Co., 608 F.3d 1356 (Fed. Cir. 2010) and Stauffer v. Brooks Brothers, Inc., Nos. CIV.A.2009-1428, 2009-1430, 2009-1453, 2010 WL 3397419 (Fed. Cir. Aug. 31, 2010). The Federal Circuit has since ruled on both cases. Accordingly, the Motion is denied.

III. MOTION TO DISMISS

A. STANDARD OF REVIEW

Under Rule 12(b)(6), a defendant bears the burden of demonstrating that the plaintiff has not stated a claim upon which relief can be granted. FED. R. CIV. P. 12(b)(6); see also Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005). In Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007), the United States Supreme Court recognized that "a plaintiff's obligation to provide the 'grounds' of his 'entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Id. at 555. The Court emphasized that it would not require a "heightened fact pleading of specifics," but only "enough facts to state a claim to relief that is plausible on its face." Id. at 570.

In the subsequent case of Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009), the Court enunciated two fundamental principles applicable to a court's review of a motion to dismiss for failure to state a claim. First, it noted that "the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id. at 1949. Thus, although "[Federal] Rule [of Civil Procedure] 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era . . . it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Id. at 1950. Second, the Supreme Court emphasized that "only a complaint that states a plausible claim for relief survives a motion to dismiss." Id. The task of determining whether a complaint states a plausible claim for relief is "context-specific," and "requires the reviewing court to draw on its judicial experience and common sense." Id. The Supreme Court explained:

The plausibility standard is not akin to a "probability requirement," but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are "merely consistent with" a defendant's liability, it "stops short of the line between possibility and plausibility of 'entitlement to relief.'"

Id. at 1949 (citing Twombly, 550 U.S. at 556-57).

Expanding on the Twombly/Iqbal standards, the United States Court of Appeals for the Third Circuit succinctly defined a two-prong analysis to be undertaken by ...


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