The opinion of the court was delivered by: McLaughlin, J.
The plaintiffs are a group of indirect purchasers of Wellbutrin XL, a once-a-day antidepressant, who are suing the producers of Wellbutrin XL, Biovail Corp., Biovail Laboratories, Biovail Laboratories International (together, "Biovail"), and its distributors, SmithKline Beecham Corp. and GlaxoSmithKline PLC (together, "GSK"), for illegally conspiring to prevent generic versions of Wellbutrin XL, or buproprion hydrochloride, from entering the American market.
The plaintiffs have moved to amend their complaint to add state law antitrust claims under New York's Donnelly Act, N.Y. Gen. Bus. Law § 340, et seq., and the Illinois Antitrust Act ("IAA"), 740 Ill. Comp. Stat. 10/1, et seq. in light of Shady Grove Orthopedic Assocs. v. Allstate Ins. Co., 130 S. Ct. 1431 (2010), which addressed the applicability of state law class action restrictions in federal court. The plaintiffs argue that the Illinois and New York restrictions on class actions are not applicable in federal court after Shady Grove because the restrictions conflict with Federal Rule of Civil Procedure 23 and are not "intertwined" with the state substantive rights. The defendants argue that amendment would be futile because the class action restrictions survive Shady Grove or in the alternative that amendment would result in unfair prejudice. For the reasons stated below, the Court will grant in part and deny in part the motion to amend.
On March 26, 2009, the plaintiffs filed their first amended complaint seeking treble damages for the defendants' alleged unlawful exclusion of generic versions of Wellbutrin XL through the filing of sham litigation. On July 30, 2009, the Court granted in part and denied in part the defendants' motions to dismiss and dismissed the plaintiffs' Illinois and New York claims. In re Wellbutrin XL Antitrust Litig., 260 F.R.D. 143, 162, 164-165 (E.D. Pa. 2009). The Court dismissed the plaintiffs' Illinois consumer protection claims because the claims were "essentially antitrust claims in the guise of a claim under the Illinois consumer protection statute" and the parties did not dispute that the Illinois Antitrust Act would preclude relief. Id. at 162. The Court dismissed the plaintiffs' New York unfair competition claims because the plaintiffs were too remote from the allegedly deceptive acts to state a claim for relief under New York law. Id. at 165. The plaintiffs did not assert claims under either New York or Illinois antitrust law.
The case was placed in civil suspense on April 8, 2010 and removed from civil suspense on August 9, 2010. The instant motion to amend the plaintiffs' complaint was filed on September 14, 2010 (Docket No. 196). On December 14, 2010, the Court held oral argument for this motion. Following a telephone conference with counsel in this action and the direct purchaser action, the Court issued an amended scheduling order setting the defendants' opposition to the plaintiffs' motion for class certification to be due on or before January 28, 2011.
This motion to amend arises in response to the recent Supreme Court case Shady Grove. Shady Grove Orthopedic Assocs. v. Allstate Ins. Co., 130 S. Ct. 1431 (2010). In Shady Grove, the Supreme Court addressed whether Federal Rule of Civil Procedure 23, which governs class actions, conflicts with N.Y. Civ. Prac. Law § 901(b), which precludes class actions seeking "penalties" or statutory minimum damages.
In Shady Grove, the plaintiff had filed a putative class action in federal court to recover unpaid statutory interest under N.Y. Ins. Law Ann. § 5106(a). This action would have been barred in New York state courts. Id. at 1436. The United States Court of Appeals for the Second Circuit affirmed the District Court's dismissal and found that (1) Rule 23 and § 901(b) did not conflict and (2) that § 901(b) was "substantive" and must be applied by federal courts sitting in diversity.
Id. at 1437. In a 5-4 decision, the Supreme Court reversed.
Justice Scalia delivered the opinion of the Court with respect to Parts I and II-A. The Court articulated a "familiar" two-step framework for its analysis. First, the Court inquired "whether Rule 23 answers the question in dispute." Id. at 1437. If it does, Rule 23 governs "unless it exceeds statutory authorization or Congress's rulemaking power." Id. (citations omitted).
A majority of the Court agreed that Rule 23 "creates a categorical rule entitling a plaintiff whose suit meets the specified criteria to pursue his claim as a class action" and the New York procedural statute "flatly contradict[ed]" Rule 23. Id. at 1438, 1441. The dissent concluded that there was "no unavoidable conflict between Rule 23 and § 901(b)" and instead would have interpreted the Federal Rules "with awareness of, and sensitivity to, important state regulatory policies." Shady Grove, 130 S. Ct. at 1460, 1469 (Ginsburg, J. dissenting).
Turning to the second inquiry, Justice Stevens wrote separately as to whether Rule 23 violates the Rules Enabling Act as applied to New York law. See Shady Grove, 130 S. Ct. at 1451 (Stevens, J. concurring in part and concurring in judgment). See also Bearden v. Honeywell Int'l, Inc., No. 09-1035, 2010 U.S. Dist. LEXIS 83996, at *26 (M.D. Tenn. Aug. 16, 2010) (noting that the majority fractured with respect to the Rules Enabling Act analysis); McKinney v. Bayer Corp., No. 10-224, 2010 U.S. Dist. LEXIS 103516, at *23 (N.D. Ohio Sept. 30, 2010) (same).
Justice Scalia, writing for himself and three other justices, stated that the proper Rules Enabling Act test is to examine solely the federal rule and whether it "really regulate[s]" procedure. Shady Grove Orthopedic Assocs., 130 S. Ct. at 1442 (Scalia, J.)
What matters is what the rule itself regulates: If it governs only "the manner and the means" by which the litigants' rights are "enforced," it is valid; if it alters "the rules of decision by which [the] court will adjudicate [those] rights," it is not. Id. (emphasis in original, citations omitted).
Justice Stevens disagreed that the "sole Enabling Act question is whether the federal rule 'really regulates procedure' . . . ." Shady Grove, 130 S. Ct. at 1452 (Stevens, J. concurring). Justice Stevens explained that the plurality's analysis ignored the limitation in the Rules Enabling Act that Federal Rules may not "abridge, enlarge or modify any substantive right . . . ." Id. (citing 28 U.S.C. § 2072).
In contrast with the plurality approach, Justice Stevens' approach to the Rules Enabling Act inquiry instructs courts to consider whether the federal rule would displace a state law that "is so intertwined" with the right or remedy that it defines the scope of the right. Id. ("A federal rule . . . cannot govern a particular case in which the rule would displace a state law that is procedural in the ordinary use of the term but is so intertwined with a state right or remedy that it functions to define the scope of the state-created right."). Justice Stevens agreed with Justice Ginsburg's four-member dissent that "there are some state procedural rules that federal courts must apply in diversity cases because they function as a part of the State's definition of substantive rights and remedies." Id. at 1448. Justice Stevens, however, concluded that "this is not such a case." Id. at 1445.
As an initial matter, considering whether a rule abridges, enlarges, or modifies a state's rights or remedies is often a difficult inquiry because "one can often argue that the state rule was really some part of the State's definition of its rights or remedies." Id. at 1457 (emphasis in original). The bar for finding an Enabling Act problem is, in Justice Stevens' view, "a high one." Id. There must be "little doubt" that a federal rule would alter a state-created right. Id. Under this standard, Justice Stevens concluded that § 901(b) was not intertwined with New York's definition of substantive rights because the rule is in New York's procedural code, it is applicable to class actions brought under any source of law, and the legislative history was ambiguous.
First, Justice Stevens noted that the text of § 901(b) applies to claims based on any source of law, not just claims based on New York Law and there is no interpretation from New York courts to the contrary. Because of § 901(b)'s apparent applicability to other sources of law, "it is . . . hard to see how ...