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In Re: Flonase Antitrust Litigation

September 26, 2011

IN RE: FLONASE ANTITRUST LITIGATION,


The opinion of the court was delivered by: Anita B. Brody, J.

THIS DOCUMENT RELATES TO: Indirect Purchaser Actions

MEMORANDUM

I.BACKGROUND AND PROCEDURAL HISTORY*fn1

Flonase is a steroid nasal spray containing the active pharmaceutical ingredient fluticasone propionate ("FP")*fn2 produced by Defendant SmithKline Beecham Corporation, doing business as GlaxoSmithKline PLC ("GSK"). Plaintiffs A.F. of L.-A.G.C. Building Trades Welfare Plan ("AFL"), IBEW-NECA Local 505 Health & Welfare Plan ("IBEW"), International Association of Bridge, Structural, Ornamental and Reinforcing Ironworkers Local No. 79 Health Fund ("IABORI "), and Painters District Council No. 30 Health & Welfare Fund ("Painters") (collectively, "Indirect Purchaser Plaintiffs" or the "Plans") are indirect purchasers of Flonase-third-party payors that underwrite prescription drug costs for their members ("Plan Members").*fn3 They allege that GSK filed sham citizen petitions with the Food and Drug Administration ("FDA") to delay the entry of a cheaper, generic version of Flonase into the market. As a result, Indirect Purchaser Plaintiffs maintain that they sustained injury when they purchased or provided reimbursement for purchases of Flonase in the states where those purchases were made ("purchase states").*fn4

Indirect Purchaser Plaintiffs bring claims of monopolization, unfair and deceptive trade practices ("UDTP"), and unjust enrichment under the laws of certain purchase states.*fn5

Specifically, each of the Indirect Purchaser Plaintiffs asserts the following state law claims:

Plan Name State Claim(s) Asserted

AFL Florida UDTP

IBEW Florida UDTP IABORI North Carolina monopolization and UDTP Painters Arizona, Iowa, and Wisconsin monopolization

Arizona and Florida UDTP

Arizona, Iowa, and Wisconsin unjust enrichment

Each Indirect Purchaser Plaintiff presents evidence it deems sufficient to support its allegations that it purchased or provided reimbursements for Flonase purchases in at least one of the following purchase states-Arizona, Florida, Iowa, North Carolina, and Wisconsin-to tie itself to an injury in those states.

A brief review of the procedural history will be beneficial at this point. On September 3, 2008, Indirect Purchaser Plaintiffs filed a first amended class action complaint ("FAC") against GSK asserting claims of monopolization, UDTP, and unjust enrichment under numerous state laws. GSK moved to dismiss the FAC by arguing that Indirect Purchaser Plaintiffs had not alleged any injury in any state to establish standing to bring their state law claims or, alternatively, had not stated a claim under any of those laws. In ruling on this motion, I inferred that each Indirect Purchaser Plaintiff could establish enough contacts in the state where it resides or has a principal place of business ("home state") to possess standing. However, I found that none of the Indirect Purchaser Plaintiffs had stated a claim under the laws of their home states. (ECF No. 53)

On May 21, 2009, Indirect Purchaser Plaintiffs filed a second amended class action complaint ("SAC") asserting the same three counts under the laws of the purchase states. They also asserted a claim of UDTP under the law of a home state (Illinois). GSK moved to dismiss the SAC by arguing that Indirect Purchaser Plaintiffs had not sufficiently plead an injury to have standing in either their home states or purchase states. On January 21, 2010, I held that the Indirect Purchaser Plaintiffs had sufficiently plead "standing in states where they are located or where they purchased Flonase or reimbursed for purchases of Flonase." (ECF No. 82, at 6).

However, I concluded that Indirect Purchaser Plaintiffs had failed to state a claim for UDTP under Illinois law. As a result, Indirect Purchaser Plaintiffs filed a third amended class action complaint ("TAC") on March 1, 2010, only asserting claims of monopolization, UDTP, and unjust enrichment under the laws of purchase states, specifically North Carolina, Florida, Arizona, Iowa, and Wisconsin.

On October 29, 2010, GSK filed a motion for summary judgment (ECF No. 180) against the Indirect Purchaser Plaintiffs based on three grounds. First, GSK argues that Indirect Purchaser Plaintiffs have not provided sufficient evidence to raise a genuine issue of material fact as to whether they have standing to bring claims under the laws of the states in which they reimbursed purchases of Flonase. Second, GSK argues that even if Indirect Purchaser Plaintiffs possess standing, choice of law rules require that the Indirect Purchaser Plaintiffs' claims be governed by the laws of their home states, rather than the laws of the states in which their members were reimbursed. As I have already held that Indirect Purchaser Plaintiffs cannot state a claim in their home states, GSK argues, their claims must be dismissed. Finally, GSK asserts that Indirect Purchaser Plaintiffs have failed to provide evidence in support of the following claims: (1) Painters, AFL, and IBEW's claim of UDTP under Florida law, (2) Painters' claim of UDTP under Arizona law, and (3) IABORI's claims of monopolization and UDTP under North Carolina law. For the reasons set forth below, I will grant in part and deny in partGSK's motion for summary judgment.

II.LEGAL STANDARD

Summary judgment will be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). There is a "genuine" issue of material fact if the evidence would permit a reasonable jury to find for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The "mere existence of a scintilla of evidence" is insufficient. Id. at 252.

The moving party must make an initial showing that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The non-movant must then "make a showing sufficient to establish the existence of [every] element essential to that party's case, and on which that party will bear the burden of proof at trial." Id. at 322; see also Fed. R. Civ. P. 56(c)(1). The non-moving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). In determining whether the non-moving party has established each element of its case, the court must draw all reasonable inferences in the non-moving party's favor. Id. at 587.

III.DISCUSSION

A. Standing

Article III of the Constitution requires that a plaintiff have standing to assert his or her claims. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). In a class action, "[t]he initial inquiry . . . is whether the lead plaintiff individually has standing." Winer Family Trust v. Queen, 503 F.3d 319, 326 (3d Cir. 2007);see alsoO'Shea v. Littleton, 414 U.S. 488, 494 (1974). At a minimum, constitutional standing requires three elements: (1) injury-in-fact, which is an invasion of a legally protected interest that is concrete and particularized, and actual or imminent; (2) causation; and (3) likelihood that the injury will be redressed by a favorable decision. Lujan, 504 U.S. at 560-61; Winer, 503 F.3d at 326. "The party invoking federal jurisdiction bears the burden of establishing these elements." Lujan, 504 U.S. at 561. The relevant inquiry is "whether the plaintiff has alleged such a personal stake in the outcome of the controversy as to warrant his invocation of federal court jurisdiction . . . ." Warth v. Seldin, 422 U.S. 490, 498 (1975) (citation and internal quotation marks omitted).

In a previous opinion, I held that the named Plaintiffs had sufficiently plead "standing in states where they are located or where they purchased Flonase or reimbursed for purchases of Flonase." (ECF No. 82, at 6). However, "the showing (whether as to standing or the merits) required to overcome a motion for summary judgment is more extensive than that required in the context of a motion to dismiss. The principal difference is that in the former context evidence is required, while in the latter setting the litigant may rest upon the allegations of his complaint." Lujan v. Nat'l Wildlife Fed'n, 497 U.S. 871, 902 (1990).

Indirect Purchaser Plaintiffs have alleged a redressable injury-paying too much for Flonase in states where they purchased Flonase or where they reimbursed Plan Members for Flonase purchases. The question now before me is whether each individual Indirect Purchaser Plaintiff has presented sufficient evidence to support its allegation that it purchased or provided reimbursements for Flonase purchases in the purchase states-Arizona, Florida, Iowa, North Carolina, and Wisconsin-to tie itself to an injury in those states.

1. Evidence of the Plans' Standing

i. AFL

AFL is a welfare benefit plan with its principal place of business in Alabama. The AFL Plan covers unions in Alabama and Florida. Blue Cross and Blue Shield administers the prescription drug benefit for the AFL Plan. AFL Plan Members have resided in Florida and made purchases covered by AFL in Florida since at least May 2004. Indirect Purchaser Plaintiffs offer as evidence of these reimbursements a spreadsheet identifying each of the Florida purchases that were reimbursed by AFL. Pls.' Resp. Ex. 2.

ii. IBEW

IBEW is a welfare benefit plan with its principal place of business in Alabama. The IBEW Plan covers the Local 505 union members who are employed by Alabama employers. IBEW Plan participants may establish permanent residence outside Alabama, and in fact many live in Florida. Blue Cross and Blue Shield administers the prescription drug benefit for the AFL Plan. IBEW reimbursed a number of Flonase purchases in Florida between 2004 and 2006. Indirect Purchaser Plaintiffs offer as evidence of these reimbursements a spreadsheet identifying each of the Florida purchases that were reimbursed by IBEW. Pls.' Resp. Ex. 2.

iii. IABORI

IABORI is a welfare benefit plan located in Goodlettsville, Tennessee. The IABORI Plan covers union members located primarily in Virginia. Southern Benefit Administrators ("Southern Benefit") is a third party that administers pension payments and health benefits for the IABORI plan. Indirect Purchaser Plaintiffs assert that IABORI Plan Members have been reimbursed for at least two purchases of Flonase made in North Carolina. Indirect Purchaser Plaintiffs offer as evidence of these reimbursements two receipts showing that purchases were made in North Carolina, two Explanation of Benefit forms, and a spreadsheet allegedly showing that those purchases were reimbursed by IABORI. Pls.' Resp. Ex. 4 at IABORI_00351, 00359, 00360, 00335, 00341.

iv. Painters

Painters is a welfare benefit plan located in Aurora, Illinois. The Painters Plan's prescription drug benefits are administered by Caremark/CVS, located in Arizona. The Plan has members in Wisconsin and Arizona, among other states. Indirect Purchaser Plaintiffs assert that Painters has reimbursed its Plan Members for purchases in Arizona, Iowa, Florida, and Wisconsin. Indirect Purchaser Plaintiffs offer as evidence of these reimbursements four spreadsheets identifying reimbursements made by Painters. Pls.' Resp. Ex. 9.

2. Sufficiency of the Plans' Evidence of Standing

Considering this evidence, GSK argues that the Indirect Purchaser Plaintiffs lack standing for three reasons: (1) the Plans have offered no evidence that reimbursement checks were physically delivered into Arizona, Florida, Iowa, North Carolina, and Wisconsin; (2) the Plans have not provided authenticated evidence showing that they purchased Flonase or reimbursed their members for Flonase purchases in Arizona, Florida, Iowa, North Carolina, and Wisconsin; and (3) the Plans' data does not include sufficient geographic information showing that they purchased Flonase or reimbursed their members for Flonase purchases in Arizona, Florida, Iowa, North Carolina, and Wisconsin.

As to the first argument, GSK misunderstands the law. I previously held that "each named plaintiff has standing to bring a claim under the laws of the states where they are located, and where they purchased Flonase or reimbursed their members for Flonase purchases." (ECF No. 82, at 7). GSK seems to understand my opinion to confer standing under the laws of states in which reimbursement checks were sent. GSK is wrong. Like many courts before me, I held that the Plans could have standing to assert claims under the laws of states in which Plan Members made Flonase purchases, where those purchases were reimbursed by the Plans. See generally In re Wellbutrin XL Antitrust Litig., 260 F.R.D. 143, 157 (E.D. Pa. 2009) ("[P]laintiffs' claims have clear connection to . . . the states where their members made purchases."); In re Terazosin Hydrochloride Antitrust Litig., 220 F.R.D. 672, 680-82 (S.D. Fla. 2004) (holding that individual named plaintiffs had standing to assert claims in states ...


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