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Apotex, Inc. v. Cephalon, Inc.

United States District Court, E.D. Pennsylvania

May 31, 2017

APOTEX, INC., Plaintiff,
v.
CEPHALON, INC., et al., Defendants. GIANT EAGLE, INC., Plaintiff,
v.
CEPHALON, INC., et al., Defendants. WALGREEN CO., et al., Plaintiffs,
v.
CEPHALON, INC., et al., Defendants. RITE AID CORPORATION, et al., Plaintiffs,
v.
CEPHALON, INC., et al., Defendants.

          MEMORANDUM OPINION

          Goldberg, J.

         This ongoing antitrust case involves four Hatch-Waxman reverse-payment settlement agreements entered into by Cephalon, Inc., the manufacturer of the brand-name pharmaceutical Provigil, and four generic drug companies. These companies are Barr Pharmaceuticals, Inc.; Mylan Laboratories, Inc. and Mylan Pharmaceuticals, Inc. (“Mylan”); Teva Pharmaceutical Industries, Ltd. and Teva Pharmaceuticals USA, Inc.; and Ranbaxy Laboratories, Ltd. and Ranbaxy Pharmaceuticals, Inc. (“Ranbaxy”). Plaintiffs allege that these settlements unlawfully delayed the market entry of generic Provigil in violation of the Sherman Act.

         The parties have submitted numerous motions in limine in anticipation of the liability trial scheduled for June 12, 2017. The only plaintiffs in the upcoming trial are Apotex, Inc., a generic competitor, and a group of owners and operators of retail pharmacies who filed their own separate actions and were excluded from the definition of the Direct Purchaser Litigation Class.[1]The only defendants in the June trial are Mylan and Ranbaxy.[2]

         This opinion addresses the omnibus motion filed on behalf of all Plaintiffs, which contains ten separate motions in limine.[3] For the reasons that follow, the motions will be granted in part and denied in part.

         I. FACTUAL BACKGROUND

         In 1997, Cephalon was issued U.S. Patent No. 5, 618, 845, covering specific formulations of modafinil, the active pharmaceutical ingredient (“API”) in Provigil. Cephalon was granted a reissue patent on modafinil, U.S. Patent No. RE 37, 516 (“the RE ‘516 patent”) in 2002. Modafinil is a wakefulness-promoting agent used to treat narcolepsy and other sleep disorders.

         On December 24, 2002, the Generic Defendants each filed an Abbreviated New Drug Application (“ANDA”) seeking to market a generic version of Provigil along with a Paragraph IV certification indicating that Cephalon's RE ‘516 patent was either invalid or the generic products did not infringe the patent. In 2003, Cephalon filed suit against the Generic Defendants for patent infringement (“the Paragraph IV litigation”).

         The Paragraph IV litigation between Cephalon and the Generic Defendants settled between December 2005 and February 2006, with the Generic Defendants agreeing to forego releasing their generic modafinil products until April 6, 2012. Plaintiffs in the antitrust case allege that in return for the Generic Defendants agreeing to settle the Paragraph IV litigation and stay off of the market until 2012, Cephalon paid the Generic Defendants millions of dollars in violation of various antitrust laws. This type of settlement-referred to as a reverse-payment settlement-was analyzed by the United States Supreme Court in Federal Trade Commission v. Actavis, Inc., 133 S.Ct. 2223 (2013).

         II. STANDARD OF REVIEW

         The purpose of a motion in limine is “to narrow the evidentiary issues for trial and to eliminate unnecessary trial interruptions.” Bradley v. Pittsburgh Bd. of Educ., 913 F.2d 1064, 1069 (3d Cir. 1990). The moving party bears the burden of demonstrating that the challenged evidence is inadmissible “on any relevant ground, and the court may deny a motion in limine when it lacks the necessary specificity with respect to the evidence to be excluded.” Leonard v. Stemtech Health Scis., Inc., 981 F.Supp.2d 273, 276 (D. Del. 2013). “Evidentiary rulings, especially ones that encompass broad classes of evidence, should generally be deferred until trial to allow for the resolution of questions of foundation, relevancy, and potential prejudice in proper context.” Id.

         III. DISCUSSION

         a. Motion in Limine Number 1

         In their first motion, Plaintiffs request that Defendants be precluded from offering direct or indirect evidence of their subjective beliefs regarding the merits of the RE ‘516 Patent because Defendants asserted the attorney-client privilege to block inquiry into those subjective views. Plaintiffs state that it would be unfair to allow Defendants to waive the privilege at the eleventh-hour because Plaintiffs have prepared their case without the benefit of knowing the content of the privileged information.

         As an example, Plaintiffs urge that Defendants should be prevented from offering evidence suggesting that their pleadings in the Paragraph IV litigation were “mere advocacy or lawyer arguments” because such evidence would suggest that Defendants' subjective beliefs differed from the positions their attorneys took in court. (Pls.' Mot. pp. 3-4.)

         Defendants respond that they do not intend to introduce testimony or evidence previously withheld as privileged. Rather, Defendants state that they intend to present non-privileged information that was made available to Plaintiffs during discovery. For example, Defendants state that they will offer testimony from fact witnesses regarding actions they took during the Paragraph IV litigation and subsequent settlement. Defendants contend that such evidence is relevant to their defense that the outcome of the Paragraph IV litigation was uncertain and that legitimate considerations motivated their decision to settle. Defendants argue that there is no legal authority to support Plaintiffs' request to preclude Defendants from introducing non-privileged evidence in this manner.

         I conclude that Defendants may present this type of non-privileged evidence despite their invocation of the attorney-client privilege. In fact, Plaintiffs themselves have argued that they are entitled to offer expert testimony on the absence of non-privileged documents concerning Defendants' due diligence and what that means in terms of the reasonableness of the side agreements. (See Pls.' Resp. to Defs.' Mot. to Exclude Testimony of Thomas Hoxie, pp. 16-17.) I agree with Plaintiffs that this type of evidence is admissible and, as such, Defendants may present relevant non-privileged information to rebut Plaintiffs' arguments in this manner.

         Although Plaintiffs have failed to support their broad request for a sweeping pre-trial prohibition, their concerns can, if necessary, be addressed in the context of a developed record and with the benefit of a concrete understanding of the proffered testimony as well as the purpose for which it is being presented. If Plaintiffs believe that Defendants are attempting to present evidence previously withheld as privileged, I will certainly entertain objections to specific lines of questioning at trial. Defendants are directed to question their witnesses with careful attention to these issues and any attempts to introduce evidence previously withheld will not be countenanced. For the foregoing reasons, Plaintiffs' Motion in Limine Number 1 will be denied.

         b. Motion in Limine Number 2

         Plaintiffs seek an order precluding Defendants from presenting opinion evidence from fact witnesses that I previously precluded Defendants' experts from offering in the November 5, 2015 Daubert Opinion and Order. See King Drug Co. of Florence, Inc. v. Cephalon, Inc., 2015 WL 6750899, at *2 (E.D. Pa. Nov. 5, 2015). Plaintiffs urge that Defendants should not be able to elicit the following previously excluded expert opinions through fact witnesses:

1. [A]ny expert opinion contrary to [the] holdings [that ‘(1) the RE ‘516 patent is invalid due to the on-sale bar, derivation and obviousness; and (2) the materiality prong of Walker Process fraud has been established'] will not be permitted.
2. Cephalon [cannot] attempt to justify the reverse-payment settlement agreements with evidence that it sought to avoid the risk of invalidation of the RE ‘516 patent.
3. [A]n expert will not be permitted to testify at trial that certain legal arguments made during the Paragraph IV litigation were ‘reasonable' or that Cephalon could have reasonably had a realistic expectation of success on the merits.
4. [T]he validity experts will not be permitted to testify as to any legal standard that was explicitly rejected by this Court during the Apotex litigation.
5. Cephalon's experts will not be permitted to opine that the Generic Defendants' products presently infringe the RE ‘516 patent.
6. Dr. Bugay's conclusions stemming from his testing of the Generic Defendants' generic Provigil API and tablets using the Hiac/Royco brand light obscuration ...

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