United States District Court, E.D. Pennsylvania
PLUMBERS' LOCAL UNION NO. 690 HEALTH PLAN, Plaintiff,
APOTEX CORP., et al., Defendants.
B. Brody, J.
Plumbers Local Union No. 690 Health Plan
(“Plumbers”) brings this putative class action
against a multitude of Defendants alleging claims under
Pennsylvania state law for violations of the Pennsylvania
Unfair Trade Practices and Consumer Protection Law, negligent
misrepresentation/fraud, unjust enrichment, civil conspiracy,
and aiding and abetting. Plumbers also brings claims against
Defendants for violations of the consumer protection laws of
forty-eight additional states and two
territories. Plumbers is a health insurance plan that
provides prescription drug coverage to members of Plumbers
Local Union No. 690 (“Plumbers' Members”) and
Defendants are companies involved in the generic prescription
pharmaceutical drug business.
Defendants (“Jurisdiction Defendants”) move to
dismiss the Amended Complaint for lack of personal
jurisdiction pursuant to Federal Rule of Civil Procedure
12(b)(2). Eleven of the Jurisdiction Defendants
(“Selling Defendants”) concede that they sell
their generic prescription drugs in
Pennsylvania. Three of the eleven Selling Defendants
(“Registration Defendants”) also concede that
they are foreign corporations registered to do business in
Pennsylvania. Four of the Jurisdictional Defendants
(“Non-Selling Defendants”) do not
manufacture, market, distribute, or sell any prescription
drugs in Pennsylvania.
reasons set forth below, I will grant in part and deny in
part the motions to dismiss of the eight Selling Defendants
who are not also Registration Defendants. I will deny
Registration Defendants' motions to dismiss for lack of
personal jurisdiction. I will grant Non-Selling
Defendants' motions to dismiss for lack of personal
Defendants are companies involved in the generic prescription
pharmaceutical drug business. Am. Compl. ¶ 1.
Jurisdiction Defendants are not incorporated in Pennsylvania
and do not have their principal place of business in
Pennsylvania. Am. Compl. ¶¶ 32, 38, 44, 60, 126,
134, 135. Plumbers resides in Pennsylvania, maintains a
principal place of business in Pennsylvania, and has members
who live in Pennsylvania. Am. Compl. ¶¶ 29, 154.
provides a health insurance plan that includes prescription
drug coverage to members of Plumbers Local Union No. 690.
See, e.g., Am. Compl. ¶ 157. Prescription drugs
are dispensed to Plumbers' Members through medical
professionals who administer the drugs to members or through
pharmacies that are authorized by medical professionals to
dispense the drugs to members. Am. Compl. ¶ 163. After a
pharmacist or medical professional provides a drug to a
member, the provider then seeks reimbursement from Plumbers.
The provider typically bills Plumbers based on the Average
Wholesale Price (“AWP”) for the drug. Am. Compl.
¶¶ 165, 169. Plumbers reimburses the providers of
the prescription drugs based on a formula, which includes
AWPs as “a key component” in determining the
amount of reimbursement. Am. Compl. ¶ 157.
Defendants are pharmaceutical companies that manufacture
generic prescription drugs and sell their generic drugs in
Pennsylvania. Plumbers' Members made numerous
purchases of Selling Defendants' generic drugs in
Pennsylvania. Selling Defendants reported the AWPs for
their prescription drugs to pricing compendia, including
First Databank's Blue Book, Medical Economics' Red
Book, and Medispan. Am. Compl. ¶¶ 158, 180.
Plumbers obtained the AWPs from these compendia and relied on
them in its drug reimbursement formula. Am. Compl.
at least 1991 to the present, the AWPs relied on by Plumbers
have not reflected the actual average wholesale prices of
prescription drugs, and Selling Defendants' generic
prescription drugs have increased in price at a rate much
faster than the actual average wholesale price. Am. Compl.
¶ 171. Selling Defendants have intentionally inflated
their reported AWPs, and the prescription drug providers have
billed Plumbers at these inflated AWPs for Selling
Defendants' generic drugs, Am. Compl. ¶¶ 163,
200. Consequently, Plumbers has reimbursed the prescription
drug providers for its members' purchases of Selling
Defendants' generic drugs on the basis of these inflated
AWPs. Am. Compl. ¶ 29.
the relevant time period, the defendants were aware that a
figure called the AWP was the embedded standard used by
virtually all payors for drug products . . . to determine how
much to reimburse and pay for a given drug.” Am. Compl.
¶ 173. Selling Defendants “deliberately and
intentionally” inflated their AWPs “so that the
medical providers who purchased and dispensed these drugs at
a low cost would bill patients and their insurers at the
inflated AWPs, and thereby earn a substantial profit from the
‘spread' between the real cost and the various
AWP-related reimbursement rates.” Am. Compl.
¶¶ 208- 09. Selling Defendants inflated their AWPs
to provide higher financial remuneration to providers, which
encouraged providers to purchase more of their generic drugs
thereby increasing Selling Defendants' market share for
their prescription drugs. Am. Compl. ¶¶ 176, 188.
Accordingly, Selling Defendants “knew, or should have
known, that when they did not report actual average wholesale
prices to the compendia, those inflated AWPs would increase
and distort reimbursement levels, ” Am. Compl. ¶
184, which would harm third party payors, like Plumbers, who
reimburse the cost of prescription drugs for its members, Am.
Compl. ¶ 185.
Defendants do not manufacture, market, distribute, or sell
any prescription drugs in Pennsylvania. Decl. Andrew S. Boyer
¶ 6, ECF No. 209-2 [hereinafter Boyer Decl.]; Aff. Brian
Shanahan ¶ 10, ECF No. 211-2 [hereinafter Shanahan
Aff.]; Decl. Abhijit Mukherjee ¶¶ 4, 16, ECF No.
227-2 [hereinafter Mukherjee]; Decl. Martin Shindler ¶
4, ECF No. 232 [hereinafter Shindler Decl.]. Additionally,
Non-Selling Defendants are not registered to conduct business
in Pennsylvania. Boyer Decl. ¶ 5; Shanahan Aff. ¶
9; Mukherjee Decl. ¶ 7; Shindler Decl. ¶ 3. Two of
the Non-Selling Defendants, Andrx Corporation (n/k/a Andrx
LLC) (“Andrx Corporation”) and Actavis, Inc.
f/k/a Watson Pharmaceuticals, Inc. (n/k/a Allergan Finance
LLC) (“Allergan Finance”), are holding companies
that “exist for the purpose of holding shares of
companies rather than producing [their] own goods or
services.” Boyer Decl. ¶ 7; Shindler Decl. ¶
5. Two of the Non-Selling Defendants, Dr. Reddy's
Laboratories Ltd. (“DRL Limited”) and Teva
Pharmaceutical Industries Ltd. (“Teva Ltd.”), are
foreign corporations. Shanahan Aff. ¶ 4; Mukherjee Decl.
¶ 4. Although the indirect subsidiary of DRL Limited and
subsidiaries and affiliates of Teva Ltd. conduct business in
Pennsylvania, these subsidiaries and affiliates are separate
legal entities with separate boards of directors that are
managed and supervised independently of DRL Limited and Teva
Ltd. Shanahan Aff. ¶ 15; Mukherjee Decl. ¶¶
STANDARD OF REVIEW
defendant moves to dismiss a lawsuit for lack of personal
jurisdiction, then the plaintiff bears the burden of
demonstrating the facts that establish jurisdiction.
Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324,
330 (3d Cir. 2009). “[W]hen the court does not hold an
evidentiary hearing on the motion to dismiss, the plaintiff
need only establish a prima facie case of personal
jurisdiction and the plaintiff is entitled to have its
allegations taken as true and all factual disputes drawn in
its favor.” Miller Yacht Sales, Inc. v. Smith,
384 F.3d 93, 97 (3d Cir. 2004). Thus, “[i]n deciding a
motion to dismiss for lack of personal jurisdiction, we take
the allegations of the complaint as true. But once a
defendant has raised a jurisdictional defense, a plaintiff
bears the burden of proving by affidavits or other competent
evidence that jurisdiction is proper.” Dayhoff Inc.
v. H.J. Heinz Co., 86 F.3d 1287, 1302 (3d Cir. 1996)
(citation omitted); see also Metcalfe v. Renaissance
Marine, Inc., 566 F.3d 324, 330-31 (3d Cir. 2009).
courts ordinarily follow state law in determining the bounds
of their jurisdiction over persons.” Daimler AG v.
Bauman, 134 S.Ct. 746, 753 (2014) (citing Fed.R.Civ.P.
4(k)(1)(A)). Pennsylvania's long-arm statute provides for
jurisdiction “based on the most minimum contact with
th[e] Commonwealth allowed under the Constitution of the
United States.” 42 Pa. Cons. Stat. Ann. § 5322(b).
Accordingly, “[t]he Due Process Clause of the
Fourteenth Amendment sets the outer boundaries of
[Pennsylvania's] authority to proceed against a
defendant.” Goodyear Dunlop Tires Operations, S.A.
v. Brown, 564 U.S. 915, 923 (2011). In order for a court
to exercise personal jurisdiction over an out-of-state
defendant, due process requires that the defendant have
“certain minimum contacts with [the State] such that
the maintenance of the suit does not offend
‘traditional notions of fair play and substantial
justice.'” Int'l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945) (quoting
Milliken v. Meyer, 311 U.S. 457, 463 (1940)).
are two types of personal jurisdiction: general jurisdiction
and specific jurisdiction. O'Connor v. Sandy Lane
Hotel Co., 496 F.3d 312, 317 (3d Cir. 2007). “As
th[e] Court has increasingly trained on the
‘relationship among the defendant, the forum, and the
litigation, ' i.e., specific jurisdiction,
general jurisdiction has come to occupy a less dominant place
in the contemporary scheme.” Daimler, 134
S.Ct. at 758 (footnote omitted) (quoting Shaffer v.
Heitner, 433 U.S. 186, 204 (1977)).
Plaintiff may demonstrate that a court's exercise of
personal jurisdiction is proper, by establishing that a court
has either general jurisdiction or specific jurisdiction over
the defendant, or by establishing that the defendant has
consented to jurisdiction. See Bane v. Netlink,
Inc., 925 F.2d 637, 640 (3d Cir. 1991).
contends that this Court has both general jurisdiction and
specific jurisdiction over Jurisdiction Defendants.
Additionally, Plumbers contends that several Jurisdiction
Defendants consented to personal jurisdiction in
a limited set of affiliations with a forum will render a
defendant amenable to all-purpose jurisdiction there.”
Daimler, 134 S.Ct. at 760. “A court may assert
general jurisdiction over foreign (sister-state or
foreign-country) corporations to hear any and all claims
against them when their affiliations with the State are so
‘continuous and systematic' as to render them
essentially at home in the forum State.”
Goodyear, 564 U.S. at 919. The paradigm forums, in
which a corporation is reasonably regarded as at home, are
the place of incorporation and the principal place of
business. Daimler, 134 S.Ct. at 760. “The
exercise of general jurisdiction is not limited to these
forums; in an ‘exceptional case, ' a corporate
defendant's operations in another forum ‘may be so
substantial and of such a nature as to render the corporation
at home in that State.'” BNSF Ry. Co. v.
Tyrrell, 137 S.Ct. 1549, 1558 (2017) (quoting
Daimler, 134 S.Ct. at 761, n.19). However,
“the exercise of general jurisdiction in every State in
which a corporation ‘engages in a substantial,
continuous, and systematic course of business' . . ., is
unacceptably grasping.” Daimler, 134 S.Ct. at
761 (citation omitted). “The Fourteenth Amendment due
process constraint described in Daimler. . . applies
to all state-court assertions of general jurisdiction over
nonresident defendants; the constraint does not vary with the
type of claim asserted or business enterprise sued.”
Tyrrell, 137 S.Ct. at 1558-59.
Defendants are not incorporated in Pennsylvania and do not
have their principal place of business in Pennsylvania.
Plumbers contends that this Court has general jurisdiction
over Jurisdiction Defendants because of their continuous and
systematic contacts with Pennsylvania. Daimler
establishes, however, that engaging in a substantial,
continuous, and systematic course of business is insufficient
to establish general jurisdiction. A court may only assert
general jurisdiction in a forum in which the corporation is
regarded as home-typically, the place of incorporation or the
principal place of business. Plumbers does not argue that
this is an exceptional case in which Jurisdiction
Defendants' operations in Pennsylvania are so substantial
and important as to render them at home in Pennsylvania.
Because Jurisdiction Defendants are not incorporated in
Pennsylvania and do not have their principal place of
business in Pennsylvania, they are not at home in
Pennsylvania. Accordingly, this Court lacks general
jurisdiction over Jurisdiction Defendants.
analysis of whether a forum state has sufficient minimum
contacts to exercise specific jurisdiction over a nonresident
defendant “focuses on ‘the relationship among the
defendant, the forum, and the litigation.'”
Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775
(1984) (quoting Shaffer, 433 U.S. at 204).
“For a State to exercise jurisdiction consistent with
due process, the defendant's suit-related conduct must
create a substantial connection with the forum State.”
Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014). The
minimum contacts necessary to create specific jurisdiction
“must arise out of contacts that the ‘defendant
himself'' creates with the forum
State.” Id. at 1122 (quoting Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)). The
“analysis looks to the defendant's contacts with
the forum State itself, not the defendant's contacts with
persons who reside there.” Id.
“[A]lthough physical presence in the forum is not a
prerequisite to jurisdiction, physical entry into the
State-either by the defendant in person or through an agent,
goods, mail, or some other means-is certainly a relevant
contact.” Id. (citation omitted). Specific
jurisdiction “depends on an ‘affiliation between
the forum and the underlying controversy, ' principally,
activity or an occurrence that takes place in the forum State
and is therefore subject to the State's
regulation.” Goodyear, 564 U.S. at 919
specific personal jurisdiction over a defendant exists when:
(1) the defendant “purposefully directed [its]
activities” at the forum; and (2) the litigation
“arise[s] out of or relate[s] to” at least one of
the defendant's activities in Pennsylvania.
O'Connor, 496 F.3d at 317 (internal quotation
marks omitted). If the “purposeful availment” and
“relatedness” requirements are met, a court may
exercise personal jurisdiction as long as the assertion of
jurisdiction “comport[s] with ‘fair play and
substantial justice'.” Burger King, 471
U.S. at 476 (citation omitted).
court usually determines specific jurisdiction on a
claim-by-claim basis, claim specific analysis may not be
necessary “for certain factually overlapping
claims.” O'Connor, 496 F.3d 312, 317 n.3
(3d Cir. 2007); see also Bhd. of Locomotive Eng'rs
& Trainmen v. United Transp. Union, 413 F.Supp.2d
410, 417 (E.D. Pa. 2005) (“[W]here the considerations
in analyzing jurisdiction do not differ between particular
claims, a claim specific analysis is not necessary.”).
Because Plumbers' claims all stem from the same conduct
of Jurisdiction Defendants-the alleged intentional
misrepresentation of the AWPs for their generic drugs-a
claim-specific analysis is not necessary. Plumbers'
Pennsylvania state law claims (“Pennsylvania
Claims”), however, require separate analysis from
Plumbers' claims against Jurisdiction Defendants for
violations of the consumer protection laws of forty-eight
additional states and two territories
Defendants sold their generic drugs in Pennsylvania to
Plumbers' Members. The inquiry is whether Selling
Defendants purposefully directed their activities at
Pennsylvania when they sold their generic drugs in
Pennsylvania, and whether Plumbers' claims arise out of
or relate to the sale of these drugs. If the purposeful
availment and relatedness requirements are met, then the
final inquiry is whether the exercise of jurisdiction