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United Healthcare Services, Inc. v. Cephalon, Inc.

United States District Court, E.D. Pennsylvania

July 8, 2019

CEPHALON, INC., Defendants.


          GOLDBERG, J.

         This antitrust matter, referred to as In re Modafinil, has presented many challenges for all involved. The multiple parties involved in this litigation include a brand drug manufacture, numerous generic drug companies, retail drug distributors, the Federal Trade Commission, and direct and indirect purchasers. The facts and law underlying the antitrust claims, which are premised on what is known as a “reverse patent settlement, ” also implicate Hatch-Waxman patent issues. Antitrust and patent trials have been held, appellate litigation in both the Third and Federal Circuits has occurred, and extensive settlement negotiations have taken place, resulting in the resolution of many segments of this case.

         One of the biggest challenges has been discovery and trial management and, in particular, balancing judicial resources with fairness to each of the respective parties' interests. The current Motion before me presents one such challenge.

         In what appears to the final phase of this matter, Plaintiff, United Healthcare Services (“UHS”), is pressing unresolved antitrust claims against two generic drug companies, Mylan Pharmaceuticals, Inc. (“Mylan”) and Sun Pharmaceutical Industries, Ltd., Ranbaxy Laboratories, Ltd., and Ranbaxy Pharmaceuticals, Inc. (collectively, “Ranbaxy”). While In re Modafinil has been ongoing for many years, UHS entered the fray only recently, filing a lawsuit in the District of Minnesota, which was removed to this Court on February 6, 2017.

         UHS's case against Ranbaxy and Mylan was originally set to proceed to trial on July 8, 2019. I postponed this date so that the current discovery dispute could be sorted out and resolved. Leading up to the July 8, 2019 trial date, and in connection with the controlling trial scheduling order, UHS submitted an expert witness list, which included six experts that either had never been previously disclosed or whose accompanying reports included new opinions not previously subject to discovery. This prompted Ranbaxy to file the current Motion to Preclude UHS from Asserting New Experts, New Expert Opinions, and New Legal Theories at this Late Stage of the Case.

         I have carefully reviewed the history of this case as it pertains to the remaining parties. Upon consideration of the parties' briefing on this Motion, as well as oral argument, I will grant Ranbaxy's Motion in part, precluding certain expert testimony. But, as detailed below, UHS will be permitted to offer certain opinions from the newly-identified experts.


         A review of the background facts and the numerous moving parts is required to fully understand my ruling on Ranbaxy's Motion.

         UHS's Second Amended Complaint, filed January 29, 2018, sets forth antitrust claims arising out of allegations that Defendants Mylan and Ranbaxy (among other generic pharmaceutical manufacturers) entered into reverse payment agreements with brand-name manufacturer and former Defendant, Cephalon, Inc. (“Cephalon”), to delay entry of generic versions of the drug Provigil into the market. This particular case involves the same subject matter as numerous cases consolidated in the In re Modafinil litigation, where numerous experts have previously been identified.

         On January 30, 2018, a status and scheduling conference was held in the three remaining In re Modafinil cases: (a) King Drug Company of Florence, Inc. v. Cephalon, Inc., Civil Action No. 06- 1797 (“King Drug”) brought by a putative class of direct purchaser plaintiffs (“DPPs”) against Ranbaxy; (b) Vista Healthplan, Inc. v. Cephalon, Inc., Civil Action No. 06-1833 (“Vista”) brought by a putative class of end payor plaintiffs (“EPPs”) against Ranbaxy; and (c) the current case, United Healthcare Services, Inc. v. Cephalon, Inc., Civil Action No. 17-555 (“United”) brought by individual plaintiff UHS against Cephalon, Mylan, Ranbaxy, Barr Laboratories, Inc. (“Barr”), and Teva Pharmaceuticals Industries, Ltd. and Teva Pharmaceuticals USA, Inc. (collectively, “Teva”).[1] At that conference, a discussion was held (1) regarding streamlining the cases with an eye towards a joint trial involving all three plaintiffs, and (2) whether additional fact and expert discovery was necessary. Following the conference, the parties were invited to submit correspondence explaining their preference as to whether all three remaining cases should proceed jointly in one trial or via separate trials.[2] (ECF No. 77.)[3]

         On March 1, 2018, upon consideration of the parties' correspondence, I scheduled both the King Drug case and the Vista case for trial on October 1, 2018. As UHS was currently engaged in related litigation with Cephalon and its associated entities, I declined to include the United case in the October 1, 2018 trial and, instead, scheduled it for a Rule 16 conference on March 21, 2018.[4] (ECF No. 93.)

         In advance of the Rule 16 conference, UHS, Mylan, and Ranbaxy submitted a Rule 26(f) Report, which included a discussion about the use of experts who had been retained for other litigated pieces of this case. In pertinent part, this Report stated:

After an initial review of the expert opinions previously relied upon the Related Actions, during a conference call on April 6, 2018, UHS raised with Mylan and Ranbaxy the possibility of a stipulation involving the adoption of certain prior expert opinions in an effort to streamline the litigation and conserve resources of the parties and the court. UHS followed-up on April 19 with a written proposal that included the names of the six plaintiff liability experts it intended to approach, if it could get Mylan's and Ranbaxy's general agreement that Mylan and Ranbaxy would adopt the expert reports and testimony that they had respectively offered in response to those plaintiff liability experts. UHS noted in the original email that, once the parties agreed to the proposal, UHS would approach the experts to confirm their availability and willingness to be retained to assist in this manner.

(ECF No. 99, at pp. 5-6 (emphasis added).)

         Mylan did not agree to this proposal because it wanted to use new experts of its own. Ranbaxy, however, “agreed conceptually” with UHS and “was willing to work with UHS regarding a formal agreement” to “streamline the issues” and “reduce the need for a lengthy, if any, expert discovery period before trial.” (Id. at 6.) UHS concurred with Ranbaxy, stating:

UHS believes the proposal would greatly streamline the process of preparing for trial. UHS would adopt the reports and testimony of certain specific liability experts, and Mylan and Ranbaxy would adopt the testimony of the corresponding experts that they had previously proffered in response to those experts. UHS expects to offer other experts and anticipates that Mylan and Ranbaxy would offer corresponding expert testimony.


         At the Rule 16 conference on June 11, 2018, trial scheduling was fully discussed. Counsel for Ranbaxy understandably advised that his client preferred to defend against all plaintiffs at the same time (including the DPPs, EPPs, and UHS), instead of in two separate trials. Ranbaxy's counsel stressed that UHS had “sat on the sidelines” for years while the DPPs in King Drug and the EPPs in Vista had been litigating. (ECF No. 190-3, at 6:12-24, 8:22.) Ranbaxy's counsel also noted that he had received a February 2018 letter indicating that UHS already had new experts, but UHS had yet to disclose these experts. (Id. at 11:5-13.) UHS's counsel confirmed that it had, in fact, hired its own experts on liability and damages, but as there had been no scheduling order in place, there was no date yet to disclose them. (Id. at 15:2-8.)

         At that juncture, the following exchange occurred with UHS's counsel:

THE COURT: . . . The complaint, I think, is self-evident that they've [Ranbaxy] been in the case for a long time, have deposed-I'm going to pick a number out of the air-35 to 50 experts so far. And now-on . . . what are admittedly complex theories, you have now hired new experts . . . and he's already-they've already dealt with every expert in this area. And now they've got to deal with new ones. So that's why he [Ranbaxy's counsel] was upset.
MR. HUME: Well, we're entitled to have our own experts, and we're trying to use the experts from the other case to the maximum extent possible, consistent with our rights as an independent litigant to use our own experts. So we had made a proposal to the defendants that we get to adopt the prior experts on the technical patent questions and related question son the agreement. Six experts. So we're adopting six. We want to.
THE COURT: How many new?
. . . MR. HUME: Two.
. . . THE COURT: Six adopting, two new; that's good news.
. . .
MR. HUME: But the proposal hasn't been accepted. Until it's accepted, it's very hard for us-for us to commit to a schedule. I mean- . . . MR. HUME: In terms of being ready in October, Your Honor, after this scheduling conference was set, at this time, it was our understanding that the trial wouldn't proceed in our case in October. Our experts-the two that we are definitely using, now have scheduling conflicts that's going to make it extremely difficult. There's no way we can suddenly have expert reports in July, in two or three weeks as Ranbaxy is claim-requesting.
. . .

(Id. at 15:11-17:2.)

         At the close of the conference, I reaffirmed and concluded that neither the United case against Ranbaxy nor the United case against Mylan should proceed to trial in October, along with DPPs in King Drug and the EPPs in Vista. (Id. at 17:5-22.) Nonetheless, I again invited the parties to submit letters/e-mails regarding their positions. Two days later, I emailed all counsel asking (a) if the UHS were to proceed against Ranbaxy and Mylan in the October trial, whether Ranbaxy would agree to forego its request to file motions for summary judgment, and (b) what Mylan's position was as to an October trial against UHS. (ECF No. 189-2, Ex. 1, at p. 4.) UHS responded on June 15, 2018:

United is prepared to try its claims as promptly as possible. United would be prepared to try its liability claims on October 1[, 2018] if: (a) defendants agree, as United has, to adopt all prior liability expert opinions and forego any additional depositions of any of the various experts; and (b) all parties for[e]go filing summary judgment and Daubert motions. With those assurances in place, United would also need agreement from the direct purchaser plaintiffs (DPPs) that United can retain and rely on the same experts DPPs plan to call to testify on issues of liability . . . . United believes that the DPP counsel are willing to work jointly with United's counsel to try the Ranbaxy liability claim on October 1, [2018, ] including allowing United to adopt and present the experts already retained by the DPPs.

(ECF No. 189-2, Ex. 1, at p. 2.) UHS reserved its right to produce its own damages expert should the trial reach that phase. (Id.)

         UHS made a similar important representation about experts in an e-mail exchange among counsel on June 15, 2018. Specifically, counsel for Ranbaxy referenced UHS's June 15, 2018 e-mail to the Court and asked, “Does this mean UH[S] will not have any ‘new' experts?” (ECF No. 189-2, Ex. 2, at p. 1.) Counsel for UHS replied that “United would have no new experts if it went to trial on October 1 with the DPPs in King Drug on liability and causation. Under this proposal, United will engage a new expert on damages only, and would expect that the parties would conduct/conclude expert discovery on damages after the October 1 trial.” (Id.)

         Upon consideration of the parties' letters regarding trial scheduling, I decided, through a July 10, 2018 Order, that UHS's claims against Ranbaxy, but not those against Mylan, would proceed to trial on October 1, 2018, along with the DPPs in King Drug and the EPPs in Vista. (ECF No. 105). On the same date, I issued a Scheduling Order for UHS's claims against Mylan, setting deadlines for fact discovery, expert discovery, and dispositive motions, with the understanding that trial would be scheduled at a later date. (ECF No. 106.)

         During pre-trial submissions among the remaining parties in the October 1, 2018 trial, [5] UHS provided an updated witness list, advising that UHS would call six expert witnesses and twenty-one fact witnesses. (ECF No. 189-2, Ex. 4.) Consistent with the agreements reached above, all of these experts had previously been disclosed either in the King Drug case, except one-Dr. Hal Singer- who had been an expert previously retained in another modafinil-related case.

         On September 27, 2018, just prior to the start of the October 1, 2018 trial, the DPPs and Ranbaxy settled. That development created a situation where the October 1, 2018 trial now only involved UHS versus Ranbaxy, while UHS also was pursuing the same type of claims against Mylan that was progressing under a separate discovery schedule. This dynamic created an untenable scenario where two trials would have to ...

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