Federal Trade Com'n v. Mylan Laboratories, Inc., 98-3114 (TFH).

Citation99 F.Supp.2d 1
Decision Date14 December 1999
Docket NumberNo. 98-3115(TFH).,No. 98-3114 (TFH).,98-3114 (TFH).,98-3115(TFH).
PartiesFEDERAL TRADE COMMISSION v. MYLAN LABORATORIES, INC., Cambrex Corp., Profarmaco S.R.L., and Gyma Laboratories of America, Inc.
CourtUnited States District Courts. United States District Court (Columbia)

Peter D. Isakoff, David A. Hickerson of Weil, Gotshal & Manges, L.L.P., Washington DC, for Gyma Laboratories of America.

OPINION

THOMAS F. HOGAN, District Judge.

The above-captioned cases are actions by the Federal Trade Commission (FTC) and thirty-three States against Mylan Laboratories and other drug companies for various federal and state law antitrust violations. On July 7, 1999, this Court issued a Memorandum Opinion granting in part and denying in part defendants' motions to dismiss [1999-2 TRADE CASES ¶ 72,573]. The Opinion addressed issues of federal law and the various antitrust and consumer protection laws of the plaintiff states. Sixteen of the plaintiff states have moved for reconsideration of the Court's ruling in respect to various issues decided under their state laws.1 Two of the states seeking reconsideration-Ohio and Kentucky-have also asked this Court to certify the questions of state law to their highest state courts. After careful consideration of plaintiffs' motion and the opposition thereto, the motion will be granted in part and denied in part.

I. BACKGROUND

The plaintiff states request that this Court reconsider a number of its rulings in respect to the states' antitrust and consumer protection laws. The states seeking reconsideration argue that: (1) the interpretation of the Supreme Court's decision in Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977), relied on in the July 7, 1999 Memorandum Opinion, conflicts with the Supreme Court's subsequent ruling in California v. ARC America Corp., 490 U.S. 93, 109 S.Ct. 1661, 104 L.Ed.2d 86 (1989); (2) the Court mistakenly dismissed various state claims for equitable monetary relief in light of the Court's ruling on Idaho's claims under the Idaho Consumer Protection Act (ICPA); and (3) the Court mistakenly dismissed various state damages claims on behalf of both direct and indirect purchasers. The Court will address these arguments generally, and then apply that discussion to the individual state statutes.

II. DISCUSSION
A. Standard of Review

Under Federal Rule of Civil Procedure 54(b), a party may seek to revise an order or other form of decision "at any time before the entry of judgment adjudicating all of the claims and the rights and liabilities of all of the parties." Fed.R.Civ.P. 54(b). "Because federal courts have a strong interest in the finality of judgments, motions for reconsideration should be granted sparingly." Continental Casualty Co. v. Diversified Indus., Inc., 884 F.Supp. 937, 943 (E.D.Pa.1995). Nevertheless, "[i]t is clear ... that there are circumstances when a motion to reconsider may perform a valuable function." Above the Belt v. Mel Bohannan Roofing, Inc., 99 F.R.D. 99, 101 (E.D.Va.1983). In such circumstances, a Rule 54(b) motion can operate as the proper mechanism "for correcting errors and preventing injustice." United States ex rel. Houck v. Folding Carton Admin. Committee, 121 F.R.D. 69, 70 (N.D.Ill.1988).

B. Substantive Arguments
1. Illinois Brick and ARC America

The plaintiff states seeking reconsideration argue that this Court adopted an overly expansive interpretation of the Supreme Court's decision in Illinois Brick. The states argue that this Court held that Illinois Brick in effect pre-empted state laws addressing the rights of indirect purchasers, in violation of the principles set forth by the Supreme Court in California v. ARC America Corp.

The states' argument is based on a misunderstanding of both ARC America and this Court's Memorandum Opinion. ARC America addressed the preemptive effect of Illinois Brick's decision to deny standing to indirect purchasers under the Clayton Act. The issue was whether those states that had passed statutes expressly granting standing to indirect purchasers (so-called "Illinois Brick repealer statutes") could enforce those statutes in light of the federal adoption of the indirect purchaser doctrine. See ARC America, 490 U.S. at 100, 109 S.Ct. 1661. The Supreme Court held that they could, as the decision in Illinois Brick was not intended to have a preemptive effect on the state's ability to craft and enforce their own antitrust laws. Id. at 105-06, 109 S.Ct. 1661.

Contrary to plaintiffs' argument, the ARC America Court did not hold that state courts were forbidden from relying on Illinois Brick as persuasive authority for how a state should interpret its antitrust regime. As noted by the Florida Court of Appeals:

[ARC America] is not to say that the concerns raised in Hanover Shoe[, Inc. v. United Shoe Machinery Corp., 392 U.S. 481, 88 S.Ct. 2224, 20 L.Ed.2d 1231 (1968)] and Illinois Brick -the difficulties of tracing overcharges through a distribution chain, the possibility of multiple liability for defendants, and the prospects of inconsistent or duplicate federal and state judgments-are not valid policy considerations under state antitrust or deceptive trade practice statutes. ARC America simply declines to impose on each state the federal legislative antitrust policy of deterring violations by simplifying antitrust litigation.

Mack v. Bristol-Myers Squibb, 673 So.2d 100, 107-08 (Fla.App.1996) review dism'd, 689 So.2d 1068 (Fla. Jan.31, 1997). Indeed, a number of courts have looked to Illinois Brick to determine the scope and structure of state antitrust laws. See, e.g., Boos v. Abbott Labs., 925 F.Supp. 49 (D.Mass.1996); Stifflear v. Bristol-Myers Squibb Co., 931 P.2d 471 (Colo.Ct.App. 1996); Abbott Labs. v. Segura, 907 S.W.2d 503 (Tex.1995). The fact that this Court similarly sought guidance from Illinois Brick's discussion of antitrust policy does not conflict with the Supreme Court's ruling in ARC America. Thus, insofar as the states have asserted that this Court's interpretation of Illinois Brick was improper, their motion is denied.

2. State Restitution Claims

A number of states ask this Court to reconsider its rulings disallowing state restitution claims. This Court dismissed a number of state restitution claims on the basis that the law of those states prompts courts to look to federal law in interpreting their unfair competition and consumer protection statutes, and the Clayton Act does not authorize restitution. See FTC v. Mylan Laboratories, 62 F.Supp.2d 25, 41 (D.D.C.1999). The Court allowed Idaho's claim under the Idaho Consumer Protection Act (ICPA) to stand, however, on the basis that Idaho law prompts courts to consider decisions interpreting § 5(a)(1) of the FTC Act, rather than the Clayton Act. See Idaho Code § 48-604(a). As this Court had already held that the FTC could pursue equitable remedies such as disgorgement, the Court reasoned that Idaho should be permitted to pursue similar kinds of equitable relief under the ICPA.2 Alaska, Connecticut, Florida, South Carolina, Vermont and West Virginia have asked this Court to reconsider its rulings under the laws of those states in light of the fact that they too prompt courts to consider the FTC Act when interpreting the state statutes. Other states have moved for reconsideration on the ground that, although their state statutes do not explicitly reference the FTC Act, the structure and purpose of the state statutes suggest that they should be interpreted in a similar manner.

The states are correct that there is an internal inconsistency between the Court's ruling on Idaho law and its rulings in respect Alaska, Connecticut, Florida, South Carolina and Vermont. The Court also finds that this inconsistency extends to other states whose statutes, though not explicitly referencing the FTC Act, permit the state to proceed in equity. Thus, the Court will reassess its rulings in respect to state statutes that explicitly reference, or are modeled after, the FTC Act, or that otherwise permit the state to pursue equitable remedies.

3. Individual State Law Claims Alaska

Alaska's Unfair Trade Practices and Consumer Protection Act provides that "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of trade or commerce are declared to be unlawful." Alaska Stat. § 45.50.471(a). The Alaska Act empowers the Alaska Attorney General to bring unfair competition and consumer protection actions under § 45.50.471. That statute states that "[w]hen the attorney general has reason to believe that a person has used `an act or practice declared unlawful in AS 45.50.471 the attorney general may bring an action in the name of the state against the person to restrain the act or practice.'" Alaska Stat. § 45.50.501(a). Alaska law further provides that "[i]n interpreting AS 45.50.471 due consideration and great weight should be given the interpretations of 15 U.S.C. § 45(a)(1) (§ 5(a)(1) of the Federal Trade Commission Act)." Id. § 45.50.545. Given this authority, the Court finds that Alaska is entitled to the full panoply of remedies that would be available to the FTC under the FTC Act. The Court will therefore reinstate Alaska's claim for restitution on behalf of indirect purchasers.

Arkansas

Arkansas requests reconsideration of this Court's decision to dismiss Arkansas' claims for restitution for indirect purchasers under the Arkansas Deceptive Trade Practices...

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