Aetna Us Healthcare v. Hoechst Aktiengesellschaft

Decision Date09 June 1999
Docket NumberCivil Action No. 99-2034-KHV.
Citation54 F.Supp.2d 1042
PartiesAETNA U.S. HEALTHCARE, INC., on behalf of itself and its subsidiaries and all others similarly situated, Plaintiff, v. HOECHST AKTIENGESELLSCHAFT, Hoechst Marion Roussel, Inc., and Andrx Pharmaceuticals, Inc., Defendants.
CourtU.S. District Court — District of Kansas

Angela K. Green, Niewald, Waldeck & Brown, P.C., Kansas City, MO, Victoria M. Schroeder, Levy & Craig, Kansas City, MO, Victoria M. Schroeder, Levy & Craig, P.C., Kansas City, MO, for plaintiff.

Joseph M. Rebein, Joseph G. Matye, Shook, Hardy & Bacon, L.L.P., Kansas City, MO, Gregory T. Wolf, Shook, Hardy & Bacon, L.L.P., Overland Park, KS, for defendants Hoechst Aktiengesellschaft, Hoechst Marion Roussel, Inc.

John J. Jurcyk, Jr., McAnany, Van Cleave & Phillips, P.A., Kansas City, KS, for defendant Andrx Pharmaceuticals, Inc.


VRATIL, District Judge.

This matter comes before the Court on plaintiffs' Motion To Remand For Lack Of Subject Matter Jurisdiction (Doc. # 16) filed March 8, 1999; Defendant, Andrx Pharmaceuticals, Inc.'s Motion To Stay Proceedings (Doc. # 8) filed February 19, 1999; and Hoechst Marion Roussel's Motion To Join Andrx Pharmaceuticals Motion To Stay Proceedings (Doc. # 13) filed March 2, 1999.1 For reasons stated below the motions of plaintiffs and Hoechst Marion Roussel are sustained, and the motion by Andrx is denied.


Hoechst Marion Roussel, Inc. ("HMR") manufactures Cardizem CD ("Cardizem"), a prescription drug which is used to treat high blood pressure and chronic chest pain. HMR is a combination of two former companies — Marion Merrell Dow, Inc. ("MMD") and Hoechst-Roussel Pharmaceuticals, Inc. ("HRP"). MMD created Cardizem. Before it merged with MMD, HRP developed a competing product (Tiazac) in cooperation with Biovail Corporation International ("Biovail"). Andrx Pharmaceuticals, Inc. ("Andrx") was the first manufacturer to develop and receive approval from the U.S. Food & Drug Administration ("FDA") to produce a generic version of Cardizem.

In 1996, Hoechst Aktiengesellschaft ("Hoechst"), the parent company of HMR, entered into a consent order with the Federal Trade Commission ("FTC") regarding its acquisition of MMD. As part of this process, HMR divested its interest in Tiazac. The consent order required HMR to give Biovail a right to rely upon toxicology data which HMR had produced to the FDA — a so-called "right of reference." The right of reference was intended to help get Tiazac on the market by allowing Biovail to get FDA approval for Tiazac. Around November 8, 1996, however, HMR renounced its right of reference by limiting Biovail's access to information regarding drugs other than Tiazac. Because of HMR's renunciation, Biovail could not obtain FDA approval for a product that would have competed with Cardizem.

Under the Hatch-Waxman Act, 21 U.S.C. § 355, which is part of the Federal Food, Drug and Cosmetic Act, 21 U.S.C. § 301 et seq., a manufacturer of a generic drug must certify that its product does not infringe any valid patent before the product can receive FDA approval. A patent holder can challenge the certification, however, and bring a patent infringement suit within 45 days of the notice of non-in-fringement. If the holder brings suit, the FDA stays the final approval of the generic product for 30 months after the date that notice was given, or until the date on which the patent litigation produces a final determination of non-infringement or patent invalidity, whichever date is earlier. See 21 U.S.C. § 355(j)(4)(B)(iii).

The Hatch-Waxman Act also provides 180 days of market exclusivity to the first generic manufacturer who applies to produce a generic product. The 180 day period begins to run on the date the applicant first sells its generic product or the date on which a final, non-appealable decision determines that the patent is invalid or not infringed — whichever is the earlier date. See 21 U.S.C. § 355(j)(5)(B)(iv).

In September of 1995, Andrx asked the FDA to approve a generic version of Cardizem. Andrx served on HMR its certification that the generic drug did not infringe any outstanding HMR patents. In January of 1996, HMR responded by filing a patent infringement action against Andrx. By bringing suit, HMR delayed final FDA approval until the end of the 30 month waiting period, which would expire July 3, 1998, or the end of the patent litigation.

On September 15, 1997, the FDA gave preliminary approval to Andrx's generic drug. On September 26, 1997, HMR entered into an agreement (the "stipulation agreement") with Andrx. Under that agreement HMR makes quarterly payments to Andrx in the amount of $10,000,000. In exchange, Andrx agreed to dismiss its counterclaims in the patent suit, refrain from marketing its generic drug until the end of the suit, continue to diligently prosecute its claim for FDA approval, and assert its rights as first in line against other potential producers of generic drugs.

Since reaching this agreement, HMR and Andrx have not actively pursued the patent infringement suit. Andrx has not begun selling its generic product, and its 180 day exclusivity period has yet to begin. Consequently, producers of competing generic products have been unable to compete against either HMR or Andrx.

On behalf of a class of Kansas plaintiffs who purchased Cardizem, Aetna U.S. Healthcare, Inc. ("Aetna") filed suit in state district court in Johnson County, Kansas, against Hoechst, HMR and Andrx. The suit alleges that defendants have harmed class members by preventing production of a lower-cost generic version of Cardizem. Specifically, Aetna alleges unfair competition in violation of the so-called Unfair Trade and Consumer Protection Act, K.S.A. § 50-101 et seq., for which it seeks treble damages on account of defendants' illegal trust and conspiracy in restraint of trade. Aetna also seeks disgorgement of all monies obtained as part of the conspiracy and restraint of competition and, under a theory of unjust enrichment, recovery of benefits which defendants have received from overpayments by Aetna and other members of the proposed class. Aetna also seeks a declaration that the stipulation agreement is void for violation of Kansas law regarding unfair competition. It alleges that individual class members suffered damages which amount to less than $75,000 apiece.

Standard For Remand

A civil action is removable only if plaintiffs could have originally brought the action in federal court. 28 U.S.C. § 1441(a). The Court is required to remand "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction." 28 U.S.C. § 1447(c). Because federal courts are courts of limited jurisdiction, the law imposes a presumption against federal jurisdiction. Frederick & Warinner v. Lundgren, 962 F.Supp. 1580, 1582 (D.Kan.1997) (citing Basso v. Utah Power & Light Co., 495 F.2d 906, 909 (10th Cir.1974)). The rule is inflexible and without exception, and requires a court to deny its jurisdiction in all cases where such jurisdiction does not affirmatively appear in the record. Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982). Accordingly, the Court must strictly construe the federal removal statute. Fajen v. Foundation Reserve Ins. Co., Inc., 683 F.2d 331, 333 (10th Cir.1982). "The burden is on the party requesting removal to set forth, in the notice of removal itself, the `underlying facts supporting [the] assertion that the amount in controversy exceeds [$75,000].'" Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995) (quoting Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir.1992)).

1. Motion To Stay

Defendants argue that the Court should stay consideration of plaintiffs' motion for remand (and all other issues) until the Joint Panel on Multi-District Litigation ("JPMDL") has decided their motion to consolidate numerous similar actions. Defendants contend that plaintiffs will still get a chance to seek remand, after the JPMDL has made its decision.

The Court sees no reason to delay ruling on plaintiffs' motion to remand. The Court retains jurisdiction to decide the remand issue, despite defendants' motion to the JPMDL. See Panel Rule 1.5, 181 F.R.D. 1, 3 (1998). Defendants cite six district courts which have already addressed the jurisdictional issue, which is an important preliminary issue in this case. "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).

While staying the proceedings might allow a single district court to rule on the jurisdictional issue in the various cases, a stay would not affect the law that applies to the present case and little would be gained by a stay of decision on the motion to remand. The parties would still be subject to Kansas law.2 No great judicial economy will be realized from a delay. The parties will not save time, for they have already briefed the remand issue. The Court is well versed in both Kansas and federal law, while the transferor court would need to apply the law of different states to different claims. See Karofsky v. Abbott Laboratories, 921 F.Supp. 18, 21 n. 4 (D.Me.1996) (easier for federal judge in forum state to resolve issues implicating state law). For purposes of judicial economy, the jurisdictional issue should be resolved immediately. If federal jurisdiction does not exist, the case can be remanded before federal resources are further expended. In the Court's view, judicial economy dictates a present ruling on the remand issue. See generally Tortola Restaurants, L.P. v. Kimberly-Clark Corp., 987 F.Supp. 1186, 1188 (N.D.Cal.1997).

2. Diversity Jurisdiction

Defendants first argue that the Court has diversity jurisdiction under 28 U.S.C. § 1332. The parties...

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