Barr Laboratories, Inc. v. Quantum Pharmics, Inc., No. CV-90-4406.

Decision Date07 July 1993
Docket NumberNo. CV-90-4406.
Citation827 F. Supp. 111
PartiesBARR LABORATORIES, INC., Plaintiff, v. QUANTUM PHARMICS, INC., American Home Products Corp. and Jin-Shung Chang, Defendants.
CourtU.S. District Court — Eastern District of New York

Bruce L. Downey, Robert M. Rader, Winston & Strawn, Washington, DC, Anthony S. Genovese, David C. Burger, Robinson Brogg Leinwand Reich Genovese & Gluck, New York City, for plaintiff.

David R. Jewell, Richard J. DeMarco, Jr., Joseph J. Conklin, Donovan Leisure Newton & Irvine, New York City, for defendants Quantum Pharmics, Ltd. and American Home Products Corp.

William J. Ruane, American Home Products Corp., New York City, for American Home Products Corp.

MEMORANDUM AND ORDER

GLASSER, District Judge.

Plaintiff commenced this action under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. ("RICO"); section 43(a) of the Lanham Act, 15 U.S.C. 1125(a); and asserted pendent state law claims of intentional interference with prospective economic advantage and unjust enrichment. Defendants' move to dismiss this action for failure to state a claim under Fed. R.Civ.P. 12(b)(6), or alternatively, for a transfer of venue pursuant to 28 U.S.C. § 1404(a). For the following reasons, defendants' motion to transfer venue is denied, and their motion to dismiss is granted.

FACTS

Plaintiff Barr Laboratories, Inc. ("Barr") is a generic prescription drug manufacturer. The three defendants are Quantum Pharmics ("Quantum"), a competitor of Barr; American Home Products Corp., the parent corporation of Quantum; and Jin-Shung Chang, an employee, officer and agent of Quantum. Barr commenced this action after it discovered that Quantum had filed false applications with the Food and Drug Administration ("FDA") in order to obtain FDA approval to market certain generic drugs and then sold those drugs in the marketplace. The alleged misrepresentations were made to the FDA in "ANDA's," or "Abbreviated New Drug Applications," which all generic drug manufacturers are statutorily required to file before they may market generic drugs. The essential goals of an ANDA are to demonstrate to the FDA that the therapeutic properties of the generic drug are the "bioequivalent" of the brand-name drug (or innovator drug) it imitates, and that the generic drug will be produced according to certain manufacturing standards. Typically, the FDA bases its decision to approve or to disapprove an application on data and material submitted by the generic drug manufacturer. Many manufacturers may obtain approval to market the same generic drug, provided that each manufacturer submits an independent ANDA to the FDA. In this case, Quantum received approval to market its version of the generic drugs in question, marketed them, and thereafter approval was rescinded by the FDA after it determined that material submitted by Quantum was not accurate.

Arguing that it would have sold more of its generic drug products had Quantum's product not been available in the marketplace, Barr seeks to recover damages from Quantum and its corporate parent, American Home, for Quantum's alleged violations of the RICO statute, 18 U.S.C. § 1962(a), (b), and (c), based on predicate acts of mail and wire fraud, 18 U.S.C. §§ 1341, 1343, when it submitted "materially false statements and deliberate omissions in bioequivalence data ... in its ANDA's for each of the drugs specified ... and ... made false claims in drug labels, advertisements, promotional literature and the like...." (Count I); for alleged violations of the Lanham Act, 15 U.S.C. § 1125(a), when Quantum affixed labels with false descriptions and representations of its generic drugs (Count II); and pendent state law claims of intentional interference with prospective economic advantage (Count III) and unjust enrichment (Count IV). Defendants Quantum and American Home1 move for dismissal under Fed. R.Civ.P. 12(b)(6), and, alternatively, for a transfer of venue under 28 U.S.C. § 1404(a) to the District Court of Maryland because Quantum filed its ANDA's with the central FDA office, which is located in Maryland. For the following reasons, defendants' motion to transfer venue is denied and their motion to dismiss is granted.

DISCUSSION
I. Motion to Transfer Venue

Section 1404(a) of Title 28 of the United States Code provides that "for the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." 28 U.S.C. 1404(a). The determination of whether to grant a motion to transfer is within the broad discretion of the trial court, Red Bull Assocs. v. Best Western Int'l, Inc., 862 F.2d 963, 967 (2d Cir.1988); Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 218 (2d Cir.1978), cert. denied, 440 U.S. 908, 99 S.Ct. 1215, 59 L.Ed.2d 455 (1979), and the movant bears the burden of establishing the propriety of a § 1404(a) transfer. Factors Etc., 579 F.2d at 218; Leasing Serv. Corp. v. Patterson Enters., 633 F.Supp. 282, 284 (S.D.N.Y. 1986). In determining whether the movant has met its burden, the district court should consider the following factors: (1) the convenience of the parties; (2) the convenience of material witnesses; (3) the availability of process to compel the presence of unwilling witnesses; (4) the cost of obtaining witnesses; (5) the relative ease of access to sources of proof; (6) where the events at issue took place; (7) the practical problems indicating where the case can be tried more expeditiously and inexpensively; and (8) the interests of justice in general. Levitt v. State of Maryland Deposit Ins. Fund Corp., 643 F.Supp. 1485, 1492-93 (E.D.N.Y.1986). See also Calavo Growers of California v. Generali Belgium, 632 F.2d 963, 966-67 (2d Cir. 1980), cert. denied, 449 U.S. 1084, 101 S.Ct. 871, 66 L.Ed.2d 809, reh'g denied, 451 U.S. 934, 101 S.Ct. 2012, 68 L.Ed.2d 321 (1981).

Based on these criteria, it is clear that defendants' motion for a transfer of venue to the District of Maryland must be denied. Both plaintiff Barr and defendant Quantum are New York corporations, and American Home is a Delaware corporation with its principal place of business in New York. Each of the parties will offer testimony of witnesses who are located in New York and they will produce documents located in New York.

Defendants contend, however, that the District of Maryland is a more convenient forum because the non-party witnesses are to be found in that district. Where a movant requests a venue transfer based upon the cost, convenience and availability of non-party witnesses, he must identify key witnesses to be called along with a general description of the substance of their testimony. Factors Etc., 579 F.2d at 218; Leasing Serv. Corp., 633 F.Supp. at 284. Here defendants assert that they will have to call FDA personnel to testify concerning the approval of Quantum's ANDA's and that documents in FDA files are relevant to their defense. Defs.' Reply Mem. of Law at 28. However, defendants do not dispute that Quantum employees will be called to testify regarding those alleged misrepresentations and that documents in Quantum's headquarters and in American Home's New York office are relevant to this action. See Mem. of Pl. Barr Labs. in Opp'n at 34-35 & n. 82. Since "where the balance of convenience is in equipoise, plaintiffs choice of forum will control," Leasing Serv., 633 F.Supp. at 285, this Court declines to transfer this action to Maryland because defendants have not demonstrated that the inconvenience to them in this forum outweighs the inconvenience to Barr were this action tried in Maryland.

Defendants' remaining arguments are not persuasive. Defendants contend that this action should be transferred to Maryland because that jurisdiction has an interest in adjudicating fraud perpetrated upon the FDA. Allegations that a defendant fraudulently obtained generic drug licenses and that it filed false and deceptive documentation with a federal agency, implicate the national, public interest, and not merely the local interest of the State of Maryland.2 Defendants argue that this action will be tried sooner in the district court in Maryland than in the Eastern District of New York. This argument is similarly not persuasive. See O'Brien v. Goldstar Technology, Inc., 812 F.Supp. 383, 385 (W.D.N.Y.1993) (court calendar congestion not dispositive).

II. Motion to Dismiss
A. RICO count

Defendants move to dismiss the RICO count under Fed.R.Civ.P. 12(b)(6) for failure to state a claim. It is well settled that a court may only dismiss a complaint under Rule 12(b)(6), if after accepting the material facts alleged in the complaint as true, Easton v. Sundram, 947 F.2d 1011, 1014-15 (2d Cir. 1991) (citing Cooper v. Pate, 378 U.S. 546, 84 S.Ct. 1733, 12 L.Ed.2d 1030 (1964)), cert. denied, ___ U.S. ___, 112 S.Ct. 1943, 118 L.Ed.2d 548 (1992), it still appears "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). Since it is clear that Barr cannot show that its injury was caused by the alleged predicate acts of mail or wire fraud, the RICO count is dismissed.

Barr alleges that defendants Quantum and Chang committed two or more predicate acts of mail or wire fraud in violation of the RICO statute, 18 U.S.C. § 1962(a)-(c), by submitting false and deceptive ANDA's to the FDA with the intent to defraud the FDA in order to obtain licenses to market generic drugs. See Complaint ¶¶ 23-27. Barr now concedes, however, that such a scheme, by itself, would not give rise to a violation of the mail fraud or wire fraud statutes, 18 U.S.C. §§ 1341, 1343, because the FDA did not possess a property interest in the issued licenses. See McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987); Carpenter v. United States, 484 U.S. 19, ...

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