Ex Parte Par Pharm. Inc.(in Re State v. Par Pharm. Inc.).Ex Parte Mylan Inc.

• Decision Date: 30 September 2010
• Docket Number: 1090992 and 1090994.
• Citation: 58 So.3d 767
• Parties: Ex parte PAR PHARMACEUTICAL, INC.(In re State of Alabamav.Par Pharmaceutical, Inc.).Ex parte Mylan Inc., Mylan Pharmaceuticals Inc., and UDL Laboratories, Inc.(In re State of Alabamav.Mylan Inc., Mylan Pharmaceuticals Inc., and UDL Laboratories, Inc.).
• Court: Alabama Supreme Court

58 So.3d 767

Ex parte PAR PHARMACEUTICAL, INC.(In re State of Alabama

v.Par Pharmaceutical, Inc.).Ex parte Mylan Inc., Mylan Pharmaceuticals Inc., and UDL Laboratories, Inc.(In re State of Alabama

v.Mylan Inc., Mylan Pharmaceuticals Inc., and UDL Laboratories, Inc.).

1090992 and 1090994.

Supreme Court of Alabama.

Sept. 30, 2010.

Richard H. Gill and George W. Walker III of Copeland, Franco, Screws & Gill, P.A., Montgomery; and Richard M. Cooper, Paul K. Dueffert, and Andrew T. Boone of William & Connolly LLP., Washington, D.C., for petitioner Par Pharmaceutical, Inc.M. Christian King and Nikaa Jordan of Lightfoot Franklin & White, LLC, Birmingham; William A. Escobar, Neil Merkl, and Christopher C. Palermo of Kelly Drye & Warren LLP, New York, New York; Donald R. Jones, Jr., Montgomery; and Joseph W. Letzer of Burr & Forman LLP, Birmingham, for petitioners Mylan Inc., Mylan Pharmaceuticals Inc., and UDL Laboratories, Inc.Troy King, atty. gen.; Caine J. O'Rear III, and Windy C. Bitzer of Hand Arendall LLC, Mobile; Roger L. Bates of Hand Arendall LLC, Birmingham; and Jere L. Beasley and W. Daniel Miles III of Beasley, Allen, Crow, Methvin, Portis & Miles, P.C., Montgomery, for respondent.SMITH, Justice.

In two separate petitions, Par Pharmaceutical, Inc., and Mylan Inc. (formerly known as Mylan Laboratories, Inc.), Mylan Pharmaceuticals Inc., and UDL Laboratories, Inc., petition this Court for a writ of mandamus, asking us to vacate an order of the Montgomery Circuit Court that consolidates for a single trial under Rule 42, Ala. R. Civ. P., the cases filed against the petitioners by the State of Alabama as a part of cases the State has filed against multiple pharmaceutical companies. See generally AstraZeneca LP v. State, 41 So.3d 15 (Ala.2009). We deny the petitions.

Facts and Procedural History

This opinion represents the fourth opinion from this Court addressing some aspect of the underlying litigation by the State against the pharmaceutical companies. See Ex parte Novartis Pharm. Corp., 975 So.2d 297 (Ala.2007) ( “ Novartis I ”); Ex parte Novartis Pharm. Corp., 991 So.2d 1263 (Ala.2008) (“ Novartis II ”); and AstraZeneca, supra. The following background as stated in Novartis II is relevant to the present petitions:

“This action is part of the Alabama Medicaid Pharmaceutical average wholesale price (‘AWP’) litigation, in which the State has sued 73 pharmaceutical companies, including AstraZeneca [AstraZeneca LP and AstraZeneca Pharmaceuticals LP], GSK [SmithKline Beecham Corporation d/b/a GlaxoSmithKline], and Novartis [Pharmaceuticals Corporation]. According to Novartis, the State alleges that each pharmaceutical company independently ‘engaged in false, misleading, wanton, unfair, and deceptive acts and practices in the pricing and marketing of their prescription drug products' by reporting false pricing benchmarks and by failing to disclose to Alabama Medicaid the discounts or rebates made available by the pharmaceutical companies to Alabama physicians and pharmacies who dispensed the drugs (‘the providers'). Novartis's petition at 2–3. The State asserts that [the] Alabama Medicaid [program] relied on these allegedly false disclosures and deceptive nondisclosures, and that, as a result, Alabama Medicaid compensated the providers more for the prescription drugs than the drugs actually cost the providers. Id. Thus, according to the State, these fraudulent practices by the pharmaceutical companies caused the State to overpay for Medicaid prescription drugs. The State alleges that each defendant pharmaceutical company marketed this profit margin or ‘spread’ (the difference between what the providers actually paid for the drugs and the amounts reimbursed to providers by Alabama Medicaid) to the providers to encourage them to use that company's products rather than those of its competitors. See generally Novartis I, 975 So.2d 297.

“Originally, the State brought a single action against all 73 defendant pharmaceutical companies. Many of the defendant pharmaceutical companies moved to sever the claims against them from those of the other defendants; however, the trial court summarily denied the motions to sever. Forty-four defendant pharmaceutical companies filed mandamus petitions in this Court challenging the trial court's ruling on the severance issue; those petitions resulted in the opinion in Novartis I. At issue in Novartis I was whether joinder of all 73 defendants in a single action was improper under Rule 20(a), Ala. R. Civ. P., which permits joinder of multiple defendants in a single action when the two requirements of Rule 20(a) are met. First, ‘the plaintiff must assert against each defendant a “right to relief in respect of or arising out of the same transaction, occurrence, or series of transactions or occurrences,” ’ and, second, ‘there will arise in the action “any question of law or fact common to all defendants.” ’ Novartis I, 975 So.2d at 299 (quoting Rule 20(a), Ala. R. Civ. P.). In Novartis I, this Court found that the joinder of all the defendants was improper because the facts of the case did not satisfy the first requirement of permissive joinder. We concluded that the State was not asserting a right to relief against all defendants arising out of the same transaction or occurrence; rather, the State was suing each defendant pharmaceutical company for independently committing logically unrelated, yet ‘coincidentally similar,’ fraudulent acts that were not part of a conspiracy or a series of coordinated transactions or occurrences. Novartis I. Because the State's claims against the pharmaceutical companies did not satisfy the first requirement of permissive joinder, this Court did not reach the second requirement; thus, it did not decide in Novartis I whether ‘any question of law or fact common to all defendants [would] arise in the action.’ See Ala. R. Civ. P. 20(a).

“Justice Lyons concurred specially in Novartis I and was joined by Chief Justice Cobb; he noted that the Court's finding of misjoinder in Novartis I did not preclude the prospect of consolidated trials under Rule 42(a), Ala. R. Civ. P. Rule 42(a) vests trial courts with the discretion to order a joint trial ‘of any or all the matters in issue’ in ‘actions involving a common question of law or fact,’ whether or not the right to relief asserted by the plaintiff against all defendants arises out of the same transaction or occurrence. Ex parte Flexible Prods. Co., 915 So.2d 34, 43 (2005). Justice Lyons encouraged the trial court to consider, in response to Novartis I, ‘the extent to which some number of trials less than 73 might be appropriate,’ 975 So.2d at 305, but cautioned the trial court against the opaque manner in which it had arrived at an earlier ‘consolidation’ order grouping the defendant pharmaceutical companies into four tracks for trial:

“ ‘In the proceedings that led to the present petitions, the trial court, as best I can determine, announced that there would be four trials consisting of four tracks of defendants. The trial court then sought the assistance of two special masters, placing them in what appears to be a Procrustean bed of four trials. The special masters' report and any bases therein for selecting the parties for the four trials was not made available to the parties. The trial court entered an order based upon the report in which it created four tracks of defendants without identifying its rationale for clustering various defendants in the various tracks.

“ ‘The validity of the prior order of consolidation is not before us because we have found a misjoinder of parties, necessitating our setting aside the trial court's order. I will not speculate on the result that might have been reached had it been necessary to address the order of consolidation. Suffice it to say that, upon remand, a more transparent proceeding not so ostensibly lacking in a principled basis would better serve the ends of justice. For example, if the trial court once again seeks the input of special masters, its announcement of the number of tracks without stating any basis therefor before the masters' participation, its failure to disclose to the parties the recommendation of the masters, and its failure to identify the reasoning upon which any clusters of defendants are created for resolution of this proceeding in any order calling for fewer than 73 trials will substantially increase the State's burden in sustaining its protestations against this Court's micromanagement of the trial court's exercise of discretion should there be a subsequent mandamus proceeding challenging consolidation.’

“ Novartis I, 975 So.2d at 305 (Lyons, J., concurring specially).

“After this Court issued its opinion in Novartis I, the trial court ordered a joint trial of AstraZeneca LP and AstraZeneca Pharmaceuticals LP, to begin on February 11, 2008. AstraZeneca did not object to the order scheduling the joint trial of the State's claims against it. Subsequently, the State moved the trial court to consolidate the AstraZeneca trial with 14 similar fraud cases against other defendant pharmaceutical companies, including GSK and Novartis. The various defendant pharmaceutical companies opposed the State's consolidation motion, and the trial court conducted a hearing on the motion. After the hearing, the trial court issued a nine-page order that granted the State's motion in part and consolidated the trial of the State's claims against AstraZeneca with the trials of the State's claims against GSK and Novartis.... The trial court denied the State's consolidation motion as to the remaining 12 pharmaceutical companies the State had sought to join in a single trial.

“AstraZeneca, GSK, and Novartis (collectively ‘the pharmaceutical manufacturers') each petitioned this Court for the writ of mandamus directing the trial court to vacate its order consolidating the cases....”

Novartis II, 991 So.2d at 1267–70 (footnotes omitted).

In Novartis II, this...