Hartig Drug Co. v. Senju Pharm. Co.

• Decision Date: 07 September 2016
• Docket Number: No. 15–3289,15–3289
• Citation: 836 F.3d 261
• Parties: Hartig Drug Company Inc., on behalf of itself and all others similarly situated, Appellant v. Senju Pharmaceutical Co. Ltd. ; Kyorin Pharmaceutical Co. Ltd.; Allergan Inc.
• Court: U.S. Court of Appeals — Third Circuit

836 F.3d 261

Hartig Drug Company Inc., on behalf of itself and all others similarly situated, Appellant

v.Senju Pharmaceutical Co. Ltd. ; Kyorin Pharmaceutical Co. Ltd.; Allergan Inc.

No. 15–3289

United States Court of Appeals, Third Circuit.

Argued June 13, 2016

Filed: September 7, 2016

J. Clayton Athey, Prickett Jones & Elliott, 1310 King Street, P.O. Box 1328, Wilmington, DE 19899, Brent W. Landau [ARGUED], Hausfeld, 325 Chestnut—Ste. 900, Philadelphia, PA 19106, Counsel for Appellant

Stephen B. Brauerman, The Bayard Firm, 222 Delaware Avenue—Ste. 900, Wilmington, DE 19801, William F. Sondericker, Carter Ledyard & Milburn, 2 Wall Street, New York, NY 10005, Counsel for Appellee Senju Pharmaceutical Co. Ltd.Sara Kusiak, Jones Day, 250 Vesey Street, New York, NY 10281, Rosanna K. McCalips, Kevin D. McDonald, Jones Day, 51 Louisiana Avenue, NW, Washington, DC 20001, David E. Ross, Benjamin J. Schladweiler, Ross Aronstam & Moritz, 100 South West Street—# 400, Wilmington, DE 19801, Counsel for Kyorin Pharmaceutical Co. Ltd.

Ashley E. Johnson, M. Sean Royall [ARGUED], Gibson Dunn & Crutcher, 2100 McKinney Avenue—Ste. 1100, Dallas, TX 75201, Mark A. Perry, Lucas C. Townsend, Gibson Dunn & Crutcher, 1050 Connecticut Avenue, NW—9th Fl., Washington, DC 20036, Counsel for Appellee Allergan Inc.

Scott E. Perwin, Kenny Nachwalter, 1441 Brickell Avenue—Ste. 1000, Miami, FL 33131, Counsel for Amicus Appellants, Walgreen Co., Safeway, Inc., Kroger Co., HEB Grocery Co. LP, Albertsons LLC

Barry L. Refsin, Hangley Aronchick Segal Pudlin & Schiller, One Logan Square, 18th & Cherry Sts.—27th Fl., Philadelphia, PA 19103, Counsel for Amicus Appellant Rite Aid Corp.

Before: AMBRO, JORDAN, and GREENBERG, Circuit Judges

OPINION OF THE COURT

JORDAN

, Circuit Judge

This appeal arises from a putative class action in which Hartig Drug Company Inc. (“Hartig”) filed a complaint against Senju Pharmaceutical Co., Ltd. (“Senju”), Kyorin Pharmaceutical Co., Ltd. (“Kyorin”), and Allergan Inc. (“Allergan”) (collectively, the “Defendants”), alleging antitrust violations involving medicated eyedrops manufactured by the Defendants. Hartig argues that the Defendants' wrongful suppression of generic competition resulted in supracompetitive pricing of those eyedrops. Although not a direct purchaser of the medications, Hartig claims it has standing to sue because of an assignment of rights from AmerisourceBergen Drug Corporation (“Amerisource”) which is a direct purchaser.

The District Court dismissed Hartig's complaint under Federal Rule of Civil Procedure 12(b)(1)

for lack of subject matter jurisdiction. In its opinion, the Court ruled that an anti-assignment clause in a distribution agreement between Allergan and Amerisource barred any assignment of antitrust claims from Amerisource to Hartig, leaving Hartig without standing to sue and divesting the Court of subject matter jurisdiction. We conclude that the District Court erred in treating antitrust standing as an issue of subject-matter jurisdiction. Accordingly, we will vacate and remand for further proceedings.

I. BACKGROUND

A. Factual Background¹

Kyorin researchers developed an antibiotic called gatifloxacin

and, in 1990, were awarded a patent on the drug. In 1997, Kyorin licensed Senju to develop, manufacture, and commercialize ophthalmic solutions containing gatifloxacin. Later, in 2001, Senju researchers obtained U.S. Patent No. 6,333,045 (the “'045 Patent”) claiming aqueous liquid pharmaceutical compositions containing gatifloxacin and methods of utilizing them. The named inventors on that patent assigned their rights to Kyorin and Senju jointly.

Kyorin and Senju also “licensed to Allergan the right—including a license under the '045

[P]atent—to market aqueous liquid gatifloxacin

ophthalmic products in the United States.” (A33.) Allergan filed New Drug Applications (“NDAs”) with the Food and Drug Administration for a 0.3% gatifloxacin solution (branded “Zymar ”), and for a 0.5% gatifloxacin solution (branded “Zymaxid”); those NDAs were approved in 2003 and 2010 respectively. Amerisource subsequently began purchasing Zymar and Zymaxid eyedrops directly from the Defendants and selling them to Hartig, an Iowa-based drug store chain.

Hartig alleged that the Defendants engaged in a number of illegal practices to prevent or delay the introduction into the market of generic alternatives to Zymar and Zymaxid.² First, the Defendants filed a baseless lawsuit against another pharmaceutical company, Apotex, claiming patent infringement and delaying FDA approval of that company's generic version of Zymar. Next, the Defendants engaged in so-called “product hopping” (A35)—discouraging doctors from prescribing generic alternatives to the original 0.3% Zymar eyedrops by phasing out that product in favor of “new” 0.5% Zymaxid eyedrops. To buy time for that shift in marketing strategy, the Defendants prolonged the Apotex litigation by filing a frivolous motion for a new trial. They also asked the United States Patent and Trademark Office to reexamine claims of the '045 Patent

, but failed to disclose material information both from the trial record in the Apotex case and from their own expert that undermined their reexamination claims. After the FDA approved Apotex's 0.3% gatifloxacin eyedrops, the Defendants sued Apotex a second time. Although the courts ultimately held that the Defendants' suit was barred by claim preclusion, Apotex was deterred from launching a generic competitor to Zymar. Since then, the Defendants have filed numerous lawsuits against competing drug manufacturers to bar the market entry of generic equivalents to both Zymar and Zymaxid.

B. Procedural Background

Hartig filed its complaint in the United States District Court for the District of Delaware on June 6, 2014. Styled as a class action, the complaint alleged that, were it not for the Defendants' violations of the Sherman Antitrust Act, generic versions of the gatifloxacin eyedrops would have been sold after Kyorin's patent on gatifloxacin expired in 2010.³ Hartig alleged that the “Defendants' unlawful scheme effectively denied direct purchasers of Zymar and Zymaxid the benefits of competition and of less expensive, generic versions. As a result, [Hartig] and members of the Class ... have paid supracompetitive prices for Zymar and Zymaxid and [Zymaxid's] generic equivalent[ ].”⁴ (A24.)

The complaint acknowledged that Hartig was only an indirect purchaser of the two gatifloxacin products and that Hartig obtained the products through Amerisource, a direct purchaser. That point was—and is—significant because, under the so-called “direct purchaser rule” recognized in Illinois Brick Co. v. Illinois , 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977)

, a direct purchaser of a product has standing to sue under federal antitrust statutes whereas an indirect purchaser does not. Nevertheless, the complaint alleged that Amerisource had entered an assignment agreement with Hartig that

conveyed, assigned, and transferred to Hartig all of its rights, title and interest in and to all causes of action it may have against Defendants under the antitrust laws of the United States or of any state arising out of or relating to Amerisource's purchase of Zymar and Zymaxid to the extent such product was subsequently resold to Hartig....⁵

(A24–25 ¶ 9.)

Allergan responded to Hartig's suit by filing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(1)

for lack of subject matter jurisdiction. Kyorin and Senju jointly filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim.⁶ Allergan's 12(b)(1) motion argued that Hartig lacked “[s]tanding to sue under the antitrust laws” because an anti-assignment clause in the Distribution Services Agreement (“DSA”) that Allergan had with Amerisource expressly prohibited either party from assigning the agreement or related rights and obligations without prior written consent from the other party. Hartig v. Senju, et al. , D. Del., CA No. 14–719–SLR Docket Item (“D.I.”) 15, at 4; see

id. , at 5-9. The DSA is not mentioned in Hartig's complaint, but it was appended to Allergan's motion to dismiss as an exhibit to a declaration from one of Allergan's corporate officers, a Mr. Kafer. The anti-assignment clause of the DSA provides as follows:

This Agreement may not be assigned by either party without the prior written consent of the other party. Notwithstanding the foregoing, either party may assign its rights and obligations hereunder without the consent of the other party to a subsidiary or affiliate or to an entity which purchases all or substantially all of the assigning party's stock or assets or acquires control of the assigning party, whether by merger, consolidation or any other means.

(A108–109 § 14.b.) The Kafer declaration stated that Hartig was not a direct purchaser from Allergan and that Amerisource had not sought or obtained written consent from Allergan for the alleged assignment, as purportedly required by the DSA's anti-assignment clause.

After briefing on both the 12(b)(1) and 12(b)(6) motions, the District Court granted Allergan's 12(b)(1) motion and, in an order dated August 19, 2015, dismissed the action for lack of subject matter jurisdiction. The District Court relied on the anti-assignment clause in the DSA to conclude that Hartig lacked standing, reasoning that the clause's prohibition applied to antitrust claims and therefore barred the assignment of the very claims on which Hartig's standing relied. Hartig timely appealed. Later, a group of seven drug retailers joined the appeal as amici curiae in support of Hartig.⁷

II. DISCUSSION ⁸

A. The Appropriateness of Review under Rule 12(b)(1)

The parties have not challenged the District Court's decision to address antitrust standing as a question of subject matter jurisdiction. Rather, it is the amici who contend that Allergan's anti-assignment argument implicated only antitrust standing and that such standing is different...