In re Intuniv Antitrust Litig.
| Decision Date | 29 January 2021 |
| Docket Number | Civil Action No. 1:16-cv-12653-ADB |
| Parties | In re INTUNIV ANTITRUST LITIGATION (Direct Purchasers) |
| Court | U.S. District Court — District of Massachusetts |
BURROUGHS, D.J.
This "pay-for-delay" or "reverse settlement" case arises from an alleged anticompetitive agreement between the brand and generic manufacturers of Intuniv, an ADHD medication. Defendants Shire LLC and Shire U.S., Inc. (collectively, "Shire") manufacture Intuniv, which is the brand-name for extended release guanfacine hydrochloride. Defendants Actavis Elizabeth LLC, Actavis Holdco US, Inc., and Actavis LLC (collectively, "Actavis," and, together with Shire, "Defendants") manufacture Intuniv's generic counterpart. Plaintiffs, who include both Direct Purchaser Plaintiffs ("DPPs") and Indirect Purchaser Plaintiffs ("IPPs," and, together with the DPPs, "Plaintiffs"), allege that they were forced to pay inflated prices for Intuniv due to Defendants' improper agreement to delay competition for both brand Intuniv and generic Intuniv in violation of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1-2. [FWK 140].1 Currently before the Court are Shire's motion to compel Meijer, Inc. and Meijer Distribution, Inc. (together, "Meijer"), one of the DPPs, to arbitrate its claims against Shire, [FWK 475-1], andMeijer's motion to be appointed class representative for the DPPs, [FWK 485]. For the reasons set forth below, Shire's motion to compel arbitration is GRANTED in part, and, in light of that ruling, Meijer's motion to be appointed class representative is DENIED with leave to renew.
Because a full recitation of the factual background is unnecessary for resolution of the instant motion, the Court will provide only the pertinent facts here. For a more comprehensive factual background, the Court refers the reader to its summary judgment order, [FWK 523].
In September 2009, the Food and Drug Administration ("FDA") approved Shire's New Drug Application for Intuniv. [FWK 523 at 3]. As a result, Shire was entitled to three years of regulatory exclusivity, during which time the FDA could not approve a generic version of Intuniv. [Id.]. In December 2009, Actavis filed an Abbreviated New Drug Application ("ANDA") for a proposed generic version of Intuniv and asserted that its drug would not infringe on Shire's patent. [Id. at 4]. As the first filer of an ANDA, Actavis would have been entitled to a 180-day period during which no other generic manufacturer could have manufactured an Intuniv alternative. [Id.].
In May 2010, Shire sued Actavis for patent infringement in the United States District Court for the District of Delaware (the "Delaware Court"), which automatically triggered a 30-month stay of the FDA's approval of Actavis' ANDA. [FWK 523 at 4]. After denying Actavis' motion for summary judgment, the Delaware Court held a bench trial in September 2012. [Id. at 5]. While the underlying patent litigation proceeded, Shire and Actavis engaged in settlement negotiations. [Id. at 6-9]. In April 2013, before the Delaware Court issued a decision, Shire and Actavis settled the case. [Id. at 9-10]. In broad strokes, Shire and Actavisagreed that (1) Shire would drop the patent suit; (2) Actavis could make and market generic Intuniv beginning in December 2014; (3) Actavis would pay a 25% royalty to Shire for the first 180 days that Actavis' generic Intuniv was on the market so long as it was the only generic Intuniv on the market; and (4) Shire could not authorize or license a third party to market or sell a generic Intuniv during Actavis' 180-day exclusivity period but could, itself or via an affiliate, market a generic Intuniv during that time. [Id. at 10].
Plaintiffs argue that this settlement agreement was anticompetitive. See [FWK 247]. Essentially, Plaintiffs assert that the market for Intuniv would have become competitive earlier had Shire and Actavis not entered into their settlement because Actavis would have launched a generic Intuniv before December 2014 and Shire would have authorized a third-party to market a generic to compete with Actavis' generic. [Id. ¶¶ 151-54].
FWK Holdings, LLC ("FWK") filed this action on December 30, 2016, [FWK 1], and Rochester Drug Co-Operative Inc. ("RDC") filed similar claims on January 11, 2017, [Complaint, Rochester Drug Co-Operative, Inc., v. Shire LLC, No. 17-cv-10050 (D. Mass. Jan. 11, 2017), ECF No. 1]. The Court granted a joint motion to consolidate the two actions. [FWK 19]. The case has also proceeded in tandem with the IPPs' action against Shire and Actavis arising out of the same alleged misconduct. [FWK 343 at 4]. On September 24, 2019, the Court granted the DPPs' motion to certify the following class:
All persons or entities in the United States and its territories, or subsets thereof, that purchased Intuniv and/or generic Intuniv in any form directly from Shire or Actavis, including any predecessor or successor of Shire or Actavis, from October 19, 2012 through June 1, 2015 (the "Class").
[FWK 343 at 23]. The Court, however, dismissed FWK as a class representative after finding that its relationship with class counsel was too entangled. [Id. at 16]. Despite some reservationsabout RDC's adequacy as a class representative, the Court permitted RDC to take on that role. [Id. at 17-18].
On March 12, 2020, RDC filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Western District of New York. See In re Rochester Drug Co-Operative, Inc., No. 20-bk-20230 (Bankr. W.D.N.Y.). Because of RDC's bankruptcy, Defendants moved to decertify the DPP class. [FWK 404]. The Court granted the motion in part, finding that RDC could not adequately represent the interests of absent class members given bankruptcy-related conflicts of interest. [FWK 456]. Nevertheless, the Court declined to decertify the class in favor of allowing motions to intervene. [Id. at 14-15].
Meijer is a pharmacy retailer headquartered in Michigan. [FWK 469-1 ¶ 24]. On June 2, 2020, Meijer filed a motion to intervene, [FWK 439], which Shire opposed, [FWK 449]. On July 24, 2020, the Court granted Meijer's motion to allow the parties to engage in limited discovery to "evaluate Meijer's adequacy as a class representative." [FWK 462 at 20]. A few days later, Meijer filed an intervenor complaint. [FWK 469-1]. According to Meijer, it "purchased generic Intuniv directly from Actavis . . . during the class period and is the assignee of the antitrust claims of the Frank W. Kerr Company and McKesson Corp., which purchased branded Intuniv from Shire . . . during the class period." [FWK 469-1 ¶ 24].
On August 28, 2020, Shire moved for an order compelling Meijer to arbitrate its claims against Shire. [FWK 475-1]. On September 8, 2020, Meijer filed a motion to be appointed the DPPs' class representative. [FWK 485]. The parties subsequently filed oppositions, replies, and sur-replies. [FWK 496-1 (); FWK 503-1 (); FWK 511-1 () FWK 526-1 (); FWK 536-2 ()]. Both motions are fully briefed.
Shire argues that Meijer entered agreements that require it to arbitrate its claims against Actavis and, because of the doctrine of equitable estoppel, it must therefore also arbitrate its related claims against Shire.2 See [FWK 477-1]. Shire asserts that equitable estoppel applies for two independent reasons. First, because Meijer's "claims [against Shire] arise from and are directly related to the [a]greements [Meijer] entered into with Actavis to purchase, inter alia, generic Intuniv" and those agreements contain arbitration clauses. [Id. at 23-25]. Second, because Meijer's claims against Shire and Actavis "turn on the same factual and legal issues," Meijer is bound by contract to arbitrate its claims against Shire. [Id. at 25-27]. Shire further maintains that because the arbitration agreements at issue delegate the threshold question of arbitrability to the arbitrator, the Court must dismiss Meijer's complaint, or stay the litigation, until an arbitrator decides whether Meijer must arbitrate. [Id. at 27].
In opposition, Meijer maintains that Shire has waived any right to arbitration, and further, that Shire's equitable estoppel argument, an issue to be decided by the Court, fails for a number of reasons. See [FWK 496-1].
In its reply brief, Shire asserts that the arbitrator must decide whether Shire has waived its right to arbitrate, that, in any event, it has not waived its right to arbitrate because it soughtarbitration promptly after discovering that the right existed, and that it can properly invoke the doctrine of equitable estoppel. [FWK 511-1].
Shire identifies two agreements that it believes require Meijer to arbitrate its claims against Shire. [FWK 477-1 at 11-15].
First, in July 2008, Meijer entered into a Retail Purchase Agreement ("RPA") with Watson Pharma, Inc. ("Watson"), pursuant to which Watson agreed to sell certain generic dings at specified prices to Meijer. [FWK 476-1]. Watson merged with Actavis in October 2012, with Actavis as the surviving company. See [FWK 477-1 at 11 (citing Actavis plc, Annual Report (Form 10-K) at 3 (Feb. 25, 2014))]. Although generic Intuniv was not among the generic drugs originally covered by the RPA, the parties amended the product list to include it in November 2014. See [FWK 476-3]. The RPA contains the following "Disputes and Arbitration" section:
[Redacted]
Second, in 2017, Teva USA ("Teva") and various affiliates entered into a Generic Products Purchase Agreement ("GPPA") with The Buyers Consortium, LLC (the "BC"), whereby members of the BC agreed to purchase certain drugs, including generic Intuniv, from Teva in particular quantities and at...
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