In re Mylan N.V. Sec. Litig.
| Decision Date | 30 March 2023 |
| Docket Number | 16-CV-7926 (JPO) |
| Parties | In re Mylan N.V. Securities Litigation |
| Court | U.S. District Court — Southern District of New York |
This case is a securities fraud class action against Mylan N.V (“Mylan” or “Defendant”) and several of its current and former officers (the “Individual Defendants”). Mylan is a publicly traded firm which operates as a large pharmaceutical manufacturer and distributor. Plaintiffs are purchasers of Mylan securities who challenge various statements by Mylan and its agents as omitting allegedly illegal conduct on the part of Mylan diminishing the value of their shares. The liability theory advanced by Plaintiffs reflects “claims within claims” - that Plaintiffs misled investors by obscuring underlying violations of antitrust law and regulatory law. Plaintiffs offer three such claims: one alleging that Mylan's statements to investors became misleading due to its antitrust violations in marketing the EpiPen; the second based on the theory that Mylan misled investors about its statutory rebating practices; and the third alleging that Mylan's statements to investors about the generic drug market were misleading due to its participation in an antitrust conspiracy in the generics market.
Before the Court are Defendant's motion for summary judgment as to all claims and Plaintiffs' motion for partial summary judgment on certain elements of the second claim. For the reasons that follow, Defendants' motion for summary judgment is granted and Plaintiffs' motion for partial summary judgment is denied.
I. Background
Plaintiffs in this matter are a certified class under Federal Rule 23(b)(3) defined as:
All persons or entities that purchased Mylan N.V. and/or Mylan's N.V.'s predecessor, Mylan, Inc., common stock between February 21, 2012 and May 23, 2019, both dates inclusive, excluding Defendants, current and former officers and directors of Mylan, members of their immediate families and their legal representatives, heirs, successors or assigns, and any entity in which Defendants have or had a controlling interest.
(ECF No. 140 (“MTD Op. III”) at 14.) Plaintiffs challenge statements made by Mylan as materially misleading to investors under Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5, for three reasons.[1]
First Plaintiffs claim that certain of Mylan's statements to investors were materially misleading because they either implicitly denied, or failed to disclose the existence of various anti-competitive agreements between Mylan and various third-party payors and health plans relating to EpiPen, which were allegedly illegal under either Section 1 or Section 2 of the Sherman Act. These claims are referred to as the “EpiPen Antitrust Claims.”
Second, Plaintiffs argue that statements by Mylan were materially misleading because they failed to disclose that Mylan, in fact, had to rebate the EpiPen at a lower rate than it suggested. This allegedly resulted in injury to shareholders as evidenced by the fact that Mylan eventually entered a settlement with the Department of Justice as part of a separate litigation. This part the argument is mechanically and procedurally like the first, but it alleges an underlying violation of the Medicare Drug Rebate Program (MDRP), a subsidiary component of the federal Medicaid scheme. These are the “MDRP Claims.”
Third, Plaintiffs claim that certain statements by Mylan were misleading because they failed to disclose alleged market allocation or price-fixing conspiracies involving numerous generic drugs. These claims are the “Generic Drug Antitrust Claims.”
This Court has issued three opinions partially denying Defendants' motions to dismiss for failure to state a claim. First, the Court for the most part permitted Plaintiffs' claims regarding EpiPen competition, EpiPen's MDRP classification for rebate rates, and antitrust claims to proceed, while dismissing certain claims under Israeli law and claims based on statements about a firm's general reputation that qualify as nonactionable puffery. (See ECF No. 69 (“MTD Op. I”) at 20 - 21 (quoting City of Pontiac Policemen's & Firemen's Ret. Sys. v UBS AG, 752 F.3d 173, 183 (2d Cir. 2014) (internal citation omitted)); 36 - 40.) The Court also dismissed Plaintiffs' claims that certain intellectual property litigation settlements involving the EpiPen amounted to antitrust violations. See id. at 27 (citing F.T.C. v. Activis, Inc., 570 U.S. 136, 139 (2013)). In reaching these conclusions, the Court recognized the somewhat unusual posture in this case - which features three distinct iterations of a “claim within a claim” - stating:
The Complaint alleges that Mylan's statements were misleading because they failed to disclose that illegal means had inflated Mylan's margins and altered the market. Nothing in the Complaint explains why Mylan's statements would be materially misleading if the [challenged] agreements [or rebating conduct] were, as a legal matter, not unlawfully anticompetitive [or violative of the MDRP statute].
MTD Op. I at 30 (emphasis in original).
In its second pass at this litigation, the Court again permitted the lion's share of Plaintiffs' allegations to proceed past another motion to dismiss and revived, based on amended pleading, a claim about the generic drug Doxy DR. But it also clarified an important requirement for Plaintiffs, especially with regard to their generic drug antitrust claims. The Court dismissed certain parts of the generic drug allegations as insufficiently supported by any plausible scienter inference with respect to a number of generic drugs.[2] The Court permitted many of Plaintiffs' allegations about generic drugs to survive the motion to dismiss on the basis of Plaintiffs' representations that they would rely on direct evidence of an agreement to fix the generics market in the form of testimony by a whistle-blowing former Mylan employee. The Court observed, however, that without this and as the litigation developed, Plaintiffs would have to prove their generics case “on a drug-by-drug basis.” (See ECF No. 102 (“MTD Op. II”) at 14-15.)
The Court's third foray into this case continued to permit many of Plaintiffs' claims to survive, but the Court dismissed claims related to 20 different generic drugs based on the above principle. As the Court explained:
This Court has previously dismissed Plaintiffs' generic drug allegations for failing to meet the evidentiary standards required by . . . the Sherman Act. Even considering Plaintiffs' position that the generic drug allegations should be assessed as a whole to support the broader allegation that “virtually all” of Mylan's generic drugs were affected by anticompetitive activity, that evidentiary standard must still be met.
See MTD Op. III at 8 (emphasis added). Thus, the Court held that Plaintiffs were responsible for pleading and, later proving, their case on a drug-by-drug basis. The Court again explained that “[a]llegations about individual generic drugs that fall short of the evidentiary minimum required by the Sherman Act cannot support the notion that ‘virtually all' of Mylan's generic drugs were affected by unlawful anticompetitive conduct.” Id. at 9. This was so because, first, it would be impermissible to draw any inference of market-wide liability based on examples of specific liability, and, second, Plaintiffs bore not only the burdens associated with the Sherman Act but also the additional burden of showing scienter as to this wrongdoing under the securities laws. See id. at 8 - 10, 12.
Following discovery and class certification, the parties now cross-move for summary judgment and, in connection with those motions, also ask the court to resolve various motions in limine. Defendant Mylan and the Personal Defendants move for summary judgment as to each of Plaintiffs' bases for liability. Defendants first challenge the existence of a predicate statutory violation of either the Sherman Act or the MDRP statute. Second, the argue that even if such a violation did exist, summary judgment would still be appropriate for want of scienter, a showing of materiality, or loss causation. Plaintiffs move for partial summary judgment as to their MDRP-related claims, seeking a judgment that (1) Mylan did misclassify the EpiPen for drug rebate purposes; (2) this was omitted in Mylan's disclosures and was material; and (3) Mylan acted with the requisite scienter that it was violating the MDRP in so doing.
To survive summary judgment, nonmovants must raise a genuine issue of material fact. Fed.R.Civ.P. 56(c). To raise such an issue requires “more than simply show[ing] that there is some metaphysical doubt as to the material facts.” Caldarola v. Calabrese, 298 F.3d 156, 160 (2d Cir. 2002) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Further, in so doing, nonmovants “may not rely on conclusory allegations or unsubstantiated speculation.” Fujitsu Ltd. v. Fed. Express Corp., 247 F.3d 423 428 (2d. Cir. 2001) (internal citations omitted). Rather, they “must offer some hard evidence showing that [their] version of events is not wholly fanciful.” D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir. 1998). The movant can prevail if, after discovery, “there is no genuine issue as to any material fact” such that a reasonable juror could find for the nonmovant. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). If the movant does produce evidence tending to exclude the possibility of a genuine dispute of material fact, “the nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial.'” Matsushita, 475 U.S. at...
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