In re Skelaxin (metaxalone) Antitrust Litig., Case No. 1:12-md-2343
| Decision Date | 20 May 2013 |
| Docket Number | Case No. 1:12-md-2343 |
| Parties | In re: Skelaxin (Metaxalone) Antitrust Litigation |
| Court | U.S. District Court — Eastern District of Tennessee |
MEMORANDUM
Pharmaceutical antitrust litigation presents unique challenges due in part to the Constitutional and statutory protection afforded intellectual property rights and the peculiar regulatory scheme that governs pharmaceutical approval, sales, and marketing. Those unique challenges come into play in all aspects of the litigation even in the early stages. One such challenge presented in the early stages of litigation is whether the claims brought by an antitrust plaintiff sufficiently allege facts that survive a Fed. R. Civ. P. 12(b)(6) motion.
The Court is faced with such a motion in this case filed by Defendants King Pharmaceuticals LLC, formerly known as King Pharmaceuticals, Inc. ("King") and Mutual Pharmaceutical Company, Inc. ("Mutual") (collectively, "Defendants") (Court File No. 84).
Bound by the relevant and applicable law concerning dismissing a claim for failure to state a plausible claim for relief, and after giving careful consideration to the parties' substantive and substantial written submissions, and the parties' arguments at the April 16 extensive oral argument hearing, the Court concludes that it must DENY Defendants' motion to dismiss (Court File No. 84).
The Plaintiffs in this case are a collection of large businesses, pharmacies, labororganizations, health insurance companies and entities, and individuals that purchased or reimbursed purchasers for buying metaxalone, a prescription muscle relaxant sold under the brand name Skelaxin. Skelaxin is manufactured and sold by King. Many of the Plaintiffs have chosen to proceed by way of a class action lawsuit. The Court has divided the putative Class Plaintiffs into three groups: the Direct Purchasers ("Direct Purchaser Plaintiffs" or "Direct Purchasers"), the Indirect Purchasers for Resale ("Indirect Purchaser Plaintiffs" or "Indirect Purchasers"), and the End Payors ("End Payor Plaintiffs" or "End Payors") (collectively, "Plaintiffs" or "Class Plaintiffs").1 ,2 The Direct Purchaser class is comprised primarily of wholesalers who allege they purchased Skelaxin directly from King during the class period . The named plaintiffs in this class include Professional Drug Company, Inc.; Meijer, Inc. and Meijer Distribution, Inc.; Rochester Drug Co-Operative, Inc.; Stephen L. LaFrance Pharmacy, Inc. d/b/a SAJ Distributors and Stephen L. LaFrance Holdings, Inc.; and Ahold USA, Inc. The Indirect Purchaser for Resale class is made up primarily of retail pharmacies who allege they indirectly purchased Skelaxin for resale during the class period . The named plaintiffs in this class are Johnson's Village Pharmacy, Inc.; Russell's Mr. DiscountDrugs, Inc.; Knight Pharmacy, Inc.; and Bidwell Pharmacy & Medical Supply, Inc. Finally, the End Payor class is comprised of primarily health and welfare benefit funds, trust funds, and insurance companies who allege they purchased and/or provided reimbursement for Skelaxin or its generic equivalent in various states . The named plaintiffs in this class are United Food and Commercial Workers Union and Midwest Health Benefits Fund; Pirelli Armstrong Retiree Medical Benefits Trust; Allied Services Division Welfare Fund; Plumbers and Pipefitters Local 572 Health and Welfare Fund; Laborers Trust Fund for Northern California; and Louisiana Health Service Indemnity Company.
The Defendants in this case are King Pharmaceuticals, LLC and Mutual Pharmaceutical Company, Inc. King is a pharmaceutical company with its principal place of business in this district in Bristol, Tennessee. King manufactures and sells Skelaxin. Mutual is also a pharmaceutical company that develops, manufactures, and sells drugs. It has its principal place of business in Philadelphia, Pennsylvania.
In January 2012 the first lawsuit in this matter was filed against Defendants in the Eastern District of Tennessee. Since that time several more cases have been filed in various jurisdictions. The Judicial Panel on Multidistrict Litigation transferred all of the pending actions to the Court in a transfer order issued on April 17, 2012. The Court consolidated all of the actions into this Multidistrict Litigation ("MDL") and subdivided the action into the three classes.
On November 2, 2012, all of the Class Plaintiffs--that is, the Direct Purchasers, Indirect Purchasers, and End Payors--filed amended consolidated class action complaints. On January 4,2013, Defendants filed the pending motion to dismiss. The Class Plaintiffs filed a consolidated response in opposition to Defendants' motion to dismiss (Court File No. 102), and Defendants submitted a reply (Court File No. 132). The Court held extensive oral arguments on April 16, 2013, at which time counsel for Defendants and counsel for the three proposed Plaintiffs' classes presented their arguments in support of their positions on behalf of their respective parties. Counsel were very well prepared and did an exemplary job in their arguments. They demonstrated a complete command of the facts, mastery of the applicable law, and an in-depth understanding of the underlying policy reasons and considerations of patent and antitrust law. The Court found their arguments enlightening and of great assistance to the Court in resolving this motion.
In 2007 the Supreme Court changed the framework for considering a Rule 12(b)(6) motion in antitrust cases. Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). While retaining much of the familiar framework of the 12(b)(6) analysis Twombly added a plausibility requirement. The pre-Twombly analysis started with the proposition that a Rule 12(b)(6) motion should be granted when it appears "beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Lewis v. ACB Bus. Servs., Inc., 135 F.3d 389, 405 (6th Cir. 1998). For purposes of this determination, the Court construes the complaint in the light most favorable to the plaintiff and assumes the veracity of all well-pleaded factual allegations in the complaint. Thurman v. Pfizer, Inc., 484 F.3d 855, 859 (6th Cir. 2007). The same deference does not extend to bare assertions of legal conclusions, however, and the court is "not bound to accept as true a legal conclusion couched as a factual allegation." Papasan v. Allain, 478 U.S. 265, 286 (1986). The Courtnext considers whether the factual allegations, if true, would support a claim entitling the plaintiff to relief. Thurman, 484 F.3d at 859.
In Twombly the Court considered a class action complaint brought under § 1 of the Sherman Act. The complaint in that case, according to the Court, alleged that major telecommunications companies engaged in certain parallel conduct unfavorable to competitive telecommunications companies. Id. at 548-49. The complaint failed to contain factual content suggesting an agreement, "as distinct from identical, independent action." Id. at 549. The Court held that it was not requiring "heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face." Id. at 570. The Court began its analysis by observing that because "the Sherman Act 'does not prohibit [all] unreasonable restraints of trade . . . but only restraints effected by a contract, combination, or conspiracy,'" "'[t]he crucial question' is whether the challenged anticompetitive conduct 'stem[s] from independent decision or from an agreement, tacit or express.'" Id. at 553 (citations omitted). The Court then repeated the familiar formulation of the requirements necessary to survive a 12(b)(6) motion. After stating those the Court said:
In applying these general standards to a § 1 claim, we hold that stating such a claim requires a complaint with enough factual matter (taken as true) to suggest that an agreement was made. Asking for plausible grounds to infer an agreement does not impose a probability requirement at the pleading stage; it simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of illegal agreement. And, of course, a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and "that a recovery is very remote and unlikely."
Id. at 556 (footnote omitted).
The Court explained that the requirement of plausibility adheres to the requirement of Fed. R. Civ. P. 8(a)(2).
The need at the pleading stage for allegations plausibly suggesting (not merelyconsistent with) agreement reflects the threshold requirement of Rule 8(a)(2) that the "plain statement" possess enough heft to "sho[w] that the pleader is entitled to relief." A statement of parallel conduct, even conduct consciously undertaken, needs some setting suggesting the agreement necessary to make out a § 1 claim; without that further circumstance pointing toward a meeting of the minds, an account of a defendant's commercial efforts stays in neutral territory. An allegation of parallel conduct is thus much like a naked assertion of conspiracy in a § 1 complaint: it gets the complaint close to stating a claim, but without some further factual enhancement it stops short of the line between possibility and plausibility of "entitle[ment] to relief."
The Court expressed the practical concern that allowing claims that possess only a mere possibility of loss causation would permit a claimant with "a largely groundless claim" to "take up the time of a number of other people, with the right to do so representing an in terrorem increment of the settlement value." Id. at 557-58 (citations omitted). The Court recognized that antitrust discovery...
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