Meyers v. Bayer Ag, Bayer Corp.

Decision Date13 July 2007
Docket NumberNo. 2003AP2840.,2003AP2840.
Citation735 N.W.2d 448,2007 WI 99
PartiesBarbara A. MEYERS, Lynn Stucker, Loyal Berg and Eugene Browning, individually and on behalf of all others similarly situated, Plaintiffs-Appellants, v. BAYER AG, BAYER CORPORATION, Barr Laboratories, Inc., Rugby Group, Inc., Watson Pharmaceuticals, Inc. and Hoeschst Marion Roussel, Inc., Defendants-Respondents-Petitioners.
CourtWisconsin Supreme Court

For the defendants-respondents-petitioners there were briefs by Phillip A. Proger, Kevin D. McDonald, Lawrence D. Rosenberg, and Jones Day, Washington, D.C.; Gerardo H. Gonzalez, Richard J. Krill, and Gonzalez, Saggio & Harlan, L.L.P., Milwaukee; Fred H. Bartlit, Jr., Peter B. Bensinger, Jr., Michael J. Valaik, Paul J. Skiermont, and Bartlit Beck Herman Palenchar & Scott L.L.P., Chicago, IL; William J. Mulligan, Kathy L. Nusslock, and Davis & Kuelthau, S.C., Milwaukee; Thomas D. Yannucci, P.C., Karen N. Walker, Edwin John U, and Kirkland & Ellis L.L.P., Washington, D.C.; Stephen P. Hurley, Kristine A. Long, Andrew W. Erlandson, and Hurley, Burish & Milliken, S.C., Madison; David E. Everson, Heather S. Woodson, Victoria L. Smith, and Stinson Morrison Hecker L.L.P., Kansas City, MO, and oral argument by Fred H. Bartlit, Jr.

For the plaintiffs-appellants there was a brief by John C. Cabaniss, Thomas Armstrong, and von Briesen & Roper, s.c., Milwaukee, and oral argument by Thomas Armstrong, Jr.

An amicus curiae brief was filed by Stephen E. Meili and Consumer Law Litigation Clinic, Madison; Peter C. Carstensen, David Dudley, and University of Wisconsin Law School, Madison; on behalf of the University of Wisconsin Law School Consumer Law Litigation Clinic, Professor Peter C. Carstensen of the University of Wisconsin Law School, and David Dudley of the University of Wisconsin Law School.

An amicus curiae brief was filed by Eric J. Wilson and Gwendolyn J. Cooley, assistant attorneys general, with whom on the brief was Peggy A. Lautenschlager, attorney general, on behalf of the state of Wisconsin, and there was oral argument by Eric J. Wilson.

An amicus curiae brief was filed by Paul E. Benson, Grant C. Killoran, and Michael Best & Friedrich, L.L.P., Milwaukee, on behalf of the Milwaukee Metropolitan Chamber of Commerce and the Wisconsin Manufacturers and Commerce, Inc.

¶ 1 LOUIS B. BUTLER, JR., J

The defendants, Bayer AG, et al. (collectively "Bayer"), seek review of a published court of appeals' decision1 reversing a circuit court order that dismissed all claims brought under Wisconsin's Antitrust Act, Chapter 133 of the Wisconsin Statutes, by Barbara Meyers, Lynn Stucker, Loyal Berg, and Eugene Browning (collectively "Meyers"), representing a putative class of Wisconsin residents who purchased the antibiotic ciprofloxacin hydrochloride from Bayer under the brand name Cipro. Meyers' complaint2 alleges that Wisconsin consumers paid inflated prices for Cipro as a result of an unlawful agreement between Bayer and three manufacturers of generic drugs, Barr Laboratories, Inc. ("Barr"), Hoechst Marion Roussel, Inc. ("HMR") and The Rugby Group ("Rugby"), which precluded Barr, HMR and Rugby from selling or marketing generic ciprofloxacin hydrochloride to compete with Cipro.

¶ 2 The circuit court, Honorable Michael D. Guolee, dismissed Meyers' claims against Bayer, concluding that Wisconsin's Antitrust Act, Wis. Stat. § 133.03 (2005-06),3 applied only to intrastate commerce. Meyers appealed, and the court of appeals held the case in abeyance pending our decision in Olstad v. Microsoft Corp., 2005 WI 121, 284 Wis.2d 224, 700 N.W.2d 139. Subsequently, we concluded in Olstad that Wisconsin's Antitrust Act applies to cases involving interstate conduct if

(1) the actionable conduct, such as the formation of a combination or conspiracy, occurred within this state, even if its effects are felt primarily outside of Wisconsin; or (2) the conduct complained of "substantially affects" the people of Wisconsin and has impacts in this state, even if the illegal activity resulting in those impacts occurred predominantly or exclusively outside this state.

Olstad, 284 Wis.2d 224, ¶ 1, 700 N.W.2d 139. Applying Olstad, the court of appeals reversed the circuit court on grounds that the Wisconsin Antitrust Act reaches interstate commerce, and Meyers' complaint alleged facts of illegal conduct that, if true, "substantially affected" the people of Wisconsin and had impacts in this state. Meyers v. Bayer AG, 2006 WI App 102, ¶¶ 1, 10-11, 293 Wis.2d 770, 718 N.W.2d 251.

¶ 3 We follow our precedent set forth in Olstad for determining when Chapter 133 reaches interstate commerce: A plaintiff filing an action under Wisconsin's Antitrust Act must allege price fixing as a result of the formation of a combination or conspiracy that "`substantially affects' the people of Wisconsin and has impacts in this state" when the challenged conduct occurs predominately or exclusively outside this state. Olstad, 284 Wis.2d 224, ¶ 85, 700 N.W.2d 139. We conclude that additional limitations Bayer and amici Milwaukee Metropolitan Chamber of Commerce and Wisconsin Manufacturers and Commerce seek to read into the "substantially affects" standard are unsupported by our precedents and are contrary to the policy choices of the legislature.

¶ 4 Meyers' 35-page, 106-paragraph complaint alleges a broad price-fixing scheme affecting "at a minimum, thousands . . . in Wisconsin" who purchased the best-selling antibiotic Cipro "at any time since January 6, 1995." We conclude Meyers' complaint alleges illegal conduct that, if true, substantially affected the people of Wisconsin and had impacts in this state.4 We therefore affirm the court of appeals' decision reversing the circuit court's order dismissing Meyers' claims, and remand for further proceedings consistent with this opinion.

I

¶ 5 This review of a decision of the court of appeals arises on a motion to dismiss for failure to state a claim. For purposes of this review, we accept as true the facts alleged in Meyers' complaint. Tietsworth v. Harley-Davidson, Inc., 2004 WI 32, ¶ 5, 270 Wis.2d 146, 677 N.W.2d 233. The facts as set forth below are taken from Meyers' complaint except where otherwise noted.

¶ 6 Bayer filed U.S. Patent No. 4,670,444 ("`444 patent") on May 29, 1984, a compound patent for the drug ciprofloxacin hydrochloride. In October 1987, a subsidiary of Bayer obtained approval from the Food and Drug Administration ("FDA") to market ciprofloxacin hydrochloride. The drug was marketed under the name Cipro, a broad spectrum antibiotic approved to treat sinusitis, lower respiratory infections, and fifteen other ailments. Cipro quickly became one of the most prescribed drugs of its kind.5 Meyers' complaint states that within one year of its introduction, Cipro was adopted in the formulary of every hospital in the United States.

¶ 7 In October 1991 Barr filed an Abbreviated New Drug Application ("application") with the FDA, pursuant to certain provisions of 21 U.S.C. § 355, a/k/a the Hatch-Waxman Act, requesting approval to market and sell generic ciprofloxacin hydrochloride ("generic Cipro"). Pursuant to the Hatch-Waxman Act, Barr notified Bayer of its application, and asserted that Bayer's '444 patent was invalid and unenforceable. In response, Bayer filed a patent infringement lawsuit against Barr on January 16, 1992, challenging Barr's application to market and sell generic Cipro. As a result of the infringement lawsuit, FDA approval of Barr's application was automatically postponed by operation of statute, 21 U.S.C. § 355(j)(5)(B)(iii) (1991), pending resolution of the patent infringement lawsuit.

¶ 8 On January 6, 1995, with the patent case as yet unresolved, the FDA gave tentative approval to Barr's application for generic Cipro. Meyers' complaint states that, following the FDA's action, a Barr official reportedly stated that Barr would bring to market its generic Cipro "immediately" if Barr prevailed in the patent infringement suit.

¶ 9 On March 29, 1996, Barr entered into an agreement with Rugby, a rival generic drug manufacturer, in which Barr agreed to share equally with Rugby any rights and profits from the eventual marketing and distribution of generic Cipro in exchange for Rugby's assistance in funding the patent litigation with Bayer.

¶ 10 Bayer moved for summary judgment in the patent suit with Barr and Rugby in January 1996. On June 5, 1996, the court presiding over the patent litigation denied Bayer's motion for summary judgment, and denied a motion for reconsideration on September 5, 1996.

¶ 11 On January 8, 1997, Bayer, Barr, HMR, and Rugby entered into four agreements (collectively, the "Agreement") which allocated the entire United States market for Cipro for at least six years, and required Bayer to make large monetary payments to Barr and HMR.6 According to the complaint, Bayer made an initial payment to Barr and HMR of $49.1 million. The complaint asserts that the Agreement granted Bayer an unlawful monopoly in the market for Cipro and generic Cipro. As a part of the Agreement, Bayer and Barr agreed to resolve the patent litigation by entering into a consent judgment that acknowledged the validity and enforceability of the '444 patent. Bayer states it is undisputed that the discussions relating to the Agreement occurred in New York and Germany.

¶ 12 The Agreement further provided that Bayer could either (a) license and supply Bayer-manufactured Cipro to Barr and HMR for resale under a generic label; or (b) pay quarterly amounts to Barr from 1998 through at least 2003.7 The former of these options established the price Barr and HMR would pay to Bayer for Cipro, and required Barr and HMR to share its profits with Bayer. The Agreement also required Barr to amend its application to the FDA, ending its challenge to the validity of the '444 patent. The Agreement required that the parties not disclose the terms of the Agreement. The...

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