Meyers v. Bayer Ag

• Decision Date: 09 May 2006
• Docket Number: No. 2003AP2840.,2003AP2840.
• Citation: 718 N.W.2d 251,2006 WI App 102
• Court: Wisconsin Court of Appeals
• Parties: Barbara 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.<SMALL><SUP>†</SUP></SMALL>

718 N.W.2d 251

2006 WI App 102

Barbara 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.^†

No. 2003AP2840.

Court of Appeals of Wisconsin.

Submitted on Briefs April 4, 2006.

Opinion Filed May 9, 2006.

On behalf of the plaintiffs-appellants, the cause was submitted on the briefs of John C. Cabaniss of von Briesen & Roper, s.c., Milwaukee.

On behalf of the defendants-respondents Bayer AG and Bayer Corporation, the cause was submitted on the joint brief of iGerardo H. Gonzalez and Jeffrey Krill of Gonzalez, Saggio & Harlan, LLP, Milwaukee; Phillip A. Proger, Kevin D. McDonald, William V. O'Reilly and Lawrence D. Rosenberg of Jones Day, Washington, D.C.; Fred H. Bartlit, Jr., Peter B. Bensinger, Jr., Michael J. Valaik and Paul J. Skiermont of Bartlit Beck Herman Palenchar & Scott LLP, Chicago, IL.

On behalf of the defendant-respondent Barr Laboratories, Inc., the cause was submitted on the joint brief of William J. Mulligan and Kathy L. Nusslock of Davis & Kuelthau, S.C., Milwaukee and Thomas D. Yannucci, P.C., Karen N. Walker and Edwin John U of Kirkland & Ellis LLP, Washington, D.C.

On behalf of the defendants-respondents Aventis Pharmaceuticals Inc., The Rugby Group, Inc. and Watson Pharmaceuticals, Inc., the cause was submitted on the joint brief of Stephen P. Hurley and Kristine A. Long of Hurley, Burish & Milliken, S.C., Madison and David E. Everson, Heather S. Woodson and Victoria L. Smith of Stinson Morrison Hecker LLP, Kansas City, MO.

Before WEDEMEYER, P.J., FINE and KESSLER, JJ.

¶ 1 WEDEMEYER, P.J

Barbara A. Meyers, Lynn Stucker, Loyal Berg and Eugene Browning, representing a putative class of Wisconsin residents, (hereinafter "appellants") appeal from an order dismissing their complaint against Bayer AG, Bayer Corporation, Barr Laboratories, Inc., Rugby Group, Inc., Watson Pharmaceuticals, Inc. and Hoeschst Marion Roussel, Inc. (hereinafter "Bayer"), which alleged that Bayer violated WIS. STAT. § 133.03 (2003-04)¹ antitrust laws by conspiring to inflate the cost of Cipro, a widely prescribed antibiotic. The trial court dismissed the complaint on the basis that Chapter 133 of the Wisconsin Statutes applies only to intrastate commerce. After the trial court's decision, our supreme court changed existing law, concluding that "Wisconsin's antitrust statutes may reach interstate commerce if ... the conduct complained of `substantially affects' the people of Wisconsin and has impacts in this state ...." Olstad v. Microsoft Corp., 2005 WI 121, ¶ 1, 284 Wis.2d 224, 700 N.W.2d 139. Based on Olstad's holdings, the trial court erred in dismissing the appellants' complaint at this stage in the case; we reverse and remand for further proceedings consistent with this opinion.

BACKGROUND

¶ 2 The genesis of this case arises from a 1997 settlement of a patent lawsuit between Bayer, which held the patent to the active ingredient of the antibiotic Cipro, and Barr Laboratories, which made and sought to market a generic version of Cipro before Bayer's patent expired. Appellants contend that the settlement agreement created an antitrust conspiracy between Bayer and Barr Laboratories, resulting in Wisconsin residents having to pay inflated prices for Cipro.

¶ 3 Bayer owns the Cipro patent, issued on June 2, 1987, and which expired on June 9, 2004.² On December 6, 1991, Barr Laboratories gave notice, pursuant to the Hatch-Waxman Act, see 21 U.S.C. § 355, that it had filed an Abbreviated New Drug Application with the FDA seeking permission to market generic Cipro before Bayer's patent expired. Barr Laboratories contended that Bayer's patent was invalid and unenforceable. Under the Hatch-Waxman Act, Bayer then had forty-five days to sue Barr Laboratories for patent infringement. See id. § 355(j)(5)(B)(iii).

¶ 4 On January 16, 1992, Bayer sued Barr Laboratories in the southern district of New York, alleging that Barr's application infringed on its Cipro patent. The FDA stayed approval of Barr's application. See In re Ciprofloxacin Hydrochloride Antitrust Litig., 363 F.Supp.2d 514, 518 (E.D.N.Y.2005). Barr answered the complaint and asserted counterclaims based on invalidity and unenforceability of the patent. Id. Before the case went to trial, Bayer and Barr Laboratories entered into a settlement agreement. In the agreement, dated January 8, 1997, Barr Laboratories consented to judgment in Bayer's favor affirming the Cipro patent's validity. Barr Laboratories agreed not to market its generic Cipro until after Bayer's patent expired. In exchange, Bayer agreed to pay Barr Laboratories ongoing settlement payments, which ultimately totaled $398 million.³

¶ 5 On November 6, 2000, the appellants in the instant case commenced this action on behalf of themselves and a putative class of Wisconsin consumers who purchased Cipro during the class period. Bayer removed the case to the eastern district of Wisconsin federal court and it was subsequently transferred to the federal eastern district court in New York. On October 1, 2001, the New York district court judge remanded this matter back to the state court where it had originally been filed. See In re Ciprofloxacin Hydrochloride Antitrust Litig., 166 F.Supp.2d 740, 742-43 (E.D.N.Y.2001).

¶ 6 Upon remand of the matter back to the Milwaukee Circuit Court, Bayer filed a motion seeking to dismiss the appellants' complaint for failure to state a claim upon which relief could be granted. The trial court conducted a hearing on the motion. Following the hearing, the trial court entered an order dated September 19, 2003, concluding: "Because this court agrees that Wisconsin case law indicates that Chapter 133 applies to intrastate and not interstate commerce, the Defendants' motion to dismiss for failure to state a claim is granted. This court does not reach the merits of the Defendants' other ground for dismissal." Appellants now appeal from this order.

DISCUSSION

¶ 7 The sole issue in this case is whether the trial court erred in dismissing the appellants' complaint. We conclude, through no fault of its own, the trial court erred in dismissing the complaint. In reviewing an order granting a motion to dismiss, we apply the same standards as the trial court. Hennig v. Ahearn, 230 Wis.2d 149, 164, 601 N.W.2d 14 (Ct.App. 1999). The purpose of a motion to dismiss pursuant to WIS. STAT. § 802.06(2) for failure to state a claim upon which relief can be granted, is to test the legal sufficiency of the complaint. Wausau Tile, Inc. v. County Concrete Corp., 226 Wis.2d 235, 245, 593 N.W.2d 445 (1999); see also Evans v. Cameron, 121 Wis.2d 421, 426, 360 N.W.2d 25 (1985). When it is clear that the plaintiffs cannot recover under any conditions, a motion to dismiss should be granted. Ramsden v. Farm Credit Servs., 223 Wis.2d 704, 711, 590 N.W.2d 1 (Ct. App.1998). When ruling on a motion to dismiss for failure to state a claim, the general rule is that the court should accept the facts as pleaded and all reasonable inferences to be drawn from them as true. Id.

¶ 8 Here, as noted, the trial court's decision was based on a line of authority that construed Chapter 133 very narrowly, limiting its reach to only intrastate transactions. See Conley Publ'g Group, Ltd. v. Journal Commc'ns, Inc., 2003 WI 119, ¶ 16, 265 Wis.2d 128, 665 N.W.2d 879 ("the scope of Chapter 133 is limited to intrastate transactions"). Because the facts in this case involved interstate transactions, the trial court ruled there was no possibility for the plaintiffs to recover.⁴ However, on July 13, 2005, in Olstad, our supreme court withdrew the language from Conley Publishing, which limited the scope of Chapter 133 to intrastate transactions. Olstad, 284 Wis.2d 224, ¶ 74, 700 N.W.2d 139. The court held that Chapter 133 can apply to interstate conduct in certain circumstances. Id.

¶ 9 In light of Olstad, it is clear that the trial court's view of the scope of Wisconsin Antitrust Act, Chapter 133 was erroneous. The instant case should not have been dismissed due to the fact that it involved interstate commerce, rather than intrastate commerce. Bayer, acknowledging the modification of the law established by Olstad, nevertheless argues that the trial court's dismissal was correct because the appellants failed to allege specific effects on Wisconsin consumers or on the Wisconsin economy. Bayer argues that in order to establish that the interstate transactions "substantially affected" the people of Wisconsin and had an adverse impact in Wisconsin, the appellants were required to assert specific harm, such as the number of prescriptions involved or the price paid for those prescriptions.⁵ We reject Bayer's arguments.

¶ 10 In Olstad, our supreme court held that Wisconsin's antitrust law may apply to interstate commerce when either of the following circumstances is alleged:

(1) actionable conduct, such as the formation of a combination or conspiracy, occurred within this state, even if its effects are felt primarily outside 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. Operating with lesser standards would jeopardize the action, undermine the validity of our antitrust statute, and create the spectacle of Lilliputian harassment in Wisconsin courts.

Id., ¶ 85 (citation omitted). This case involves reviewing the second circumstance. Although Olstad itself does not specifically define "substantially affects," one of the cases Olstad discusses—State v. Allied Chemical & Dye Corp., 9 Wis.2d 290, 101 N.W.2d 133 (1960)—did define this term, holding that defendants were liable because increased...