Connecticut v. Sandoz, Inc.

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THE STATE OF CONNECTICUT; THE STATE OF ALASKA; THE STATE OF ARIZONA; THE STATE OF ARKANSAS; THE STATE OF CALIFORNIA; THE STATE OF COLORADO; THE STATE OF DELAWARE; THE DISTRICT OF COLUMBIA; THE STATE OF FLORIDA; THE STATE OF GEORGIA; THE TERRITORY OF GUAM; THE STATE OF HAWAII; THE STATE OF IDAHO; THE STATE OF ILLINOIS; THE STATE OF INDIANA; THE STATE OF IOWA; THE STATE OF KANSAS; THE COMMONWEALTH OF KENTUCKY; THE STATE OF LOUISIANA; THE STATE OF MAINE; THE STATE OF MARYLAND; THE COMMONWEALTH OF MASSACHUSETTS; THE STATE OF MICHIGAN; THE STATE OF MINNESOTA; THE STATE OF MISSISSIPPI; THE STATE OF MISSOURI; THE STATE OF MONTANA; THE STATE OF NEBRASKA; THE STATE OF NEVADA; THE STATE OF NEW HAMPSHIRE; THE STATE OF NEW JERSEY; THE STATE OF NEW MEXICO; THE STATE OF NEW YORK; THE STATE OF NORTH CAROLINA; THE STATE OF NORTH DAKOTA; THE COMMONWEALTH OF THE NORTHERN MARIANA ISLAND; THE STATE OF OHIO; THE STATE OF OKLAHOMA; THE STATE OF OREGON; THE COMMONWEALTH OF PENNSYLVANIA; THE COMMONWEALTH OF PUERTO RICO; THE STATE OF RHODE ISLAND; THE STATE OF SOUTH CAROLINA; THE STATE OF TENNESSEE; THE STATE OF UTAH; THE STATE OF VERMONT; THE COMMONWEALTH OF VIRGINIA; THE STATE OF WASHINGTON; THE STATE OF WEST VIRGINIA; THE STATE OF WISCONSIN; and U.S. VIRGIN ISLANDS v. SANDOZ, INC.; ACTAVIS HOLDCO US, INC.; ACTAVIS ELIZABETH LLC; ACTAVIS PHARMA, INC.; AMNEAL PHARMACEUTICALS, INC.; AMNEAL PHARMACEUTICALS, LLC; ARA APRAHAMIAN; AUROBINDO PHARMA U.S.A., INC.; BAUSCH HEALTH AMERICAS, INC.; BAUSCH HEALTH US, LLC; MITCHELL BLASHINSKY; DOUGLAS BOOTHE; FOUGERA PHARMACEUTICALS INC.; GLENMARK PHARMACEUTICALS INC., USA; JAMES JIM GRAUSO; GREENSTONE LLC; G&W LABORATORIES, INC.; WALTER KACZMAREK; ARMANDO KELLUM; LANNETT COMPANY, INC.; LUPIN PHARMACEUTICALS, INC.; MALLINCKRODT INC.; MALLINCKRODT LLC; MALLINCKRODT plc; MYLAN INC.; MYLAN PHARMACEUTICALS INC.; KURT ORLOFSKI; MICHAEL PERFETTO; PERRIGO NEW YORK, INC.; PFIZER INC.; SUN PHARMACEUTICAL INDUSTRIES, INC.; TARO PHARMACEUTICALS USA, INC.; TELIGENT, INC.; ERIKA VOGEL-BAYLOR; JOHN WESOLOWSKI; and WOCKHARDT USA LLC

No. 3:20-cv-00820 (MPS)

United States District Court, D. Connecticut

November 12, 2024

RULING ON MOTION TO DISMISS STATE-LAW CLAIMS

Michael P. Shea, U.S.D.J.

The Defendants, thirty-six makers of generic drugs, have moved under Fed.R.Civ.P. 12(b)(6) to dismiss state-law claims asserted by the Plaintiffs, the Attorneys General of most of the States and certain U.S. Territories, in this sprawling action alleging price-fixing, market allocation, and bid rigging in the sale of generic drugs for skin ailments. For the reasons set forth below, I grant in part and deny in part the Defendants' motion.

I. Introduction

A. Procedural Background

This is one of three cases in which the Attorneys General of the States and territories have sued scores of generic drug makers for alleged antitrust violations and unfair trade practices. All three cases were originally filed in this Court but were transferred to the Eastern District of Pennsylvania (the “MDL Court”), which was designated by the Judicial Panel on Multi-district Litigation (the “JPMDL) to preside over these and other similar cases brought by private parties in a consolidated proceeding. ECF No. 9.^[1] In April, the JPMDL remanded these three cases to this Court, and they were assigned to me. ECF No. 11.

B. Allegations

The operative complaint in this case, the September 9, 2021 amended complaint (ECF No. 196 on this Court's docket), spans 609 pages and includes 2,123 numbered paragraphs. It alleges collusion in the pricing, market allocation, and bidding for generic drugs for dermatological applications. (The parties refer to it as the “the Dermatology Complaint.”) The complaint describes a series of conspiracies, and an overarching conspiracy, between makers of generic dermatological drug-related products to collude on price, market allocation, and bids for the business of customers. For example, the complaint alleges that generic drug makers “had long-standing agreements over the course of several years not to compete for each other's customers and to follow each other's price increases” and that “to maintain these unlawful agreements, the competitors stayed in nearly constant communication-meeting regularly at trade shows and customer conferences and communicating frequently by phone and text message to reinforce their understandings.” ECF No. 196 at 15. The complaint claims that these agreements were endemic in the generic drug industry as a whole: “For many years, the larger generic pharmaceutical industry has operated pursuant to an overarching understanding to avoid competing with each other and to instead settle for what these competitors refer to as their ‘fair share.' This understanding has permeated every segment of the industry, and the purpose of the agreement was to avoid competition among generic manufacturers that would normally result in lower prices and greater savings to the ultimate consumer.” Id. at 16. The complaint goes on to discuss the structure of the industry and to allege in detail a myriad of specific communications between competitors in the segment concerning skin products. See also In re Generic Pharms. Pricing Antitrust Litig., No. 16-md-2724, 2023 WL 2244685, at *1 (E.D. Pa. Feb. 27, 2023) (briefly summarizing allegations in Dermatology Complaint). Because the factual details of the alleged agreements are not critical to this ruling for reasons I explain below, however, I do not further summarize the complaint here.

C. Rule 12(b)(6)

While the Defendants have filed previous motions attacking the federal antitrust claims in this case, this motion targets only the States' state-law claims and, as discussed below, only certain portions of those claims. In federal court, each complaint must include “a short and plain statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. 8(a)(2), and if the complaint “fail[s] to state a claim upon which relief can be granted,” Fed.R.Civ.P. 12(b)(6), the court must dismiss it. In deciding the Defendants' motion to dismiss under Rule 12(b)(6), I must determine whether the States have alleged “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). I must accept as true the complaint's factual allegations, id., and must “draw all reasonable inferences in favor of the non-moving party,” Vietnam Ass'n for Victims of Agent Orange v. Dow Chem. Co., 517 F.3d 104, 115 (2d Cir. 2008), but “threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice” to survive a motion to dismiss. Mastafa v. Chevron Corp., 770 F.3d 170, 177 (2d Cir. 2014) (citation omitted).

For the most part, however, the Defendants' motion does not involve the application of these standards-making it an unusual Rule 12(b)(6) motion. Most of the motion does not argue that the States' allegations under state antitrust and unfair and deceptive practice statutes “fail[] to state a claim upon which relief can be granted,” Fed.R.Civ.P. 12(b)(6), or that the price-fixing, bid-rigging, and market allocation allegations do not “plausib[ly]” plead violations of those statutes. Instead, the bulk of the motion asks me to foreclose the States from pursuing particular types of relief-such as “parens patriae” damages and disgorgement-under state l a w.

Saying that a State cannot recover parens patriae damages under its antitrust statute, however, is quite different from saying that the State has “fail[ed] to state a claim upon which [some] relief can be granted.” Fed.R.Civ.P. 12(b)(6). This explains why several courts have held that the prayer for relief is not even pertinent on a Rule 12(b)(6) motion, noting that the requirement of “a short and plain statement of the claim showing that the pleader is entitled to relief” is set forth in a separate subparagraph of Rule 8 from the requirement of a prayer for relief - or “demand for judgment.” See Fed. R. Civ. P. 8(a)(2)-(3); Wright & Miller, 5 Federal Practice & Procedure § 1255 at 1 nn. 6-7 (4th ed.) (citing cases); Alevsky v. GC Services Limited Partnership, No. 13-cv-6793, 2014 WL 1711682, at *1 (E.D.N.Y. Apr. 30, 2014) (“[A]s a general matter, damages are not an element of a cause of action. A Rule 12(b)(6) motion therefore cannot challenge the demand for relief, since that motion tests the legal sufficiency of allegations . . ., not the request for relief . . . .”). But some courts have disagreed, addressing the propriety of specific types of relief at the pleadings stage. See Constellation Brands, Inc. v. Keste, LLC, No. 14-cv-6272, 2014 WL 6065776, at *4 (W.D.N.Y. Nov. 13, 2014) (“The Court is . . . aware of decisions in which courts have dismissed damages claims under Rule 12(b)(6), as well as decisions of the Second Circuit . . . affirming such dismissals, that do not hint at the alleged procedural bar upon which Plaintiff relies.”) (citing cases). Further, the States have not raised this procedural argument, and I appreciate that there might be practical value in clarifying the forms of relief available in anticipation of settlement discussions.

Still the Defendants' request for a ruling on the pleadings about the availability of particular forms of relief remains a tall order. A court is generally not in a position to assess what relief might suit a particular case until after liability is established, usually at trial. Indeed, the Federal Rules require courts to maintain flexibility in fashioning relief-even relief that ...