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LOUISIANA HEALTH SERVICE & INDEMNITY COMPANY D/B/A/ BLUE CROSS AND BLUE SHIELD OF LOUISIANA, AND HMO LOUISIANA, INC., ET AL. ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, Plaintiffs,
v.
JANSSEN BIOTECH, INC., JANSSEN ONCOLOGY, INC., JANSSEN RESEARCH & DEVELOPMENT, LLC, and BTG INTERNATIONAL LIMITED, Defendants.
Civ. No. 19-cv-14146 (KM) (ESK)
United States District Court, D. New Jersey
October 27, 2021
OPINION
Hon. Kevin McNulty, United States District Judge.
To extend its exclusivity as the sole seller of profitable prostate cancer drug, Zytiga, Janssen Biotech (“Janssen”), along with BTG International Limited (“BTG”), obtained a follow-on combination therapy patent that was later invalidated. Now, Louisiana Health Service & Indemnity Company (“BCBSLA”) brings this antitrust action, in which it seeks to represent a class of indirect purchasers of Zytiga who allegedly overpaid for the drug during the period in which Janssen's[1] infringement litigation delayed the entrance of generic versions of Zytiga into the market. Defendants move to dismiss the currently operative complaint. (DE 155.)[2] For the following reasons, defendants' motion to dismiss (DE 155) is GRANTED.
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I. BACKGROUND
In 1997, BTG obtained a patent (U.S. Patent No. 5, 604, 213, the “'213 patent”) on a therapeutic compound called abiraterone acetate. (SCCAC ¶ 3, 113.) BTG licensed this patent to Cougar Biotechnology in 2004, and Cougar was purchased by Janssen in 2009. (Id. ¶ 114.) Abiraterone acetate is the key ingredient in Janssen's drug Zytiga, which in 2011 was approved by the FDA as a treatment for prostate cancer. (Id. ¶ 127.) Zytiga was widely prescribed for prostate cancer and earned Janssen billions of dollars in sales revenue. (Id. ¶ 130.) The original '213 patent, however, was set to expire in 2016. (Id. ¶ 3, 151.) Anticipating generic competition and lower profits, Janssen sought to parlay its patent protection by (to simplify a bit) patenting a combined therapy. Its initial attempts to obtain a new patent on the combined use of abiraterone and a steroid, prednisone, were repeatedly rejected by the United States Patent and Trademark Office (“PTO”) as obvious. (Id. ¶ 115-25, 131-148.) In 2013, however, Janssen did obtain a new patent for combined abiraterone acetate/prednisone therapy (United States Patent No. 8, 822, 438, the “'438 patent”), relying substantially on the argument that obviousness was rebutted by the prior commercial success of Zytiga. (Id. at ¶ 152-67.) Janssen, however, allegedly never disclosed to the PTO that Zytiga's commercial success was attributable to the '213 “blocking patent, ” dating back to 1997, which had blocked any other company from manufacturing and selling any drug that contained abiraterone acetate. (Id. at ¶ 166.)[3]
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In 2015, a number of generic companies filed Abbreviated New Drug Applications (“ANDAs”) with the FDA, claiming that Janssen's new '438 patent was invalid and that they should be permitted to sell generic versions of Zytiga when the first, '213, patent expired in 2016. (Id. ¶ 168-69.) Janssen, exercising its rights under the Hatch-Waxman Act, then filed an action (the “infringement action”, 15cv5909 (D.N.J.)), against the generic manufacturers, triggering a 30-month stay of the approval of the ANDAs. (Id. ¶ 170.)[4] The infringement action and its appeals lasted for more than four years. In that action, Janssen filed a complaint and two amended complaints, and was denied leave to file a third amended complaint. (Infringement Action DE 279.) The parties briefed numerous motions, including three motions in limine and a motion for summary judgment. (Infringement Action DE 364-66, 369, 387, 389, 408.) Oral argument was held on summary judgment. (Infringement Action DE 420.) The motion for summary judgment was administratively terminated, however, and an 8-day bench trial took place (Infringement Action DE 483, 522-31.) As it happened, both the Patent Trial and Appeal Board (“PTAB”) and this Court ultimately determined that Janssen's second patent was invalid for obviousness. (SCCAC ¶ 203-35.)[5] Janssen made every effort to enjoin generic competition, but the Federal Circuit and the Supreme Court denied those attempts and generic competition began on November 21, 2018 (Id. ¶ 238-43.) In May 2019, the Federal Circuit upheld the decision of the PTAB, a ruling which required it also to dismiss the appeal from this Court. (Id. ¶¶ 247-50).[6]
By engaging in this extended litigation, Janssen allegedly delayed the entrance of generics onto the market. (Id. ¶ 251-53.) And as a result of that delay, indirect purchasers paid much more for Zytiga in the interim than they would have paid for a generic substitute. (Id. ¶ 11.) In this action, Plaintiffs
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allege that by bringing “sham litigation, ” Janssen violated the Sherman Act, 15 U.S.C. § 2, as well as a number of state antitrust and consumer protection laws. They seek to represent a class of indirect purchasers of Zytiga.
BCBSLA initially filed this suit in the United States District Court for the Eastern District of Virginia on April 18, 2019. (DE 1.) On May 24, 2019, Janssen moved to change venue to this court. (DE 30.) On May 31, 2019, BCBSLA moved to consolidate this case and to appoint interim class counsel. (DE 35, 37.) On June 21, 2019, the Eastern District of Virginia transferred the case to this court, which granted the motion to consolidate and appoint interim co-lead class counsel. (DE 54.) On August 20, 2019, Self-Insured Schools of California, the plaintiff in a related case, moved to consolidate cases. (DE 92.)[7]This second motion to consolidate was granted on September 27, 2019. (DE 108.) On February 10, 2021, I granted BCBSLA's motion to appoint class counsel. (DE 146.)
On February 22, 2021, plaintiffs filed their Second Consolidated Class Action Complaint. (DE 147.) On April 6, 2021, Janssen moved to dismiss. (DE 155.) Plaintiffs filed a brief in opposition (DE 158) and Janssen filed a reply (DE 160). This motion is fully briefed and ripe for decision.
II. STANDARD OF REVIEW
Federal Rule of Civil Procedure 8(a) does not require that a pleading contain detailed factual allegations, but it must assert “more than labels and conclusions.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The allegations must raise a claimant's right to relief above a speculative level, so that a claim is “plausible on its face.” Id. at 570. That standard is met when “factual content [] 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). Rule 12(b)(6) provides for the dismissal of a complaint if it fails to state a claim. The defendant bears the burden to show that no claim has been stated. Davis v. Wells Fargo, 824 F.3d 333, 349 (3d Cir. 2016). I accept facts in
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the complaint as true and draw reasonable inferences in the plaintiffs' favor. Morrow v. Balaski, 719 F.3d 160, 165 (3d Cir. 2013) (en banc).
III. DISCUSSION
a. Standing
Plaintiffs bring 58 numbered claims, all essentially based on the allegation that Janssen engaged in “sham litigation.” (SCCAC ¶ 287-823.)[8] Count 58 is a federal claim under the Sherman Act, 15 U.S.C. § 2. (Id. ¶ 803- 23.). Counts 1-29 bring claims under the antitrust laws of a number of states, plus the District of Columbia and Puerto Rico. (Id. ¶ 287-488.) Counts 29-56 bring claims under many jurisdictions' consumer protection laws. (Id. ¶ 489- 755.) Finally, count 57 asserts unjust enrichment claims under the laws of 41 jurisdictions. (Id. ¶ 756-801.) The named plaintiffs, however, allege that they purchased or were reimbursed for Zytiga in only 22 states. (Id. ¶ 20-24.) Janssen does not contest that plaintiffs have standing to bring their own federal claims, and may assert claims under the laws of states where they purchased or reimbursed insurance policy holders for Zytiga. Janssen argues, however, that plaintiffs lack standing to assert state-law claims under the laws of states where the named plaintiffs did not purchase Zytiga. (Mot. at 39-44.)
After first outlining the law of standing in putative class actions, I rule that plaintiffs' claims should not be dismissed on standing grounds.
Class actions, governed in federal court by Federal Rule of Civil Procedure 23, are a form of representative litigation. One or more class representatives litigate on behalf of absent class members and, if a class is certified, both the named plaintiffs and the absent class members will be bound by the court's decision.
A named class representative, like any federal-court plaintiff, must establish personal standing under the relevant constitutional standard. See
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Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992).[9] Thus it is not enough that absent class members suffered injuries; rather, “the representative herself must have standing.” William B. Rubenstein, 1 Newberg on Class Actions § 2:3 (5th ed.); see also Simon v. E. Kentucky Welfare Rts. Org., 426 U.S. 26, 40 n.20 (1976). Here, there is no question that the plaintiffs properly alleged personal standing, in that they were themselves allegedly overcharged for Zytiga.
Next comes the murky issue of so-called “class standing, ” invoked by defendants here. Plaintiffs argue that their claims under the laws of states in which they did not purchase Zytiga should not be dismissed, because they have personal standing and there is no separate “class standing” requirement. (Opp. at 36-37 (quoting In re Prudential Ins. Co. Am. Sales Prac. Litig. Agent Actions, 148 F.3d 283, 306 (3d Cir. 1998).) It is true that once the class representative demonstrates that he or she possesses standing, for him or her “there remains no further separate class standing requirement in the constitutional sense.” Prudential Ins. Co., 148 F.3d at 306-07. Nor are absent class members required to...
