In re Namenda Direct Purchaser Antitrust Litig.

331 F.Supp.3d 152

IN RE NAMENDA DIRECT PURCHASER ANTITRUST LITIGATION

No. 15 Civ. 7488 (CM)

United States District Court, S.D. New York.

Signed August 2, 2018

Filed August 16, 2018

MEMORANDUM DECISION AND ORDER DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT; GRANTING IN SUBSTANTIAL PART AND DENYING IN PART DEFENDANTS' DAUBERT MOTIONS TO EXCLUDE OPINIONS AND TESTIMONY OF PLAINTIFFS' EXPERTS; AND GRANTING PLAINTIFFS' MOTION FOR CLASS CERTIFICATION

McMahon, C.J.:

Plaintiffs J.M. Smith Corporation d/b/a Smith Drug Company ("Smith") and Rochester Drug Co-Operative, Inc. ("RDC") (collectively, "Direct Purchaser Plaintiffs" or "Plaintiffs") commenced this antitrust suit on behalf of themselves and a putative class of similarly situated purchasers of Namenda. Plaintiffs allege that Defendants – Actavis PLC (now known as Allergan PLC), Forest Laboratories, LLC, Forest Laboratories, Inc., and Forest Laboratories Holdings Ltd. (collectively, "Forest" or "Defendants") – schemed to delay entry of generic versions of an Alzheimer's disease treatment by entering into collusive settlements with various generic drug companies and attempting a hard switch in violation of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2 (2016).

Namenda ® ("Namenda") is a branded drug used to treat moderate to severe stages of Alzheimer's, a neurodegenerative brain disease that causes memory loss, among other symptoms. Forest had a license to market both Namenda IR (immediate release), a twice-daily drug, and Namenda XR (extended release), a once-daily drug, in the United States under U.S. Patent No. 5,061,703 (the "'703 Patent"). (Am. Compl. ¶ 2, Dkt. No. 29.)

Plaintiffs allege that Forest engaged in a two-part anticompetitive scheme to improperly block generic competition for Namenda IR by: (1) conspiring with manufacturers of generic versions of Namenda IR to drop their legal challenges to the '703 Patent and delay launch of generic versions of Namenda IR until an identical date three months after the expiration of the '703 Patent ; and (2) using this improperly obtained period of additional exclusivity to launch the successor branded product, Namenda XR, in order to force the conversion of the market from Namenda IR to the clinically equivalent Namenda XR (hereinafter the "hard switch") before market entry of the generic versions of Namenda IR. (See id. at ¶ 5.) Here, Plaintiffs allege that Defendants' illegal hard switch strategy included prematurely removing Namenda IR from the market before its patent expiration such that only Namenda XR would be available for purchase in the months before Forest faced generic competition for Namenda IR. Plaintiffs allege Defendants knew that, given the nature of Alzheimer's treatment, once a patient was on Namenda XR, there was a decreased likelihood that the patient would "reverse commute" back to a generic version of Namenda IR after cheaper generic versions of the drug became available.

Presently before the Court are two motions: Defendants' motion for summary judgment on all claims in Direct Purchaser Plaintiffs' First Amended Complaint (Dkt. No. 434) and Plaintiffs' motion to certify this as a class action. (Dkt. No. 400.) For the reasons set forth below, Defendants' motion for summary judgment is DENIED, and Plaintiffs' motion for class certification is GRANTED.

Additionally, Defendants have filed six separate motions to exclude the opinions and proposed testimony of Plaintiffs' experts (see Dkt. Nos. 437, 439, 441, 443, 445, 505), each of which is addressed below.

I. DAUBERT MOTIONS

Before I recount the facts, I must consider exactly what should and should not be part of the record on Defendants' motion for summary judgment. "If the expert testimony is excluded as inadmissible, the court must make the summary judgment determination without that evidence." Water Pollution Control Auth. of City of Norwalk v. Flowserve US Inc. , No. 3:14 Civ. 00549 (VLB), 2018 WL 1525709, at *5 (D. Conn. Mar. 28, 2018).

Defendants have moved to exclude the opinions and proposed testimony of: (1) Janet K. DeLeon (Dkt. No. 437); (2) Professor Einer Elhauge (Dkt. No. 439); (3) Dr. Russell Lamb (Dkt. No. 445); (4) Dr. Ernest Berndt and Dr. Russell Lamb regarding their use of forecast averages (Dkt. No. 441); (5) John R. Thomas, Esq. (Dkt. No. 505); and (6) George W. Johnston, Esq. (Dkt. No. 443).

The Daubert Standard

"On a summary judgment motion, the district court properly considers only evidence that would be admissible at trial." Nora Beverages, Inc. v. Perrier Grp. of Am., Inc. , 164 F.3d 736, 746 (2d Cir. 1998) (citing Raskin v. Wyatt Co. , 125 F.3d 55, 66 (2d Cir. 1997) ). Whether expert evidence should be admitted on a motion for summary judgment is a matter committed to the district court's "broad discretion." Yurman Design, Inc. v. PAJ, Inc. , 29 F. App'x 46, 48 (2d Cir. 2002) (internal citation and quotation marks omitted); see also Nora Beverages, Inc. , 164 F.3d at 746.

Under Rule 702 of the Federal Rules of Evidence, which codifies the standard for admissibility set forth by Daubert v. Merrell Dow Pharmaceuticals, Inc. , 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), the court's role is to determine whether the "expert" is qualified to testify as an expert. Rule 702 provides:

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.

Fed. R. Evid. 702.

"The proponent of the expert testimony has the burden to establish the [ Rule 702 ] admissibility requirements, with the district court acting as a gatekeeper to ensure that the expert's testimony both rests on a reliable foundation and is relevant to the task at hand." Novick v. AXA Network LLC , 714 F. App'x 22, 25 (2d Cir. 2017) (citing In re Pfizer Inc. Sec. Litig. , 819 F.3d 642, 658 (2d Cir. 2016) ) (internal citation omitted); see also United States v. Apple, Inc. , 791 F.3d 290, 335 n.24 (2d Cir. 2015) (citing United States v. Williams , 506 F.3d 151, 160 (2d Cir. 2007) ).

Though the Rule "embodies a liberal standard of admissibility," Nimely v. City of New York , 414 F.3d 381, 395 (2d Cir. 2005), "when an expert opinion is based on data, a methodology, or studies that are simply inadequate to support the conclusions reached, Daubert and Rule 702 mandate the exclusion of that unreliable opinion testimony." Cedar Petrochemicals, Inc. v. Dongbu Hannong Chem. Co. , 769 F.Supp.2d 269, 282 (S.D.N.Y. 2011) (internal citations omitted). "In Daubert , the United States Supreme Court confirmed that trial courts should serve as sentries, preventing juries from being overwhelmed by unsupportable speculation cloaked as expertise." Id. at 281–82.

Furthermore, the Second Circuit has held that to "warrant admissibility ... it is critical that an expert's analysis be reliable at every step." United States v. Morgan , 675 F. App'x 53, 55 (2d Cir. 2017), cert. denied , ––– U.S. ––––, 138 S.Ct. 176, 199 L.Ed.2d 103 (2017) (internal citation omitted). Of course, "the district court must focus on the principles and methodology employed by the expert, without regard to the conclusions the expert has reached or the district court's belief as to the correctness of those conclusions." Amorgianos v. Nat'l R.R. Passenger Corp. , 303 F.3d 256, 266 (2d Cir. 2002) (internal citation omitted). Nevertheless, as the Supreme Court has recognized,

conclusions and methodology are not entirely distinct from one another ... [N]othing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence that is connected to existing data only by the ipse dixit of the expert. A court may conclude that there is simply too great an analytical gap between the data and the opinion proffered.

Id. at 266 (citing Gen. Elec. Co. v. Joiner , 522 U.S. 136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997) ).

Moreover, "The standard to evaluate non-scientific expert testimony is whether the expert bases testimony upon professional studies or personal experience and employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field." Louisiana Wholesale Drug Co. v. Sanofi-Aventis , No. 07 Civ. 7343 (HB), 2008 WL 4580016, at *6 (S.D.N.Y. Oct. 14, 2008) (citing Kumho Tire Ltd. v. Carmichael , 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999) ).

1. Janet K. DeLeon

Defendants move to exclude the opinions and testimony of Plaintiffs' expert, Janet K. DeLeon. The motion is GRANTED.

Plaintiffs offer Ms. DeLeon as an expert in the process of developing and launching a generic drug. Plaintiffs offer two reports from Ms. DeLeon: (1) an initial report dated September 15, 2017 (Hamburger Decl. Ex. 10, Dkt. No. 438 ("DeLeon Rep.") ); and (2) a supplemental report dated October 23, 2017 (Id. at Ex. 11 ("DeLeon Supp. Rep.").) Ms. DeLeon was asked to answer the following question: whether there were any supply, equipment or manufacturing challenges that would have prevented five generic competitors – Amneal Pharmaceuticals, Dr. Reddy's Laboratories, Inc., Lupin Pharmaceuticals, Inc., Mylan Pharmaceuticals, Inc. ("Mylan"), and Sun Pharmaceutical Industries, Inc. – or Forest itself from launching a generic version of Namenda IR prior to July 2015. (See DeLeon Rep. ¶ 6.) Her answer is that there were none. She rests her opinion on "[her] educational background, [her] professional experience, [her] knowledge and understanding of pharmaceutical industry practices, [U.S. Food and Drug Administration ("FDA") ] regulations, guidelines, and enforcement policies, and...