Sage Chem. v. Supernus Pharm.

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SAGE CHEMICAL, INC., et al., Plaintiffs, v. SUPERNUS PHARMACEUTICALS, INC., et al., Defendants.

Civil Action No. 22-1302-CJB

United States District Court, D. Delaware

June 4, 2024

Dominick T. Gattuso, HEYMAN ENERIO GATTUSO & HIRZEL LLP Wilmington, DE; W. Gordon Dobie, WINSTON & STRAWN LLP Chicago, IL; Susannah P. Torpey, WINSTON & STRAWN LLP New York, NY; Robert A. Julian, BAKER & HOSTETLER LLP, San Francisco, CA, Attorneys for Plaintiffs.

Daniel M. Silver and Alexandra M. Joyce, MCCARTER & ENGLISH, LLP, Wilmington, DE; Erick J. Stock, Shireen A. Barday and Joshua J. Obear, GIBSON DUNN & CRUTCHER LLP, New York, NY, Attorneys for Defendants U.S. WorldMeds Partners, LLC and USWM, LLC.

MEMORANDUM OPINION

BURKE,UNITED STATES MAGISTRATE JUDGE

In this case, Plaintiffs Sage Chemical, Inc. (“Sage”) and TruPharma, LLC (“TruPharma” and collectively with Sage, “Plaintiffs”) brought antitrust-related claims against Defendants Supernus Pharmaceuticals, Inc. (“SPI”), MDD U.S. Enterprises, LLC (f/k/a USWM Enterprises, LLC), MDD U.S. Operations, LLC (f/k/a U.S. WorldMeds, LLC), U.S. WorldMeds Partners, LLC, USWM, LLC, Paul Breckinridge Jones, Herbert Lee Warren, Jr., Henry van den Berg, Kristen L. Gullo and Britannia Pharmaceuticals Limited (“Britannia”). Pending before the Court^[1] is a motion to dismiss filed by Defendants U.S. WorldMeds Partners, LLC and USWM, LLC, (collectively, the “Reorganized Entities”), pursuant to Federal Rule of Civil Procedure 12(b)(6) (the “Motion”). (D.I. 48) For the reasons set forth below, the Court GRANTS the Motion.

I. BACKGROUND

A. Factual Background

The Court hereby incorporates its summary of the factual background set out in its May 9, 2024 Memorandum Opinion (“May 9 MO”) regarding Defendants' Omnibus Motion to Dismiss and its May 31, 2024 Memorandum Opinion regarding the Individual Defendants' Motion to Dismiss. (D.I. 376 at 2-6; D.I. 386 at 2-5) Further factual background information relevant to the pending Motion will be set out below.

US WorldMeds, LLC was the original operating company for the Apokyn business relevant to this case; the entity was formed in 2001. (D.I. 16 at ¶ 41) From 2015 until 2020, USWM Enterprises, LLC was the parent company to U.S. WorldMeds, LLC. (Id. at ¶¶ 40, 42, 44) In March 2020, U.S. WorldMeds Partners, LLC was formed, and on April 28, 2020, SPI and US WorldMeds Partners, LLC entered into a Sale and Purchase Agreement (“SPA”); pursuant to the SPA, SPI would acquire the outstanding equity of USWM Enterprises, LLC, including the United States rights to Apokyn. (Id. at ¶¶ 44, 57, 60, 154) The day after the SPA was executed, the members of U.S. WorldMeds, LLC incorporated USWM, LLC. (Id. at ¶¶ 45, 46, 52)

On June 9, 2020, the transaction closed. (Id. at ¶¶ 57, 154) As a result of the sale, certain entities that were once part of the U.S. WorldMeds business became subsidiaries of SPI, including U.S. WorldMeds, LLC (which changed its name to MDD U.S. Operations, LLC) and USWM Enterprises, LLC (which changed its name to MDD U.S. Enterprises, LLC) (collectively, SPI, MDD U.S. Enterprises, LLC and MDD U.S. Operations, LLC will be referred to herein as the “Supernus Defendants”). (Id. at ¶¶ 43, 57) The transaction resulted in an upfront payment to U.S. WorldMeds Partners, LLC of $300 million dollars, and U.S. WorldMeds Partners, LLC also has the potential to receive up to an additional $230 million dollars based on the achievement of certain regulatory and commercial milestones, such as passing certain sales thresholds for Apokyn. (Id. at ¶ 60)

Additional relevant factual allegations will be discussed below in Section III.

B. Procedural Background

Plaintiffs filed this action on October 3, 2022. (D.I. 2) On October 26, 2022, Plaintiffs filed the operative First Amended Complaint (“FAC”). (D.I. 16) Plaintiffs assert the following counts of the six-count FAC against, inter alia, the Reorganized Entities:

• Count 1: Agreements that Unreasonably Restrain Trade, Violations of Section 1 of the Sherman Act, 15 U.S.C. § 1, Section 3 of the Clayton Act, 15 U.S.C. § 14, New Jersey Antitrust Act, N.J.S.A. 56:9-3, (id. at ¶¶ 285-93);

• Count 3: Monopolization and Attempted Monopolization in the Alternative, Violation of Section 2 of the Sherman Act, 15 U.S.C. § 2, New Jersey Antitrust Act, N.J.S.A. 56:9-4(a), (id. at ¶¶ 304-17); and

• Count 6: Tortious Interference With Prospective Economic Advantage, (id. at ¶¶ 328-35).

On January 10, 2023, the Reorganized Entities filed the instant Motion. (D.I. 48) The Motion was fully briefed as of April 12, 2023. (D.I. 102)

II. LEGAL STANDARD

In the May 9 MO, the Court set out the familiar standard of review for a Rule 12(b)(6) motion to dismiss for failure to state a claim, as articulated by the United States Court of Appeals for the Third Circuit in Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009). (D.I. 376 at 8) The Court incorporates that standard into this opinion by reference, and will follow it herein.

III. DISCUSSION

With the Motion, the Reorganized Entities argue that they should be dismissed from this case because each of Plaintiffs' theories as to why they should be liable for the alleged anticompetitive conduct of their former affiliates are meritless. They make three primary arguments in this regard. The Court will address them in turn.

A. Plaintiffs Plead No Pre-Sale Wrongful Conduct by the Reorganized Entities

First, the Reorganized Entities argue that Plaintiffs fail to plead that they engaged in any wrongful conduct prior to the 2020 sale of the Apokyn business to SPI (or “pre-sale conduct”)- because these companies did not exist much prior to that transaction. (D.I. 50 at 5)

In the FAC, Plaintiffs define the Reorganized Entities, collectively with Defendants U.S. WorldMeds, LLC (pre-sale to SPI), USWM Enterprises, LLC (pre-sale to SPI), and Mr. Jones, Mr. Warren, Jr., Mr. van den Berg and Ms. Gullo, as the “US WorldMeds Defendants.” (D.I. 16 at ¶ 56) With regard to the alleged wrongful pre-sale conduct, the FAC asserts that the US WorldMeds Defendants committed multiple overt acts in furtherance of Defendants' anticompetitive scheme. These include: (1) establishing a limited distribution network with the specialty pharmacies selling Apokyn, in order to restrict access to the Apokyn drug and pen; (2) preparing and submitting sham citizen petitions to the United States Food and Drug Administration; and (3) negotiating and entering into a September 2019 Agreement with both Britannia and Apokyn pen supplier Becton, Dickinson and Company to foreclose Plaintiffs from access to Apokyn pens. (Id. at ¶ 58) All of this conduct occurred before 2020. The limited distribution network was in place in 2018, (id. at ¶¶ 99-107), the citizen petitions at issue were submitted in 2015 and 2019, (id. at ¶¶ 90, 111, 143), and the September 2019 Agreement was executed (as one might expect) in September 2019, (id. at ¶ 121).

So how do Plaintiffs assert that Reorganized Entities could be liable for events occurring before those entities ever existed? Plaintiffs do so by arguing that pursuant to the SPA, U.S. WorldMeds Partners, LLC “expressly retains the liabilities of U.S. WorldMeds.” (D.I. 82 at 7) More specifically, Plaintiffs point to Section (6)(a)(iv)(a) of the SPA, which they say provides that U.S. WorldMeds Partners, LLC “retained liability for claims arising out of ‘liabilities and operation of the Company Group and its businesses prior to Completion' of the sale.” (Id. (quoting D.I. 87, ex. 4 at 32-33))^[2] The “Company Group[,]” in turn, is defined by the SPA to include, inter alia, U.S. WorldMeds, LLC. (D.I. 87, ex. 4 at 7) According to Plaintiffs, this provision “is sufficient to raise an inference that the Reorganized Entities remain liable for U.S. WorldMeds' conduct”-presumably even conduct that occurred before the Reorganized Entities existed. (D.I. 82 at 8)

The Court agrees with the Reorganized Entities that this provision does not appear to be relevant to Plaintiffs' claims against Defendants. (D.I. 102 at 2) Plaintiffs ignore that Section (6)(a)(iv)(a) is all about the claims that SPI may bring against U.S. WorldMeds Partners, LLC. Indeed, Section 6(a) begins by stating that “[s]ubject to the limitations set forth in Schedule 6, Purchaser [SPI] may bring any claims it may have against Seller [US WorldMeds Partners, LLC]” as are further set out in that subsection (including in Section 6(a)(iv)(a)). (D.I. 87, ex. 4 at 32 (emphasis added)) Plaintiffs fail to explain how this language amounts to a statement that the Reorganized Entities retain liability for claims regarding pre-sale conduct brought by entities like Plaintiffs. (D.I. 102 at 1-2); cf. In re Publ'n Paper Antitrust Litig., Civil Action No. 3:04md1631 (SRU), 2013 WL 3155371, at *3 (D. Conn. June 20, 2013) (denying plaintiffs' motion to substitute or join the former parent company (“SEO”) of the defendant (“SENA”) as a defendant, where plaintiff argued that SEO assumed direct liability for SENA's alleged anticompetitive misconduct under the terms of a Sales Purchase Agreement (“SPA”), and concluding that: (1) “given SENA's separate corporate existence as SEO's subsidiary prior to . . . 2007 [], SEO was never directly liable for SENA's alleged misconduct in the first place, and therefore had no liability to []retain[;]” and (2) nothing in the SPA indicated that SEO affirmatively assumed liability for SENA's alleged anticompetitive activity) (internal quotation marks omitted).^[3] For the above reasons, the FAC does not plausibly assert that the Reorganized Entities are liable for any pre-sale anticompetitive conduct.

B. Plaintiffs Plead No Post-Sale Wrongful Conduct by the Reorganized Entities

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