In Re Flonase Antitrust Litigation
879 F.3d 61
| 3rd Cir. | 2017Background
- Private indirect purchasers sued GSK in federal court alleging sham citizen petitions delayed generic Flonase and inflated prices; a class was certified and a settlement was negotiated and approved by the district court.
- The settlement released claims of all class members and included a permanent injunction barring them ("including Louisiana") from suing GSK in any state or federal court.
- Louisiana, an indirect purchaser and potential class member, received only the CAFA notice (not the individualized class notice) and did not affirmatively opt out or otherwise participate.
- GSK filed an ancillary enforcement action in the approving federal court seeking to enjoin the Louisiana Attorney General from pursuing claims in Louisiana state court as released by the settlement.
- The District Court dismissed GSK’s enforcement motion, holding the Eleventh Amendment barred involuntary joinder/enforcement against Louisiana because the State had not waived sovereign immunity. The court also denied GSK’s Rule 60(b) motion for newly discovered evidence.
- The Third Circuit affirmed: the Eleventh Amendment covers the settlement approval/enforcement here and Louisiana did not waive sovereign immunity by receiving CAFA notice or remaining silent; denial of Rule 60(b) relief was not an abuse of discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a motion approving a class settlement that enjoins a State from suing in state court constitutes a "suit" against the State under the Eleventh Amendment | GSK: federal court approval and ancillary jurisdiction permit enforcement; settlement is effectively a consent decree enforceable in federal court | Louisiana: Eleventh Amendment bars involuntary inclusion; the injunction in the settlement would be a suit against the State and requires waiver | Held: Yes — Eleventh Amendment covers such a motion; enjoining a State from suing in its courts is a suit against the State |
| Whether Louisiana waived sovereign immunity by receiving CAFA notice and not acting | GSK: silence after receiving CAFA notice and failure to opt out equates to waiver; settlement should bind absent class members | Louisiana: mere receipt of CAFA notice and silence is insufficient; waiver requires a clear, voluntary consent or equivalent litigation act | Held: No — receiving CAFA notice and inaction did not constitute a clear waiver of sovereign immunity |
| Whether federal ancillary jurisdiction supports enforcement of the settlement against the State | GSK: Kokkonen ancillary jurisdiction over settlement enforcement justifies injunction against Louisiana | Louisiana: ancillary jurisdiction cannot be used to bind a State when Eleventh Amendment immunity was not waived in the primary suit | Held: Ancillary jurisdiction cannot supply jurisdiction to bind a non-consenting State; enforcement suit barred by Eleventh Amendment |
| Whether the district court abused its discretion denying Rule 60(b)(2) newly discovered evidence relief | GSK: discovery that Humana filed a claim on Louisiana’s behalf is newly discovered and would have affected settlement enforcement analysis | Louisiana: GSK failed to show it exercised reasonable diligence or that the evidence could not have been obtained earlier via court process | Held: No abuse of discretion — GSK did not show the evidence could not have been discovered earlier with reasonable diligence |
Key Cases Cited
- Cohens v. Virginia, 19 U.S. 264 (1821) (definition of a "suit" and "commenced or prosecuted")
- Missouri v. Fiske, 290 U.S. 18 (1933) (Eleventh Amendment covers motions to enjoin a State from suing in its own courts)
- Pennhurst State School & Hospital v. Halderman, 465 U.S. 89 (1984) (Eleventh Amendment protects States from suits that would restrain or interfere with state government)
- Kokkonen v. Guardian Life Insurance Co., 511 U.S. 375 (1994) (federal ancillary jurisdiction for enforcing settlements arises only when independent basis for federal jurisdiction exists)
- Peacock v. Thomas, 516 U.S. 349 (1996) (ancillary jurisdiction requires primary lawsuit to have independent federal jurisdiction)
- Frew ex rel. Frew v. Hawkins, 540 U.S. 431 (2004) (private parties may sue state officials to enforce settlement in certain circumstances)
- College Savings Bank v. Florida Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666 (1999) (State waiver of immunity requires a clear and unequivocal declaration)
- Lapides v. Board of Regents of Univ. System of Ga., 535 U.S. 613 (2002) (certain litigation acts such as removal can operate as waiver)
- Ex parte Young, 209 U.S. 123 (1908) (suit against state officials to enjoin ongoing violations of federal law may avoid Eleventh Amendment)
- Thomas v. FAG Bearings Corp., 50 F.3d 502 (8th Cir. 1995) (involuntary joinder of a State is barred because it compels the State to litigate under federal dictates)