In re: Lipitor Antitrust Lit v.
14-4632
| 3rd Cir. | Jan 3, 2018Background
- RP Healthcare (California pharmacists) sued over a settlement between Pfizer and Ranbaxy concerning Lipitor, alleging a per se violation of California's Cartwright Act.
- The broader MDL had produced prior Third Circuit opinions (Lipitor III and Lipitor IV) addressing jurisdiction and merits questions in related consolidated cases.
- Jurisdiction was disputed: initial federal jurisdictional basis (federal patent “arising under”) was erroneous, so the Third Circuit remanded limited discovery to determine defendants’ citizenship. By final judgment the parties stipulated complete diversity, and the District Court retained jurisdiction under 28 U.S.C. § 1332.
- On the merits, RP Healthcare characterized the Pfizer–Ranbaxy agreement as a per se illegal “reverse settlement” (a patent-holder pays an alleged infringer to stay out of the market).
- The District Court had dismissed RP Healthcare under Rule 12(b)(6) for failing to value the alleged reverse payment; the Third Circuit previously rejected that stringent valuation requirement for other plaintiffs but RP Healthcare pressed a per se Cartwright Act theory.
- The District Court also determined it lacked personal jurisdiction over defendant Daiichi Sankyo Co., Ltd.; the Third Circuit affirmed that ruling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Federal jurisdiction | Federal forum proper because patent defenses supported removal | Removal based on patent defenses was improper; but diversity exists at final judgment | Court: jurisdiction proper at time of final judgment under §1332 (Caterpillar principle) |
| Nature of claim (per se vs rule of reason) | Agreement is a per se Cartwright Act violation as a reverse settlement | Reverse settlements are not per se illegal under California law; require rule-of-reason analysis | Court: RP Healthcare’s per se claim fails; Cipro controls—reverse settlements get structured rule-of-reason scrutiny |
| Characterization of the agreement (was it a reverse settlement?) | Settlement covered post-patent period only, so not a reverse settlement | Settlement covered periods within the term of other Lipitor patents that extended to 2013–2017, so it is a reverse settlement | Court: Agreement has the attributes of a reverse settlement; characterization by RP Healthcare is incorrect |
| Personal jurisdiction over Daiichi Sankyo Ltd. | Alleged that Daiichi conditioned purchase of Ranbaxy stock on the settlement, supporting jurisdiction | Daiichi is a Japanese corporation with no purposeful contacts with California | Court: RP Healthcare failed to meet its burden; no purposeful availment; no personal jurisdiction over Daiichi |
Key Cases Cited
- In re: Lipitor Antitrust Litig., 855 F.3d 126 (3d Cir.) (jurisdictional opinion addressing citizenship and removal)
- In re: Lipitor Antitrust Litig., 868 F.3d 231 (3d Cir.) (merits opinion reversing dismissals in related complaints)
- Caterpillar Inc. v. Lewis, 519 U.S. 61 (1996) (federal jurisdiction may be tested at time of final judgment)
- FTC v. Actavis, Inc., 570 U.S. 136 (2013) (reverse-payment settlements implicate antitrust when payments are large and unjustified)
- In re Cipro Cases I & II, 61 Cal.4th 116 (2015) (California Supreme Court applying Actavis; reverse settlements evaluated under structured rule-of-reason)
- Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422 (2007) (district court may resolve personal jurisdiction before merits)
- IMO Indus. v. Kiekert AG, 155 F.3d 254 (3d Cir.) (plaintiff bears burden to prove jurisdiction by a preponderance)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (personal jurisdiction requires purposeful availment)