ANTRIM PHARMACEUTICALS LLC, Plaintiff-Appellant, v. BIO-PHARM, INC., Defendant-Appellee.
No. 18-3434
United States Court of Appeals For the Seventh Circuit
Decided February 14, 2020
Argued September 16, 2019
Before BAUER, BRENNAN, and ST. EVE, Circuit Judges.
Antrim challenges the district court’s jury instructions, evidentiary rulings, and decision to allow Bio-Pharm to request lost profits as a remedy on its counterclaim. Bio-Pharm argues Antrim waived these arguments on appeal because Antrim agreed to a general verdict form and did not file a post-trial motion under
I.
As 2011 gave way to the new year, some in the pharmaceutical industry believed easy money was to be made. The patent for Lexapro, an anti-depressant with billions of dollars in yearly sales, was set to expire in March 2012. See Gary Robbins, Consumers to Save Big as Lexapro Patent Expires, SAN DIEGO UNION-TRIBUNE, Mar. 5, 2012, https://www.sandiegouniontribune.com/business/biotech/sdut-consumes-save-big-lexapro-patent-expires-2012mar05-htmlstory.html. The expiration of Lexapro’s patent presented a potentially lucrative business opportunity for pharmaceutical companies looking to sell the generic version of Lexapro, known as escitalopram.
Enter the startup company Antrim and the drug manufacturer Bio-Pharm. These companies appeared to be a perfect match to profit from Lexapro’s loss of patent protection. Brian Tambi, the head of Antrim, had extensive experience in growing pharmaceutical companies from the ground up. Bio-Pharm was a well-known contract manufacturer for the generic drug industry. And Antrim and Bio-Pharm had
The two companies forged ahead without a signed agreement. In May 2015, the Food and Drug Administration approved Antrim’s Abbreviated New Drug Application (ANDA) for escitalopram, which permitted Antrim to sell escitalopram and contract out its manufacturing to Bio-Pharm. Later that year, Bio-Pharm manufactured the first batch.
Bio-Pharm, however, never shipped the escitalopram to Antrim. Bio-Pharm insists it was not obligated to supply Antrim with the escitalopram because the companies never signed a new agreement after the term sheet expired. Although the companies lacked a written contract, Bio-Pharm claims Antrim had promised they would share equity in the new venture according to the now-expired term sheet. But when Antrim told Bio-Pharm that equity was off the table, Bio-Pharm contends it decided to leave the business venture.
Antrim tells a different story. According to Antrim, the two parties committed to an oral contract in early 2012, under which Bio-Pharm received a share of net profits instead of
Antrim sued Bio-Pharm for allegedly breaching the oral contract. Bio-Pharm counterclaimed on the theory of promissory estoppel, asserting it relied on Antrim’s false promises of shared equity in the venture. In the alternative, Bio-Pharm counterclaimed against Antrim for breaching the oral contract Antrim claimed existed.
Both parties filed motions in limine relevant to this appeal. Antrim argued the district court should preclude expert testimony by one of Bio-Pharm’s expert witnesses, Mark Schwartz, on how the FDA regulates ANDA holders. Bio-Pharm argued the district court should preclude expert testimony by Sean Brynjelsen, one of Antrim’s expert witnesses, on industry practices and to what degree Bio-Pharm’s alleged breach impaired the value of Antrim’s business under a lost enterprise value theory. The district court denied Antrim’s motion in limine to exclude Schwartz’s testimony on FDA practices, but it granted Bio-Pharm’s motions in limine to exclude those portions of Brynjelsen’s testimony on industry practices and Antrim’s losses under a lost enterprise value theory.
Several other motions are pertinent to this appeal. In the final pretrial order and later at the jury instruction conference, Antrim proposed Jury Instruction No. 8. That instruction stated that under FDA policy the holder of an ANDA is also the owner of the product underlying that ANDA. The district court rejected Jury Instruction No. 8 after finding the instruction on what an ANDA means was irrelevant to the case. DE 169 at 39. Antrim also filed a motion to bar Bio-Pharm from requesting lost profits as a remedy for its counterclaim
The case went to trial, and the district court used a general verdict form after neither party objected.1 Following the jury’s verdict in favor of Bio-Pharm on Antrim’s claim and in favor of Antrim on Bio-Pharm’s counterclaim, Antrim timely appealed.
II.
On appeal, Antrim alleges the district court erred by: (1) rejecting Jury Instruction No. 8, (2) denying its motion to preclude Schwartz’s testimony on FDA practices, (3) granting Bio-Pharm’s motion to preclude Brynjelsen’s testimony on industry practices, (4) granting Bio-Pharm’s motion to preclude Brynjelsen’s testimony on Antrim’s lost enterprise value, and (5) allowing Bio-Pharm to request lost profits as a remedy for its counterclaim.2
Bio-Pharm incorrectly assumes that on appeal Antrim challenges the sufficiency of the evidence. For example, Bio-Pharm contends that [a] general verdict, without more, will ... give rise to the presumption that material fact issues have been resolved in favor of the prevailing party. Freeman v. Chicago Park Dist., 189 F.3d 613, 616 (7th Cir. 1999) (quoting Dual Mfg. & Eng’g, Inc. v. Burris Indus., Inc., 619 F.2d 660, 667 (7th Cir. 1980)). Although a true statement of the law, it is irrelevant to this appeal because Antrim challenges pretrial rulings, not the jury’s factual findings. Therefore, Antrim has not waived any of the issues it raises on appeal by failing to file for a renewed judgment as a matter of law. Bio-Pharm is also correct that [a] party’s failure to comply with
A. Jury Instructions
We review the legal accuracy of [] jury instruction[s] de novo, but we evaluate the particular phrasing for abuse of discretion. United States v. Beavers, 756 F.3d 1044, 1056 (7th Cir. 2014) (citing United States v. Dickerson, 705 F.3d 683, 688 (7th Cir. 2013)). If a court’s instructions were legally accurate, [r]eversal is warranted only if it appears both that the jury was misled and that the instructions prejudiced the defendant. United States v. McKnight, 655 F.3d 786, 791 (7th Cir. 2011) (quoting United States v. Curry, 538 F.3d 718, 731 (7th Cir. 2008)); see also Jimenez v. City of Chicago, 732 F.3d 710, 717 (7th Cir. 2013) (citing Gile v. United Airlines, Inc., 213 F.3d 365, 374–75 (7th Cir. 2000)) (If the instructions were deficient, we ask whether the jury was confused or misled by the instructions. Even if we believe that the jury was confused or misled, we would need to find that the defendants were prejudiced before ordering a new trial.).
According to Antrim, the district court erred by failing to instruct the jury on the legal significance of Antrim holding an escitalopram ANDA. Before trial, Antrim proposed Jury Instruction No. 8, which directed the jury to conclude that Antrim owns [e]scitalopram according to FDA regulation and policy if it found that Antrim is the holder of the ANDA for [e]scitalopram. DE 173-3 at 13. Since the district court rejected Jury Instruction No. 8 and never instructed the jury on the preclusive effects of ANDA ownership, Antrim claims the trial devolved into a debate about [whether] Bio-Pharm[] ... owned an interest in the ANDA, or was promised an
Neither party disputes that Antrim owned an escitalopram ANDA and was an ANDA holder for escitalopram under FDA regulations. But the parties dispute the consequences of that ownership. Antrim argues ANDA holders own the products manufactured in accordance with those ANDAs as well as the ANDAs themselves. Antrim insists that because it owns an ANDA for escitalopram and Bio-Pharm was aware of that ownership, Bio-Pharm accepted its role as a contractor and not a co-owner. Bio-Pharm’s position is that although Antrim held an ANDA for escitalopram, Antrim did not own the escitalopram manufactured by Bio-Pharm under the ANDA unless Bio-Pharm agreed to sell it. We conclude FDA regulations support Bio-Pharm’s position.
Before manufacturing and marketing a generic drug, a company must file an ANDA with the FDA. See FDA, Abbreviated New Drug Application (ANDA), https://www.fda.gov/drugs/types-applications/abbreviated-new-drug-application-anda (May 22, 2019). To receive FDA approval, ANDA applicants are not required to replicate original costly clinical trials, but they must demonstrate their generic drug functions in the same manner as the non-generic version of the drug. Id. After the FDA accepts an ANDA filed by an ANDA applicant, that
Before the district court, the parties disputed ownership of the escitalopram, not ownership of the ANDA. As described above, these are unrelated concepts; whether Antrim had an ownership interest in the ANDA was irrelevant to the question of ownership. Reversal is not appropriate because Antrim has failed to show the district court confused or misled the jury by not permitting Jury Instruction No. 8. See Jimenez, 732 F.3d at 717. In fact, Jury Instruction No. 8 likely posed a risk of confusing or misleading even the most astute jurors given its irrelevant language on ANDA ownership.
B. Motions in Limine
Antrim next challenges the district court’s rulings on three motions in limine. We review rulings on motions in limine for abuse of discretion. See Carmody v. Bd. of Trustees. of the Univ. of Ill., 893 F.3d 397, 407 (7th Cir. 2018) (citing Empire Bucket, Inc. v. Contractors Cargo Co., 739 F.3d 1068, 1071 (7th Cir. 2014)); United States v. Johnson, 916 F.3d 579, 586–87 (7th Cir. 2019) (quoting United States v. Causey, 748 F.3d 310, 316 (7th Cir. 2014)) (We afford the district court’s evidentiary rulings special deference and find an abuse of discretion only where no reasonable person could take the view adopted by the trial court.).
1. Schwartz’s testimony on FDA practices
Mark Schwartz was an expert witness for Bio-Pharm and a former FDA lawyer. Schwartz had extensive experience with federal drug regulations: he spent 13 years at the FDA before joining a private firm that advises generic drug manufacturers. In his expert witness report, Schwartz disclosed he intended to testify about what the FDA would infer based on Antrim’s status as an ANDA holder for escitalopram. Specifically, Schwartz planned to testify that the FDA would treat the relationship between Antrim and Bio-Pharm as a contractual relationship for Bio-Pharm to manufacture the drug at issue on behalf of Antrim because Bio-Pharm was identified as the manufacturer on the ANDA application. DE 154 Ex. 1 at 2. Schwartz also planned to testify that the FDA
Antrim’s first argument is easily rejected. Schwartz’s testimony that ownership of an ANDA does not determine ownership of the underlying product is legally correct. Just as the district court did not err by rejecting Jury Instruction No. 8, the district court did not err by rejecting Antrim’s motion in limine to preclude Schwartz’s testimony.
Antrim’s second argument—that the district court should not have permitted Schwartz to testify on FDA statutes and regulations—is more complicated. Experts generally may not testify on pure issues of law, such as the meaning of statutes or regulations. See, e.g., United States v. Caputo, 517 F.3d 935, 942 (7th Cir. 2008) (citing Bammerlin v. Navistar Int’l Transportation Corp., 30 F.3d 898, 900 (7th Cir. 1994)) (The ... meaning of the statute and regulations [is] a subject for the court, not for testimonial experts.). But courts have permitted regulatory experts to testify on complex statutory or regulatory frameworks when that testimony assists the jury in understanding a party’s actions within that broader framework. See, e.g., In re Mirena IUD Prods. Liab. Litig., 169 F. Supp. 3d 396, 478–79 (S.D.N.Y. 2016) (Dr. Parisian‘s experience as an
The district court properly admitted Schwartz’s testimony on the FDA’s statutory and regulatory authority. His testimony helped the jury better grasp the relationship between Antrim and Bio-Pharm in light of the FDA’s regulations on generic pharmaceuticals. Schwartz’s testimony on ANDA ownership assisted the jury with understanding how Antrim’s ownership of the escitalopram ANDA was irrelevant to whether Antrim owned the escitalopram manufactured by Bio-Pharm. And that testimony was particularly important in this case, where one of Antrim’s witnesses incorrectly stated there is no difference between ownership of an ANDA and ownership of the underlying product. DE 213 at 406. We conclude the district court did not abuse its discretion by denying
2. Brynjelsen’s intended testimony on industry practices
Antrim then challenges the preclusion of testimony from its expert, Sean Brynjelsen, on industry practices. With over 20 years of experience working for pharmaceutical companies, Brynjelsen intended to testify that, according to his experience and well-known industry practice and norms, contract manufacturers like Bio-Pharm never [hold] an ownership interest in the drugs falling under the ANDA. DE 140 at 12. But after Bio-Pharm filed a motion in limine to preclude Brynjelsen’s testimony on industry practices, the district court prohibited Brynjelsen from testifying that Antrim’s ownership of the ANDA for escitalopram somehow makes it less likely or impossible that Antrim promised Bio-Pharm an equity share. DE 168 at 4.
On appeal, Antrim argues the district court erred by granting Bio-Pharm’s motion in limine because Brynjelsen’s testimony would have established that Antrim’s ownership of the escitalopram ANDA meant Antrim was more likely to own escitalopram manufactured under that ANDA. But the district court’s decision to preclude Brynjelsen’s testimony on this issue does not rise to an abuse of discretion. During his deposition, Brynjelsen admitted he did not have specific knowledge of whether Antrim and Bio-Pharm ever agreed to split equity in the escitalopram produced under the ANDA. DE 142 at 33. Without specific knowledge of any agreement between Antrim and Bio-Pharm, Brynjelsen’s intended testimony on general industry customs and practices was not relevant to whether the parties entered into an
3. Brynjelsen’s intended testimony on Antrim’s lost enterprise value
Antrim also sought Brynjelsen’s testimony on how Bio-Pharm’s alleged breach reduced Antrim’s profits and reduced the value of Antrim’s business. But the district court excluded Brynjelsen’s latter calculation after finding that Antrim had failed to show a legal basis or a proper evidentiary foundation for recoverability of damages for lost enterprise value in this case (as distinguished from lost profits). DE 174.
Antrim argues the district court erred because federal courts, applying Illinois law,4 permit breach of contract awards based on theories of lost enterprise value. But Antrim oversimplifies Illinois law, under which damages cannot be based on potential or future loss, unless it is reasonably certain to occur, nor can damages be based on speculation and conjecture. Platinum Tech., Inc. v. Fed. Ins. Co., 282 F.3d 927, 933 (7th Cir. 2002) (citing Schoeneweis v. Herrin, 443 N.E.2d 36, 42 (1982); Harp v. Ill. Cent. Gulf R.R. Co., 370 N.E.2d 826, 829 (1977)). See also Westlake Fin. Grp. v. CDH-Delnor Health Sys., 25 N.E.3d 1166, 1179 (Ill. App. Ct. 2015) (quoting Thornhill v. Midwest Physician Ctr. of Orland Park, 787 N.E.2d 11 (Ill. App. Ct.
Brynjelsen failed to show the damages to Antrim’s business value were reasonably certain to occur; he instead based his estimate on impermissible conjecture and speculation. To reach his estimate, he took the annual profits he believed Antrim would have received had Bio-Pharm provided the escitalopram and multiplied that figure by between 8.3 and 24 times to account for precedent transactions involving other acquired companies. DE 140 at 8. But, as Brynjelsen admitted in his deposition, he never compared those acquired companies to Antrim. In addition to this exercise in conjecture, another problem arises: these damages would never occur unless Antrim chose to sell itself. And Antrim has provided no evidence that its owners ever intended to sell the business or had ever engaged in discussions with potential buyers. Thus, Brynjelsen’s lost value calculations assumed Bio-Pharm and Antrim would successfully introduce escitalopram into the market, the venture would prove profitable, Antrim’s market value would rise to between 8.3 and 24 times its annual profits, and Antrim would sell itself to an interested buyer. This chain of assumptions grows weaker with each additional link. Brynjelsen’s potential testimony, replete with assumptions, was based on improper speculation and conjecture. Furthermore, because Antrim provided no evidence that it intended to sell itself, Brynjelsen failed to show the loss of Antrim’s business value was reasonably certain to have occurred. Platinum Tech., Inc., 282 F.3d at 933 (7th Cir. 2002) (citations omitted). Applying Illinois law, the district court therefore did not abuse its discretion by barring Antrim from presenting to the jury Brynjelsen’s calculations on Antrim’s lost enterprise value.
Lastly, Antrim argues the district court erred by allowing Bio-Pharm to request lost profits as an alternative remedy for its counterclaim. Roughly three months before the trial began—and more than two years after its initial
Here, Antrim argues the district court erred by allowing Bio-Pharm’s counterclaim to advance to trial because Bio-Pharm missed the
III.
The district court correctly ruled on the various evidentiary and procedural questions presented in this case, so we AFFIRM its judgment.