United States District Court for the District of Columbia
In re: Nifedipine Antitrust Litigation.
The opinion of the court was delivered by: RICHARD LEON, District Judge
MEMORANDUM OPINION & ORDER
Before the Court are the Joint Motion of Elan and Biovail to
Dismiss the Complaints and Teva's Motions to Dismiss the
Consolidated Class Action Complaints. Upon consideration of the
defendants' motions, the plaintiffs' oppositions, the defendants'
replies, the various supplemental filings of both parties and the
entire record herein, the Court GRANTS IN PART and DENIES IN PART
the defendants' motions to dismiss. Specifically, the Court
grants the motion to dismiss the claims for injunctive relief for
lack of subject matter jurisdiction. Because the Court lacks
jurisdiction over the End-Payor Plaintiffs' sole federal claims,
the Court likewise lacks jurisdiction over, and must dismiss, the
End-Payor Plaintiffs' state law claims.
A. The Parties
The defendants in this case, Biovail Corporation, Elan
Corporation, and Teva Pharmaceutical Industries (collectively
"the defendants"), are pharmaceutical companies involved in the manufacture and distribution of generic Adalat
CC, a once-a-day prescription drug used in the treatment of
hypertension. Sherman Act Second Consolidated Amended Class
Action Complaint ("SACC") ¶¶ 13-15; End-Payor Consolidated
Amended Class Action Complaint ("EPCC") ¶¶ 15-21. The plaintiffs
in this case fall into three general categories. The Sherman Act
Class Plaintiffs are comprised of companies, such as retail and
wholesale drug stores and distributors, that bought generic
Adalat CC from the defendants.*fn1 SACC ¶¶ 7-12. The Sherman
Act Non-Class Plaintiffs include major national drug store chains
that purchased generic Adalat CC from the defendants.*fn2
The End-Payor Plaintiffs include health and benefit funds for
unions, an HMO, a consumer advocacy group, and one individual
user of generic Adalat CC.*fn3 EPCC ¶¶ 7-14. Although the
End-Payor Plaintiffs purchased generic Adalat CC, they did not
purchase it directly from any of the defendants. Id. The
plaintiffs bring this antitrust action alleging that Biovail,
Elan, and Teva conspired to allocate the sales of generic Adalat
CC so as to reduce competition among the generics and the branded
drug and to artificially, and illegally, inflate prices for both. SACC
¶ 2. The plaintiffs seek treble damages and injunctive relief.
B. Regulatory History of Generic Adalat CC and the Agreement
Between Biovail and Elan
Nifedipine, the drug at the center of this litigation, is a
coronary vasodilator used for the treatment of hypertension. SACC
¶ 31; EPCC ¶ 48. Bayer Corporation holds an approved New Drug
Application ("NDA")*fn4 for an extended release formulation
of nifedipine that it sells under the name Adalat CC®*fn5
SACC ¶ 34; EPCC ¶ 52. Adalat CC is marketed in the United States
in 30 mg, 60 mg, and 90 mg dosages.*fn6 EPCC ¶ 57. Bayer's
Adalat CC extended release tablets are subject to two United
States patents. Id.
On April 30, 1997, Elan filed the first Abbreviated New Drug
Application ("ANDA") with the Food and Drug Administration
("FDA"), seeking approval to produce a generic version of 30 mg Adalat CC. SACC ¶ 37; EPCC ¶
58. In its ANDA, Elan certified that its manufacture, use, sale,
or importation of the 30 mg generic Adalat CC either would not
infringe on any of Bayer's patents or that the patents were
invalid.*fn7 SACC ¶¶ 28, 37; EPCC ¶ 63. On August 22, 1997,
Bayer filed a patent infringement suit against
Elan.*fn8*fn9 SACC ¶ 38; EPCC ¶ 64. Under FDA
regulations, Elan's ANDA was put on hold pending the resolution
of the patent suit. SACC ¶ 38; EPCC ¶ 64. With that suit pending,
Biovail filed on ANDA on December 9, 1997 for generic versions of
30 mg and 60mg Adalat CC. SACC ¶ 39; EPCC ¶ 65. Six days later,
on December 15, 1997, it entered into an exclusive agreement with
Teva for the marketing and distribution of its products in the
United States ("the Biovail/Teva Agreement").
On March 16, 1999, the United States District Court for the
Northern District of Georgia found that Elan's 30 mg generic
product did not infringe Bayer's patent. SACC ¶ 40. Two months
later, the FDA, on May 28, 1999, notified Elan that it had
tentatively approved Elan's ANDA for 30 mg generic Adalat CC.
SACC ¶ 43; EPCC ¶ 68. A month later, on June 29, 1999, the FDA
tentatively approved Biovail's ANDA for 30mg and 60 mg Adalat CC generics. SACC ¶ 43; EPCC ¶ 69. The next day,
June 30, 1999, Elan filed an ANDA to produce a 60mg generic for
Adalat CC. SACC ¶ 44; EPCC ¶ 70. However, on October 4, 1999,
while still awaiting final approval on its 30 mg generic, Biovail
entered into an exclusive agreement to market and distribute
Elan's 30 mg generic ("the Distribution Agreement"), which had
only been tentatively approved by the FDA four weeks earlier than
Biovail's 30 mg generic. SACC ¶ 45; EPCC ¶ 71. In exchange for
the marketing and distribution rights, Biovail agreed to pay Elan
at least $73.5 million over a six-year period. Id.
On March 10, 2000, the FDA granted a final approval of Elan's
30mg generic. SACC ¶ 48; EPCC ¶¶ 58, 60, 72. Three days later, on
March 13, 2000, Biovail announced that, pursuant to a
Distribution Agreement with Elan, it would launch Elan's 30 mg
generic Adalat CC, using Teva as the exclusive U.S.
Distributor.*fn10 SACC ¶ 49; EPCC ¶ 73. Under FDA
regulations, Elan received a 180-day period of market exclusivity
because it was the first ANDA filer to receive approval for the
30mg generic. SACC ¶ 29.
On December 4, 2000, the FDA granted final approval to Biovail
for its 30 mg and 60 mg generic Adalat. SACC ¶ 53; EPCC ¶¶ 59,
77. Immediately thereafter, Biovail launched a 60 mg generic version of Adalat CC. SACC ¶ 53; EPCC ¶
77. As the first filer on the 60 mg generic, Biovail qualified
for the 180-day period of exclusivity, which ran until
approximately June 4, 2001. SACC ¶ 59. Although Elan's period of
market exclusivity for the 30 mg generic had expired by that
point in time, Biovail chose not to launch its own 30 mg generic,
continuing to distribute Elan's 30 mg generic product. SACC ¶ 53.
On March 20, 2001, the FDA tentatively approved Elan's 60 mg
generic. SACC ¶ 56. Final approval was granted October 26, 2001,
more than four months after Biovail's period of market
exclusivity on the 60 mg dosage had expired. SACC ¶ 60; EPCC ¶
84. However, Elan chose not to launch a 60 mg product at that
time. SACC ¶ 60. Indeed, although both Biovail and Elan were
legally entitled to produce a generic version of 60 mg Adalat CC
by October 26, 2001, and both companies were similarly legally
able to produce a generic version of 30 mg Adalat CC by December
4, 2000, neither did. SACC ¶¶ 61, 63; EPCC ¶¶ 84, 87. Biovail
only produced a 60 mg product and Elan only produced a 30 mg
product, which Biovail exclusively distributed. According to the
plaintiffs, neither product had any direct competition and both
products were exclusively distributed through Teva. SACC ¶ 63.
The plaintiffs allege that the exclusive Distribution Agreement
between the parties entered into on October 4, 1999 precluded
Elan from selling generic Adalat products in competition with
Biovail and Teva. SACC ¶ 45; EPCC ¶ 71. The plaintiffs also
allege that Teva participated in the negotiations with Biovail and Elan
and that, as a result of the Biovail/Teva Agreement, Teva became
the exclusive marketing and distribution agent for Elan in the
United States. SACC ¶ 47.
The plaintiffs further allege that, but for the Distribution
Agreement among the defendants, Biovail would have introduced a
30 mg generic as of December 4, 2000, when the FDA approved
Biovail's ANDA. SACC ¶ 54. Similarly, plaintiffs allege that Elan
would have introduced a 60 mg generic as of October 26, 2001,
when the FDA approved Elan's ANDA. SACC ¶ 60. In either case, had
either company that received the second approval brought a
product to market, the new competition would have resulted in
lower prices to consumers. Thus, the alleged effect of the
agreement among the defendants was to maintain supra-competitive
prices on both the 30 mg and 60 mg dosages of generic Adalat
CC.*fn11 SACC ¶¶ 55, 60; EPCC ¶ 79.
C. The FTC Consent Order
On June 27, 2002, the Federal Trade Commission ("FTC") filed an
administrative complaint alleging that Biovail and Elan had
"unreasonably restrained competition" in the market for generic
Adalat CC. SACC ¶ 65. On the same date, the FTC announced that it
had entered into a proposed Consent Order with the two companies.
Id. The Consent Order, which was finally approved on August 15, 2002, requires
Elan and Biovail to terminate the Distribution Agreement and
prohibits each company from entering anti-competitive price,
output or distribution agreements with another generic
competitor. SACC ¶¶ 65-66. In addition, the Consent Order
prohibits Elan from distributing its generic Adalat CC through
Teva, and requires it to use its best efforts to sell its 30 mg
and 60 mg generic Adalat CC through another distributor as
promptly as possible. SACC ¶¶ 66, 67. Biovail was required to use
its best efforts to bring a 30 mg product to market as soon as
possible and to continue marketing its 60 mg product. SACC ¶ 67.
As a temporary remedy, Elan was required to supply Biovail with
its 30 mg generic Adalat CC at cost until Biovail launched its
own 30 mg product or until May 31, 2003, whichever came first.
SACC ¶ 68. This would ensure that the supply of 30 mg generic
Adalat CC would continue uninterrupted while Elan sought a new
distributor and that consumers would have two competing 30 mg
products as soon as possible. EPCC ¶ 98. In August 2002, Watson
Pharmaceuticals, Inc. acquired the U.S. rights to Elan's 30 mg
and 60 mg dosages of generic Adalat CC. SACC ¶ 69; EPCC ¶ 99.
Watson thereafter began selling generic Adalat CC in both
dosages. Id. The plaintiffs allege that since the implementation
of the Consent Order, prices of Adalat have begun to decrease and
that, but for the Distribution Agreement, that decrease would
have occurred much earlier. SACC ¶ 69. D. The Instant Lawsuit
The Sherman Act Plaintiffs*fn12 allege that the
Distribution Agreement between Elan and Biovail was an
unreasonable restraint of trade in violation of Section 1 of the
Sherman Act, 15 U.S.C. § 1. SACC ¶¶ 74, 75. Each of the Sherman
Act Plaintiffs seek monetary damages under Section 4 of the
Clayton Act and injunctive relief under Section 16 of the Clayton
Act, 15 U.S.C. §§ 15, 26.*fn13 SACC ¶ 5. The End-Payor
Plaintiffs also allege that the Distribution Agreement was an
unreasonable restraint of trade in violation of Section 1 of the
Sherman Act.*fn14 EPCC Count I. However, they only seek
declaratory and injunctive relief on their federal claim. EPCC
Prayer for Relief ¶¶ D, E. They additionally allege damage claims
under the antitrust statutes, consumer protection statutes, and
the common law of unjust enrichment under the laws of numerous
individual states. EPCC Counts II-IV. The End-Payor Plaintiffs
argue that this Court should exercise supplemental jurisdiction
over their state law claims because they are closely related to
the federal claim and are part of the same case or controversy.
End-Payor Purchaser Plaintiff's Mem. of P&A in Opp. to Def. Joint Mot. to
Dismiss ("EPP Opp.") at 16.
The defendants base their motions to dismiss on various
theories, three of which are discussed more fully below. First,
the defendants argue that the Section 1 claims brought by the
Sherman Act Plaintiffs should be dismissed for failure to state a
claim for damages under Section 4 of the Clayton Act.
Fed.R.Civ. P. 12(b)(6). Joint Mot. to Dismiss ¶ 9; Teva's Mot. to
Dismiss the SACC ¶¶ 3-9. Second, the defendants argue that all of
the plaintiffs' claims for injunctive relief should be dismissed
for lack of subject matter jurisdiction and for failure to state
a claim upon which relief can be granted. Fed.R. Civ. P.
12(b)(1), (b)(6); Joint Mot. to Dismiss ¶ 10; Teva's Mot. to
Dismiss the EPCC. Finally, for purposes of this opinion, the
defendants argue that the Court should decline to exercise
supplemental jurisdiction over the End-Payor Plaintiffs' state
law claims if their federal claims are dismissed.
28 U.S.C. § 1367(c); Joint Mot. to Dismiss ¶ 11.
II. STANDARD OF REVIEW
Federal district courts are courts of limited jurisdiction and
"possess only that power conferred by [the] Constitution and [by]
statute." Kokkonen v. Guardian Life Ins. Co. of Am.,
511 U.S. 375, 377 (1994). There is a presumption against federal court
jurisdiction and the burden is on the plaintiff to establish that
the Court has subject matter jurisdiction over the action.
McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 182-83 (1936). Federal Rule of Civil Procedure 12(b)(1)
imposes on the Court "an affirmative obligation to insure that it
is acting within the scope of its jurisdictional authority."
Jones v. Ashcroft, 321 F.Supp.2d 1, 5 (D.D.C. 2004) (citing
Uberoi v. EEOC, 180 F.Supp.2d 42, 44 (D.D.C. 2001)). Thus, upon
a motion to dismiss for lack of jurisdiction, the Court need not
limit itself to the allegations of the complaint. Hohri v.
United States, 782 F.2d 227, 241 (D.C. Cir. 1986), vacated on
other grounds, 482 U.S. 64, 107 S.Ct. 2246, 96 L.Ed.2d 51
(1987). In determining whether it has jurisdiction over the case,
the Court may consider the complaint, any undisputed facts, and
its resolution of any disputed facts. Herbert v. Nat'l Acad. of
Sciences, 974 F.2d 192, 197 (D.C. Cir. 1992).
The Court will only dismiss a complaint under Rule 12(b)(6) for
failure to state a claim if "it appears beyond doubt that the
plaintiff can prove no set of facts in support of his claim which
would entitle him to relief." Conley v. Gibson, 355 U.S. 41,
45-46 (1957); Kowal v. MCI Communications Corp., 16 F.3d 1271,
1276 (D.C. Cir. 1994). However, while the Court accepts as true
all of the factual allegations set forth in the complaint, Doe
v. United States Dept. of Justice, 753 F.2d 1092, 1102 (D.C.
Cir. 1985), and construes the complaint liberally in favor of the
plaintiff, Schuler v. United States, 617 F.2d 605, 608 (D.C.
Cir. 1979), it "need not accept inferences drawn by [the]
plaintiffs if such inferences are unsupported by the facts set
out in the complaint." Kowal, 16 F.3d at 1276. III. DISCUSSION
A. Sherman Act Damage Claims
The Sherman Act Plaintiffs seek damages pursuant to Section 4
of the Clayton Act, 15 U.S.C. § 15, for alleged violations of
Section 1 of the Sherman Act, 15 U.S.C. § 1. SACC ¶ 5; CVS Compl.
¶ 5; Walgreen Compl. ¶ 5. Biovail and Elan move to dismiss these
claims under Rule 12(b)(6) on the grounds that the Sherman Act
Plaintiffs lack standing because Teva, a named co-defendant and
alleged co-conspirator, is the direct purchaser and the only
proper plaintiff under the Supreme Court's decision in Illinois
Brick Co. v. Illinois, 431 U.S. 720 (1977) ("Illinois Brick").
Teva also moves for dismissal of the plaintiffs' Section 1 claims
on the grounds that Teva was not a party to the allegedly
anticompetitive agreement and any allegations regarding Teva's
involvement are "simply conclusory." Teva Mot. to Dismiss the
In an antitrust case, as in other cases under the Federal
Rules, the plaintiffs need only provide "[a] short plain
statement of a claim for relief which gives notice to the
opposing party . . ." In re Vitamins Antitrust Litigation, 2000
WL 1475705, at *8 (D.D.C. May 9, 2000) ("Vitamins") (citing
Nagler v. Admiral Corp., 248 F.3d 319, 322-23 (2d Cir. 1957)).
While the plaintiffs may not "simply paraphrase the language of
the federal antitrust laws" in conclusory terms, if their
complaint sets forth direct or inferential allegations with
respect to the material elements necessary for recovery under a
viable legal theory, it should survive a motion to dismiss. Jung v.
Association of Medical Colleges, 300 F.Supp.2d 119, 157 (D.D.C.
2004). Moreover, as discovery is usually critical to securing
proof, or disproof, of an alleged antitrust conspiracy, the Court
will grant dismissal prior to the discovery stage sparingly.
Applying these standards, as set forth below, the Court finds
that the Sherman Act Class Plaintiffs' have sufficiently pled
their allegations of conspiracy against the three defendants in
this case. The Court thus denies the defendants' motions as to
the claims for damages based on a violation of Section 1 of the
1. Biovail and Elan's Motion to Dismiss under the
Direct-Purchaser Rule of Illinois Brick
In Illinois Brick, the Supreme Court held that the
"overcharged direct purchaser, and not others in the chain of
manufacture or distribution" is the proper plaintiff in an action
for damages under federal antitrust laws. 431 U.S. at 727-28;
see also California v. ARC Am. Corp., 490 U.S. 93, 100 (1989).
The Supreme Court reasoned that permitting indirect purchasers to
collect damages would subject defendants to the risk of multiple
liability and would also lead to complex damage apportionment if
successive suits were brought based on the same alleged antitrust
violation. Illinois Brick, 431 U.S. at 730, 731-32. The Court
did, however, leave open the possibility of two exceptions to
this direct-purchaser rule. First, indirect purchasers might be
able to maintain a damage action if they could show that "the
direct purchaser is owned or controlled by its customer." Id. at 736 n. 16. Second, a "pass-on" defense might
be available where an overcharged indirect purchaser has a
pre-existing cost-plus contract, which would insulate the direct
purchaser from any decrease in sales as a result of passing on an
overcharge to its customer, a circumstance clearly not present
here. Id. at 735-36.
Several federal Circuit courts have recognized a variant of the
"control" exception through a so-called "co-conspirator"
exception, under which an indirect purchaser could maintain a
damage action upon a showing that there was a conspiracy between
the manufacturers and the direct purchaser middleman. See In re
Brand Name Prescription Drugs Antitrust Litigation,
123 F.3d 599, 604-05 (7th Cir. 1997); see also Lowell v. American
Cyanamid Co., 177 F.3d 1228, 1233 (11th Cir. 1999); Arizona v.
Shamrock Foods Co., 729 F.2d 1208, 1212-14 (9th Cir. 1984); In
re Beef Antitrust Litigation, 600 F.2d 1148, 1163 (5th Cir.
1979). But see Link v. Mercedes-Benz of North America,
788 F.2d 918, 931-33 (3d Cir. 1986) (declining to recognize the
co-conspirator exception where the alleged co-conspirators were
not joined as co-defendants). Under this "co-conspirator" theory,
the party who purchases from a co-conspirator middleman is
treated as a "direct purchaser" because the manufacturers and the
middleman direct purchaser are viewed as one entity.
In this case, the defendants assert that the damage claims of
the Sherman Act Plaintiffs must fail because these plaintiffs did
not purchase nifedipine directly from Biovail or Elan, or from
any party owned or controlled by these entities. Joint Mot. to Dismiss 19. Moreover, the defendants argue that the Sherman Act
Plaintiffs cannot proceed under a "co-conspirator" theory because
the D.C. Circuit has not yet recognized the "co-conspirator"
exception. Id. at 34. Finally, the defendants argue that
recognizing a "co-conspirator" exception would be inconsistent
with the Supreme Court's decision in Perma-Life Mufflers, Inc.
v. International Parts Corp., 392 U.S. 134 (1968), which
rejected the use of the in pari delicto defense in antitrust
actions, unless Teva was alleged to be an "equal, voluntary and
complete" co-conspirator. Id. at 139-40.
The Sherman Act Plaintiffs respond that their damage claims are
not barred because Illinois Brick, as interpreted by the lower
federal courts, provides that the first purchaser from the
alleged conspiracy is a proper plaintiff. SAP Opp. 10. Moreover,
the plaintiffs assert that Perma-Life does not bar their suit
because they have alleged that Teva was an essential, voluntary,
and active participant in the illegal conspiracy and that Teva
and Biovail entered into a joint venture relationship. Id. at
In light of the Sherman Act Plaintiffs' allegations regarding
the active role of Teva in the alleged conspiracy, which the
Court must accept as true, the Court will deny Biovail and Elan's
motion to dismiss with regard to their Illinois Brick
challenge. In the Court's view, it would be premature to dismiss
the plaintiffs' claims when their allegations raise factual
issues yet to be explored in discovery with regard to Teva's
relationship to Biovail and Elan, and the extent to which the
plaintiffs may have been prevented from purchasing nifedipine
from parties other than Teva as a result of the alleged conspiracy. While the D.C. Circuit has neither rejected a
"co-conspirator" exception to the Illinois Brick
direct-purchaser rule, nor ruled that Perma-Life prevents a
plaintiff from asserting such an exception, the Court need not,
at this point, rule on the viability of this legal theory since
there is at least one other theory of recovery alleged by the
plaintiffs (i.e., the existence of a joint venture between
Biovail and Teva). As such, the Court finds that under the
existing state of the facts and law in this case, the Sherman Act
Plaintiffs have pled a viable legal theory for
2. Teva's Motion to Dismiss for Failure to State a Conspiracy
In a separate motion to dismiss, Teva moves for dismissal of
the Sherman Act Plaintiffs' damage claims on the grounds that
Teva was not a party to the allegedly anticompetitive agreement
between Biovail and Elan and all other allegations regarding
Teva's participation in the conspiracy are too conclusory to
state a claim for relief. Section 1 of the Sherman Act provides
the "[e]very contract, combination in the form of trust or
otherwise, or conspiracy, in restraint of trade or commerce among
the several States, or with foreign nations, is declared to be illegal."
15 U.S.C. § 1. Thus, to withstand a motion to dismiss a Section 1
conspiracy claim, the plaintiffs must allege concerted action by
two or more persons that unreasonably restrains interstate or
foreign trade or commerce. Vitamins, 2000 WL 1475705, at *9.
With regard to the existence of concerted action, an claim of
antitrust conspiracy is adequate so long as "there are
allegations `from which an inference of an unlawful agreement can
be drawn.'" Id. at *10. Accord In re Linerboard Antitrust
Litigation, 2000 WL 1475559, at *6 (E.D. Pa. Oct. 4, 2000). The
plaintiffs need not plead an overt act on the part of each
defendant because "a single overt act by just one of the
conspirators is enough to sustain a conspiracy even on the
merits." Vitamins, 2000 WL 1475705, at *11 (citing In re
Nasdaq Market-Makers Antitrust Litigation, 894 F.Supp. 703, 712
Among the Sherman Act Plaintiffs' allegations with regard to
Teva are that: (1) Teva "participated in negotiating" the
unlawful agreement between Biovail and Elan, which allocated all
sales of generic Adalat CC to Biovail/Teva, SACC ¶¶ 1, 47; (2)
that as result of Teva's marketing agreement with Biovail and the
Distribution Agreement between Biovail and Elan, Teva became "the
agent of and/or joint venturer with Biovail and Elan" as the
exclusive distributor of generic versions of Adalat CC in the
United States, SACC ¶ 47; and (3) that Teva shared in unlawful
profits flowing from the agreement between Biovail and Elan. SACC
¶ 47. Furthermore, the plaintiffs assert that "[w]ithout Teva,
neither Biovail nor Elan could have sold generic Adalat CC in the United States because neither company distributed generic drugs
in the United States." SAP Opp. 17-18. The Court finds that the
Sherman Act Plaintiffs have sufficiently pled a claim of
conspiracy against Teva in their complaint, even though they do
not allege that Teva was a party to the Biovail/Elan Distribution
Agreement. Simply stated: "It is not necessary to find an express
agreement in order to find a conspiracy. It is enough that a
concert of action is contemplated and that the defendants
conformed to this arrangement." Ambook Enterprises v. Time,
Inc., 612 F.2d 604, 614 (2d Cir. 1979). Accordingly, the Court
will also deny Teva's motion to dismiss the Sherman Act
Plaintiffs' Section 1 conspiracy claim.
B. Claims for Injunctive Relief
All of the plaintiffs seek injunctive relief pursuant to
Section 16 of the Clayton Act.*fn16 The defendants move to
dismiss*fn17 on the grounds that plaintiffs lack standing to
bring these claims because there is no threat of future
violations or injuries, and therefore, this Court lacks subject
matter jurisdiction over the claims for injunctive relief.
Fed.R.Civ. P. 12(b)(1); Joint Mot. to Dismiss ¶ 10. To establish that
they have standing, the plaintiffs must demonstrate that they
have suffered an injury-in-fact, that the injury is fairly traceable to the challenged conduct, and that the injury
is redressable by the relief sought from the Court. See Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560-1 (1992). Because the
FTC Consent Order disbanded the Distribution Agreement between
the defendants and required the companies to take various steps
to introduce competition to the market, the defendants argue that
there is no threat of future injury and that any hypothetical
injury is redressable only by money damages, and not injunctive
relief. In short, they argue that there is nothing to enjoin, and
as a result, the plaintiffs lack standing to bring claims for
injunctive relief. The Court agrees that the plaintiffs have
failed to allege a real and immediate threat of future injury and
that, as a result, this Court lacks jurisdiction over any claims
for injunctive relief in this case.*fn18
The defendants also argue that the Court should decline to
exercise supplemental jurisdiction over the End-Payor Plaintiffs'
state law claims if their federal claims are dismissed.
28 U.S.C. § 1367; Joint Mot. to Dismiss ¶ 11. For the following reasons,
the Court agrees, and dismisses the End-Payor Plaintiffs' state
law claims for lack of jurisdiction. 1. Injury-in-Fact
When seeking injunctive relief to prevent a future injury, the
plaintiff must show that he "is immediately in danger of
sustaining some direct injury" and that the threat of injury is
"real and immediate," and not "conjectural" or "hypothetical."
City of Los Angeles v. Lyons, 461 U.S. 95, 102 (1983) (internal
citations omitted). "Abstract injury is not enough." O'Shea v.
Littleton, 414 U.S. 488, 494 (1974). Moreover, "[p]ast exposure
to illegal conduct does not in itself show a present case or
controversy regarding injunctive relief . . . if unaccompanied by
any continuing, present adverse effects." Lyons,
461 U.S. at 102 (quoting O'Shea, 414 U.S. at 495-96). The
plaintiffs*fn19 make several arguments in support of their
contention that they have alleged a real and immediate threat of
future injury such that they have standing to request injunctive
relief. None of their arguments, however, bear this out.
First, the plaintiffs point out, and the Court agrees, that the
mere existence of the Consent Order does not preclude private
injunctive relief. See Sam Fox Publishing Co. v. United States,
366 U.S. 683, 689 (1961). Indeed, in antitrust cases, private and
governmental claims for injunctive relief "were designed to be
cumulative, not mutually exclusive." EPP Opp. at 10 (quoting
United States v. Borden Co., 347 U.S. 514, 518 (1954)).
However, the party seeking the injunction nonetheless has the
burden of establishing that such cumulative relief is needed. Although the
existence of the Consent Order in this case is not dispositive,
it is relevant to the determination of whether "there exists some
cognizable danger of [a] recurrent violation." United States v.
W.T. Grant Co., 345 U.S. 629, 633 (1953)). In short, the
plaintiff must still satisfy the injury-in-fact requirement of
the standing doctrine while taking the effect of the Consent
Order into account.
The plaintiffs insist that they meet this requirement because
the relief they seek exceeds the scope of the FTC Consent Order.
EPP Opp. at 11. The only differences that the plaintiffs are able
to point to, however, are that they seek a permanent
injunction, whereas the Consent Order expires in ten years, and
they lack standing to enforce the Consent Order in the event that
it is violated. EPP Opp. at 11-13. The plaintiffs do not
articulate any specific action that they seek to enjoin that is
not already prohibited by the Order or identify any action taken
by defendants in violation of the Order.*fn20 Neither of the
distinctions relied upon by the plaintiffs bears on the inquiry
of whether there exists a real and immediate danger of recurrent
violations. Moreover, a review of the facts, as laid out by the
plaintiffs, simply does not support the existence of a real and
immediate threat of injury.
The Distribution Agreement, which is at the center of the
plaintiffs' claim that an illegal agreement existed, has already been terminated by the
Consent Order. SACC ¶ 65; EPCC ¶ 96. The Order further prohibits
Elan from selling generic Adalat CC to a generic competitor, and
specifically prohibits Elan from selling generic Adalat CC
through Teva. SACC ¶ 66. Indeed, the plaintiffs acknowledge that
Watson purchased the rights to Elan's 30 mg and 60 mg generic
versions of Adalat CC, that Watson is currently selling them, and
that neither product is being sold to either Biovail or Teva.
SACC ¶ 68; EPCC ¶ 99. At this point, Biovail has also launched a
30 mg version in competition with Elan's 30 mg generic.*fn21
Hr'g Tr. 72:1-6. The plaintiffs have neither alleged that the
Consent Order is inadequate nor have they identified any specific
conduct that should be enjoined over and above the conduct
prohibited by the Consent Order. In short, none of the allegedly
illegal conduct is currently occurring and, more importantly,
none seems likely to resume in light of the Consent Order and the
Finally, the plaintiffs generally allege, without providing any
factual basis, that the defendants have continued their allegedly
unlawful conduct after the entry of the Consent Order.*fn22
EPP Opp. at 15; see e.g., EPCC ¶ 110 ("Defendants are presently
engaged in illegal conduct to prevent competition in the U.S.
marketplace of generic versions of 30 mg and 60 mg Adalat CC. The illegal combination continues."); and
EPCC ¶ 115 ("The Plaintiffs and the Class will continue to be
injured in their person and property by Biovail's and Elan's
continuing conduct in violation of the antitrust laws of the
United States."). The plaintiffs further argue that, even if the
defendants' allegedly illegal conduct had ended,*fn23 they
would still be entitled to seek a "reparative injunction,"
designed to "prevent the future harmful effects of past acts"
by "requir[ing] the defendant to restore the plaintiff to a
pre-existing condition to which plaintiff was entitled." EPP Opp.
at 15 (quoting Lampkin v. District of Columbia, 886 F.Supp. 56,
62 (D.D.C. 1995). Both of these theories fail. The Court is not
required to accept the plaintiffs' conclusions and inferences if
they are unsupported by facts, and indeed, the plaintiffs have
provided no factual basis for their claims that there is any kind
of continuing violation on the part of the defendants. Moreover,
notwithstanding the fact that a reparative injunction does not
appear to be appropriate because the plaintiffs have not
identified a "pre-existing condition to which [they were]
entitled," the plaintiffs have failed to establish that there is any ongoing injury to justify
such a remedy. See O'Shea, 414 U.S. at 495-96 ("Past exposure
to illegal conduct does not in itself show a present case or
controversy regarding injunctive relief, however, if
unaccompanied by any continuing, present adverse effects.").
Although the plaintiffs make a passing observation that prices
may remain artificially inflated after a conspiracy ends, they
stop short of actually alleging that the prices are currently
inflated in this case.*fn24 EPP Opp. at 16 n. 9. Indeed, the
Court would agree that lingering price inflation would be a
natural factor in damages calculations. In the context of
injunctive relief, however, lingering monetary injury, without
any ongoing threat of recurrent violations, is not sufficient to
confer standing to seek an injunction.*fn25 Thus, the Court
concludes, based on the absence of facts alleged in the
Complaints and the speculative nature of the plaintiffs'
remaining arguments regarding present and future damages, that
the plaintiffs have simply not established that there remains any
"threatened conduct that will cause loss or damage" such that
they have standing to seek injunctive relief. 15 U.S.C. § 26.
Accordingly, this Court lacks jurisdiction over the claims for injunctive relief.
C. State Law Claims
Under 28 U.S.C. § 1367, which governs supplemental
jurisdiction, the District Court may generally decline, in its
discretion, to entertain supplemental jurisdiction after it "has
dismissed all claims over which it has original jurisdiction."
28 U.S.C. § 1367(c)(3). However, if the underlying claim is
dismissed on jurisdictional grounds, then the Court does not have
available to it the option of maintaining supplemental
jurisdiction over pendant state law claims. Saksenasingh v.
Sec'y of Educ., 126 F.3d 347, 351 (D.C. Cir. 1997). Because the
Court lacks jurisdiction over the End-Payor Plaintiffs' sole
federal claim, it also necessarily lacks supplemental
jurisdiction over the End-Payor Plaintiffs' state law claims.
Accordingly, the End-Payor Plaintiffs' case is dismissed in its
It is, this 1st day of September, 2004, hereby
ORDERED that the Joint Motion of Elan and Biovail to Dismiss
the Complaints [#20] and Teva's Motion to Dismiss the Sherman Act
Plaintiffs' Complaint [#22] are GRANTED as to plaintiffs'
claims for injunctive relief, and are otherwise DENIED as to
any remaining claims; and it is further
ORDERED that Teva's Motion to Dismiss the End-Payor
Plaintiffs' Complaint [#24] is GRANTED; and it is further
ORDERED that the End-Payor Plaintiffs' Amended Complaint [Dkt
#10] be dismissed with prejudice (Case Nos. 02-cv01343, 02cv1377,
02cv01777, and 02cv02121).