State of Louisiana, by and through its Attorney General James Caldwell v. AstraZeneca AB, AstraZeneca LP, AstraZeneca Pharmaceuticals LP, and Aktiebolaget Hassle ( 2020 )

STATE OF LOUISIANA
COURT OF APPEAL
FIRST CIRCUIT
NUMBER 2019 CA 0986
STATE OF LOUISIANA, BY AND THROUGH ITS
ATTORNEY GENERAL JEFF LANDRY
VERSUS
ASTRAZENECA AB, ASTRAZENECA LP, ASTRAZENECA
PHARMACEUTICALS LP, AND AKTIBOLAGET HASSLE
Judgment Rendered: FJUL 0 2 2020
Appealed from the
Nineteenth Judicial District Court
In and for the Parish of East Baton Rouge
State of Louisiana
Suit Number C637960
Honorable Timothy E. Kelly, Presiding
Jeff Landry Counsel for Plaintiff/Appellant
Attorney General State of Louisiana, by and through
Elizabeth B. Murrill
its Attorney General Jeff Landry
Nicholas J. Diez
Baton Rouge, LA
Jerald P. Block
Thibodaux, LA
Alejandro Perkins
Baton Rouge, LA
Robert L. Salim
Barrett Beasley
Natchitoches, LA
John Alden Meade
Adam G. Young
New Orleans, LA
Patrick C. Morrow
James P. Ryan
Opelousas, LA
Bradley C. Myers Counsel for Defendants/ Appellees
Linda R. Rodrigue AstraZeneca AB, AstraZeneca LP,
Amanda M. Collura -Day AstraZeneca Pharmaceuticals LP, and
Baton Rouge, LA Aktibolaget Hassle
Michael P. Kelly
Daniel M. Silver
Daniel J. Brown
Wilmington, DE
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BEFORE: WHIPPLE, C. J., GUIDRY, AND BURRIS, JJ.
Judge William J. Burris, retired, serving pro tempore by special appointment of the Louisiana
Supreme Court.
2
GUIDRY, J.
Plaintiff, the State of Louisiana, by and through its Attorney General, Jeff
Landry, appeals from a trial court judgment granting summary judgment in favor
of defendants, AstraZeneca AB, AstraZeneca LP, AstraZeneca Pharmaceuticals
LP, and Aktibolaget Hassle,' and dismissing the State' s claims against them with
prejudice.
For the reasons that follow, we reverse and remand.
FACTS AND PROCEDURAL HISTORY
Average Wholesale Price Litigation
On November 3, 2010, the State, by and through its Attorney General, James
Caldwell3,
D. " Buddy" filed suit against multiple pharmaceutical companies,
including AstraZeneca LP and AstraZeneca Pharmaceuticals LP, alleging that
these defendant pharmaceutical companies had engaged in false, misleading,
wanton, unfair, and deceptive acts and practices in the pricing and marketing of
their prescriptive drug products. State v. Abbott Laboratories Inc., Suit Number
596164, 19th Judicial District Court (Average Wholesale Price " AWP" Litigation).
The State further alleged that the defendants' fraudulent pricing and marketing of
their prescription drugs impacted elderly, disabled, and poor Louisiana citizens
covered by the State' s Medicaid program by causing the State' s Medicaid agency
to pay grossly excessive prices for the defendants' prescription drugs.
According to the State' s petition, reimbursement for pharmacy -dispensed
prescription drugs under the Louisiana Medicaid program is based on information
supplied by defendants to industry reporting services. This information includes
the following prices indices: ( 1) wholesale acquisition cost ( WAC); ( 2) average
wholesale price ( AWP); and ( 3) direct price. The State alleged that from 1991-
2
We note that the spelling of defendant, Aktibolaget Hassle, varies throughout the record.
However, for consistency, we will spell the name of defendant in this opinion as it appears in the
caption of this proceeding and in the judgment at issue.
In January 2016, Jeff Landry succeeded Attorney General James D. " Buddy" Caldwell.
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2010,
each of the named defendants knowingly, wantonly, and/ or intentionally
provided or caused to be provided false and inflated AWP, WAC, and/ or direct
price information for their individual drugs to various nationally known drug
industry reporting services. These reporting services in turn published the pricing
information to various reimbursers, such as Louisiana Medicaid, who contracted to
receive the information as a basis for providing reimbursement to pharmacy
providers who dispense prescription drugs. According to the State, it relied on
these artificially inflated AWP, WAC, and/ or direct prices in determining the
amount it must reimburse providers, causing the State to pay excessive amounts for
the prescription drugs.
Additionally, the State alleged that the defendants created a " spread" for
their drugs, which is the difference between the AWP and WAC and the actual
price of the prescription drug, and marketed that spread to physicians and
pharmacies so they would purchase defendants' prescription drugs. The State
alleged that the defendants' actions caused the State to pay millions of dollars in
excess Medicaid payments.
Therefore, the State claimed violations of the Louisiana Unfair Trade
Practices Act ( LUTPA), La. R. S. 51: 1401, the Medical Assistance
et seq.;
Programs Integrity Law, La. R.S. 46: 437. 1, et seq.; and the Louisiana Antitrust
Law, La. R.S. 51: 121 et seq. The State also asserted claims for fi-aud, negligent
misrepresentation, and unjust enrichment.
Thereafter, on June 27, 2012, the State and the AstraZeneca defendants
entered into a settlement agreement and release,
thereby resolving the AWP
litigation.
Instant Toprol-XL litigation
On March 18, 2015, the State filed the instant suit against defendants,
AstraZeneca AB, AstraZeneca LP, AstraZeneca Pharmaceuticals LP, and
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Aktibolaget Hassle. The petition alleged violations of the Louisiana Antitrust Law
and the LUTPA arising from the manufacture, marketing, and sale of Toprol- XL,
an extended- release drug used for the treatment of angina, hypertension, and
congestive heart failure. Specifically, the petition alleged that defendants prevented
generic versions of Toprol- XL from the
entering market by improperly
manipulating patent filings and filing baseless patent infringement lawsuits to
frustrate or delay market availability of generic equivalents, thus unlawfully
monopolizing and/ or attempting to monopolize the domestic market for Toprol- XL
and its generic bioequivalents such as metoprolol succinate. The State alleged that
this unlawful scheme and anticompetitive conduct unreasonably restrained and
injured competition by protecting Toprol-XL from generic competition in the
relevant market.
The State further alleged that as a result of defendants' conduct, it paid for
Toprol-XL at prices significantly higher than what it would have paid if multiple
competing and/ or generic versions of Toprol-XL were on the market. Also, the
State alleged that as a result of defendants' unlawful scheme and anticompetitive
conduct, it had been deprived of the benefits of free and unrestricted competition
by being denied the opportunity to choose between branded Toprol- XL and generic
alternatives,
which would have cost thirty to forty percent less than branded
Toprol-XL. Instead, the State alleged it was forced to continue to pay
supracompetitive prices for Toprol- XL,
thereby causing it to sustain injury.
Accordingly, the State sought restitution and treble damages, seeking to recover
the amounts paid by the State for illegally obtained funds due to defendants'
monopolistic actions ( violation of La. R. S. 51: 121, and unfair and
et seq.)
deceptive trade practices ( violation of La. R.S. 51: 1401, et seq.). The State also
alleged claims for unjust enrichment.
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On November 4, 2015, defendants filed exceptions raising the objections of
no cause of action, no right of action, prescription, peremption, lack of subject
matter jurisdiction, and vagueness
or ambiguity. Following a hearing on
defendants' exceptions,
the trial court signed a judgment on March 18, 2016,
sustaining the exceptions raising the objections of no cause of action and no right
of action. The State appealed the trial court' s judgment, and in State v.
AstraZeneca AB, 2016- 1073 ( La. App. 1st Cir. 4/ 11/ 18), 249 So. 3d 38, this court
reversed the trial court' s judgment and overruled the exceptions. The Louisiana
Supreme Court subsequently denied writs in State v. AstraZeneca AB, 2018- 00766
La. 9/ 21/ 18), 252 So. 3d 899 and 2018- 0758 ( La. 9/ 21/ 18), 252 So. 3d 904.
Thereafter, on November 8, 2018,
the defendants filed an Answer and
Affirmative Defenses, wherein they asserted, among other defenses, that the State
had already been made whole with respect to the alleged damages due to the
settlement between the AstraZeneca defendants and the State in the AWP
litigation.
On November 21, 2018,
the defendants filed a motion for summary
judgment, asserting several bases for summary judgment, including that the State' s
claims against them,
which defendants characterized as claims that defendants
unlawfully overcharged the State for pharmaceutical drugs, were compromised
pursuant to the settlement agreement in the AWP litigation, and that the State' s
claims are barred by res judicata. Pursuant to an agreement between the parties,
the only issues for consideration at the hearing on defendants' motion for summary
judgment were whether the AWP litigation and/ or res judicata barred the State' s
claims in the instant case.
Following a hearing on April 15, 2019, the trial court signed a judgment,
finding that there was no genuine issue of material fact as to whether res judicata
applies or whether the settlement agreement in the AWP litigation compromised
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the claims made in the instant matter. The judgment therefore granted defendants'
motion for summary judgment and dismissed all of the State' s claims against the
defendants with prejudice. The State now appeals from the trial court' s judgment.
DISCUSSION
The general rule of res judicata in Louisiana is set forth in La. R. S. 13: 4231,
which provides:
Except as otherwise provided by law, a valid and final judgment is
conclusive between the same parties, except on appeal or other direct
review, to the following extent:
1) If the judgment is in favor of the plaintiff, all causes of action
existing at the time of final judgment arising out of the transaction or
occurrence that is the subject matter of the litigation are extinguished
and merged in the judgment.
2) If the judgment is in favor of the defendant, all causes of action
existing at the time of final judgment arising out of the transaction or
occurrence that is the subject matter of the litigation are extinguished
and the judgment bars a subsequent action on those causes of action.
3) A judgment in favor of either the plaintiff or the defendant is
conclusive, in any subsequent action between them, with respect to
any issue actually litigated and determined if its determination was
essential to that judgment.
Under La. R. S. 13: 4231, a second action is precluded when all of the
following are satisfied: ( 1) the judgment is valid and final; ( 2) the parties are the
same; ( 3) the cause or causes of action asserted in the second suit existed at the
time of final judgment in the first litigation; and ( 4) the cause or causes of action
asserted in the second suit arose out of the transaction or occurrence that was the
subject matter of the first litigation. Pierrotti v. Johnson, 11- 1317, p. 8 ( La. App.
1st Cir. 3/ 19/ 12), 91 So. 3d 1056, 1063.
While the doctrine of res judicata is ordinarily premised on a final judgment
on the merits, it also applies where there is a transaction or settlement of a disputed
or compromised matter that has been entered into by the parties. Ortego v. State,
Department of Transportation and Development, 96- 1322, p. 6 ( La. 2/ 25/ 97), 689
So. 2d 1358, 1363. Thus,
compromises have the legal efficacy of the thing
adjudged.
Ortego, 96- 1322 at p. 6, 689 So. 2d at 1363; see also La. C. C. art. 3080.
Louisiana Civil Code article 3071 defines a compromise as " a contract
whereby the parties, through concessions made by one or more of there, settle a
dispute or an uncertainty concerning an obligation or other legal relationship." A
party claiming res judicata based on a compromise must have been a party to the
compromise, and the authority of the thing adjudged extends only to the matters
the parties intended to settle. Ortego, 96- 1322 at pp. 6- 7, 689 So. 2d at 1363.
As a written contract, a compromise instrument is the law between the
parties and must be interpreted according to the parties' intent. Ortego, 96- 1322 at
p. 7, 689 So. 2d at 1363. Interpretation of a compromise agreement is governed by
the same general rules of construction applicable to contracts. Brown V. Drillers,
Inc., 630 So. 2d 741, 748 ( La. 1994).
When the words of a contract are clear and
explicit and lead to no absurd consequences, no further interpretation may be made
in search of the parties' intent. La. C. C. art. 2046. Each provision in a contract
must be interpreted in light of other provisions so that each is given the meaning
suggested by the contract as a whole. La. C. C. art. 2050.
A motion for summary judgment can be granted based on a finding of res
judicata when there is no genuine issue as to any material fact. Brown, 630 So. 2d
at 747, n.7.
In determining whether summary judgment is appropriate, appellate
courts review the evidence de novo under the same criteria that govern the trial
court' s determination of whether summary judgment is appropriate. Lieux v.
Mitchell, 06- 0382, p. 9 ( La. App. 1st Cir. 12/ 28/ 06), 951 So. 2d 307, 314, writ
denied, 07- 0905 ( La. 6/ 15/ 07), 958 So. 2d 1199. A motion for summary judgment
is properly granted if, after an opportunity for adequate discovery, the motion,
memorandum, and supporting documents show that there is no genuine issue as to
material fact and that the mover is entitled to judgment as a matter of law. La.
C. C. P. art. 966( A)( 3). When the issue before the court on the motion for
summary judgment is one on which the party bringing the motion will bear the
burden of proof at trial, the burden of showing there is no genuine issue as to
material fact remains with the party bringing the motion. See La. C. C. P. art.
966( D)( 1); Sova v. Cove Homeowner' s Association Inc., 11- 2220, p. 3 ( La. App.
1st Cir. 9/ 7/ 12), 102 So. 3d 863, 866.
In the instant suit, the defendants assert that the State' s claims are barred by
res judicata due to the settlement agreement entered into between the State and
defendants in the AWP litigation. The AWP settlement provides, in relevant part:
2. This agreement is intended to cover all pharmaceutical products
manufactured, distributed, marketed, co -marketed, co -promoted
and/ or sold by the Released Parties as defined herein, whether or not
the drug was specifically named or referred to in the Litigation. These
pharmaceutical products are referred to hereinafter as the " Covered
Drugs."
3. All: (
a) conduct alleged in the Litigation, including that Defendant
allegedly engaged in false, misleading, willful, wanton, unfair,
deceptive and unconscionable acts and practices in the pricing and
marketing of prescription drug products; ( b) that Defendant allegedly
engaged in a conspiracy in an effort to increase its market share; and
c) potential claims of State concerning any conduct relating to any of
the Released Parties ( as defined below) reporting, setting, publishing,
or failure to object to the publication of another of [AWP, WA
and/or Direct Price (" DP"),
or any marketing activity relating to any
such prices, constitutes the " Covered Conduct"
that is addressed by
this Agreement. The Covered Conduct is expressly limited to: ( a)
conduct which has occurred prior to the Effective Date of this
Agreement; ( b)
conduct as expressly alleged by the State in this
Litigation and the potential claims referenced in the preceding
sentence, as though such conduct and potential claims had been
alleged with respect to all of the Covered Drugs; and ( c) claims
concerning the State of Louisiana and its Medicaid Program.
6. ... [ T] he State, on behalf of itself, and its officers, employees,
attorneys, agents, agencies, departments ... political subdivisions and
boards and commissions with any authority to initiate or maintain any
claims released herein, does hereby fully and finally release
Defendant, and each of its past and present parents, and its associated
companies, which means any corporation, partnership, limited liability
company or other entity or combination thereof that directly or
indirectly owns or controls Defendant, is owned or controlled by
Defendant or is under common ownership or control with Defendant
as well as any subsidiaries, divisions, partners, current and former
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directors, mangers, officers, employees, ... agents, shareholders,
predecessors, divisions, executors, assigns, or legal representatives of
each of the foregoing ( collectively, " Released Parties") from any
known or unknown civil, regulatory,
administrative or monetary
claim, action,
suit or proceeding the State or any of its political
subdivisions with any authority to initiate or maintain any claims
released herein has or may have or could have asserted in the future
under any source of law arising from or relating to the Covered
Conduct.... This Release is expressly limited to the Covered Conduct
and shall only release the Released Parties with respect to the
Covered Conduct...
The State shall not initiate or prosecute any civil
or administrative actions, qui tam lawsuits, whistleblower lawsuits,
claims, investigations,
or any other type of proceeding against the
Released Parties arising from or relating to the Covered Conduct.
Emphasis added.]
According to the clear and unambiguous language of the settlement
agreement read as a whole, the parties to the agreement intended only to settle and
release claims, known or unknown, for " covered conduct." The agreement
specifically and narrowly defines covered conduct to include: conduct alleged in
the AWP litigation,
including unlawful acts and practices in the pricing and
marketing of prescription drug products and engaging in a conspiracy to increase
its market share,
and potential claims concerning any conduct relating to the
reporting, setting, publishing, or failure to object to the publication of another of
AWP,
WAC, and/or Direct Price, or any marketing activity relating to any such
prices.
The agreement further limits the covered conduct to conduct occurring
before the effective date of the agreement, to potential claims referenced in the
preceding sentence, and to claims concerning the State and its Medicaid Program.
Accordingly, the conduct at issue in the AWP settlement, as specifically
described therein, was conduct relating to the unlawful price setting, and marketing
of those prices, of defendants' prescription drug products. This interpretation
conforms with not only the plain language of the settlement agreement but also
with the claims asserted in the AWP litigation. The current claims of the State,
however, do not arise from this conduct. There is no complaint in the instant
petition regarding the defendants' pricing of Toprol-XL, or specifically the AWP,
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WAC, or direct price thereof, nor does the State complain about the marketing of
those prices.
Rather, the State' s claims, as detailed in its petition for damages,
arise from defendants' unlawful manipulation of patent applications and patent
litigation to delay and/ or prevent generic versions of Toprol- XL from entering the
market.
The State asserts that the actions of the defendants deprived the State of
free and unrestrained competition by denying the State the opportunity to choose
between branded Toprol-XL and lower-priced generic alternatives, which would
have cost thirty to forty percent less than the branded Toprol- XL. The State
alleges that had generic competitors been able to enter the market and compete
with defendants, the State would have paid for lower-priced generics in place of
the higher -priced brand name drug. Accordingly, the State asserts that the actions
of the defendants caused the State to pay more for metoprolol succinate products
than it otherwise would have paid had generic drugs been permitted to enter the
market.
Therefore, we find, based on the language of the settlement agreement, that
the State' s current claims in the Toprol- XL litigation were not intended to be
settled in the AWP settlement agreement, and that the conduct at issue in the
instant litigation does not arise out of the covered conduct at issue in that
agreement. See Chauvin v. Exxon Mobil Corporation, 14- 0808, pp. 13- 14 ( La.
12/ 9/ 14), 158 So. 3d 761, 770 ( finding that the transaction or occurrence for res
judicata purposes was defendant' s conduct and actions). As such, the trial court
erred in finding that res judicata
applies4
and in granting summary judgment in
4
We also note that another requirement of res judicata is that the actions involve the same
parties.
Furthermore, with regard to compromise agreements, the party claiming res judicata
based on a compromise must have been a party to the compromise. In the instant case, while two
of the defendants in the current suit were also parties to the AWP settlement agreement, two of
the defendants were not. Defendants assert that these two additional defendants are successors
or assigns of the defendants who were parties to the AWP settlement, and therefore, they are the
same parties for purposes of res judicata. However, there is no evidence or allegations
supporting this assertion in the record.
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favor of defendants, dismissing the State' s claims against them with prejudice.
CONCLUSION
For the foregoing reasons, we reverse the judgment of the trial court and
remand this matter to the trial court for further proceedings. All costs of this
appeal are assessed to defendants, AstraZeneca AB, AstraZeneca LP, AstraZeneca
Pharmaceuticals LP, and Aktibolaget Hassle.
REVERSED AND REMANDED.
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