In re: Nexium Antitrust v.

United States Court of Appeals
For the First Circuit
Nos. 15-2005, 15-2006, 15-2007
IN RE: NEXIUM (ESOMEPRAZOLE) ANTITRUST LITIGATION
AMERICAN SALES COMPANY, LLC, on behalf of itself and all others
similarly situated; VALUE DRUG COMPANY; BURLINGTON DRUG COMPANY
INC.; ROCHESTER DRUG CO-OPERATIVE, INC., on behalf of itself and
others similarly situated; MEIJER, INC.; MEIJER DISTRIBUTION,
INC.; ALLIED SERVICES DIVISION WELFARE FUND; LABORERS
INTERNATIONAL UNION OF NORTH AMERICA LOCAL 17 HEALTH CARE FUND;
LABORERS INTERNATIONAL UNION OF NORTH AMERICA LOCAL 35 HEALTH
CARE FUND; A.F. OF L. - A.G.C. BUILDING TRADES WELFARE PLAN;
FRATERNAL ORDER OF POLICE MIAMI LODGE 20 INSURANCE TRUST FUND;
NEW YORK HOTEL TRADES COUNCIL AND HOTEL ASSOC. OF NEW YORK CITY,
INC. HEALTH BENEFITS FUND; UNITED FOOD & COMMERCIAL WORKERS
UNIONS AND EMPLOYERS MIDWEST HEALTH BENEFITS FUND; MICHIGAN
REGIONAL COUNCIL OF CARPENTERS EMPLOYEE BENEFITS FUND;
INTERNATIONAL UNION OF MACHINISTS AND AEROSPACE WORKERS DISTRICT
NO. 15 HEALTH FUND; INTERNATIONAL BROTHERHOOD OF ELECTRICAL
WORKERS LOCAL 595 HEALTH AND WELFARE FUND; WALGREEN CO.; THE
KROGER COMPANY; SAFEWAY INCORPORATED; SUPERVALU, INC.; HEB
GROCERY CO. LP; GIANT EAGLE, INC.; RITE AID CORPORATION; RITE
AID HEADQUARTERS CORPORATION; JCG (PJC) USA, LLC; MAXI DRUG,
INC., d/b/a BROOKS PHARMACY; ECKERD CORPORATION; CVS, INC.,
Plaintiffs, Appellants,
v.
ASTRAZENECA LP; ASTRAZENECA AB; AKTIEBOLAGET HASSLE; RANBAXY
PHARMACEUTICALS INC.; RANBAXY INC.; RANBAXY LABORATORIES LTD.,
Defendants, Appellees.
APPEALS FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. William G. Young, U.S. District Judge]
Before
Lynch, Stahl, and Thompson,
Circuit Judges.
Thomas M. Sobol, with whom David S. Nalven, Kristen A.
Johnson, James J. Nicklaus, Kristie A. LaSalle, Hagens Berman Sobol
Shapiro LLP, Bruce E. Gerstein, Joseph Opper, Elena K. Chan,
Ephraim R. Gerstein, Garwin Gerstein & Fisher, LLP, David F.
Sorensen, Ellen Noteware, Daniel C. Simons, Caitlin G. Coslett,
Berger & Montague, P.C., Linda P. Nussbaum, Nussbaum Law Group,
P.C., Steve D. Shadowen, Hilliard & Shadowen LLP, Kenneth A.
Wexler, Bethany R. Turke, Justin N. Boley, Wexler Wallace LLP, J.
Douglas Richards, Sharon K. Robertson, Donna M. Evans, Cohen
Milstein Sellers & Toll, PLLC, Jayne A. Goldstein, Pomerantz LLP,
Matthew Wessler, and Gupta Wessler PLLC were on brief, for direct
purchaser and end-payor class appellants.
Barry L. Refsin, Monica L. Rebuck, Maureen S. Lawrence,
Hangley Aronchick Segal Pudlin & Schiller, Bernard D. Marcus, Moira
Cain-Mannix, Marcus & Shapira LLP, Richard A. Arnold, Scott E.
Perwin, Lauren C. Ravkind, Anna T. Neill, and Kenny Nachwalter,
P.A. on brief for individual retailer appellants.
Kannon K. Shanmugam, with whom Dane H. Butswinkas, Paul B.
Gaffney, John E. Schmidtlein, and Williams & Connolly LLP were on
brief, for appellees AstraZeneca LP, AstraZeneca AB, and
Aktiebolaget Hassle.
Jay P. Lefkowitz, P.C., with whom Steven J. Menashi, Amanda
Elbogen, Jonathan D. Janow, Kirkland & Ellis LLP, James Douglas
Baldridge, Lisa Jose Fales, Danielle R. Foley, Vincent E.
Verrocchio, and Venable LLP were on brief, for appellees Ranbaxy
Inc., Ranbaxy Pharmaceuticals Inc., and Ranbaxy Laboratories Ltd.
Mark S. Hegedus, Attorney, Office of the General Counsel,
Federal Trade Commission, Deborah L. Feinstein, Director, Markus
H. Meier, Acting Deputy Director, Bradley S. Albert, Deputy
Assistant Director, Elizabeth R. Hilder, Attorney, Bureau of
Competition, Daniel W. Butrymowicz, Attorney, Bureau of
Competition, Jonathan E. Nuechterlein, General Counsel, and Joel
Marcus, Director of Litigation, on brief for Federal Trade
Commission, amicus curiae.
November 21, 2016
LYNCH, Circuit Judge. This appeal arises from the first
pharmaceutical-settlement antitrust action tried before a jury
since the Supreme Court's decision in FTC v. Actavis, Inc., 133 S.
Ct. 2223 (2013). The jury found that although the plaintiffs had
proved an antitrust violation in the form of a large and
unjustified reverse payment from AstraZeneca to Ranbaxy, the
plaintiffs had not shown that they had suffered an antitrust injury
that entitled them to damages.
Defendant AstraZeneca is a brand-name drug manufacturer
that owns the patents covering Nexium, a prescription heartburn
medication that has grossed billions of dollars in annual sales.
After defendant Ranbaxy notified the Food and Drug Administration
("FDA") that it sought to market a generic version of Nexium,
AstraZeneca sued Ranbaxy for patent infringement. The two
companies reached a settlement agreement, under which Ranbaxy
agreed to delay the launch of its generic until a certain date in
return for various promises from AstraZeneca. AstraZeneca
similarly sued and subsequently settled two patent infringement
suits with generic manufacturers Teva and Dr. Reddy's, who were
(but no longer remain) defendants in this case. The plaintiffs
-- various pharmaceutical retail outlets and certified classes of
direct purchasers and end payors -- brought suit, arguing that the
terms of these settlement agreements violated federal antitrust
laws and state analogues.
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After summary judgment proceedings that winnowed down
the number of causal mechanisms through which the plaintiffs could
attempt to prove antitrust violation and injury, the case proceeded
to a jury, which found as we have described. Following the
verdict, the district court denied the plaintiffs' motions for a
permanent injunction and for a new trial.
The plaintiffs appeal, raising four categories of
claims. First, they challenge various evidentiary rulings.
Second, they argue that the district court erroneously granted
judgment as a matter of law in the defendants' favor on the issue
of overarching conspiracy. Third, they argue that the special
verdict form and jury instructions contained reversible error.
The final argument, which lies at the heart of this appeal, is
that the district court, at summary judgment, impermissibly cut
down the number of causal mechanisms through which the plaintiffs
could make their case to the jury. See In re Nexium (Esomeprazole)
Antitrust Litig. ("In re Nexium [Summary Judgment]"), 42 F. Supp.
3d 231 (D. Mass. 2014). This error at summary judgment pervaded
the entire trial, the plaintiffs argue, and constitutes grounds to
vacate the jury verdict and award a new trial.
We find no reversible error in the district court's
evidentiary rulings, the formulation of the special verdict form
and jury instructions, or its judgment as a matter of law on
overarching conspiracy. In fact, many of the plaintiffs'
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objections have been forfeited or mooted by the jury's findings.
We further hold that the jury verdict, finding an antitrust
violation but not an antitrust injury, coupled with developments
at trial on the issue of patent invalidity, renders harmless any
error that may have occurred during the summary judgment
proceedings. Accordingly, we need not, and indeed should not,
review the summary judgment order for error. We affirm.
I. REGULATORY FRAMEWORK
An overview of the intricate pharmaceutical regulatory
framework is necessary to understand the issues presented. A
manufacturer that seeks to market a new brand-name drug must file
a New Drug Application ("NDA") with the FDA and "undergo a long,
comprehensive, and costly testing process." Actavis, 133 S. Ct.
at 2228. Generic-drug manufacturers formerly underwent similarly
rigorous processes to obtain FDA approval to market generic
versions of the brand-name drug. In order to accelerate the entry
of generic competitors into the market and decrease healthcare
costs, Congress enacted the Drug Price Competition and Patent Term
Restoration Act of 1984 ("Hatch-Waxman Act"), Pub. L. No. 98-417,
98 Stat. 1585. The Hatch-Waxman Act has three regulatory
components that are relevant here.
First, the Act permits generic manufacturers to file the
notably less costly Abbreviated New Drug Application ("ANDA"),
"specifying that the generic has the 'same active ingredients as,'
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and is 'biologically equivalent' to, the already-approved brand-
name drug." Actavis, 133 S. Ct. at 2228 (quoting Caraco Pharm.
Labs., Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670, 1676 (2012)).
"[B]y allowing the generic to piggy-back on the pioneer's approval
efforts, [the Hatch-Waxman Act] 'speed[s] the introduction of low-
cost generic drugs to market,' thereby furthering drug
competition." Id. (third alteration in original) (quoting Caraco,
132 S. Ct. at 1676).
Second, the Act requires brand-name manufacturers to
list the numbers and expiration dates of all relevant patents in
their NDAs, which are then published in the FDA's "Orange Book,"
an annual publication of all approved drugs and the reported
patents or statutory exclusivities that cover those drugs. In
turn, generic manufacturers filing ANDAs must "'assure the FDA'
that the generic 'will not infringe' the brand-name's patents,"
and may provide this assurance in one of four ways. Id. (quoting
Caraco, 132 S. Ct. at 1676). The generic manufacturer may
(1) certify that the brand-name manufacturer has failed to list
any relevant patents; (2) certify that any relevant patents have
expired; (3) request the FDA's approval to market its generic upon
the expiration of any still active patents covering the brand name;
or (4) certify that "any listed, relevant patent 'is invalid or
will not be infringed by the manufacture, use, or sale' of the
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drug described in the [ANDA]." Id. (quoting 21 U.S.C.
§ 355(j)(2)(A)(vii)(IV)).
This last route, known as a "paragraph IV
certification," usually triggers an immediate patent infringement
suit from the brand-name manufacturer. If that suit is brought
within 45 days of the paragraph IV certification, the FDA must
withhold approval of the generic ANDA, usually for a 30-month
period, during the course of litigation on patent validity or
infringement. Id. If the court decides the patent matter within
30 months, the FDA follows the court's determination. But if the
court does not, the FDA may approve an ANDA before a court rules
on patent validity or infringement. Id. (citing 21 U.S.C.
§ 355(j)(5)(B)(iii)). This pre-ruling approval, in turn, allows
the generic manufacturer to launch its product "at risk" -- that
is, "with the risk of losing the infringement case against it
hanging over its head. Losing an infringement case after launching
at risk can result in significant liability for the generic
manufacturer, as damages typically are calibrated by the amount of
its at-risk sales." In re Nexium [Summary Judgment], 42 F. Supp.
3d at 245.
The final relevant component of the Hatch-Waxman Act is
that it rewards the first generic manufacturer to file an ANDA
with a paragraph IV certification by granting that first filer a
180-day period of exclusivity. Actavis, 133 S. Ct. at 2228–29.
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During that 180-day window, the FDA cannot approve ANDAs from
competing manufacturers for the same generic, leaving only the
first filer with the ability to market its generic. Accordingly,
this period of exclusivity can be "worth several hundred million
dollars." Id. at 2229 (quoting Hemphill, Paying for Delay:
Pharmaceutical Patent Settlement as a Regulatory Design Problem,
81 N.Y.U. L. Rev. 1553, 1579 (2006)). In fact, the "vast majority
of potential profits for a generic drug manufacturer materialize
during the 180-day exclusivity period." Id. From the market
perspective, however, the first filer may create a bottleneck, as
all other generic manufacturers must wait for the exclusivity
period to end before launching their own generics.
Significantly, this lucrative 180-day exclusivity period
is not absolute. Under the Medicare Prescription Drug,
Improvement, and Modernization Act of 2003, Pub. L. No. 108-173,
117 Stat. 2066, a first filer may forfeit its exclusivity period
if it fails to come to market within 75 days of a final,
nonappealable court judgment that the first filer's product does
not infringe the brand-name's patents. 21 U.S.C.
§§ 355(j)(5)(D)(i)(I)(bb), (D)(ii). Alternatively, first-filer
exclusivity can be forfeited if another generic manufacturer
successfully challenges the brand-name patents at issue and if the
first filer fails to market its generic within 75 days of a final,
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nonappealable judgment in that other manufacturer's suit. Id.;
see also In re Nexium [Summary Judgment], 42 F. Supp. 3d at 246.
In 2013, the Supreme Court held that reverse payment
settlements in paragraph IV litigation "can sometimes violate the
antitrust laws." Actavis, 133 S. Ct. at 2227. A reverse payment
refers to an arrangement in which the brand-name manufacturer and
patent holder compensates the generic manufacturer and alleged
patent infringer to settle the paragraph IV litigation and delay
the generic's market entry. Id. at 2229. When a brand-name
manufacturer pays to delay the first filer's generic launch, that
reverse payment postpones not only the first filer's product but
also those of all other generic manufacturers, who must wait out
the 180-day exclusivity period before going to market. Given that
"a reverse payment, where large and unjustified, can bring with it
th[is] risk of significant anticompetitive effects," the Supreme
Court held that the potential anticompetitive effects of a reverse
payment are subject to the antitrust "rule of reason" test. Id.
at 2237.
Earlier this year, in In re Loestrin 24 Fe Antitrust
Litigation, 814 F.3d 538 (1st Cir. 2016), this circuit ruled that
improper reverse payments may take the form of "non-monetary"
advantages. Id. at 549. The language and logic of Actavis
dictated that outcome. See id. ("[T]he Supreme Court recognized
that a disguised above-market deal, in which a brand manufacturer
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effectively overpays a generic manufacturer for services rendered,
may qualify as a reverse payment subject to antitrust scrutiny and
militates against limiting the Supreme Court's decision to pure
cash payments."). Under this functional approach, "no-AG"
provisions -- in which the brand-name manufacturer agrees not to
market an "authorized generic" version of the drug for a certain
period of time -- and other settlement provisions in which some
advantage is transferred from the patent holder to the alleged
infringer may constitute a reverse payment subject to antitrust
scrutiny.
II. FACTS
Nexium is a proton-pump inhibitor whose active
ingredient is esomeprazole magnesium. The FDA approved
AstraZeneca's NDA to market Nexium in 2001. Between 2008 and 2014,
Nexium grossed at least $3 billion annually in U.S. sales and
joined the ranks of "blockbuster" drugs -- those that generate
annual sales of at least $1 billion. In 2001, AstraZeneca held
fourteen active patents covering Nexium. As relevant here, two
medical patents expired on May 27, 2014, two other patents expired
in February 2015 and July 2015, and two more are set to expire in
May 2018.
In August 2005, Ranbaxy first filed an ANDA with a
paragraph IV certification in order to market a generic version of
Nexium. The filing stated that Ranbaxy's launch would await the
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2007 expiration of some of AstraZeneca's Nexium patents, but
certified that other patents were either not infringed or invalid.
As to patent invalidity, Ranbaxy contended that there was "nothing
new" about Nexium, as the active compound in Nexium was effectively
"one-half" of the compound in Prilosec, another blockbuster drug
for stomach-acid treatment that AstraZeneca had marketed prior to
Nexium.
AstraZeneca promptly brought suit, alleging that Ranbaxy
had violated six of its patents: two that would expire on May 27,
2014, two that would expire in 2015, and two that would expire in
May 2018. The suit stayed FDA approval of Ranbaxy's ANDA until
April 2008. Meanwhile, Teva filed its ANDA for generic Nexium in
November 2005, and Dr. Reddy's filed in December 2007. AstraZeneca
sued Teva and Dr. Reddy's as well, and all three patent
infringement suits were consolidated in the U.S. District Court
for the District of New Jersey.
A. Settlement Agreements
Ranbaxy was the first defendant to settle after reaching
an agreement with AstraZeneca in April 2008. Under the settlement
agreement, Ranbaxy received a license to all relevant Nexium
patents starting on May 27, 2014. The settlement also contained
a no-AG clause, under which AstraZeneca agreed not to market an
authorized generic version of Nexium during Ranbaxy's 180-day
period of exclusivity. The clause thus ensured that Ranbaxy's
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generic would be the only one on the market if it could launch in
time to avoid triggering the statutory forfeiture provisions.
AstraZeneca could still continue to market its brand-name drug
during that period. In return, Ranbaxy stipulated to patent
validity and infringement and consented to the entry of an
injunction against the sale of its generic before the license took
effect on May 27, 2014.
AstraZeneca and Ranbaxy also executed three other
agreements, under which Ranbaxy would serve as AstraZeneca's
subcontractor and manufacture certain quantities of branded
Nexium, and would also serve as AstraZeneca's distributor for
authorized generic versions of two other AstraZeneca drugs,
Prilosec and Plendil. For the distribution agreement, Ranbaxy
would receive 20% of AstraZeneca's profits.
After litigating for a few more years, Teva settled with
AstraZeneca in January 2010. Like Ranbaxy, Teva received a license
to the Nexium patents starting on May 27, 2014 and also consented
to an injunction barring the sale of its generic before that
license took effect. Simultaneously, AstraZeneca and Teva agreed
to settle another pending patent infringement lawsuit regarding
Prilosec. In that multiyear litigation, AstraZeneca had succeeded
in establishing Teva's liability, but Teva had been contesting the
damages amount based on its past infringing sales. Teva paid
AstraZeneca $9 million to resolve that suit.
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Dr. Reddy's settled with AstraZeneca in January 2011.
Like Ranbaxy and Teva, Dr. Reddy's received a license for the
Nexium patents starting on May 27, 2014 and also consented to an
injunction barring sales before that date. Simultaneously,
AstraZeneca and Dr. Reddy's settled another pending patent
infringement lawsuit in which AstraZeneca agreed to drop its appeal
of the entry of summary judgment in Dr. Reddy's favor.
The three settlement agreements contained parallel
contingent launch provisions under which each generic manufacturer
agreed to delay launching its generic in the United States until
(1) May 27, 2014; (2) a hypothetical date prior to May 27, 2014 on
which any third party launched generic Nexium pursuant to a final,
nonappealable court order that AstraZeneca's Nexium patents were
invalid, unenforceable, or not infringed by the generic; or (3) a
hypothetical date prior to May 27, 2014 on which AstraZeneca
authorized any third party to manufacture a generic Nexium. In re
Nexium [Summary Judgment], 42 F. Supp. 3d at 249 (citing ¶ 5.2 in
the three settlement agreements).
B. Ranbaxy's Regulatory Troubles
Throughout Ranbaxy's paragraph IV litigation challenging
AstraZeneca's Nexium patents, Ranbaxy faced serious issues with
the FDA. Specifically, Ranbaxy had filed its ANDA for generic
Nexium out of its manufacturing facility in Paonta Sahib, India,
which meant that any FDA approval to launch generic Nexium would
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extend only to that facility. In February 2009, after issuing
several warnings about quality control problems with the India
facility, the FDA ultimately invoked its Application Integrity
Policy ("AIP") against Paonta Sahib. The AIP "halted FDA's
substantive review and approval of all pending ANDAs, including
amendments and post-approval supplements that relied on supporting
data from the Paonta Sahib site -- including the generic Nexium
ANDA." Id. at 266. The agency then rejected Ranbaxy's proposed
Corrective Action Operating Plan and further turned down Ranbaxy's
request that it grant a public health exception to the AIP and
continue the approval process for the generic Nexium ANDA.
Meanwhile, the FDA granted a public health exception for generic
Lipitor, another Ranbaxy product manufactured out of the Paonta
Sahib facility.
In 2010, Ranbaxy and the FDA began negotiating a Consent
Decree, which they finalized on January 25, 2012. Under its terms,
Ranbaxy could meet "several onerous and time-consuming milestones"
to obtain potential FDA approval for generic Nexium or to obtain
a site-transfer amendment to change the manufacturing site for the
drug. The Consent Decree also contained a "key relinquishment
date" of September 30, 2014. Id. at 274. If Ranbaxy could not
meet the requisite milestones before that date, it would forfeit
its 180-day exclusivity period. Id. Ranbaxy took over two and a
half years to prepare a site-transfer amendment, and the
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manufacturer failed to receive final FDA approval for its generic
Nexium ANDA prior to May 27, 2014.
On November 4, 2014, the FDA rescinded its tentative
approval of Ranbaxy's generic Nexium ANDA, and Ranbaxy promptly
sued the FDA in the U.S. District Court for the District of
Columbia. See Ranbaxy Labs, Ltd. v. Burwell, 82 F. Supp. 3d 159,
163 (D.D.C. 2015). Subsequently, in January 2015, the FDA notified
Ranbaxy that it had forfeited its first-filer exclusivity period
by failing to obtain approval for its generic within 30 months of
submitting its ANDA. The FDA simultaneously approved Teva's ANDA
for generic Nexium, which launched on February 17, 2015.
C. Dispute over Teva's Readiness to Launch Generic Nexium
The plaintiffs' evidence at summary judgment and at
trial showed that Teva was closer than Ranbaxy to obtaining FDA
approval and launching generic Nexium before May 27, 2014. An
internal Teva email from February 2007 approximated Teva's "Launch
Readiness date" as July 2008. And by 2009, Teva had passed FDA
review in two out of the three categories necessary for tentative
approval of its generic Nexium.
The parties vehemently disagreed at summary judgment on
whether the third remaining category for FDA approval was "a
significant hurdle or a minor one," an issue material to determine
whether Teva was indeed close to FDA approval. In re Nexium
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[Summary Judgment], 42 F. Supp. 3d at 288–89. The jury heard
evidence from both sides on this issue.
III. PROCEDURAL HISTORY
A. Pretrial Proceedings
Plaintiffs commenced six different actions in three
different federal district courts, alleging that AstraZeneca made
improper reverse payments to Ranbaxy, Teva, and Dr. Reddy's in
order to delay the market entry of generic Nexium. On December 7,
2012, the U.S. Judicial Panel on Multidistrict Litigation
consolidated and assigned the six pending actions to the U.S.
District Court for the District of Massachusetts. See 28 U.S.C.
§ 1407. This appeal arises from that consolidated case.
On appeal, plaintiffs are a class of wholesale drug
distributors (the "Direct Purchasers"); a class of individual
consumers, third-party payors, union plan sponsors, and certain
insurance companies (the "End Payors"); and numerous
pharmaceutical retail outlets.1 In January 2015, a panel of this
circuit affirmed the certification of the End Payors damages class
over a dissent. See In re Nexium Antitrust Litig., 777 F.3d 9(1st Cir. 2015). The original defendants in this litigation were
1 The pharmaceutical retail outlets are CVS, Inc.; Eckerd
Corporation; Giant Eagle, Inc.; HEB Grocery Co. LP; JCG (PJC) USA,
LLC; the Kroger Company; Maxi Drug, Inc. d/b/a Brooks Pharmacy;
Rite Aid Corporation; Rite Aid Headquarters Corporation; Safeway
Incorporated; Supervalu, Inc.; and Walgreen Co.
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AstraZeneca, Ranbaxy, Teva, and Dr. Reddy's. Teva and Dr. Reddy's
have settled, leaving only AstraZeneca and Ranbaxy as defendants
on appeal.
Consistent with In re Loestrin 24 Fe, the plaintiffs'
complaints identified aspects of AstraZeneca's settlements with
each of the three generic manufacturers that allegedly were reverse
payments in violation of the antitrust laws. In the Ranbaxy
settlement, the plaintiffs pointed to the no-AG clause, as well as
the side manufacturing and distribution agreements. In the Teva
settlement, the plaintiffs argued that Teva's payment of only $9
million to settle the Prilosec lawsuit, rather than the higher
amount that Teva actually owed AstraZeneca, constituted the
reverse payment. In the Dr. Reddy's settlement, the plaintiffs
cited AstraZeneca's agreement to drop its appeal challenging Dr.
Reddy's summary judgment win in another patent infringement
lawsuit.
In December 2013, the defendants collectively filed
eleven motions for summary judgment. Following the court's initial
rulings from the bench, both parties filed various motions for
reconsideration. In a September 4, 2014 opinion, the district
court memorialized its rationale as to each summary judgment motion
that it decided. See In re Nexium [Summary Judgment], 42 F. Supp.
3d 231. This opinion grouped the motions into five categories:
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First, the district court denied the defendants' motions
for partial summary judgment on the existence of an overarching
antitrust conspiracy, among all four original defendants, to
restrain trade in the market for generic Nexium. Id. at 248–60.
At the pretrial stage, the court found that the plaintiffs had
"met their burden of establishing a reasonable inference of
overarching conspiracy," id. at 249, as the evidence demonstrated
that each generic "manufacturer's calculus [on its entry date into
the generic Nexium market] changed . . . when it received assurance
that it would only have to restrict its business if its competitors
did the same," id. at 258. The denial of summary judgment to the
defendants imposed no restrictions on the plaintiffs' ability to
produce evidence at trial. Following the plaintiffs' case in
chief, the district court granted judgment as a matter of law in
the defendants' favor on this overarching conspiracy claim.
Second, although the district court denied the
defendants' motion for summary judgment as to the existence of an
improper reverse payment from AstraZeneca to Ranbaxy, the court
granted the motion as to the argument that such a reverse payment
caused the plaintiffs' injury. Id. at 260. The court elaborated
that the no-AG clause in the AstraZeneca–Ranbaxy settlement
agreement "may be considered part of an illegal reverse payment,"
id. at 265, while the lucrative "side" agreements granting Ranbaxy
supply and distribution contracts likewise "raise[] enough
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suspicions to support a reasonable inference [of] improper reverse
payments to induce Ranbaxy to delay its generic launch," id. at
264.
Nonetheless, in light of the quality control issues that
Ranbaxy's Paonta Sahib facility had experienced, the court found
that the plaintiffs did not show how Ranbaxy could still have
obtained final FDA approval and launched its generic before May
27, 2014. Id. at 270-75. The court was skeptical of the
plaintiffs' analogy to generic Lipitor, which had been
manufactured out of Paonta Sahib and had faced similar regulatory
issues but had nonetheless launched after Ranbaxy reached a
compromise with the FDA. Id. at 273-74.
"The net effect of these rulings [wa]s that the Ranbaxy
Settlement [could] not [be] a basis for imposing antitrust
liability." Id. at 279. However, later at trial, the court
acknowledged its error as to this ruling and reversed course.
Third, the court denied the defendants' motions for
summary judgment based on the Teva settlement. The court found
that the plaintiffs' evidence -- that Teva's $9 million payment to
AstraZeneca to settle the Prilosec lawsuit was so low a sum that
it "constituted a significant forgiveness of debt" by AstraZeneca
to delay the launch of Teva's generic -- was sufficient to proceed
to trial. Id. at 286. The court next found that the plaintiffs
had also met their burden as to, what it called, antitrust
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causation because they showed (1) that Teva was close to obtaining
tentative FDA approval but slowed down its efforts toward that
goal after settling with AstraZeneca, and (2) that Teva could have
entered the market before May 2014, notwithstanding Ranbaxy's
first-filer exclusivity period, by partnering with Ranbaxy on a
joint launch. Id. at 288–89.2 In sum, the plaintiffs could pursue
the Teva settlement as a basis for antitrust liability at trial.
Fourth, the district court granted the defendants'
motion for summary judgment based on the Dr. Reddy's settlement,
finding that the plaintiffs had proffered insufficient evidence
both on the existence of an improper reverse payment and on
"antitrust causation." Id. at 291–95.
Finally, the district court denied three miscellaneous
motions for summary judgment that AstraZeneca had filed: (1) a
motion against the Direct Purchaser and Individual Retailer
plaintiffs for lack of actual injury and seeking exclusion of
testimony from two experts; (2) a motion barring assigned claims;
and (3) a motion on the basis of the statute of limitations. Id.at 295–300.
2 The court rejected as too speculative another causal
mechanism -- namely, that Teva could have won its paragraph IV
suit and obtained a final, nonappealable judgment that
AstraZeneca's Nexium patents were invalid or not infringed. That
theoretical victory could, in turn, have triggered the regulatory
75-day window within which Ranbaxy had to launch its generic or
forfeit its first-filer exclusivity. Id. at 289–90.
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In sum, after the summary judgment proceedings, the
plaintiffs were allowed to present evidence on AstraZeneca's
improper reverse payment to Teva and any antitrust liability
flowing from that payment, as well as the existence of an
overarching antitrust conspiracy among AstraZeneca, Ranbaxy, Teva,
and Dr. Reddy's. That evidence would include testimony from the
plaintiffs' expert, Dr. Thomas McGuire. The court further directed
the plaintiffs to present all evidence supporting an antitrust
violation arising out of the Teva settlement first, before
presenting any other evidence.
After summary judgment, at a January 21, 2014 pretrial
motion hearing, the district court granted the defendants' motion
in limine to exclude testimony from Shashank Upadhye, a former in-
house lawyer at a nondefendant generic manufacturer. The
plaintiffs sought Upadhye's testimony to "augment Dr. McGuire's
economic testimony with a real world business perspective on
settlement negotiations for drug patent lawsuits." The court
reasoned that Upadhye, along with another proposed expert witness
(John Thomas), could not testify because they were "lawyers, not
economists, and . . . they d[id] not have the requisite
qualifications to testify." At an October 15, 2014 charge
conference, the court reminded both parties that its decisions
regarding motions in limine were "not rulings" and that the parties
- 21 -
"must make [their] objections known during the course of the
trial."
Dr. Reddy's settled and dropped out of the lawsuit
shortly before trial.
B. Trial
A six-week trial commenced on October 20, 2014. The
trial transcript, exhibits, and filings comprise thousands of
pages in the record. We summarize only the aspects of trial that
are relevant to the arguments on appeal.
1. Plaintiffs' Statement on Patent Invalidity and
Evidence Introduced During Their Case in Chief
At a conference on the second day of trial, the
plaintiffs described their case in chief to the district court:
[In order to show that Teva could have gotten
to market before May 27, 2014, the district court
said that the plaintiffs] would need to prove that
Teva would have won its litigation [against
AstraZeneca]. And then . . . [the court] also
indicated though that we could also perhaps prove
that Teva would have done a deal with Ranbaxy in
order to have the 180 days lifted.
. . . We plan to do the latter, primarily in
our case in chief . . . . We don't plan on proving
a patent case inside of an antitrust case [by
pursuing the former]. . . . [W]e do not plan to be
proving that Teva would have won the litigation.
This choice by the plaintiffs was not mandated by the district
court's ruling. At trial, consistent with the district court's
order, the plaintiffs first presented evidence on the existence of
a reverse payment from AstraZeneca to Teva.
- 22 -
Dr. McGuire, an economist and one of the plaintiffs' key
expert witnesses, testified twice during the plaintiffs' case in
chief. McGuire first testified to "the enormous financial stakes
that turned on the entry date of a lower cost generic into a market
hitherto dominated by a patented, more expensive brand name drug."
In re Nexium (Esomeprazole) Antitrust Litig. ("In re Nexium [Post-
Trial Opinion]"), 309 F.R.D. 107, 119 (D. Mass. 2015). He further
"detailed how the benefits AstraZeneca conferred on Teva through
their mutual settlement exceeded the litigation costs the parties
thereby avoided." Id.During McGuire's second testimony, despite the summary
judgment order precluding the plaintiffs from introducing evidence
of a reverse payment to Ranbaxy, the court allowed McGuire to
testify "for context" on the "far greater reverse payment made by
AstraZeneca to Ranbaxy to induce it to forego its challenge to
AstraZeneca's Nexium patents." Id. The district court also
allowed McGuire to testify about Ranbaxy's economic incentives to
include a contingent launch provision in its settlement agreement
with AstraZeneca. Specifically, McGuire noted that the provision
made it "less likely" that subsequent ANDA filers would pursue
generic entry. He further stated that the clause "had the effect
of reducing the likelihood that Teva would challenge and break the
bottleneck, which means for Ranbaxy[,] it became more likely that
- 23 -
[it was] able to use [its] 180-day exclusivity period and make the
profits associated with that."
At one point during McGuire's second testimony, the
court forbade him from quantifying Ranbaxy's incentive to
participate in the overarching conspiracy as "about $700 million
in [Ranbaxy's] pocket that [it] otherwise wouldn't have." It ruled
as such because the existence of contingent launch provisions, and
not that theory, was what kept the plaintiffs' "case against
Ranbaxy alive." The court nonetheless allowed McGuire to testify
that AstraZeneca netted "hundreds of millions of dollars" by
settling with Ranbaxy to "strengthen the 180-day [first-filer]
barrier."
Plaintiffs were permitted to introduce expert testimony
on the but-for entry dates. For three days, starting on November
18 and after the district court articulated its "misconception,"
the plaintiffs presented the testimony of Dr. Cheryl Blume, their
"lead witness on the issue of the crucial 'but for entry date.'"
Id. at 120. Looking back at trial, the district court noted that
"Blume did not fare very well, especially under the searching
cross-examination by Teva's counsel. The Court was left with the
distinct impression that much of her testimony was a priori
rationalization." Id.
- 24 -
2. The District Court's Mid-Trial Shift, Defendants'
Mistrial Motion, and the Exclusion of McGuire's Event
Study and Other Testimony
On November 18, 2014, the seventeenth day of the trial,
the court admitted that it had had a "fairly fundamental
misconception" of the plaintiffs' theory of the case. The court
then adjusted its thinking about the relevance of the AstraZeneca–
Ranbaxy settlement by noting that "[t]he large and unjustified
payment to Ranbaxy, which keeps Ranbaxy, given its blocking
position [as first filer], off the market until May 27th, 2014,
has an effect on all the later ANDA filers, such that if it were
to be proved that but for that agreement, . . . Teva could have
partnered with Ranbaxy and come to market prior to that date."
In light of this shift, the district court announced
that it would alter the jury verdict form and allow the plaintiffs
to recall McGuire to testify for a third time. The court also
emphasized that its shift in thinking did "not injure[]" the
plaintiffs because "they seem to have in the record enough evidence
of a large and unjustified payment to Ranbaxy and based upon their
expert's testimony it can be argued that it was anticompetitive."
In response to the district court's stated reversal of
its position, the defendants filed two motions, to both of which
the plaintiffs objected. The first motion was for a mistrial.
The second was to exclude McGuire's additional proffered testimony
-- an "Event Study" that postulated an earlier entry date had there
- 25 -
not been a reverse payment in the AstraZeneca-Ranbaxy settlement
-- under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S.
579 (1993). The district court first excluded McGuire's Event
Study testimony under Daubert. That Study purported to "use
econometric analysis of the stock market's reaction to the actual
settlement reached by AstraZeneca and Ranbaxy to estimate an
objective entry date without [a reverse] payment." While the court
acknowledged McGuire's expertise and stated that the Event Study's
methodology was "perhaps reliable," the Study did not meet Daubert
requirements because there was "no fit" "between the event study
and this culmination of the case." The court recognized that the
plaintiffs might nonetheless want to call McGuire a third time to
testify to "other things" besides the Event Study. It ruled,
however, that it still would not allow him to testify to those
"additional matters" because to do so would be "simply unfair."
Given that the court had said on November 18 that it
would allow the plaintiffs to recall McGuire, the court
acknowledged that its "no more McGuire" ruling could "change the
plaintiffs' position on mistrial." It directed the plaintiffs to
make "tactical decisions" on whether to reassess their initial
opposition to the defendants' mistrial motion.
The plaintiffs continued to oppose a mistrial. They
pointed out that despite the summary judgment ruling precluding
evidence of AstraZeneca's reverse payment to Ranbaxy, such
- 26 -
evidence had nonetheless been presented to the jury under another
theory. Indeed, the plaintiffs had introduced evidence on that
payment because it was relevant and admissible under the claim of
overarching conspiracy.3 Plaintiffs also argued that the "chopped
up" way in which McGuire's earlier testimony was presented to the
jury and the court's exclusion of McGuire's Event Study went "a
long way to curing whatever prejudice . . . these defendants may
have incurred."
Immediately following these statements, the court denied
the motion for mistrial.
3. Judgment as a Matter of Law on Conspiracy and Patent
Invalidity
At the close of the plaintiffs' case, the defendants
moved for judgment as a matter of law on the overarching conspiracy
claim, as well as on the question of antitrust causation. The
court granted the motion on the conspiracy claim, noting that
3 The vigor with which the plaintiffs acknowledged the
admission of evidence on the Ranbaxy reverse payment is worth
noting:
From the very beginning of this case the payment to
Ranbaxy has been in clearly as at least an overt
act in furtherance of the conspiracy. . . . But
for [the defendants] to come here now and say, Oh,
this was never in the case, that simply from our
perspective is not true. It was unclear exactly
how much and what role that payment was going to
make, but it was clear it was in this as an overt
act . . . . And we made our tactical choices and
[the defendants] made theirs.
- 27 -
"[t]here [wa]s no sufficient evidence here that Ranbaxy and Teva
conspired together, [or] that they acted otherwise than in their
own individual best interest." Although the court "came within an
ace" of granting the motion on causation as well, it decided to
deny the motion for "prudential reasons" and let that question go
to the jury. The court did grant the defendants' motion on
causation with regard to any theory of antitrust causation based
on patent invalidity, as it found "no adequate evidence that any
of these patents would be adjudicated invalid." Earlier in the
trial, the plaintiffs had already told the court that they would
not pursue such a theory.
To be sure of the accuracy and consequences of its ruling
on patent invalidity, the court invited the parties to present
further arguments on that issue following its initial ruling. The
court subsequently refined its judgment regarding patent
invalidity. Specifically, the court credited the plaintiffs'
argument that, as a matter separate from the absolute validity of
the Nexium patents, patent holders like AstraZeneca protect their
patent monopoly and maximize profit in a world in which patent
infringement litigation may loom but has not taken place.
Accordingly, the court allowed the plaintiffs, independent of the
ruling on patent invalidity, to argue that the defendants could
have been incentivized to reduce the risk of patent invalidation
-- for instance, by paying to delay the market entry of generics.
- 28 -
On November 24, 2014, Teva settled and dropped out of
the suit, leaving only AstraZeneca and Ranbaxy as defendants.
4. Exclusion of Plaintiffs' Proposed Rebuttal Evidence
At the close of the defendants' case on December 2, 2014,
the plaintiffs unsuccessfully sought to admit rebuttal evidence,
which included the McGuire Event Study that the court had already
excluded; a report published by Federal Trade Commission ("FTC")
staff and entitled "Pay-for-Delay: How Drug Company Pay-Offs Cost
Consumers Billions"; and expert testimony from Dr. Keith Leffler.
Leffler, an economist, proffered testimony that "virtually all
Hatch-Waxman cases can be settled without reverse payments" and
that it would have been in both AstraZeneca's and Ranbaxy's
economic interest to enter into a payment-free settlement with a
February 2012 entry date. The court refused to admit any of this
evidence "because it [was] not true rebuttal" and should have been
introduced during the plaintiffs' case in chief.
5. Special Verdict Form and Jury Instructions
The district court first provided the parties with the
revised verdict form at a December 2, 2014 conference. This form
contained the following seven questions:
1. Did AstraZeneca exercise market power within the
relevant market?
2. Did the settlement of the AstraZeneca-Ranbaxy
patent litigation include a large and unjustified
payment by AstraZeneca to Ranbaxy?
- 29 -
3. Was AstraZeneca's Nexium settlement with Ranbaxy
unreasonably anticompetitive, i.e. did the
anticompetitive effects of that settlement
outw[ei]gh any pro-competitive justifications?
4. Had it not been for the unreasonably
anticompetitive settlement, would AstraZeneca have
agreed with Ranbaxy that Ranbaxy might launch a
generic version of Nexium before May 27, 2014?
5. If so, what would be the effective date of such a
license?
6. a. Had it not been for the unreasonably
anticompetitive settlement, would Ranbaxy have
agreed with Teva to launch a generic version of
Nexium before May 27, 2014? b. If so, when would
Teva have launched?
7. If a generic version of Nexium had come to market,
would an authorized generic have entered at or
about the same time?
After the court explained its revisions, it engaged in a colloquy
with the parties, which focused, in relevant part, on the
plaintiffs' objection that Question 4 applied a legally incorrect
"subjective" test for antitrust causation.
The district court instructed the jury the next day. On
Question 4, the court explained that answering "yes" to the first
three questions was insufficient because "[j]ust making a
deal . . . is not enough for liability[;] there has to be a harm."
The court further explained that although the question mentioned
by name AstraZeneca and Ranbaxy, it was "not necessarily just
focusing on the AstraZeneca–Ranbaxy settlement":
Now, the test here is an objective test. In other
words I use the names "AstraZeneca" and "Ranbaxy"
- 30 -
because those are the folks we're talking about
here, but the test is not what they did . . . we
know what agreement they entered into, you would
have found [in Question 3] that agreement is
unreasonably anticompetitive. So then you're asked
the question, "Well, suppose they didn't enter into
such an agreement, suppose they were settling
straight up without any anticompetitive effects,
would that settlement license entry date have been
earlier than the date they agreed to, May 27th,
2014?"
The court also reviewed Teva's role in the plaintiffs' theory --
namely, that had AstraZeneca not made a reverse payment to Ranbaxy,
their settlement agreement would have contained an earlier entry
date, which would have allowed Teva to obtain that same earlier
date or to partner with Ranbaxy for a joint launch of generic
Nexium. Finally, the court informed the jury that a "no" to any
question meant that the jury should not consider any subsequent
question.
During the sidebar following the charge, each party
objected to certain aspects of the court's instructions. The court
had earlier warned that the parties had to raise their objections
at the end of the charge to preserve them for appeal. The
plaintiffs' objections to Question 4 were limited to the district
court's colloquial framing of that question. They also objected
to other aspects of the instructions unrelated to Question 4.
6. Plaintiffs' Closing Statement
The plaintiffs' closing expressly reminded the jury of
the "large and unjustified payment" from AstraZeneca to Ranbaxy.
- 31 -
Plaintiffs' counsel argued that "[i]t's large because it was worth
about $690 million to Ranbaxy, or according to [one witness], about
$300 million. It was going to cost AstraZeneca, in terms of lost
sales, about $500 million of its own revenues that it might be
able to get from the sale of [an authorized generic]." The
plaintiffs further urged the jury to draw inferences from that
payment: "By the fact that there was a payment you can infer that
there was a movement of that entry date. Absolutely. And [by]
the fact that this payment was so large you can infer that the
entry date was moved back and should have been earlier."
Notwithstanding the court's judgment as a matter of law
on the issue of patent invalidity, the plaintiffs' closing also
questioned the strength of AstraZeneca's Nexium patents and the
relevance of those patents to the defendants' settlement
agreement. The closing emphasized that the two defendants denied
"ever talk[ing] about the strengths and weaknesses of the patent
in order to negotiate some kind of date." Further, "[b]ecause
. . . there was never a negotiation here where the two companies
sat down and said we've got these claims on the patents . . .
here's infringement issues, let's see how we can negotiate on the
merits of this case a resolution," the plaintiffs urged the jury
to find that the AstraZeneca-Ranbaxy deal consisted of "payoffs
that weren't related to the merits." Upon the defendants'
objections to the plaintiffs' characterization of "the patent
- 32 -
merits a[s] a coin flip" during the closing, the court reminded
the jury that "on this record there is no evidence that any of
these patents at the end of the day would have been held invalid."
Finally, the plaintiffs' closing discussed at least two
mechanisms through which the Ranbaxy reverse payment could have
led to an antitrust injury in the form of a delayed generic launch.
First, they explained that AstraZeneca faced a "major risk of
potential at-risk launch . . . in late 2007 and early 2008" and
thus had an incentive to settle with Ranbaxy to avoid that outcome.
Next, the plaintiffs reminded the jury about the Lipitor analogy.
Articulating the "striking" similarities between Nexium and
Lipitor, the plaintiffs emphasized that generic Lipitor launched
despite Ranbaxy's regulatory troubles, while generic Nexium did
not, because the Lipitor settlement agreement did not contain a
no-AG clause and thus provided for an earlier entry date compared
to the Nexium settlement agreement.
7. Jury Verdict
After deliberating for two and a half days, the jury
returned a verdict for the defendants. The jury answered "yes" to
the first three questions, finding that the AstraZeneca-Ranbaxy
settlement contained a "large and unjustified payment" and had an
"unreasonably anticompetitive" market impact. But the jury
answered "no" to Question 4, finding that the plaintiffs had failed
to prove that AstraZeneca would have negotiated an entry date
- 33 -
earlier than May 27, 2014. Heeding the court's earlier
instructions, the jury stopped after its "no" answer.
C. Post-Trial Proceedings
On December 31, 2014, the plaintiffs moved for a new
trial based in part on allegedly contradictory evidence that
Ranbaxy had presented in litigation against the FDA in December
2014. One week later, a subset of plaintiffs moved for a permanent
injunction under Section 16 of the Clayton Antitrust Act, Pub. L.
63-212, 38 Stat. 730 (codified at 15 U.S.C. §§ 12-27, 29 U.S.C.
§§ 52-53). The district court denied both motions. See In re
Nexium [Post-Trial Opinion], 309 F.R.D. at 134, 143.
This appeal followed.
IV. ANALYSIS
Plaintiffs have chosen to focus their appeal on the
partial grant of summary judgment, the exclusion of certain
evidence at trial, alleged errors in the district court's special
verdict form and jury instructions, and the grant of judgment as
a matter of law on the claim of overarching conspiracy. Plaintiffs
argue that any one of these alleged errors entitles them to a new
trial.
We disagree and affirm the district court's evidentiary
rulings, judgment as a matter of law on overarching conspiracy,
and decision to structure the special verdict form and jury
instructions in the manner that it did. Further, in light of the
- 34 -
jury verdict and other critical developments at trial on the issue
of patent invalidity, we decline to revisit the district court's
summary judgment rulings. It would be improper for an appeals
court to wade into such pretrial matters when, as here, a
confluence of the plaintiffs' trial strategy, the district court's
rulings, and the jury verdict rendered harmless any alleged error
at the summary judgment stage.
A. Evidentiary Rulings
The plaintiffs challenge numerous evidentiary rulings of
the district court. We find no error and affirm.
1. Exclusion of McGuire's Event Study Testimony
The plaintiffs argue that the district court committed
reversible error by refusing to allow Dr. Thomas McGuire to testify
for a third time after it concluded that the subject of his
testimony, the Event Study, was inadmissible under Daubert. We
review Daubert determinations for abuse of discretion. Ruiz-
Troche v. Pepsi Cola of P.R. Bottling Co., 161 F.3d 77, 81 (1st
Cir. 1998) (citing General Elec. Co. v. Joiner, 522 U.S. 136, 141-
42 (1997)). Federal Rule of Evidence 702 requires district courts
to "ensur[e] that an expert's testimony both rests on a reliable
foundation and is relevant to the task at hand" before admitting
it into evidence. Daubert, 509 U.S. at 597. The district court,
as gatekeeper, must "ensure that there is an adequate fit between
- 35 -
the expert's methods and his conclusions." Samaan v. St. Joseph
Hosp., 670 F.3d 21, 32 (1st Cir. 2012).
We conclude on the merits4 that the district court did
not abuse its discretion in excluding the Event Study and McGuire's
corresponding testimony. The court properly found that the Event
Study methodology -- which purported to use econometric analysis
of stock market data to "estimate an objective entry date without
[a reverse] payment" -- did not fit the conclusions for which it
was offered. Although such studies had previously been "admitted
on valuation, something much more germane to stock price," the
study had questionable relevance to hypothesizing the outcome of
a settlement agreement, especially one as crucial as the but-for
entry date in a reverse-payment case. Furthermore, when asked to
offer an example of another study that had used the Event Study
methodology to predict settlement terms, the plaintiffs could not
produce anything but an unpublished, non-peer-reviewed working
paper that McGuire co-authored during the course of this
litigation. The exclusion of McGuire's Event Study testimony under
these circumstances did not constitute an abuse of discretion.
4 As a threshold matter, the defendants argue that the
plaintiffs are judicially estopped from appealing the exclusion of
McGuire's Event Study, as they agreed to give up that evidence to
defeat the defendants' mistrial motion. We need not reach this
claim.
- 36 -
2. Exclusion of Other Aspects of McGuire's Testimony
The plaintiffs also accuse the district court of
improperly forbidding McGuire from testifying about three other
issues: (1) specific but-for entry dates, (2) "the purpose and
effect of the side deals" between AstraZeneca and Ranbaxy, and
(3) the exact size of the reverse payment from AstraZeneca to
Ranbaxy. We can quickly dispose of these arguments.
First, as to McGuire's testimony on the but-for entry
dates, examining the district court's decision in the context of
the overall record makes clear that the exclusion did not prejudice
the plaintiffs. During McGuire's second testimony, which took
place before the district court's mid-trial epiphany on the Ranbaxy
reverse payment's relevance, the court did not allow McGuire to
testify that Ranbaxy and Teva "would have been able to enter in
2011" but for the reverse payments. This ruling did not constitute
reversible error in light of events at trial that took place both
before and after the court's epiphany.
Even before its shift in thinking, the district court
gave McGuire leeway to testify about Ranbaxy's economic incentives
to enter into the settlement agreement with AstraZeneca. That
testimony, in turn, implied how the AstraZeneca-Ranbaxy settlement
could have led to delayed generic entry. In particular, McGuire
testified, during his second time on the stand, that the contingent
launch provision in Ranbaxy's settlement agreement diminished the
- 37 -
likelihood of subsequent ANDA filers seeking to enter the generic
Nexium market. "In fact," McGuire testified, "there were no
subsequent ANDA filers that pursued this [generic entry] through
litigation." The district court also permitted plaintiffs'
counsel to ask McGuire whether he had "reach[ed] a conclusion as
to whether Ranbaxy had an economic motive to agree to the
[contingent launch] clause." McGuire answered in the affirmative
and, over an objection, was allowed to elaborate that the
contingent launch provision "had the effect of reducing the
likelihood that Teva would challenge and break the bottleneck,
which mean[t] for Ranbaxy[,] it became more likely that [it was]
able to use [its] 180-day exclusivity period and make the profits
associated with that." Notwithstanding McGuire's inability to
testify to exact but-for entry dates, the district court afforded
him great latitude to give testimony on Ranbaxy's economic
incentives to block other ANDA filers and thus delay generic entry.
Next, after the court's adjustment in thinking, it
informed the parties that it would not allow McGuire to testify a
third time out of principles of fairness and that the plaintiffs
should consider this ruling's implications on their mistrial-
motion calculus. In addition, independent of its rulings regarding
McGuire, the court allowed testimony on but-for entry dates from
another expert, Dr. Cheryl Blume, whom the court described as the
plaintiffs' "lead witness" on this very issue. Blume testified as
- 38 -
part of the plaintiffs' case in chief over three days of trial
(November 18 to 20).
In the context of the court's rulings on McGuire and
Blume, the plaintiffs continued to oppose a mistrial. The record
does not show that they made any objections that they should have
been allowed to present cumulative evidence on specific but-for
entry dates through McGuire in addition to Blume. In short, the
plaintiffs had an opportunity to present evidence on hypothetical
earlier entry dates through Blume, and the district court was under
no obligation to also permit McGuire to testify on that same issue.
The plaintiffs' argument to the contrary seems to be little more
than an effort to admit cumulative and weaker evidence. See
McDonald v. Fed. Labs., Inc., 724 F.2d 243, 248 (1st Cir. 1984);
cf. Fed. R. Evid. 403 ("The [trial] court may exclude relevant
evidence if its probative value is substantially outweighed by a
danger of . . . unfair prejudice, confusing the issues, misleading
the jury, undue delay, wasting time, or needlessly presenting
cumulative evidence."). Plaintiffs have not shown any prejudice
resulting from the district court's decision not to permit
cumulative evidence, particularly from a witness who had already
been allowed to testify twice.
Next, the alleged errors in excluding McGuire's
testimony on the side deals and the size of the reverse payment
were harmless in light of the jury verdict. The "yes" answer to
- 39 -
Question 2 reflects the jury's finding that AstraZeneca made a
large and unjustified payment to Ranbaxy. Furthermore, as to the
size of the reverse payment, although McGuire could not assign a
specific dollar figure to the value of the reverse payment, the
district court did allow him to testify that it was worth "hundreds
of millions of dollars."
3. Pretrial Exclusion of Upadhye's Testimony
The plaintiffs also fault the district court for its
pretrial decision in limine to exclude testimony from Shashank
Upadhye, who sought to provide "a real world business perspective
on settlement negotiations for drug patent lawsuits."
Before reaching the merits, we must point out that,
despite the district court's clear instructions that its pretrial
decisions were "not rulings" and that the parties "must make
[their] objections known during the course of the trial," the
plaintiffs did not renew at trial their objections to the court's
in limine decision regarding Upadhye. In fact, although the
plaintiffs listed Upadhye as a witness whom they "m[ight] call" at
trial, they never actually attempted to do so. Under these
circumstances, the district court's in limine decision may not
even serve as proper grounds for a reversal. See, e.g., Littleton
v. McNeely, 562 F.3d 880, 891 (8th Cir. 2009).
But even if the plaintiffs had properly objected to the
exclusion of Upadhye's testimony, there would be no error.
- 40 -
"Whether a witness is qualified to express an opinion is a matter
left to the sound discretion of the trial judge." McDonald, 724
F.2d at 248 (quoting A. Belanger & Sons, Inc. v. U.S. for Use &
Benefit of Nat'l U.S. Radiator Corp., 275 F.2d 372, 376 (1st Cir.
1960)). Here, the district court excluded Upadhye's proposed
testimony because he was "not [an] economist[]" and "d[id] not
have the requisite qualifications to testify." That decision,
especially given Upadhye's reliance on his general experience and
his failure to cite any methodology undergirding his opinions, was
not an abuse of discretion. The district court may also have
"regarded [Upadhye's] proffered testimony as cumulative," as
McGuire had already testified about the Ranbaxy reverse payment
and Upadhye would have offered only a "real world" spin on that
testimony. Id.
4. Exclusion of Plaintiffs' Proposed Rebuttal Evidence
The plaintiffs next seek reversal on the ground that the
district court's exclusion of their "rebuttal" evidence was error.
Not so. "The principal objective of rebuttal is to permit a
litigant to counter new, unforeseen facts brought out in the other
side's case." Faigin v. Kelly, 184 F.3d 67, 85 (1st Cir. 1999).
"[T]he decisions as to what constitutes proper rebuttal
evidence . . . lie within the sound discretion of the trial judge
and are subject to substantial deference." United States v.
LiCausi, 167 F.3d 36, 52 (1st Cir. 1999).
- 41 -
The plaintiffs sought to admit three pieces of evidence,
purportedly in an effort to rebut the testimony of two defense
witnesses, "that AstraZeneca never 'express[ed] any willingness to
agree to any' date other than May 27, 2014." The proposed rebuttal
evidence consisted of (1) McGuire's Event Study testimony, which
the district court had already rejected as part of the plaintiffs'
case in chief; (2) an economic analysis of a no-payment settlement
by another expert, Dr. Keith Leffler; and (3) a study published by
FTC staff. At oral argument, the plaintiffs insisted that their
inability to admit any rebuttal evidence, coupled with other
alleged errors of the district court, meant that "all the jury
heard was some officers of [the defendants'] company saying they
wouldn't do things differently."
Contrary to the plaintiffs' statement, the district
court properly refused to admit the plaintiffs' proposed rebuttal
evidence, reasoning that it "was hardly true rebuttal testimony
because establishing [the date on which the defendants would have
agreed to a generic launch but for a reverse payment] was an
essential part of the Plaintiffs' prima facie case." Indeed, given
the centrality of this date to the entire litigation and especially
to the plaintiffs' need to prove an antitrust injury, it was
entirely foreseeable that the defendants would assert that the
date would not have been earlier than May 27, 2014. It was thus
within the district court's discretion to rule that the defendants'
- 42 -
testimony to that effect offered nothing "new" to warrant use of
the plaintiffs' proffered evidence as rebuttal. See Faigin, 184
F.3d at 85.
The plaintiffs respond by emphasizing the unique
circumstances of this trial. Given that the district court first
directed them to focus their case on the Teva reverse payment but
radically adjusted its understanding mid-trial to recognize the
relevance of the Ranbaxy reverse payment, the plaintiffs argue
that the district court was required to give them an opportunity,
at rebuttal, "to present evidence relating to the newly revived
issue." Alberty-Vélez v. Corporación de Puerto Rico para la
Difusión Pública, 242 F.3d 418, 422 (1st Cir. 2001) (quoting Leddy
v. Standard Drywall, Inc., 875 F.2d 383, 386 (2d Cir. 1989)). But
the record does not support the plaintiffs' contention that the
district court did not afford them such an opportunity. Instead,
the record portrays the plaintiffs' neglect in seeking to admit
relevant testimony after the court course-corrected (with the
exception of McGuire's Event Study, which was supportably excluded
on Daubert grounds, as discussed above).
The plaintiffs made no effort to seek admission of the
FTC study or Leffler's testimony as part of their case in chief,
even though they had two days between the district court's epiphany
and the end of their case in chief to do so. They offer no
explanation on appeal of their failure to seek admission of the
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FTC study before resting their case. And while they do explain
that they could not call Leffler on short notice because he resided
in Seattle, the record does not indicate that the plaintiffs
brought this geographical limitation to the district court's
attention. In short, the plaintiffs had a window of opportunity
to seek admission of the FTC study and Leffler's testimony before
resting their case. Given their own failure to do so, we conclude
that it was within the district court's discretion to refuse to
admit that evidence, which properly belonged in the plaintiffs'
case in chief, and not in their rebuttal.
B. Judgment as a Matter of Law on Overarching Conspiracy
The plaintiffs argue that the district court erroneously
granted judgment as a matter of law ("JMOL") on the overarching
conspiracy claim. They argue that they had proved the existence
of contingent launch provisions in the defendants' settlement
agreements, that this evidence had sufficed to survive summary
judgment, and that thus it necessarily was enough to defeat JMOL.
But this reasoning mixes apples and oranges.
We review de novo a district court's decision to grant
JMOL. Malone v. Lockheed Martin Corp., 610 F.3d 16, 19 (1st Cir.
2010). An antitrust conspiracy claim under Section 1 of the
Sherman Act, 15 U.S.C. § 1, requires evidence of an actual
"'agreement[]' -- whether tacit or express." White v. R.M. Packer
Co., 635 F.3d 571, 575 (1st Cir. 2011). "[I]ndependent decisions,
- 44 -
even if they lead to the same anticompetitive result as an actual
agreement among market actors," are insufficient to sustain a
Section 1 conspiracy claim. Id. As a result, mere parallel
conduct and "[e]ven 'conscious parallelism,' a common reaction of
firms in a concentrated market that recognize their shared economic
interests and their interdependence with respect to price and
output decisions[,] is not in itself unlawful." Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 553–54 (2007) (alterations omitted)
(quoting Brooke Grp. Ltd. v. Brown & Williamson Tobacco Corp., 509
U.S. 209, 227 (1993)).
The law distinguishes illegal tacit agreements from
"mere conscious parallelism" through evidence of "uniform behavior
among competitors, preceded by conversations implying that later
uniformity might prove desirable or accompanied by other conduct
that in context suggests that each competitor failed to make an
independent decision." White, 635 F.3d at 576 (emphasis added)
(quoting Brown v. Pro Football, Inc., 518 U.S. 231, 241 (1996));
see also Dickson v. Microsoft Corp., 309 F.3d 193, 203 (4th Cir.
2002) (concluding that a "rimless wheel conspiracy" -- in which
"various defendants enter into separate agreements with a common
defendant, but where the defendants have no connection with one
another, other than the common defendant's involvement in each
transaction" -- is "not a single, general conspiracy but instead
amounts to multiple conspiracies between the common defendant and
- 45 -
each of the other defendants" (citing Kotteakos v. United States,
328 U.S. 750, 755 (1946))).
The plaintiffs point to parallel contingent launch
provisions in AstraZeneca's settlements with each generic
manufacturer as evidence of the existence of one overarching
conspiracy. Under these provisions, the generic manufacturers
agreed to delay launching generic Nexium until May 27, 2014, or an
earlier date on which AstraZeneca or a court order permitted them
to do so. Beyond the provisions, however, the plaintiffs fail to
present any evidence that Ranbaxy and Teva agreed to engage in
anticompetitive conduct.
Given the dearth of additional evidence, the district
court correctly recognized that "[t]here is no sufficient evidence
here that Ranbaxy and Teva conspired together, that they acted
otherwise than in their own individual best interest." Indeed,
some evidence that Ranbaxy and Teva, independent of AstraZeneca,
agreed to engage in anticompetitive conduct was critical because
self-interest could explain equally well why each might execute a
contingent launch provision. After all, as defendant Ranbaxy
explains, "[e]ach generic company would have wanted to ensure that
no other generic preceded its entry into the market -- and would
have sought that assurance by obtaining a contingent launch
provision in its settlement agreement." In short, without proving
"the existence of a 'rim' to the wheel in the form of an agreement
- 46 -
among" the generic manufacturers, the plaintiffs did not have a
viable claim of overarching conspiracy to survive JMOL. United
States v. Apple, Inc., 791 F.3d 290, 314 n.15 (2d Cir. 2015).
The three cases that the plaintiffs string cite do not
alter our assessment. See United States v. Masonite Corp., 316
U.S. 265 (1942); Interstate Circuit v. United States, 306 U.S. 208(1939); Toys "R" Us, Inc. v. FTC, 221 F.3d 928 (7th Cir. 2000).
The cases do not say, as plaintiffs argue, that interdependent
conduct, absent more, suffices to establish overarching
conspiracy. Properly read, they in fact reinforce the opposite
proposition.
First, contrary to the plaintiffs' argument, Masonite
makes no holding on horizontal conspiracy. There, Masonite, a
manufacturer of building materials, developed a product called
hardboard and obtained patents for both the product and the process
for manufacturing it. 316 U.S. at 267–68. When competitors began
manufacturing hardboard, Masonite sued each of them for patent
infringement, id. at 268–70, but eventually settled each suit on
identical terms, including a price-fixing term, id. at 270–73.
The Supreme Court upheld the district court's factual findings
that each of Masonite's competitors had "acted independently of
the others, negotiated only with Masonite, desired the agreement
regardless of the action that might be taken by any of the others,
did not require as a condition of its acceptance that Masonite
- 47 -
make such an agreement with any of the others, and had no
discussions with any of the others." Id. at 275. The Court then
held that the individual vertical contracts between Masonite and
each competitor violated § 1 of the Sherman Act. Id. That was
the extent of Masonite's holding. Indeed, to read Masonite as
having found an overarching horizontal conspiracy would be
"nonsensical" because "an essential conspiracy element [wa]s
missing -- namely, a motive for joint action or interdependence."
6 Areeda & Hovenkamp, Antitrust Law ¶ 1427d (2d ed. 2003).
The second case that the plaintiffs cite, Interstate
Circuit, is also of no help to their claim of error. Unlike this
case, in which the district court found no evidence to infer any
agreement between Ranbaxy and Teva, the Court in Interstate Circuit
saw enough circumstantial evidence to find a "tacit agreement"
among all defendants. 306 U.S. at 225-27; White, 635 F.3d at 576.
There, "a dominant movie theater company sent a letter openly
addressed to all eight major national film distributors stating
that it would show a distributor's films only if the distributor
imposed certain restrictions on later runs of the films in
secondary theaters." White, 635 F.3d at 576. "[T]he economic
context made it clear that all eight needed to act uniformly or
all would lose business, and all eight did in fact impose the
conditions." Id. By contrast, here, the district court found
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that the plaintiffs had presented insufficient evidence from which
to infer even a tacit agreement.
Finally, Toys "R" Us is also inapposite because evidence
in that case showed that entering into parallel agreements with
Toys "R" Us ("TRU") was against each toy manufacturer's interest
unless all of them did so. TRU, "a giant in the toy retailing
industry," had executed agreements with various toy manufacturers
that TRU would carry the manufacturers' toys only if they promised
to curb sales to warehouse club stores like Costco that sold toys
at lower prices than did TRU. 221 F.3d at 930. The Seventh
Circuit affirmed an FTC finding of a horizontal conspiracy among
the toy manufacturers for two reasons. First, "the record . . .
included the direct evidence of communications" among the toy
manufacturers. Id. at 935. Second, the evidence showed that it
was actually against the toy manufacturers' economic interest to
curb sales to warehouse clubs unless they all did so:
The evidence showed that the companies wanted to
diversify from TRU, not to become more dependent
upon it; it showed that each manufacturer was
afraid to curb its sales to the warehouse clubs
alone, because it was afraid its rivals would cheat
and gain a special advantage in that popular new
market niche. . . . [T]he only condition on which
each toy manufacturer would agree to TRU's demands
was if it could be sure its competitors were doing
the same thing.
Id. at 936. The record in this case contains no such evidence.
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In Interstate Circuit and Toys "R" Us, there were "plus
factors" -- i.e. "additional facts or factors required . . . as a
prerequisite to finding that parallel action amounts to a
conspiracy." 6 Areeda & Hovenkamp, supra, ¶ 1433e ("Even those
courts that say that conscious parallelism is a factor 'to be
weighed, and generally to be weighed heavily' in establishing a
§ 1 violation are usually speaking about fact situations in which
there is other evidence of conspiracy." (emphasis added) (footnote
omitted)).
The plaintiffs' briefs do not focus on the lack of
evidence to prove their claim of overarching conspiracy. Instead,
they primarily argue that the district court initially ruled in
their favor at summary judgment and that the court should not have
reversed itself at the JMOL stage. In so doing, the plaintiffs
fail to consider that the summary judgment ruling may have been in
error. Nor do they recognize that the JMOL reasoning, not the
summary judgment reasoning, has found agreement in at least two
other trial courts that have considered the issue. See In re Actos
End Payor Antitrust Litig., No. 13-CV-9244(RA), 2015 WL 5610752,
at *24 (S.D.N.Y. Sept. 22, 2015); King Drug Co. of Florence, Inc.
v. Cephalon, Inc., No. 2:06-CV-1797, 2014 WL 2813312, at *14 (E.D.
Pa. June 23, 2014). There was no error.
Finally, the Individual Retailer plaintiffs misrepresent
the district court's opinion denying them a new trial. They
- 50 -
contend that after the court recognized its summary judgment ruling
as "a bit too sweeping," it nonetheless "reverted to the summary
judgment rationale . . . that the evidence was sufficient to
support a finding that 'AstraZeneca was the hub of a hub-and-spoke
conspiracy.'" Quoted in full, however, the district court actually
reaffirmed its JMOL ruling, noting that "[a]t trial, the evidence
warranted, at most, a finding that AstraZeneca was the hub of a
hub-and-spoke conspiracy with the three generic manufacturers
acting as competitors vis-à-vis each other, not conspirators." In
re Nexium [Post-Trial Opinion], 309 F.R.D. at 115 n.13 (emphasis
added). In other words, the court recognized that although the
evidence might show one conspiracy between AstraZeneca and Ranbaxy
and another disparate conspiracy between AstraZeneca and Teva, the
evidence was legally insufficient to tie all three players in an
overarching conspiracy. We find no error in the district court's
decision to grant JMOL on the overarching conspiracy claim in light
of the plaintiffs' inability to cite any supporting evidence other
than the parallel contingent launch provisions.
C. Special Verdict Form and Jury Instructions
The final verdict form that went to the jury asked seven
questions and was structured so that a "no" answer to any question
meant that the jury could stop considering the rest. As relevant
here, the first four questions asked:
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1. Did AstraZeneca exercise market power within the
relevant market?
2. Did the settlement of the AstraZeneca-Ranbaxy
patent litigation include a large and unjustified
payment by AstraZeneca to Ranbaxy?
3. Was AstraZeneca's Nexium settlement with Ranbaxy
unreasonably anticompetitive, i.e. did the
anticompetitive effects of that settlement
outw[ei]gh any pro-competitive justifications?
4. Had it not been for the unreasonably
anticompetitive settlement, would AstraZeneca have
agreed with Ranbaxy that Ranbaxy might launch a
generic version of Nexium before May 27, 2014?
On appeal, the plaintiffs argue that Question 4 impermissibly
"require[d] a specific factual sequence of causation," that it was
duplicative of Question 3, that it erroneously posed a "subjective"
test about the intent of the defendants, and that its wording was
"confusing" and "misled the jury." The defendants respond that
all of these objections were either waived or forfeited.
If a party fails to preserve its objections to jury
instructions after the jury is charged, those objections are
forfeited on appeal and reviewed only for plain error. Booker v.
Mass. Dep't of Pub. Health, 612 F.3d 34, 42 (1st Cir. 2010). Plain
error, "a hard-to-meet standard," requires the appellant to show
"that '(1) an error occurred (2) which was clear or obvious and
which not only (3) affected the [appellant's] substantial rights,
but also (4) seriously impaired the fairness, integrity, or public
reputation of the judicial proceedings.'" Tasker v. DHL Ret.
- 52 -
Savings Plan, 621 F.3d 34, 40–41 (1st Cir. 2010) (alteration in
original) (quoting Dávila v. Corp. de P.R. Para La Difusión
Pública, 498 F.3d 9, 14–15 (1st Cir. 2007)).
Furthermore, "with respect to special verdicts, 'the law
is perfectly clear that parties waive any claim of internal
inconsistency by failing to object after the verdict is read and
before the jury is discharged.'" Trainor v. HEI Hosp., LLC, 699
F.3d 19, 34 (1st Cir. 2012) (alterations omitted) (quoting Peckham
v. Cont'l Cas. Ins. Co., 895 F.2d 830, 836 (1st Cir. 1990)). This
has been an "iron-clad rule" in our circuit. Rodriguez-Garcia v.
Mun. of Caguas, 495 F.3d 1, 9 (1st Cir. 2007). Although we could
altogether decline to hear the plaintiffs' arguments about the
verdict form on waiver grounds, the FTC's amicus brief highlights
the importance of straightening out the conflation of antitrust
violation and antitrust injury that crept into the district court's
post-trial opinion and into some of the parties' arguments on
appeal. We accept the FTC's invitation to provide greater clarity.
Two of the plaintiffs' four objections seem to arise
from this wrongful conflation. The plaintiffs protest that
Question 4 was duplicative of Question 3 and that Question 4 held
the plaintiffs to an impermissibly stringent causation standard.5
5 In their proposed special jury verdict form, the
plaintiffs suggested precisely the same split in questions between
antitrust violation and antitrust injury (in the form of a delayed
generic entry).
- 53 -
Neither argument holds water, and in fact each shows that the
plaintiffs may have obscured the clear law that, as private
plaintiffs seeking damages, they must prove not only an antitrust
violation but also an antitrust injury that allows recovery of
damages.6
Private plaintiffs and the FTC as government enforcer
stand in different shoes. Under the governing antitrust statutes,
the FTC is empowered to directly enforce the substantive antitrust
laws. See 15 U.S.C. § 45(a)(2). Meanwhile, private plaintiffs
derive their authority to sue from Section 4 or 16 of the Clayton
Act and must therefore satisfy the additional evidentiary burdens
that those provisions impose. See id. §§ 15, 26. As the FTC's
amicus brief aptly explains, "[t]his distinction is rooted in
public policy. The interest of private plaintiffs is to remediate
an injury they have suffered or may suffer. The interest of the
government is to 'prevent and restrain' violations of the antitrust
laws along with the attendant social costs such violations can
cause."
The Supreme Court has consistently held private
plaintiffs to this standard of proving both antitrust violation
and antitrust injury. See, e.g., Atl. Richfield Co. v. USA
6 Because the plaintiffs do not appeal the district
court's denial of their post-trial motion for an injunction, they
evidently seek a new trial in order to recover damages.
- 54 -
Petroleum Co., 495 U.S. 328, 344 (1990) ("'[P]roof of [an
antitrust] violation and of antitrust injury are distinct matters
that must be shown independently.' For this reason, . . . the
right of action under § 4 of the Clayton Act is available only to
those private plaintiffs who have suffered antitrust injury."
(quoting Areeda & Hovenkamp, Antitrust Law ¶ 334.2c (1989 Supp.))).
A private plaintiff seeking monetary relief must show actual,
quantifiable damages "by reason of" the antitrust violation.
Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of
Carpenters, 459 U.S. 519, 543 (1983); see also Brunswick Corp. v.
Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977) (defining
"antitrust injury" as "injury of the type the antitrust laws were
intended to prevent and that flows from that which makes
defendants' acts unlawful").
Assessed under this framework, Questions 3 and 4 are
neither duplicative nor both aimed at causation. Rather, the
former asks the jury about antitrust violation, while the latter
asks about antitrust injury. The jury's "yes" answers to Questions
2 and 3 (large and unjustified payment with anticompetitive
effects) confirm its finding that some antitrust violation
resulted from the AstraZeneca-Ranbaxy settlement. Question 4, by
contrast, inquires whether these private plaintiffs have suffered
an "injury of the type the antitrust laws were intended to prevent"
by asking whether Ranbaxy (in partnership with Teva) would have
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launched a generic earlier than May 27, 2014 but for the antitrust
violation found in Question 3. Brunswick, 429 U.S. at 489. The
"no" answer to Question 4 thus confirms the jury's finding that
notwithstanding the existence of an antitrust violation, the
plaintiffs failed to establish an antitrust injury that entitled
them to monetary relief.
As Questions 3 and 4 played discrete and independently
necessary roles in adjudicating an antitrust suit brought by
private plaintiffs, we reject the plaintiffs' protests that the
questions led to an "absurd" outcome. There was nothing absurd in
the jury verdict. In fact, this circuit has reached similar
conclusions in past antitrust cases. See, e.g., Ocean State
Physicians Health Plan, Inc. v. Blue Cross & Blue Shield of R.I.,
883 F.2d 1101, 1105 (1st Cir. 1989) (observing that district court
granted a renewed motion for JMOL in defendant's favor in part
because "the jury's award of 'no damages' on the antitrust claim
meant that plaintiffs had failed to prove that they had been
injured by any illegal conduct by [the defendant]").
The plaintiffs next object that Question 4 erroneously
used the defendants' names and framed the relevant inquiry as a
subjective, rather than an objective, test. The record refutes
this argument. After the plaintiffs initially raised these
concerns at the December 2, 2014 conference, the court clarified
to the jury that "the test here is an objective test. In other
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words[,] I use the names 'AstraZeneca' and 'Ranbaxy' because those
are the folks we're talking about here, but the test is not what
they did." The plaintiffs failed to renew their objections
following these instructions. Examining Question 4 in the context
of the verdict form and jury instructions "as a whole," Johnson v.
Teamsters Local 559, 102 F.3d 21, 28 (1st Cir. 1996), we conclude
that the use of defendants' names did not constitute reversible
error.
The plaintiffs lastly argue that Question 4 was
confusingly worded and capable of multiple "legally erroneous"
interpretations. This objection suffers from the same defect as
the others in that it was not preserved during the post-charge
sidebar. The forfeited argument is unable to withstand plain error
review, especially when examined in the context of the
comprehensive instructions that the court provided to facilitate
the jury's understanding of the verdict form. First, the
plaintiffs' suggestion that the jury could have interpreted
Question 4 to be asking "whether AstraZeneca would allow Ranbaxy
to get Ranbaxy's product to market" is meritless in light of the
court's jury charge:
The plaintiffs' claim is not that Ranbaxy would
have launched, no evidence of that, their claim is
that had AstraZeneca not made a large payment to
Ranbaxy, they would have settled with a date for
generic entry before May 27th, 2014. . . . And
that Teva then would have obtained the same or
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earlier date . . . or that . . . Teva would have
made a deal with Ranbaxy allowing Teva to launch.
Likewise, the plaintiffs' concern that Question 4 imprecisely used
the phrase "anticompetitive settlement," rather than "large and
unjustified payment," is alleviated by jury instructions
explaining how the presence of a large and unjustified payment in
a paragraph IV litigation settlement renders that settlement
anticompetitive.
Perhaps the verdict form was inartfully phrased. But in
the context of the thorough jury instructions and the plaintiffs'
own failure to preserve objections, the plaintiffs cannot argue
that any phrasing imperfection "seriously impaired the fairness,
integrity, or public reputation of the judicial proceedings."
Tasker, 621 F.3d at 41 (quoting Dávila, 498 F.3d at 14–15).
D. Summary Judgment
We finally arrive at the core of the plaintiffs' appeal.
The plaintiffs argue that they had but one antitrust causation
theory at trial: "In this regulatory climate, generics will get to
market in some way, and we can't know exactly how." The district
court erred, they say, in prematurely cutting off at summary
judgment many causal mechanisms through which they could have
proved this theory to a jury. The defendants respond in three
ways: (1) the plaintiffs' theory of antitrust causation is actually
a hodgepodge of disparate theories, none of which independently
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proves causation, (2) later events at trial moot any potential
summary judgment error, and (3) the summary judgment ruling was
correct on its merits.
Even accepting dubitante the level of generality at
which the plaintiffs characterize their causation theory, we agree
with the defendants that any error at summary judgment was rendered
harmless by the jury verdict and by later trial proceedings on the
issue of patent invalidity. We are satisfied that the evidence in
support of even those causal mechanisms purportedly excluded at
summary judgment was in fact put before the jury, as that evidence
was relevant under other concededly admitted theories. The
district court recognized the relevance of that evidence and
generously admitted much of it notwithstanding the summary
judgment ruling (which it later reversed).
Plaintiffs identify four causal theories they say were
cut off at summary judgment. First, Ranbaxy could have launched
its generic Nexium at risk before February 2009. Second, Teva
could have won a final, nonappealable judgment in its paragraph IV
suit against AstraZeneca, thereby forcing Ranbaxy to launch its
generic within 75 days or forfeit its exclusivity, which would
have allowed Teva to launch before May 2014. Third, Ranbaxy could
have negotiated an earlier license date with AstraZeneca and
launched (either alone or in partnership with Teva) before May
2014. Finally, Ranbaxy could have negotiated an earlier license
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date with AstraZeneca and then forfeited its first-filer
exclusivity, which would have allowed another manufacturer like
Teva to launch before May 2014.
Ordinarily, "[w]e review the merits of the entry of
partial summary judgment de novo." Vélez v. Awning Windows, Inc.,
375 F.3d 35, 41 (1st Cir. 2004). But we have refused to "reenter
th[e] morass" of summary judgment where it was "perfectly clear
that, even if [a plaintiff's claim] should not have been dismissed
on partial summary judgment, any such mistake was harmless, given
the jury's verdict in [the defendant's] favor on [other claims]
addressed to the very same [factual circumstances]." Fite v. Dig.
Equip. Corp., 232 F.3d 3, 6 (1st Cir. 2000). We have so held in
the antitrust context. See Fraser v. Major League Soccer, LLC,
284 F.3d 47, 60-61 (1st Cir. 2002).
An examination of the four supposedly foreclosed causal
mechanisms, in light of later events at trial, reveals that the
outcome would have been in the defendants' favor even had the
mechanisms been explicitly put in questions to the jury. In
particular, the first two mechanisms were mooted by the district
court's grant of JMOL on any theory involving the invalidity of
AstraZeneca's patents. Indeed, the argument that Ranbaxy would
have incurred the risk of launching at risk or that Teva would
have won its paragraph IV suit against AstraZeneca depends on the
theory that AstraZeneca's Nexium patents were invalid or not
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infringed by a generic version. The district court's JMOL ruling,
however, found "no adequate evidence that any of [the Nexium]
patents would be adjudicated invalid." Accordingly, even if the
district court had allowed the plaintiffs to present these two
causal mechanisms at trial, the court's later judgment would have
yielded the same outcome in favor of the defendants.
Plaintiffs respond that they should not have to prove
patent invalidity or noninfringement to be able to present their
at-risk launch causation theory. They principally rely on two
circuit cases to advance this argument, but to no avail. See In
re Cardizem CD Antitrust Litig., 332 F.3d 896 (6th Cir. 2003);
Andrx Pharm., Inc. v. Biovail Corp. Int'l, 256 F.3d 799 (D.C. Cir.
2001). Both of these cases were decided before the Supreme Court's
Actavis decision, which may call into question aspects of their
analyses. Even assuming that the two decisions survive Actavis,
they are still inapposite to our inquiry because both cases
evaluated allegations of antitrust injury at the Rule 12(b)(6)
stage. See In re Wellbutrin XL Antitrust Litig., 133 F. Supp. 3d
734, 765 n.46 (E.D. Pa. 2015), appeal pending, No. 15-3559 (3d
Cir.). In In re Cardizem, for instance, the Sixth Circuit held
that the defendants' argument -- that their decision to stay out
of the generic market was motivated not by a reverse payment, but
rather by a fear of damages resulting from patent infringement
litigation -- "merely raise[d] a disputed issue of fact that [could
- 61 -
not] be resolved on a motion to dismiss." 332 F.3d at 900. The
Cardizem court did not altogether reject the potential relevance
of patent invalidity or noninfringement evidence in evaluating the
viability of an antitrust-injury theory based on an at-risk launch.
So too in Andrx, 256 F.3d at 805, and United Food & Commercial
Workers Local 1776 v. Teikoku Pharma USA, Inc., 74 F. Supp. 3d
1052, 1074 (N.D. Cal. 2014), yet another case that the plaintiffs
cite.7
In re Wellbutrin XL, a post-Actavis decision at the
summary judgment stage, is persuasive. 133 F. Supp. 3d 734.
There, the district court granted summary judgment to the
defendants, who were producers and distributors of a branded
antidepressant drug, on the plaintiffs' at-risk theory of
antitrust injury because the plaintiffs proffered no evidence of
patent invalidity or noninfringement. Id. at 764–67. The court
acknowledged that, if shown, "[t]he existence of a valid and
uninfringed patent would interfere with the plaintiffs' chain of
causation: a valid patent independently precludes competition
apart from any agreement and an 'at risk' launch is unlawful absent
7 In fact, the district court in Teikoku expressly
distinguished In re Nexium, describing it as "a case where the
generic manufacturer moved for summary judgment, and offered
unrebutted evidence 'that an at risk launch was "unlikely" and
"extremely risky."'" 74 F. Supp. 3d at 1074. In contrast, Teikoku
dealt with "a motion to dismiss and defendants cite[d] to no
comparable evidence that [wa]s properly before the [c]ourt at
th[at] juncture." Id.
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a later finding of patent invalidity or non-infringement." Id. at
764 (citation and alterations omitted).
But there, as here, the plaintiffs did not present such
evidence that the brand-name's patents would have been declared
invalid or that an at-risk launch would not have infringed the
patents. And without such evidence, the "patent served as an
independent regulatory bar to [a generic's] launch." Id. at 767.
So too here. Upon the conclusion of the plaintiffs' case in chief,
the district court saw no evidence that would allow the plaintiffs
to overcome the likelihood that AstraZeneca's patents, not its
reverse payment to Ranbaxy, were the bar to a generic launch. The
district court thus did not err by requiring some evidence of the
patents' invalidity or noninfringement before allowing the
plaintiffs to pursue an at-risk launch theory.
Furthermore, the district court's ruling on patent
invalidity did not prejudice the plaintiffs, for two reasons.
First, the plaintiffs are simply wrong to insist that the district
court decided and ruled out of the case the issue of patent
invalidity at summary judgment. In fact, the plaintiffs
acknowledged the availability of that line of reasoning -- and
their strategic choice not to pursue it -- at a conference on the
second day of trial: "We don't plan on proving a patent case inside
of an antitrust case. . . . [W]e do not plan to be proving that
Teva would have won the [paragraph IV] litigation." The plaintiffs
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then reaffirmed their strategic choice on November 20, 2014, at
the same conference during which they opposed the defendants'
motion for a mistrial. At that conference, they assented to the
court's characterization of their position as not having "proved
that the patents would have been declared invalid, and [arguing]
that that plays no role in this [trial]."
The district court's statements during trial likewise
reveal its consistent understanding that the summary judgment
ruling did not prevent the plaintiffs from offering patent
invalidity evidence if they chose to do so. For instance, in its
initial instructions to the jury at the beginning of trial, the
district court explained that the plaintiffs would have to
"convince [the jury] . . . that Teva entered into its deal with
AstraZeneca, staying out of the market, letting AstraZeneca charge
its supracompetitive prices for its branded Nexium product, and if
it hadn't done that, it could . . . have defeated the patent,
AstraZeneca's patents," received FDA approval, and partnered with
Ranbaxy to jointly launch a generic. The district court's view of
the impact of its summary judgment ruling on patent invalidity did
not change by the end of trial. At the December 2, 2014 charge
conference, it reminded the plaintiffs: "I think that you will
find, when you look at the record, I've never prevented the patent
evidence[;] I've said you have to lay an adequate foundation for
it." Because the ruling on patent invalidity did not take place
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until after the plaintiffs' case in chief, at the JMOL stage, the
timing of the ruling could not have foreclosed any evidence that
the plaintiffs wished to put forth at trial. Any decision to limit
evidence on patent invalidity was a voluntary and strategic choice
on the plaintiffs' part.
Second, even after the JMOL ruling, the district court
was careful to point out, and correctly so, that its decision did
not foreclose the plaintiffs from making any arguments based on
AstraZeneca's assessment of risk to its patent monopoly. That is,
the court recognized that regardless of the absolute validity or
invalidity of patents, business players make reverse payment
decisions in an environment in which that validity has not yet
been adjudicated. They take into account the risk of litigation
and the possibility that patents may be adjudicated invalid or
uninfringed. The court explained this distinction between patent
invalidity and assessment of risk to the jury: "I went into the
case thinking . . . that one of the things the plaintiffs had to
prove was that Teva would have won its patent case against
AstraZeneca. And I've come to think now that legally that's not
key, that's not what the plaintiffs have to prove." In sum, while
the JMOL ruling on patent invalidity mooted the causal mechanisms
based on at-risk launch and Teva's ability to win a paragraph IV
litigation against AstraZeneca, the JMOL ruling did not prejudice
the plaintiffs' argument that the defendants had incentives to
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violate antitrust laws. Indeed, the jury verdict confirms this
lack of prejudice, as it found that AstraZeneca made a large and
unjustified payment to Ranbaxy and that their settlement agreement
had unreasonably anticompetitive effects.
As for the next two causal mechanisms claimed to have
been cut off at summary judgment, the jury's "no" answer to
Question 4 renders any error harmless. That answer reflected the
jury's finding that AstraZeneca would not have agreed to settlement
terms with a license date earlier than May 27, 2014, the date on
which two of its medical patents expired. In light of that
finding, it made no difference to the outcome of the trial whether
the plaintiffs were able to present their theory that Ranbaxy could
have negotiated an earlier license date with AstraZeneca and
themselves launched or allowed Teva to launch before May 2014.
The plaintiffs respond that the jury had insufficient
evidence upon which to answer Question 4 differently. At oral
argument, the plaintiffs emphasized that their inability to
introduce evidence on the possibility of a Ranbaxy or Teva at-risk
launch,8 or of Ranbaxy's forfeiture of its first-filer status, had
meant that the jury had had no information on what "would have
8 Of course, as we have now repeated numerous times, the
plaintiffs voluntarily chose not to pursue the causal mechanism
involving Teva's at-risk launch after the district court informed
them that such an argument would trigger jury instructions about
their need to prove patent invalidity.
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motivated AstraZeneca to accept an earlier entry date." In other
words, the plaintiffs argue that without evidence on at-risk launch
or forfeiture, the jury could not appreciate the threat that
Ranbaxy posed to AstraZeneca or the incentive that AstraZeneca had
to cut a deal with an earlier entry date.
However, the jury answered "yes" to Questions 2 and 3 in
the plaintiffs' favor, despite the supposed exclusion of such
evidence. Indeed, this exact evidence -- about Ranbaxy's potential
adverse impact on AstraZeneca's bottom line -- must have, and did,
come in because the jury in fact found that AstraZeneca felt enough
of a threat to offer a large and unjustified payment to Ranbaxy
(Question 2) and offer settlement terms in violation of the
antitrust laws (Question 3). The plaintiffs fail to explain what
other evidence, unique to Question 4, the district court
impermissibly excluded to impede the jury's ability to answer that
question. To elaborate, while the plaintiffs recycle their
grievances about the exclusion of Leffler's and McGuire's
testimony on the Event Study, possible but-for entry dates, the
purpose and effect of AstraZeneca's side deals with Ranbaxy, and
the value of the reverse payment to Ranbaxy, we have already found
above that all of this evidence was properly excluded. Ultimately,
the jury had sufficient evidence to answer "yes" to Question 4, as
well as Questions 2 and 3. Because the plaintiffs cannot point to
improperly excluded evidence specific to Question 4, we cannot
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accept their argument on the insufficiency of the evidence
underlying the jury verdict.
In light of the jury verdict and other events at trial
that mooted any summary judgment error, we find no occasion to
readjudicate the merits of the district court's pretrial decision.
The plaintiffs are not entitled to set aside the jury verdict.
V. CONCLUSION
In any litigation, each party must make "tactical
choices" about what pretrial motions to file, what evidence to
present, and what objections to renew or forfeit. This case was
no different. And despite doubts that the district court harbored
about the merits of the plaintiffs' causation theory even before
trial commenced, the plaintiffs were able to present their
arguments to an attentive jury over six weeks. They were
represented by able counsel in every step of the proceeding.
Having had that opportunity but having failed to convince the jury
that an antitrust injury occurred, the plaintiffs cannot now rehash
summary judgment and JMOL rulings, scattered evidentiary
decisions, and unpreserved objections to the verdict form in search
of a do-over.
We affirm.
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