The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
__________________________________________
IN RE SUBOXONE (BUPRENORPHINE : MDL NO. 2445
HYDROCHLORIDE AND NALOXONE) : 13-MD-2445
ANTITRUST LITIGATION :
:
THIS DOCUMENT RELATES TO:, :
:
Wisconsin, et al. v. Indivior Inc. et al. :
Case No. 16-cv-5073 :
_________________________________________ :
STATE OF WISCONSIN :
By Attorney General Brad D. Schimel, et al. :
: CIV. A. NO. 16-5073
Plaintiffs, :
v. :
:
INDIVIOR INC. f/k/a RECKITT BENCKISER :
PHARMACEUTICALS, INC., et al. :
:
Defendants. :
__________________________________________:
Goldberg, J. April 15, 2021
MEMORANDUM OPINION
Defendant Indivior, Inc. manufactures Suboxone, a drug commonly used to combat opioid
addiction. Suboxone previously came in tablet form, but in 2010, citing safety concerns, Defendant
effectuated a change in the administration of this drug, switching from tablet to sublingual film.
Various purchasers/consumers1 of Suboxone claimed that this switch was anticompetitive and solely
designed to maintain Defendant’s market exclusivity—a scheme known as a “product hop.” These
claims have resulted in ongoing multi-district, antitrust litigation before this Court, as well as the
certification of a class of direct purchaser Plaintiffs (“DPPs”).
1 The Plaintiffs are comprised of a class of Direct Purchasers of Suboxone, a class of End Payors
of Suboxone, and a group of States’ Attorneys General.
Almost eight years into this litigation, the DPPs now move for leave to file a Third Amended
Class Action Complaint. For the following reasons, I will deny the DPPs’ Motion.
I. RELEVANT FACTUAL BACKGROUND
This action was originally commenced in June 2013, and the last operative Complaint—the
Second Amended Complaint—was filed on April 13, 2015. On February 22, 2021, the DPPs filed a
Motion for Leave to File a Third Consolidated Amended Class Action Complaint (“Proposed
Complaint”).
The Proposed Complaint seeks to plead additional antitrust theories and add three new
Defendants to the case: Reckitt Benckiser Group, plc (“RBG”), Indivior plc (“Indivior plc”), and
Indivior Solutions Inc. f/k/a Reckitt Benckiser Pharmaceutical Solutions (“Indivior Solutions”). The
Proposed Complaint contends that these three entities, through either their pervasive domination of
Defendant or as the alter ego of Defendant, participated in the same overarching scheme to
monopolize that is currently being pursued against Defendant in the ongoing MDL action. According
to the DPPs, these new entities have been siphoning large amounts of money—all of which were
derived from Suboxone sales—from Defendant, leaving Defendant grossly undercapitalized and
incapable of satisfying any judgment that could be rendered in the DPP Class’s favor. All told, the
Proposed Complaint adds three additional defendants, three new causes of action, including a
conspiracy claim, and 222 new pararaphs.
On March 2, 2021, following a conference with the parties, I directed both Defendant and
RBG to file responsive letter briefs addressing the elements of undue delay/bad faith and prejudice.
II. DISCUSSION
Both Defendant and RBG argue that any new amendment to the Complaint has been unduly
delayed and would cause unfair prejudice. Defendants correctly note that fact and expert discovery
is closed, Daubert motions have been litigated and decided, and the case is at the summary judgment
stage. Defendants posit that allowing a third amended complaint would require the Court to reopen
discovery and effectively restart the case.
Federal Rule of Civil Procedure 15 sets forth a liberal approach to pleading, and “[t]he court
should freely give leave when justice so requires. Fed. R. Civ. P. 15(a)(2); see also Spartan Concrete
Prods., LLC v. Argos USVI, Corp., 929 F.3d 107, 115 (3d Cir. 2019). “The policy favoring liberal
amendments of pleadings, however, is not unbounded.” Dole v. Arco Chem. Co., 921 F.2d 484, 487
(3d Cir. 1990). The decision whether to grant or to deny a motion for leave to amend rests within the
sound discretion of the district court. Foman v. Davis, 371 U.S. 178, 182 (1962); Lake v. Arnold,
232 F.3d 360, 373 (3d Cir. 2000). A district court may deny leave to amend a complaint where “it is
apparent from the record that (1) the moving party has demonstrated undue delay, bad faith or dilatory
motives, (2) the amendment would be futile, or (3) the amendment would prejudice the other
party.” Lake, 232 F.3d at 373 (citing Foman, 371 U.S. at 182–83). “[P]rejudice to the non-moving
party is the touchstone for the denial of an amendment.” Arthur v. Maersk, Inc., 434 F.3d 196, 204
(3d Cir. 2006) (internal quotation marks omitted).
“The ‘undue delay’ factor recognizes that a gap between when amendment becomes possible
and when it is actually sought can, in certain circumstances, be grounds to deny leave to amend.”
Mullin v. Balicki, 875 F.3d 140, 151 (3d Cir. 2017). “While simple delay cannot
justify denying leave to amend by itself, delay that is ‘undue’—a delay that is protracted and
unjustified—can place a burden on the court or counterparty, or can indicate a lack of diligence
sufficient to justify a discretionary denial of leave.” Id. “Delay becomes ‘undue,’ and thereby creates
grounds for the district court to refuse leave, when it places an unwarranted burden on the court or
when the plaintiff has had previous opportunities to amend.” Bjorgung v. Whitetail Resort, LP, 550
F.3d 263, 266 (3d Cir. 2008) (citations omitted). Thus, a review of the question of undue delay
focuses on “the movant’s reasons for not amending sooner,” and the court “balance[s] these reasons
against the burden of delay on the District Court.” Id. (internal quotations omitted). “Delays
measured in many months or years are particularly problematic. In contrast, delays of shorter
duration, measured in terms of a few months, raise lesser concerns.” Scales v. Midland Funding,
LCC, No. 18-1514, 2020 WL 1237953, at *4 (M.D. Pa. Jan. 28, 2020) (citing cases).
The DPPs contend that Defendant—originally named Reckitt Benckiser Pharmaceuticals,
Inc.—was demerged from its prior parent, RBG, in December 2014. The DPPs assert that Defendant
thereafter became Indivior, Inc., and its new parent entity became Indivior plc, which “was an attempt
by RBG to simultaneously insulate itself from liability by distancing itself from [Defendant], while
continuing to profit from the monopolistic scheme it had started.” (DPPs’ Mot. 4.) According to the
DPPs, under the demerger agreemenent, the new Indivior plc parent entity—whose only real assets
were Defendant’s Suboxone revenues—agreed to pay RBG and its executives/directors over $592
million in “dividends” in the years after the demerger. (Id.) In addition, per the DPPs, the demerger
agreement includes an indemnification clause wherein if RBG is ever forced to disgorge any of its
ill-gotten Suboxone gains, it could look to Defendant to “re-engorge” itself, thus siphoning funds out
Defendant and into RBG. (Id. at 5.)
As it relates to their request to amend their Complaint, the DPPs go on to assert that the
ramifications of this agreement only came to light recently when, on April 9, 2019, Defendant and
Indivior plc were indicted on multiple counts in the United States District Court for the Western
District of Viginia, resulting from their marketing of Suboxone film and tablets. Defendant, Indivior
plc, and an entity named Indivior Solutions all pled guilty to one count of felony healthcare fraud and
agreed to pay $600 million to the Government. In addition, on July 11, 2019, RBG, who had not yet
been indicted, agreed to pay $1.4 billion to the government to resolve its own potential criminal and
civil liability. In November 2020, following these agreements, RBG sought indemnification, under
the demerger agreement, from Defendant and Indivior plc for the $1.4 billion it owes to the
Government. Defendant ultimately agreed to pay RBG $50 million over the next five years.
The DPPs now stress that, until just months ago, there was no action by RBG seeking
indemnity from Defendant, which would leave Defendant grossly undercapitalized. The DPPs argue
that they did not know, and could not have reasonably known, until November 2020, at the earliest,
that RBG and the other proposed new defendants were using the demerger agreements as an unlawful
device to fraudulently convey monopoly profits from Defendant to RBG. The DPPs further press
that neither Defendant nor any of the other proposed new defendants will be unduly prejudiced by the
filing of the Third Consolidated Class Action Complaint.
The factual basis of the DPPs’ new theories of liability is premised almost entirely on a
provision in the demerger agreement. The demerger agreement—including its indemnification
provisions—has been publicly available on Indivior and Reckitt websites since 2014. Indeed, in
October 2017, the parties litigated a motion to dismiss, and I issued an extensive decision, discussing
in great detail the indemnification provision in the demerger agreement. In re Suboxone Antitrust
Litig., No. 13-md-2445, 2017 WL 4810801 (E.D. Pa. Oct. 25, 2017). Accordingly, the DPPs cannot
suggest that they knew nothing of this agreement and its indemnification provision until recently.
This knowledge was all the DPPs needed to pursue their current theories. RBG, through the
demerger agreement, had the ability to seek money from Defendant to recoup losses or liabilities
relating to Suboxone. The mere fact that RBG has only recently invoked that indemnification
provision does not justify the late amendment of the Complaint. Indeed, the DPPs, confident in their
belief that Defendant and its affiliates committed some wrongdoing with respect to Suboxone, could
have reasonably foreseen that at some point RBG would be held liable and would seek to use the
indemnification provision to cover its liabilities and extract money from Defendant.
Moreover, the DPPs offer no justification for why they are only now seeking to add conspiracy
to monopolize claims that were clearly known or knowable since day one of this matter. Even had
the DPPs not known the extent of any conspiracy at the outset, the parties have since engaged in years
worth of fact discovery, which ended in July 2018. Yet, the DPPs waited another two and a half years
to seek to add conspiracy claims. Accordingly, any effort to file a Third Consolidated Class Action
Complaint at this late stage of the litigation constitutes undue delay.
Such delayed amendment would undoubtedly cause an unfair prejudice on Defendant and the
proposed new defendants. This case has been pending since 2013, with the last amendment of the
Complaint occurring in 2015. Fact and expert discovery have long been closed; class certification
motions were briefed, argued, and decided; the United States Court of Appeals has considered and
affirmed the class certification ruling; and two phases of Daubert motions have been ruled upon.
Opening briefs in support of multiple summary judgment motions—totalling hundreds of pages—
have already been filed. All involved have invested an untold number of hours bringing the case to
this penultimate stage.
While the DPPs attempt to minimize the impact the proposed amendment would have on the
progress of this case, they admit that fact discovery will need to be reopened. This would also
probably involve new expert discovery and further Daubert litigation, which in turn would halt the
currently pending motions for summary judgment. The addition of new defendants would also
necessitate the entry of new counsel that would need to familiarize themselves with the extensive
proceedings in this matter. The new defendants, as separate entities, would then be entitled to file
motions to dismiss, take new discovery directed towards the particular allegations against them, hire
their own experts, and challenge the validity of the class proceedings.
Accordingly, I will deny leave to amend. An appropriate Order follows.