VALUE DRUG COMPANY v. TAKEDA PHARMACEUTICALS, U.S.A., INC.

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

VALUE DRUG COMPANY : CIVIL ACTION

:

v. : NO. 21-3500

:

TAKEDA PHARMACEUTICALS, :

U.S.A., INC., et al. :

AMENDED MEMORANDUM1

KEARNEY, J. December 29, 2021

A pharmacy purchaser alleges a manufacturer of a patented brand name drug conspired to

restrict output of its patented drug by agreeing to settle three patent infringement lawsuits it filed

against three generic drug manufacturers then actively seeking to sell generic versions of its

product. The pharmacy alleged the brand name manufacturer gave these three alleged infringing

generic competitors exclusive periods to sell an approved generic of its brand name drug before

its patent expired. The pharmacy claims the three settlement agreements are actual evidence of one

overarching joint venture conspiracy created by the brand name manufacturer designed to restrict

the output of its drug and maintain higher prices and greater profits. The competing generic

companies and the brand name company move to dismiss arguing the pharmacy pleads no direct

or circumstantial evidence of a single agreement to conspire, no antitrust injury, and we lack

personal jurisdiction over an Israeli company acquiring some of the assets and liabilities of one of

the generic companies. The pharmacy responds by partially shifting to an unplead theory after

reviewing the three settlement agreements but stands on the same plead facts. The pharmacy insists

the three settlement agreements are still direct evidence of a single horizontal conspiracy among

four competitors in a market with six or seven other admitted non-party competitors.

But the settlement agreements themselves do not demonstrate a single conspiracy among

the brand and generics to provide exclusive distribution rights. They do exactly the opposite. The

pharmacy argues it plead circumstantial evidence of a conspiracy from the close timing and

similarity of the three settlement agreements even though the agreements depend on none of the

other six or seven non-conspiring generic manufacturers seeking to sell this drug through a court

order allowing their sale or otherwise. The pharmacy swears the competitors admitted adding more

manufacturers will lead to a price collapse and lost profits. We also reject the pharmacy’s initial

thoughts concerning exercising personal jurisdiction over the Israeli purchaser based on the

allegations and record adduced to date but grant its request for limited discovery.

We grant the brand name manufacturer’s and three generic manufacturers’ motions to

dismiss for failure to plead an antitrust conspiracy but grant the pharmacy’s request for leave to

amend. We further grant the pharmacy’s request for limited expedited discovery into our specific

personal jurisdiction over the Israeli purchaser should it not amend the complaint and instead wish

to continue suing only the Israeli purchaser. We decline a request to sanction the pharmacy for not

amending its complaint after reviewing the three settlement agreements.

I. Alleged facts

Medical professionals prescribe the pharmaceutical drug Colcrys to treat gout and familial

Mediterranean fever. It contains the active ingredient colchicine, which “had been used in the

United States for decades before the [Food and Drug Administration]” approved Colcrys.2 But in

2006, the Food and Drug Administration “encouraged the pharmaceutical industry to submit New

Drug Applications (‘NDAs’) for previously unapproved drugs to facilitate the FDA evaluation of

older drug products by contemporary standards.”3

Takeda Pharmaceuticals U.S.A., Inc.’s predecessor applied for three New Drug Approvals

for colchicine’s treatment of familial Mediterranean fever and the treatment and prevention of gout

in 2008.4 The Food and Drug Administration approved Colcrys as “the first pharmaceutical

product contain[ing] colchicine as the sole active ingredient” on July 29, 2009.5 It “granted

Takeda’s colchicine product a three-year exclusivity for the treatment of gout and seven-year

exclusivity for the treatment of familial Mediterranean fever.”6 Takeda’s exclusivity period ended

on July 29, 2016.7

Par, Watson, and Amneal file Abbreviated New Drug Applications certifying their generic

versions of Colcrys do not infringe on Takeda’s patents or Takeda’s patents are invalid.

Once a name brand drug comes to market, generic drug companies attempt to bring an AB-

rated8 generic form of the drug to market by filing an Abbreviated New Drug Application with the

Food and Drug Administration, which significantly lowers the price of the brand drug once there

are “many generic competitors” on the market.9 “[B]arriers to entry by a generic drug manufacturer

are high”; they must “first formulate a generic version of the brand-name drug; conduct

bioequivalence and other studies needed to support an Abbreviated New Drug Application to [the

Food and Drug Administration]; file the [Abbreviated New Drug Application] and work with [the

Food and Drug Administration] on any issues that arise regarding approval; and invest in

manufacturing facilities for the commercialization of the product.”10 To incentivize generic drug

companies “to seek approval of generic alternatives to branded drugs, the first generic

manufacturer to file an [Abbreviated New Drug Application] containing a certification that the

generic version does not infringe on any valid patent listed in the [Food and Drug

Administration’s] ‘Orange Book’ against the reference-listed brand drug . . . gets 180 days of

protection from competition from other generic versions of the drug.”11 If a generic drug

manufacturer files the Abbreviated New Drug Application certifying its drug does not infringe on

the brand name drug’s patents, the brand name manufacturer can sue the generic manufacturer for

patent infringement, which delays final Food and Drug Administration approval of the

Abbreviated New Drug Application for up to thirty months.12

Par Pharmaceuticals, Inc. filed an Abbreviated New Drug Application with the Food and

Drug Administration in December 2011 seeking approval for its generic version of Colcrys.13 Par

certified “all pertinent patents that Takeda listed in the [Food and Drug Administration’s] Orange

Book under the Colcrys [New Drug Application] were either invalid or not infringed.”14 This

certification entitled Par “to a 180-day period of regulatory exclusivity during which the Food and

Drug Administration would not approve other generic manufacturers to sell a generic version of

Colcrys.”15 Amneal Pharmaceuticals, LLC and Watson Laboratories, Inc., along with six other

generic drug companies, also filed Abbreviated New Drug Applications “seeking approval to sell

generic versions of Colcrys and made similar . . . certifications that any listed patents were invalid

or not infringed.”16

Takeda sues the generic drug companies including Par, Watson, and Amneal; launches its

own Authorized Generic; and settles the litigation with Par, Watson, and Amneal.

Takeda responded by suing all the generic drug company filers for patent infringement.17

Takeda sued Par first in August 2013, then sued the other generic drug companies at an unplead

time.18 But Takeda’s Colcrys patents are allegedly “fatally weak” and “had already been found to

have not been infringed . . . in litigation regarding another product called Mitigare.”19

While proceeding with its patent infringement litigations, Takeda agreed non-party Prasco

could distribute its authorized generic of Colcrys “to try to lock up generic sales for Takeda” and

keep the profits “otherwise lost to generic competitors.”20 Prasco distributed the generic Colcrys

“at a price just slightly lower than branded Colcrys” and “collected and remitted back to Takeda

virtually all of the revenues” from generic Colcrys sales.21

Par obtained tentative Food and Drug Administration approval for its Abbreviated New

Drug Application in February 2015.22 Watson also obtained tentative approval in October 2015.23

But Par and Watson still needed final approval to market their generic drug.

Value Drug Company, a pharmacy chain purchaser of pharmaceutical drugs, sees these

developments as incentivizing Takeda and the generics to conspire to limit output and keep prices

higher: Takeda faced devastation in profits if more generics than only its authorized generic came

to market; Par faced an “unpleasant prospect of entering” the market with its generic because

Prasco already had a generic in the market, forcing Par “to offer very low prices to dislodge and

gain market share, depriving Par of the benefits of its 180-day exclusivity as the first [Abbreviated

New Drug Application] filer”; and Watson and Amneal faced “the unattractive prospect of entering

a market where Prasco and Par had already been fighting for market share for 180 days” thereby

making both offer “rock-bottom prices to gain sales and share.”24

So on the eve of trial in Takeda’s patent infringement suit against Par, “Takeda, Par,

Watson, and Amneal agreed to a scheme to restrain price competition to Colcrys by concertedly

reducing generic Colcrys output, and agreed to share in the monopoly profits maintained thereby

until January of 2024.”25 These four competitors (with six or seven others on the sidelines) entered

into a single horizontal conspiracy effected through Takeda settling its patent infringement suits

against Par, Watson, and Amneal under agreements presumably providing benefits to all litigants.

Par and Takeda settled in November 2015, Watson and Takeda settled in January 2016, and

Amneal and Takeda settled in March 2016—all with separate, written settlement agreements.26 As

for Amneal, although the parties did not execute the formal settlement agreement until March

2016, Takeda and Amneal signed a term sheet with essential terms of the settlement on December

10, 2015—shortly after Takeda and Par settled.27

Par and Takeda entered a distribution agreement where Par would refrain from launching

its generic version of Colcrys “despite having tentative [Food and Drug Administration] approval”

and “[two-and-a-half] years following entry of the agreement (i.e. in July of 2018) . . . Par would

. . . replace Prasco as the distributor of Takeda’s authorized generic Colcrys and remit back to

Takeda virtually all of the revenues from sales of authorized generic Colcrys, keeping some of the

revenues for itself.”28 Takeda entered into settlement agreements with Watson and Amneal

whereby each would get “a defined time, believed to be between [six] and [eighteen] months in

duration, to sell generic Colcrys free from competition from all other generic Colcrys sellers” in

exchange for “Watson and Amneal stay[ing] off the market for several years until their defined

period of marketing commenced.”29

Takeda and Par’s settlement agreement.

Takeda and Par settled Takeda’s claim for patent infringement against Par on November

24, 2015.30 Takeda granted Par a non-exclusive license through a license agreement “to distribute,

have distributed, market, sell, or offer for sale a generically-labeled .6 mg colchicine oral tablet

product manufactured by Takeda” beginning July 1, 2018.31 Takeda also granted Par “a fully paid-

up, royalty-free, irrevocable, non-exclusive license” to sell its generic of Colcrys.32 Par and Takeda

agreed Par could begin selling its generic of Colcrys beginning on the earlier of January 1, 2024;

the date a court finds the patents covering Colcrys invalid or not infringed based on a drug

“substantively identical” to Par’s generic of Colcrys; the date a “Third Party” begins selling its

generic of Colcrys with Takeda’s permission; or a date following another generic drug

manufacturer launching “at risk” without permission from Takeda.33

Takeda and Watson’s settlement agreement.

Takeda and Watson settled Takeda’s claim for patent infringement against Watson on

January 7, 2016—two months after Takeda settled with Par.34 Takeda and Watson

contemporaneously entered into a license agreement which is part of the settlement agreement

granting Watson “a fully paid-up, royalty-free, irrevocable, non-exclusive license” to sell its

generic Colcrys.35 Watson’s license is subject to additional terms, including when the license

becomes effective. Takeda and Watson agreed Watson could begin selling its generic of Colcrys

on the earlier of: October 15, 2020; 135 days before another generic (besides Par or Amneal)

begins selling its generic of Colcrys with Takeda’s permission; the date Par or Amneal begins

selling their generics of Colcrys with Takeda’s permission; the date a court finds the patents

covering Colcrys invalid or not infringed based on a drug “substantively identical” to Watson’s

generic of Colcrys; the date another generic starts selling after a court determines the Colcrys

patents are invalid or not infringed based on a drug “not substantively identical” to Watson’s

generic of Colcrys; or a date following another generic drug manufacturer launching “at risk”

without permission from Takeda.36

Takeda and Amneal’s settlement agreement.

Takeda and Amneal settled Takeda’s patent infringement litigation on March 11, 2016.37

Takeda and Amneal contemporaneously entered into a license agreement as part of the settlement

agreement granting Amneal “a fully paid-up, royalty-free, irrevocable, non-exclusive license” to

sell its generic Colcrys.38 Amneal’s license is subject to additional terms, including when the

license becomes effective. Takeda and Amneal agreed Amneal could begin selling its generic of

Colcrys on the earlier of: October 15, 2020; the date a court finds the patents covering Colcrys

invalid or not infringed based on a drug “substantively identical” to Amneal’s generic of Colcrys;

or the date a third party begins selling its generic of Colcrys with Takeda’s permission; a date

following another generic drug manufacturer launching “at risk” without permission from

Takeda.39

Amneal received final approval for its generic of Colcrys approximately six months later

in September 2016.40

The alleged conspiracy comes to an unexpected end.

Takeda and the three generics negotiated an “escape clause” in each settlement agreement

allowing the three generics to sell their generic Colcrys if another non-party company entered the

market.41

The escape clause triggered a few months later.42 Non-party generic Mylan filed and

notified Takeda in September 2016 of its Abbreviated New Drug Application with a certification

Takeda’s patents are either invalid or not infringed.43 Takeda sued Mylan for patent infringement

in October 2016, and Takeda and Mylan settled the litigation in November 2017.44 The settlement

purportedly “permitted Mylan to launch upon a court decision invalidating the patents covering

Colcrys.”45 Our Delaware colleague Judge Richard G. Andrews “issued an opinion granting a

motion by [non-party] Hikma for summary judgment in patent litigation concerning another

product subject to the same patents as Colcrys, which Takeda failed to appeal.”46 Mylan launched

its generic of Colcrys in November 2019.47 Mylan’s entry into the market “thereby trigger[ed] the

‘escape clause’ in Par, Watson, and Amneal’s agreements” with Takeda.48

Value Drug sues Takeda, Par, Amneal, Watson, Teva Ltd., and Teva USA for violations of

Section I and II of the Sherman Act.

Value Drug – a purchaser of brand Colcrys from Takeda and generic Colcrys from Prasco

and Par – sued Takeda, Par, Amneal, Watson, Teva Ltd., and Teva USA for violations of Section

I and II of the Sherman Act on August 5, 2021.49 Value Drug alleges Takeda entered a single

conspiracy with Par, Watson, and Amneal “to restrict output and restrain competition” by

preventing AB-rated generics of Colcrys from coming to market.50 The alleged conspiracy

depended on all defendants’ participation, and Value Drug alleges the co-conspirators enjoyed

“supracompetitive Colcrys profits” by virtue of this conspiracy to restrict competition.51

The basic features of the conspiracy derived from Takeda, Par, Watson, and Amneal

agreeing: Par would not bring its own generic to market and would rather agree to market Takeda’s

“authorized generic” previously distributed by Prasco, but Par would not do so until two-and-a-

half years after the agreement to lengthen the time Takeda enjoyed the Colcrys market

competition-free; Par would pay Takeda a “large royalty”; Watson and Amneal would restrict

selling their generics for several years in exchange for a defined period of time to sell their

respective generic Colcrys products free from all other generic competition; and Takeda would

enter license agreements with other non-conspiring generic companies to delay their entry beyond

Watson and Amneal’s agreed periods of competition-free sales “thereby giving the co-conspirators

long periods of supracompetitive Colcrys profits.”52

II. Analysis

Value Drug’s presently plead claims hinge on Takeda’s settlement agreements with Par,

Watson, and Amneal. Par, Watson, and Amneal argue the settlement agreements directly

contradict Value Drug’s plead theory, Value Drug reviewed the settlement agreements but chose

not to amend, and we must dismiss the Complaint because the conspiracy is implausible.

Takeda argues the principal points adopted by all competitors: (1) the conspiracy as plead

is implausible on its face and directly contradicted by the settlement agreements; (2) Value Drug

fails to plead sufficient facts supporting a single, horizontal conspiracy even if it plead a plausible

conspiracy; and (3) Value Drug’s claims are barred because the settlement agreements forming the

basis of the alleged antitrust violations are merely a legitimate exercise of Takeda’s patent rights

under the Patent Act.53 Amneal and Watson move to dismiss on similar grounds arguing the

settlement agreements Value Drug attempts to rely upon as evidence of the conspiracy directly

contradict its theory and make the conspiracy implausible, particularly with respect to Watson and

Amneal because they did not stand to receive the benefit Value Drug alleges since neither received

a defined period of serial exclusivity.54 Value Drug responds to Takeda, Watson, and Amneal’s

motions together, arguing: (1) it adequately pleads direct evidence of the conspiracy; (2)

alternatively, it adequately pleads circumstantial evidence of the conspiracy; (3) it has adequately

plead a single conspiracy; and (4) the Patent Act does not immunize Takeda’s conduct in settling

the patent litigation.55

Par moves to dismiss because Value Drug fails to plead an antitrust injury.56 Par argues it

had two independent regulatory bars to launch its generic: (1) lack of final FDA approval; and (2)

Takeda’s patents, which break the chain of causation.57 Value Drug counters antitrust injury is not

typically decided on a motion to dismiss, it adequately plead Par would have received earlier FDA

approval to launch but for the conspiracy, Par’s argument regarding Takeda’s patents providing

an independent barrier to launching is flawed, and even if it is not, Value Drug adequately pleads

Takeda’s patents are invalid or not infringed by the generic defendants.58

Israeli purchaser Teva Ltd. moves to dismiss for lack of personal jurisdiction.59 Teva Ltd.

argues Value Drug fails to adequately plead our personal jurisdiction and exercising personal

jurisdiction over it is unconstitutional.60 Teva USA moves to dismiss for failure to plead Teva Ltd.

and Teva USA’s involvement in the conspiracy or any facts regarding their liability as Watson’s

successor-in-interest or on a ratification theory.61

Because we find Value Drug’s plead conspiracy is implausible on its face, we need not

reach the substance of Par’s and Teva USA’s motions to dismiss which joined in the other

defendants’ arguments. We grant Takeda’s, and Watson and Amneal’s motions to dismiss because

Value Drug fails to plead a plausible conspiracy.62 We defer Teva Ltd.’s motion to dismiss for lack

of personal jurisdiction subject to further review following expedited jurisdictional discovery if

Value Drug chooses not to amend its Complaint and intends to proceed against Teva Ltd. alone.

A. Value Drug does not plead a plausible single horizontal conspiracy.

Value Drug brings two claims against Takeda and the three generics—conspiracy to

restrain trade in violation of 15 U.S.C. § 1 and conspiracy to monopolize in violation of 15 U.S.C.

§ 2—and one claim for monopolization against Takeda only in violation of 15 U.S.C. § 2.

Section 1 of the Sherman Act provides “[e]very contract, combination in the form of trust

or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with

foreign nations, is declared to be illegal.”63 Section 1 antitrust plaintiffs must establish three things:

(1) “a contract, combination . . . or conspiracy”; (2) an unreasonable restraint on trade; and (3)

antitrust injury.64 “[T]he existence of an agreement is the hallmark of a Section 1 claim.”65 “Instead

of assigning [contract, combination . . . or conspiracy] a distinct meaning, courts have interpreted

them collectively to require ‘some form of concerted action’ . . . in other words, a ‘unity of purpose

or a common design and understanding or a meeting or minds’ or ‘a conscious commitment to a

common scheme.’”66

Section 2, conversely, has “sweeping language” making it unlawful to “monopolize,

attempt to monopolize, or conspire to monopolize, interstate or international commerce.”67 “A

Section 2 conspiracy claim has four elements: (1) an agreement to monopolize; (2) an overt act in

furtherance of the conspiracy; (3) a specific intent to monopolize; and (4) a causal connection

between the conspiracy and the injury alleged.”68 But a litigant may bring a Section 2 claim for

monopolization as well, requiring “‘(1) the possession of monopoly power in the relevant market

and (2) the willful acquisition or maintenance of that power as distinguished from growth or

development as a consequence of a superior product, business acumen, or historic accident.’”69

The second element of a monopolization claim requires “the willful acquisition or maintenance of

monopoly power.”70 “As this element makes clear, the acquisition or possession of monopoly

power must be accompanied by some anticompetitive conduct on the part of the possessor.”71

While Value Drug’s claim for monopolization does not require the existence of a

conspiracy on its face, it requires “some anticompetitive conduct” on Takeda’s part to acquire or

maintain the monopoly power.72 Value Drug only alleges Takeda’s “conduct” is its participation

in the conspiracy with Par, Watson, and Amneal. Because we find Value Drug has not plausibly

alleged a conspiracy, we also find Value Drug fails to plead a monopolization claim.73

In pleading a conspiracy, a plaintiff must plead “enough factual matter (taken as true) to

suggest that an agreement was made.”74 A plaintiff may rely on direct or circumstantial evidence

or some combination of both to plead an agreement.75 If relying exclusively on direct evidence of

conspiracy, “the complaint must plead ‘enough fact to raise a reasonable expectation that discovery

will reveal’ this direct evidence” of illegality.76 “And if the plaintiff alternatively expects to rest

on the circumstantial evidence of parallel behavior, the complaint’s statement of facts must place

the alleged behavior in ‘a context that raises a suggestion of a preceding agreement, not merely

parallel conduct that could just as well be independent action.’”77 “[R]egardless of whether the

plaintiff expects to prove the existence of a conspiracy directly or circumstantially, it must plead

‘enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of illegal

agreement.’”78 We look at the conspiracy as a whole when assessing each defendants’

involvement, and “[i]n short, the issue is whether the pleading delineates to some sufficiently

specific degree that a defendant purposefully joined and participated in the conspiracy.”79

1. Value Drug’s single horizontal conspiracy as plead.

Value Drug alleges Takeda, Par, Watson, and Amneal conspired to restrain trade and

monopolize the market on the eve of Par’s trial with Takeda in November 2015.80 They allegedly

agreed: Par would refrain from launching its generic of Colcrys and instead distribute Takeda’s

authorized generic two-and-a-half years after reaching its settlement agreement with Takeda and

remit substantial royalty payments back to Takeda; “Watson and Amneal would restrict their

output generic of Colcrys for several years, and then would each enjoy a defined period of time to

sell their respective generic Colcrys products free from competition from all other would-be

generic Colcrys makers;” and Takeda “would enter licenses with [the] other [non-conspiring]

generic companies that would delay their entry beyond Watson and Amneal’s agreed periods of

competition-free sales, thereby giving the co-conspirators long periods of supracompetitive

Colcrys profits.”81

Value Drug swears the conspiracy has “two basic features.”82 First, Takeda and Par settled

their patent litigation and “entered into a sham joint venture . . . that concealed the first part of their

output restriction conspiracy.”83 Par and Takeda agreed Par would not launch its generic of

Colcrys, and in July 2018—two-and-a-half years after they executed the settlement agreement—

Par would become the distributor of Takeda’s authorized generic of Colcrys.84 Under this

arrangement, Par would “remit back to Takeda virtually all of the revenues from sales of authorized

generic Colcrys, keeping some of the revenues for itself.”85 The second feature involved Watson

and Amneal.86 They too settled their respective litigation with Takeda and entered into separate

settlement agreements.87 Takeda “struck agreements with Watson and Amneal, respectively,

offering each a defined time, believed to be between [six] and [eighteen] months in duration, to

sell generic Colcrys free from competition from all other generic Colcrys sellers, if Watson and

Amneal would stay off the market for several years until their defined periods of marketing

commenced.”88 The conspiracy, though, had an escape clause.89 Under Value Drug’s theory, “Par,

Watson, and Amneal would refrain from launching their own generic versions of Colcrys only for

so long as non-conspirators did so. That is, the co-conspirators agreed that if a non-conspiring

seller of generic Colcrys entered the market, Par, Watson, and Amneal could do so . . . Par’s selling

Takeda’s authorized generic Colcrys avoided this escape clause.”90 Value Drug continues: “This

escape clause, and its necessary implication that the co-conspirators were willing to restrict their

own output only so long as non-conspirators were doing so, too, illustrates the interdependence of

the promises of the co-conspirators, the existence of the conspiracy, the fact that the output

restriction was against the unilateral economic interests of the conspirators and was only in their

joint conspiratorial interests, and demonstrates the singular nature of the conspiracy.”91

Value Drug alleges this arrangement benefitted all the co-conspirators.92 According to Par

“[t]he distribution agreement between Takeda and Par . . . provides powerful incentives to ensure

that the parties preserve the two-entrant market.”93 And Par itself purportedly explained the logic

behind the conspiracy: “[A market with] a single branded drug (Takeda’s Colcrys) and a single

generic version (Par’s authorized generic) only functions if the market for Colcrys-equivalent

colchicine is limited to those two products. [] Although a drug market can maintain price stability

with a single generic version of a drug on the market, multiple entrants often product a market-

wide price collapse with mass renegotiation and cancellation of supply agreements. [] The

distribution agreement between Takeda and Par recognizes this dynamic and provides powerful

incentives to ensure that the parties preserve the two-entrant market.”94 Par also “asserted that even

the entry of a single additional competitor would cause its distribution joint venture with Takeda

‘to lose approximately 97 million in annual revenue;’” and “with ‘two or three other generic

ANDA filers enter[ing] the market,’ the joint venture would lose even more, because ‘[a]s

additional generic versions of Colcrys enter the market, Par would be forced to swiftly reduce

prices to maintain even a portion of its market share.’”95 Value Drug pleads each defendant had

no unilateral interest in this arrangement, and “[t]he conduct among [Takeda, Par, Amneal, and

Watson] only makes economic sense if there was an agreement among the four of them to restrain

their respective generic and authorized-generic output and prevent the price collapse that Par so

vividly described.”96 In other words, under Value Drug’s theory, the conspirators agreed Par,

Watson, and Amneal would stay off the market to each enjoy defined periods of competition-free

sales to avoid “the price collapse” Par so vividly described when more than a brand drug and one

generic drug is on the market.97

Value Drug alleges this conspiracy “restricted output of generic Colcrys, kept Colcrys

prices at supracompetitive levels, and delayed their fall to competitive levels.”98 Value Drug

alleges the conspiracy “was very profitable to both Takeda and Par” even though “Watson and

Amneal did not get to enjoy the fruits of the conspiracy.”99 Value Drug alleges Takeda “earned

approximately $1 billion more than it would have had it faced generic competition,” “Par expected

to earn approximately $50-80 million more than it would absent the conspiracy,” and “Watson and

Amneal each could have expected to earn approximately $12-36 million more during their

respective periods as the only generic seller on the market than they would have earned absent the

conspiracy.”100

2. Value Drug pleads no direct evidence of the conspiracy.

“Allegations of direct evidence of an agreement, if sufficiently detailed, are independently

adequate” to plead a conspiracy.101 Direct evidence is “evidence that is explicit and requires no

inferences to establish the proposition or conclusion being arrested” such as “a document or

conversation explicitly manifesting the existence of the agreement in question.”102 Value Drug

argues it offers two forms of direct evidence—the settlement agreements themselves and

defendants’ judicial admissions in a different litigation.103

Value Drug cites a string of cases purportedly supporting its argument the individual,

bilateral settlement agreements are direct evidence of the single, horizontal conspiracy among

Takeda, Par, Watson, and Amneal.104 Value Drug fails to appreciate why these cases are

distinguishable from what it pleads here. For example, Value Drug cites to one of Judge

Goldberg’s opinions in the King Drug Co. of Florence v. Cephalon, Inc. litigation.105 Judge

Goldberg considered motions for summary judgment on whether individual settlement agreements

between the brand and generic defendants themselves violated antitrust principles because they

individually contained large and unjustified reverse settlements following our Supreme Court’s

holding in Actavis.106 Value Drug seizes on Judge Goldberg’s footnote “[p]laintiffs have presented

direct evidence of concerted action through the settlement agreements between Cephalon and each

of the Generic Defendants, and Defendants have not challenged Plaintiffs’ ability to meet the

concerted action requirement on these claims.”107 But Value Drug fails to acknowledge the

concerted action Judge Goldberg is discussing is not concerted action among the brand and all of

the generics, it is concerted action between the brand and each of the generics with respect to the

individual settlement agreements raising antitrust concerns. Judge Goldberg addressed several

agreements; Value Drug alleges one.

Judge Thrash in In re Androgel Antitrust Litigation (No. II) considered whether individual

settlement agreements between the brand and each generic raised antitrust concerns as a reverse

payment settlement on a motion for summary judgment.108 One of the generics moved for

summary judgment arguing the plaintiffs failed to demonstrate a conspiracy to restrain trade in

violation of Sections 1 and 2 of the Sherman Act.109 Judge Thrash observed both claims “require

the same threshold showing—the existence of an agreement to restrain trade” and “[a] written

contract satisfies this requirement ‘only if it embodies an agreement to unlawfully restrain

trade.’”110 Judge Thrash concluded the settlement agreements constituted direct evidence of a

conspiracy because “the settlement agreements specifically address the conduct the Plaintiffs argue

is unlawful.”111 Judge Thrash reasoned: “The parties negotiated and agreed that in exchange for

dropping the patent litigation, providing some services, and delaying generic introduction until

2015, the Generics would receive compensation. Whether that common objective—dropping the

patent litigation in exchange for compensation—was an illegal restraint of trade is a separate

question. But if it was, then the settlements are clear, direct evidence of an agreement to unlawfully

restrain trade.”112 In In re Androgel, the very conduct purportedly constituting the antitrust

violation—“dropping the patent litigation in exchange for compensation” in the form of a reverse

payment—appeared in the terms of each individual written settlement agreement between the

brand and the generic manufacturer. Thus, as Judge Thrash aptly reasoned, if a jury found this

conduct to be in violation of the Sherman Act, the settlement agreements constituted direct

evidence of the conspiracy between the brand and each individual generic as they memorialized

the very agreement which violated the Sherman Act.

This is not what we have here. Value Drug is not challenging the separate bilateral

settlement agreements as individually violative of the Sherman Act.113 Value Drug pleads a single,

horizontal antitrust conspiracy among Takeda, Par, Watson, and Amneal. The bilateral settlement

agreements are not direct evidence of this alleged conspiracy. We are persuaded by another Judge

Goldberg opinion in the King Drug Co. of Florence, Inc. v. Cephalon, Inc litigation.114 Judge

Goldberg separately considered whether four individual, bilateral reverse payment settlement

agreements executed between the brand drug Cephalon and the generic defendants “were the

product of an overall antitrust conspiracy between all of the Defendants” on a motion for summary

judgment.115 As we have here, Judge Goldberg observed “[t]he motions at issue do not concern

the legality of the individual, bilateral settlement agreements between Cephalon and each Generic

Defendant. What is at issue is Plaintiffs’ claim that the separate settlement agreements were in fact

the manifestation of a horizonal conspiracy between all Defendants—with Cephalon at the

center—to restrain trade in the modafinil market.”116 Judge Goldberg found the individual,

bilateral settlement agreements are not direct evidence of an overall antitrust conspiracy.117 There,

the plaintiffs argued the settlement agreements themselves, which contained substantially similar

language and structure, constituted direct evidence.118 Judge Goldberg rejected this argument,

reasoning, “[t]he settlement agreements themselves are individual agreements, not global

agreements amongst all Defendants. Plaintiffs are unable to point to any direct evidence that the

Generics agreed amongst themselves, let alone that such overall agreement also included

Cephalon. Indeed, each agreement runs only between Cephalon and a single Generic. While

Plaintiffs are correct that the settlements contain similar terms, and it could be argued that this

similarity is evidence of an overall conspiracy, that is classic circumstantial, not direct

evidence.”119

Value Drug pleads the generics individually settled their patent infringement litigations

with Takeda around the same time and with bilateral settlement agreements containing similar

structure and terms, purportedly manifesting an overarching single, horizontal conspiracy among

Takeda, Par, Watson, and Amneal.120 Value Drug conceded at oral argument there is no provision

in the settlement agreements—beside in Watson’s agreement which references Par and Amneal’s

generic Colcrys product—providing direct evidence of an agreement among Takeda, Par, Watson,

and Amneal to restrict generic Colcrys output.121 Value Drug further conceded “conspirators

normally don’t lay out and specifically say, hey, this is what I’m doing.”122 But this is exactly the

type of “smoking gun” evidence Value Drug needs if it intends to rely on the settlement agreements

as direct evidence of a conspiracy.123 There is simply no direct evidence of an antitrust conspiracy

in the individual settlement agreements themselves. The mere fact Watson’s agreement mentions

two other products may give rise to an inference Watson, Par, and Amneal knew of each other’s

agreements’ terms and somehow fell into an overarching output restriction conspiracy. But this is

a conclusion requiring us to infer something and thus is not direct evidence; it is “classic

circumstantial” evidence just like Judge Goldberg reviewed on a summary judgment record.

Value Drug also argues it provides direct evidence of the overarching conspiracy in the

form of judicial admissions by Par in front of Judge Andrews.124 This too fails to carry the day for

Value Drug. The statements by Par only address Par and Takeda’s distribution agreement and the

benefits provided to Par and Takeda by maintaining a two-drug market.125 The statements do not

address Watson and Amneal or their agreement and involvement in this alleged overarching

conspiracy among Takeda, Par, Watson, and Amneal. Value Drug’s reliance on the statements

would require us to draw inferences Takeda, Par, Watson, and Amneal entered an overarching

conspiracy among each other from Par’s statements about its agreement with Takeda and the

benefits it draws from it. This reach is classic circumstantial evidence, not direct.

Value Drug pleads no direct evidence of a conspiracy because neither the settlement

agreements nor Par’s statements are direct evidence of the single, horizontal conspiracy among

Takeda, Par, Watson, and Amneal.

3. Value Drug pleads no circumstantial evidence of the conspiracy.

Plaintiffs may plead an anti-competitive conspiracy violating federal law through

circumstantial evidence.126 But mere allegations of parallel conduct are not enough, nor are

allegations of “conscious parallelism.”127 “In order ‘to avoid deterring innocent conduct that

reflects enhanced, rather than restrained, competition,’ . . . and in order to enforce the Sherman

Act’s requirement of an agreement, the Supreme Court has required that ‘a § 1 plaintiff’s offer of

conspiracy evidence must tend to rule out the possibility that the defendants were acting

independently.”128 “Some courts have denominated these facts, the presence of which may indicate

the existence of an actionable agreement, as ‘plus factors’” and although not exhaustive, our Court

of Appeals recognizes three such plus factors: (1) motive to enter the conspiracy; (2) evidence

defendants acted contrary to their interests; and (3) evidence implying a traditional conspiracy.129

“[P]lus factors are simply circumstances in which the inference of independent action is less likely

than that of concerted action.”130

Value Drug argues it adequately pleads circumstantial evidence of a conspiracy because it

pleads conscious parallel conduct, motive to agree, and the conspiring defendants acted contrary

to their economic interests.131 Takeda, Watson, Amneal, and Par counter the conspiracy is

implausible, and Value Drug fails to adequately plead circumstantial evidence of a conspiracy

nonetheless. We need not decide whether Value Drug plausibly pleads consciously parallel

conduct because its conspiracy as plead is admittedly implausible belying any inference of

concerted action. But we grant Value Drug leave to amend should it be able to plead its later-

argued theory consistent with Rule 11.

We again start with Value Drug’s plead conspiracy. Value Drug’s plead purpose of the

conspiracy is for “the four [conspirators] to restrain their respective generic and authorized-generic

output and prevent the price collapse that Par so vividly described”—i.e., the price collapse

which occurs when there are more than two entrants (one brand and one generic of a drug) in the

market—in order to enjoy and maintain supracompetitive profits.132 To achieve this purpose,

Takeda, Par, Watson, and Amneal agreed to consistently maintain a two-entrant system until

January 2024, with Par first enjoying exclusivity well past its 180-day exclusivity provided as the

first Abbreviated New Drug Application filer, and then Watson and Amneal each enjoying

successive periods of exclusivity—something neither would otherwise enjoy since neither filed

their Application first.133 Understanding other non-conspirator generics could also come to market,

the four competitors purportedly agreed Takeda would provide them licenses to enter the market

after Watson and Amneal had their exclusivity period.134 The competitors also purportedly agreed,

though, if a non-conspiring generic came to market, all of them could enter too; in other words,

they would only restrict their output if the non-conspirator generics did so too.135 In so doing, they

restricted competition and stood to gain supracompetitive profits.136

But what Value Drug pleads is belied by the settlement agreements Value Drug attempts

to rely on as circumstantial evidence of the conspiracy. It is not disputed Watson and Amneal did

not have a defined period of exclusive sales. The purported conspiracy (as best we can tell based

on the allegations with all inferences in Value Drug’s favor) really worked this way:

• Par agreed to be Takeda’s distributor of its authorized generic from July 1, 2018 through

the earlier of June 30, 2022 (or the date Par launches its own generic of Colcrys or any

other single-ingredient oral colchicine product other than Takeda’s or its generic of

Colcrys);137

• Par also agreed with Takeda it could launch its own generic of Colcrys on the earlier of

January 1, 2024; the date a court finds the patents covering Colcrys invalid or not infringed

based on a drug “substantively identical” to Par’s generic of Colcrys; the date a “Third

Party” begins selling its generic of Colcrys with Takeda’s permission; or a date following

another generic drug manufacturer launching “at risk” without permission from Takeda.138

Third Party does not except Watson and Amneal; rather, it means “any person other than a

Party or an Affiliate to a Party.”139

• Watson agreed with Takeda it could launch its own generic of Colcrys on the earlier of:

October 15, 2020; 135 days before another generic (besides Par or Amneal) begins selling

its generic of Colcrys with Takeda’s permission; the date Par or Amneal begins selling

their generics of Colcrys with Takeda’s permission; the date a court finds the patents

covering Colcrys invalid or not infringed based on a drug “substantively identical” to

Watson’s generic of Colcrys; the date another generic starts selling after a Court determines

the Colcrys patents are invalid or not infringed based on a drug “not substantively

identical” to Watson’s generic of Colcrys; or a date following another generic drug

manufacturer launching “at risk” without permission from Takeda.140

• And Amneal agreed with Takeda it could launch its own generic of Colcrys on the earlier

of: October 15, 2020; the date a court finds the patents covering Colcrys invalid or not

infringed based on a drug “substantively identical” to Amneal’s generic of Colcrys; the

date a third party begins selling its generic of Colcrys with Takeda’s permission; or a date

following another generic drug manufacturer launching “at risk” without permission from

Takeda.141

Thus, drawing all inferences in favor of Value Drug but reviewing the agreements Value

Drug itself relies on to state its claim, we know:

• Par and Takeda would be the only two sellers on the market, with Takeda distributing its

branded Colcrys and Par distributing Takeda’s authorized generic, from July 1, 2018 to

October 15, 2020 when Watson and Amneal entered the market with their generic products;

upon their joint entry, Watson and Amneal would cause the “price collapse” with four

market entrants—which, according to Value Drug’s own pleading, would cause the

generics to “swiftly reduce prices to maintain even a portion” of the market share.

• If Watson’s entry date of 135 days before another generic (besides Par or Amneal) got

triggered, Watson still would not have a period of exclusivity. Rather, both Par and Amneal

could come in with their generics.142 Thus, the market would have: Takeda’s brand

Colcrys; Takeda’s authorized generic of Colcrys; Par’s generic Colcrys; Watson’s generic

Colcrys; and Amneal’s generic Colcrys.143

• And, as Value Drug pleads, if a non-conspirator came into the market, Par, Watson, and

Amneal could also come in then.144

We next turn to the purported “Second Wave” theory of conspiracy Value Drug did not

plead but raised at oral argument and in its briefing. Value Drug argues the actual unplead purpose

of the conspiracy is to “order their market entry” to compete against three generics rather than the

potential nine, and thus avoid “the looming Second Wave” of generics which would cause an even

larger price collapse than what occurs when there are three generics in the market.145 In other

words, Takeda, Par, Watson, and Amneal did not conspire to totally restrict their output in

exchange for defined periods of exclusivity in a two-entrant market and supracompetitive profits

to be shared among themselves (as plead); they instead conspired to restrict their output to compete

only against each other for defined periods of time, rather than all nine generics which could have

been on the market. But Value Drug fails to plead facts supporting this theory and effectively

concedes its as-plead theory is implausible by not defending it.146

Value Drug’s conspiracy as plead is implausible because in any of these scenarios, the

admitted price collapse occurs. Value Drug concedes this result.147 Rather than doubling down on

its theory the four competitors agreed to this scheme to prevent the inevitable price collapse which

occurs when “even . . . a single additional” generic enters the market and disrupts the high prices

commanded in a two-entrant market, Value Drug argues the purpose of the conspiracy is actually

to prevent the further price collapse which would occur from the “looming Second Wave” of

generic manufacturers also trying to take their generic of Colcrys to market.148 But Value Drug

cannot plead one implausible conspiracy—a conspiracy in which each conspirator joined in order

to enjoy defined, competition-free periods of sales in a two-entrant market149—and argue because

another unplead conspiracy is plausible we should not dismiss its plead implausible allegations.150

Value Drug pleads itself out of court by focusing the plead motives of the four competitors

to reduce generic output “to prevent the price collapse that Par so vividly described”—i.e., the

price collapse which occurs when even one other generic enters the two-entrant market.151 The

settlement agreements themselves preclude Watson and Amneal from selling their generics in a

two-entrant market and rather demonstrate the price collapse Par described will happen when one

of the four competitors brings its generic to market because all three generics, and possibly

Takeda’s authorized generic, can be sold at once. As plead, we discern no motive for the

competitors to enter a single, horizontal conspiracy among all of them to cause the very price

collapse they allegedly conspired to avoid.152 This theory makes no economic sense and forecloses

an inference of concerted action among the four competitors.153

We dismiss Value Drug’s plead claims against Takeda, Par, Watson, Amneal, and Teva

USA with leave to amend.

B. We defer ruling on Teva Ltd.’s motion to dismiss for lack of personal

jurisdiction and allow limited expedited jurisdictional discovery.

Teva Ltd. moves to dismiss Value Drug’s complaint arguing we do not enjoy personal

jurisdiction over it as an Israeli company with its principal place of business in Israel.154 Value

Drug responds we enjoy personal jurisdiction over Teva Ltd. under Pennsylvania’s long arm

statute, the Clayton Act (15 U.S.C. § 22), and Federal Rule of Civil Procedure 4(k)(2).155 Value

Drug also argues exercising jurisdiction—either general or specific—is constitutional.156 In the

alternative, Value Drug asks for jurisdictional discovery. We disagree with Value Drug it has

adequately plead or proffered adequate evidence our exercise of jurisdiction over Teva Ltd. is

constitutional. But we grant Value Drug limited jurisdictional discovery on one plead theory of

personal jurisdiction.

1. Value Drug’s pleading of personal jurisdiction over Teva Ltd.

Value Drug knowingly sued a foreign company with a foreign principal place of business

and yet failed to plead barely a fact regarding our personal jurisdiction over it.157

Value Drug bases our personal jurisdiction over Teva Ltd. on four sparce allegations: (1)

“Teva Ltd. is successor-in-interest to Watson”; (2) “On July 26, 2015 Teva Ltd. purchased Watson

and, as part of that purchase, assumed all of Watson’s liabilities”; and (3) “Moreover, Teva Ltd.

ratified Watson’s conduct challenged herein”; (4) “Each defendant has transacted business,

maintained substantial contacts, and/or committed overt acts in furtherance of the illegal scheme

and conspiracy throughout the United States, including in this district. The scheme and conspiracy

have been directed at, and have had the intended effect of, causing injury to persons residing in,

located in, or doing business throughout the United States, including in this district.”158

2. Value Drug fails to plead or proffer adequate evidence to establish we

enjoy personal jurisdiction over Teva Ltd. but we allow it limited

jurisdictional discovery should it decline to timely amend its complaint.

“‘[T]he burden of demonstrating the facts that establish personal jurisdiction,’ falls on the

plaintiff . . . and ‘once a defendant has raised a jurisdictional defense,’ the plaintiff must ‘prov[e]

by affidavits or other competent evidence that jurisdiction is proper.’”159 When, as here, no party

requests an evidentiary hearing “‘the plaintiff[s] need only establish a prima facie case of personal

jurisdiction.’”160 We are required to “‘accept the plaintiff’s allegations as true, and . . . to construe

disputed facts in favor of the plaintiff.’”161 “Of course, by accepting a plaintiff’s facts as true when

a motion to dismiss is originally made, a court is not precluded from revisiting the issue if it appears

that the facts alleged to support jurisdiction are in dispute.”162

“Pennsylvania’s long-arm statute gives its courts jurisdiction over out-of-state defendants

to the maximum extent allowed by the U.S. Constitution.”163 Federal Rule of Civil Procedure

4(k)(2) provides “[f]or a claim that arises under federal law, serving a summons or filing a waiver

of service establishes personal jurisdiction over a defendant if: (A) the defendant is not subject to

jurisdiction in any state’s courts of general jurisdiction; and (B) exercising jurisdiction is consisted

with the United States Constitution and laws.”164 The Clayton Act, which allows nationwide

service of process, permits us to consider whether we have personal jurisdiction over Teva Ltd.

“on the basis of [its] aggregate contacts with the United States as a whole” under the Fifth

Amendment’s Due Process clause.165 Regardless of which statute or rule we operate under,

exercising personal jurisdiction over Teva Ltd. must still be constitutional. The parties dispute

whether exercising jurisdiction is constitutional and what standard to apply. We apply the same

analysis applied to a personal jurisdiction analysis under the Fourteenth Amendment.166

a. We do not enjoy general personal jurisdiction over Teva Ltd.

Value Drug first argues we enjoy general jurisdiction over Teva Ltd. based on Teva Ltd.’s

“continuous and systematic contacts” with the United States or alternatively as Teva USA’s alter

ego. At the outset, we reject Teva Ltd.’s argument and evidence proffered purportedly supporting

its argument we may exercise jurisdiction over Teva Ltd. under an alter ego theory.167 Value Drug

does not plead we have personal jurisdiction over Teva Ltd. under an alter ego theory. It cannot

now attempt to rely on an unplead theory through briefing.168

We consider whether we otherwise have general jurisdiction over Teva Ltd. Our inquiry is

whether the “corporation’s ‘affiliations with the State are so ‘continuous and systematic’ as to

render [it] essentially at home in the forum State.”169 The Supreme Court recently reiterated the

standard for general jurisdiction:

A state court may exercise general jurisdiction only when a defendant is

“essentially at home” in the State. General jurisdiction, as its name implies, extends

to “any and all claims” brought against a defendant. Those claims need not relate

to the forum State or the defendant's activity there; they may concern events and

conduct anywhere in the world. But that breadth imposes a correlative limit: Only

a select “set of affiliations with a forum” will expose a defendant to such sweeping

jurisdiction. In what we have called the “paradigm” case, an individual is subject

to general jurisdiction in her place of domicile. And the “equivalent” forums for a

corporation are its place of incorporation and principal place of business.170

Value Drug concedes Teva Ltd.’s state of incorporation and principal place of business is

Israel.171 Value Drug’s argument apparently seizes on our Supreme Court’s language in Daimler

leaving open the possibility of exercising general jurisdiction over a defendant “in an exceptional

case . . . [when] a corporation’s operations in a forum other than its formal place of incorporation

or principal place of business may be so substantial and of such a nature as to render the corporation

at home in that State.”172 But “it is incredibly difficult to establish general jurisdiction [over a

corporation] in a forum other than the place of incorporation or principal place of business.”173

Value Drug argues we have general jurisdiction due to Teva Ltd.’s extensive contacts with the

United States.174 We are unpersuaded by Value Drug’s citations to pre-Daimler cases and see no

“exceptional reason” to exercise general personal jurisdiction over Teva Ltd.

b. We defer ruling on whether we enjoy specific personal

jurisdiction over Teva Ltd. following limited jurisdictional

discovery.

Value Drug alternatively argues we may exercise specific jurisdiction over Teva Ltd.

Specific jurisdiction requires: (1) minimum contacts—“some act by which [the defendant]

purposefully avails itself of the privilege of conducting activities within the forum state”; (2) “[t]he

plaintiff’s claims . . . ‘must arise out of or relate to the defendant’s contacts’ with the forum’”; and

(3) exercising jurisdiction does not offend “traditional notions of fair play and substantial

justice.’”175 Value Drug relies on three theories: (1) Teva Ltd.’s contacts with the United States

are sufficient to exercise specific jurisdiction; (2) we can impute Watson’s contacts to Teva Ltd.

because Teva Ltd. is Watson’s successor-in-interest; and (3) we can impute Watson’s contacts to

Teva Ltd. because Teva Ltd. ratified its conduct.176

We grant limited jurisdictional discovery on Value Drug’s first theory.177 Value Drug

pleads “[e]ach defendant has transacted business, maintained substantial contacts, and/or

committed overt acts in furtherance of the illegal scheme and conspiracy throughout the United

States.”178 Our Court of Appeals has held this bare conclusory pleading is “clearly frivolous” and

not warranting of jurisdictional discovery.179 But in response to Teva Ltd.’s motion to dismiss,

Value Drug proffered evidence of Teva Ltd.’s contacts with the United States.180 What Value

Drugs did not do is provide evidence or argument the claims before us now arise from or relate to

Teva Ltd.’s contacts with the United States.181 We are satisfied based on the record before us,

including Value Drug’s Complaint and proffer of evidence in response to Teva Ltd.’s motion to

dismiss, Value Drug’s jurisdictional discovery will not be a fishing expedition but rather a targeted

inquiry into whether the claims here arise from or relate to Teva Ltd.’s contacts with the United

States.182

We reject Value Drug’s theory of personal jurisdiction under the successor-in-interest and

ratification theories.183 Value Drug does not plead or proffer facts supporting its legal conclusion

“Teva Ltd. ratified Watson’s conduct challenged herein.”184 We have no basis to provide discovery

when we have no facts supporting this theory.

We similarly reject Value Drug’s successor liability theory of personal jurisdiction as

plead. “[U]nder Pennsylvania law, the acts of a predecessor corporation may be attributed to its

successor for purposes of determining whether jurisdiction over the successor is proper.”185

“Accordingly, jurisdiction is established if the successor corporation may be held liable under

Pennsylvania’s law of successor liability.”186 Value Drug relies on the “express assumption of

liability” exception to Pennsylvania’s general rule of no successor liability.187 The parties dispute

whether Value Drug pleading Watson continues to exist precludes a finding of successor liability

under Pennsylvania law.188 In In re Suboxone Antitrust Litigation, Judge Goldberg considered

whether a defendant could be liable as a successor-in-interest under Pennsylvania law when the

plaintiff argued the defendant expressly assumed liabilities.189 Judge Goldberg found it could not

for three reasons: (1) the agreement did not expressly transfer liabilities to a successor corporation;

(2) “the continued existence of original entity precludes successor liability;” and (3) the plaintiffs

failed to allege the original entity had any liability, regardless.190 Judge Goldberg found: “[i]t is

well established that ‘[i]f the original entity still exists . . . there is no successor, and therefore no

successor liability.’”191 He continued: “[a]t least one district court has concluded that, under

Pennsylvania law, the ‘cessation of ordinary business operations’ factor may be satisfied when the

predecessor does not dissolve or completely cease to exist, but rather is reduced to an assetless

shell.”192 “Where, however, the original entity is not an assetless shell and does not completely

cease ordinary operations, successor liability is precluded.”193

The plaintiffs in In re Suboxone argued it did not matter the predecessor entity still existed,

relying on a Massachusetts case applying Massachusetts law.194 Judge Goldberg found he need

not consider the plaintiffs’ argument because the Massachusetts case decided under Massachusetts

law which Plaintiffs relied on “is inapposite given [his] finding that there was no assumption of

liability.”195 Value Drug attempts to distinguish the case on this basis arguing Judge Goldberg did

not decide whether the predecessor entity must cease to exist when there is an express assumption

of liability.

But we are not persuaded. Judge Goldberg found three independent reasons to deny

successor liability—one of which included the predecessor entity still existed. We are persuaded

by the analysis presented by Judge Goldberg and other judges to have considered this issue.196

Value Drug pleads Watson still exists, precluding a finding of successor liability under

Pennsylvania law, and thus precluding us from imputing Watson’s contacts for purposes of

jurisdiction as plead.197

We reject Value Drug’s argument we enjoy general jurisdiction over Teva Ltd. or we can

impute Watson’s contacts to Teva Ltd. under a successor-in-interest or ratification theory as plead.

But we grant limited jurisdictional discovery on whether Value Drug’s claims arise from or relate

to Teva Ltd.’s contacts with the United States. Understanding Value Drug may amend its

Complaint and plead other theories of our personal jurisdiction for Teva Ltd. to the extent possible

under Rule 11, we defer jurisdictional discovery until after Value Drug can amend.

3. We deny Watson and Amneal’s request for sanctions.

Watson and Amneal move for sanctions against Value Drug in the form of their fees in

prosecuting their motion to dismiss under 28 U.S.C. § 1927 if we dismiss Value Drug’s complaint

with leave to amend.198 We decline to sanction Value Drug at this stage. Its pleading is inaccurate

and possibly inartful; it is not frivolous and there is no basis to find bad faith or intentional

misconduct.

Congress in section 1927 provides “[a]ny attorney or other person admitted to conduct

cases in any court of the United States or any Territory thereof who so multiplies the proceedings

in any case unreasonably and vexatiously may be required by the court to satisfy personally the

excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.”199

Watson and Amneal argue they are entitled to their fees for moving to dismiss a complaint which

Value Drug knew contained false allegations after receiving the settlement agreements and then

consciously choose not to amend. We disagree.

Our Court of Appeals instructs sanctions under 28 U.S.C. § 1927 are limited to when an

attorney has “(1) multiplied proceedings; (2) unreasonably and vexatiously; (3) thereby increasing

the cost of the proceedings; (4) with bad faith or with intentional misconduct.”200 The sanctions

are “intended to deter an attorney from intentionally and unnecessarily delaying judicial

proceedings, and they are limited to the costs that result from such delay,” but our Court of Appeals

cautions “courts should exercise [this sanctioning power] only in instances of a serious and studied

disregard for the orderly process of justice.”201 Congress’s allowance of fees in section 1927 is to

be construed narrowly “and with great caution so as not to stifle the enthusiasm or chill the

creativity that is the very lifeblood of the law.”202 “Consequently, sanctions may not be imposed

under § 1927 absent a finding that counsel’s conduct resulted from bad faith, rather than

misunderstanding, bad judgment, or well-intentioned zeal.”203

Value Drug’s choice to stand on its Complaint and defend against the motions to dismiss

is not so clearly frivolous, unreasonable, or vexatious to rise to the level of bad faith warranting

sanctions. We decline to sanction Value Drug.

III. Conclusion

Pharmacy chain Value Drug alleges Takeda Pharmaceuticals, manufacturer of a brand

name Colcrys—a drug approved by the Food and Drug Administration for the treatment and

prevention of gout and familial Mediterranean fever—entered a single conspiracy with generic

drug manufacturers Par, Watson, and Amneal to restrict generic Colcrys output in exchange for

defined periods of exclusive sales and thus extended periods of supracompetitive profits. But

Value Drug fails to plead a plausible single horizontal conspiracy among the four competitors

based on settlement agreements. The settlement agreements are to the contrary on their face. We

must dismiss its Complaint based on this theory with leave to amend if Value Drug can plead an

alternative theory. Value Drug similarly fails to plead multiple theories of personal jurisdiction

over an Israeli purchaser of some of Watson’s assets but skates by with a bare pleading and a

proffer of evidence of one theory entitling it to limited specific jurisdictional discovery before

dismissal. We need not reach the substance of Par and Teva USA’s alternative arguments for

dismissal with an understanding Value Drug is now fully apprised of both entity’s arguments

should it amend consistent with our Order.

1 We amend our December 28, 2021 Memorandum (ECF Doc. No. 153) only to clarify unwieldly

language in our introduction sentence without affecting our legal analysis or import of our

December 28, 2021 Order (ECF Doc. No. 154). Our apologies for inartful language.

2 ECF Doc. No. 1 ¶ 28. Colchicine is “a very old drug” which doctors used to treat gout “for a very

long time.” Id. ¶ 30. The ancient Greeks used colchicine to treat gout more than two thousand

years ago. Id. Dr. Stephen Goldfinger “reported successful use of colchicine” to treat familial

Mediterranean fever in 1972. Id. Gout is “a type of severe arthritis often characterized by painful

‘flares’ (severe and sudden attacks of pain, redness, inflammation, and tenderness in joints)

resulting from the build-up of uric acid).” Id.

3 Id. ¶ 28.

4 Id. ¶ 32.

5 Id. ¶¶ 29, 32.

6 Id. ¶ 32.

7 Id.

8 “An AB rating means that the generic drug is pharmaceutically equivalent and bioequivalent to

the corresponding reference-listed brand drug.” Id. ¶ 37. “An AB-rating is particularly significant

because . . . pharmacists may (an in many states, must) substitute an AB-rated generic version of

a drug for the brand-name drug automatically at the pharmacy counter, without seeking or

obtaining permission from the prescribing physician.” Id.

9 Id. ¶¶ 33–36.

10 Id. ¶ 39.

11 Id. ¶ 40.

12 Id.¶ 41.

13 Id. ¶¶ 39 (defining “ANDA”), 42. The application number is 203976. Id. ¶ 42.

14 Id. ¶¶ 40, 42.

15 Id. ¶ 42.

16 Id. ¶ 43. Value Drug conceded this allegation is not accurate during oral argument because all

eight generic filers did not file at the same time; eight generic manufacturers filed over the course

of the allegations in the complaint, presumably from 2011 to 2019. ECF Doc. No. 148, Tr. 23:17–

24:2.

17 ECF Doc. No. 1 ¶ 44.

18 Id.

19 Id. ¶ 45. While Value Drug places this allegation right after its allegation “Takeda sued Par first,

in August 2013,” thereby suggesting this ruling came out before Takeda sued Par and the other

generics, Value Drug conceded at oral argument this ruling did not come out before Takeda filed

the lawsuits for patent infringement against the generics. It rather came out in May 2015. ECF

Doc. No. 148, Tr. 56:17–57:14.

20 ECF Doc. No. 1 ¶ 49.

21 Id. ¶¶ 50–51.

22 Id. ¶ 46

23 Id. ¶ 47.

24 Id. ¶ 53.

25 Id. ¶ 54.

26 ECF Doc. No. 123–123-2. We may review the settlement agreements on a motion to dismiss

without converting it to a motion for summary judgment because the settlement agreements are

integral and explicitly relied upon in Value Drug’s Complaint. In re Burlington Coat Factory Sec.

Litig., 114 F.3d 1410, 1426 (3d Cir. 1997) (“As a general matter, a district court ruling on a motion

to dismiss may not consider matters extraneous to the pleadings . . . However, an exception to the

general rule is that a “document integral to or explicitly relied upon in the complaint” may be

considered “without converting the motion [to dismiss] into one for summary judgment.” (internal

citations omitted) (modification in original)); see also Est. of Roman v. City of Newark, 914 F.3d

789, 796 (3d Cir. 2019) (“‘Although we examine the “complaint, exhibits attached to the

complaint, [and] matters of public record,’ . . . we can also consider documents ‘that a defendant

attaches as an exhibit to a motion to dismiss,’ . . . if they are “undisputedly authentic” and “the

[plaintiff’s] claims are based [on them].” (internal citations omitted)), cert. denied, 140 S. Ct. 82

(2019), and cert. denied, 140 S. Ct. 97 (2019).

27 ECF Doc. No. 123-2 at 45 (dates term sheet executed).

28 ECF Doc. No. 1 ¶ 55.

29 Id. ¶ 56.

30 ECF Doc. No. 123, Ex. 1, at 2.

31 Id. at 16 § 1.1 (“Takeda hereby grants to Par a non-exclusive license, with the right to sublicense

to an Affiliate, under the Licensed Patents, to distribute, have distributed, market, sell, and offer

for sale a generically-labeled .6 mg colchicine oral tablet product manufactured and supplied by

Takeda pursuant to the Takeda NDAs (‘Licensed AG Product’), subject to the terms set forth in

the Distribution and Supple Agreement attached as Exhibit B hereto, and solely during the

following period (the ‘AG License Term’): July 1, 2018, through the earlier of: June 30, 2022; or

The date Par launches Par’s ANDA Product; or The date Par launches any single-ingredient oral

colchicine product other than the Licensed AG Product or Par’s ANDA Product.”).

32 Id. at 16 § 1.2 (“Subject to Paragraph 1.3 below, Takeda hereby grants Par and its respective

Affiliates a fully paid-up, royalty-free, irrevocable, non-exclusive license under the Licensed

Patens and any other intellectual property rights owned or controlled by [Takeda] and its respective

Affiliates as of the Effective Date or at any time in the future, which Licensed Patents and

intellectual property rights are necessary to manufacture, have manufactured, use, import,

distribute, offer to sell, have sold and sell in the United State the Par ANDA Product and any and

all components thereof as necessary to make, have made, manufacture, or have manufactured the

Par ANDA Product as described in the Par ANDA (the ‘Par ANDA Product License.’)).

33 Id. at 17 § 1.3. The Par ANDA Product License allowed Par to “sell and distribute, without any

limitation or restriction, [Par’s generic of Colcrys] during the period beginning on the first to occur

of the following . . . and continuing until the expiration of the last to expire of the Licensed Patents:

(a) January 1, 2024; (b) the date of a Final Court Decision (as defined in Exhibit A) holding that

all unexpired claims of the Licensed Patents that were asserted and adjudicated against a Third

party are invalid, canceled, or unenforceable or not infringed, where the judgment of non-

infringement is based on a label that is substantively identical to the Par label that received tentative

approval from the FDA on February 12, 2015; (c) [t]he date a Third Party, pursuant to a license or

other authorization by Takeda, is permitted to launch a Generic Equivalent . . . or (e) Subject to

Par’s payment of the Profit Share as applicable, the date that is the earlier of (i) ten (1) business

days after the date of a first commercial sale in the Territory by any Third Party without license or

authorization by Takeda, of a Generic Equivalent (such Third Party referred to hereafter as the

‘Launcher at Risk’ or ‘LAR.’” Id. “Third Party” is defined as “any person other than a Party or an

Affiliate to a Party.” Id. at 29, Ex. A to License Agreement (Definitions). “Affiliate” is defined as

“any Person that directly or indirectly controls, is controlled by, or is under common control with

any one of the Parties.” Id. at 27. “Party” is defined as “[e]ach one of Plaintiff and Defendants,”

collectively “Parties”—here Takeda Pharmaceuticals USA, Inc., Par Pharmaceutical Companies,

Inc., and Par Pharmaceutical, Inc. Id. at 15.

34 ECF Doc. No. 123-1, Ex. 2, at 2.

35 Id. at 2, 16. “Subject to Paragraph 1.2 below, Takeda hereby grants Watson and its respective

Affiliates a fully paid-up, royalty-free, irrevocable, non-exclusive license under the Licensed

Patents and any other intellectual property rights owned or controlled by [Takeda] and its

respective Affiliates as of the Effective Date or at any time in the future, which Licensed Patents

and intellectual property rights are necessary to (1) manufacture, have manufacture, use, import,

distribute, offer to sell, have sold and sell in the Territory the Watson ANDA Product and any and

all components thereof as necessary to make, have made, manufacture, or have manufactured the

Watson Anda Product as described in the Watson ANDA, and (ii) to make and have made the

Watson ANDA Product outside the Territory only for use, sale and importation in or for the

Territory (the “License”).” Id. at 16 § 1.1(a).

36 Id. at 16–17 §§ 1.2(a)–(e), (g) (“Subject to the terms of the License in Paragraph 1.1 above,

Watson shall be entitled to make, use, import, market, offer for sale, sell, and distribute [Watson’s

generic of Colcrys] during the period beginning on the first to occur of the following (each, a

‘Generic Entry Date’) and continuing until the expiration of the last to expire of the Licensed

Patents: (a) October 15, 2020; (b) [t]he date that is one hundred thirty-five days (135) days prior

to the date on which a first commercial sale of a Generic Equivalent by a Third Party (other than

the Par ANDA Product or the Amneal ANDA Product) is permitted or authorized pursuant to a

license or other authorization by Takeda; (c) [t]he date that, pursuant to a license or other

authorization by Takeda, Par is permitted to launch the Par ANDA Product or Amneal is permitted

to launch the Amneal ANDA Product; (d) [t]he date of a Final Court Decision . . . holding that all

unexpired claims of the Licensed Patents that were asserted and adjudicated against a Third Party

are invalid, canceled, or unenforceable or not infringed, where the judgment of a non-infringement

is based on a label that is substantively identical to the Watson label that received tentative

approval from the FDA on October 6, 2015; (e) the date of a first commercial sale of a Third Party

Generic Equivalent following a Final Court decision of non-infringement by that Third Party based

on a label not substantively identical to the Watson label that received tentative approval from

FDA on October 6, 2015 . . . (g) Subject to Watson’s payment of the Profit Share as applicable,

the date that is the earlier of (i) ten (10) business days after the date of a first commercial sale in

the Territory by any Third Party without license or authorization from Takeda of a Generic

Equivalent.”). They further agreed: “For the avoidance of doubt, all the Generic Entry Dates in

this Paragraph 1.2 are subject to any regulatory exclusivity to which the First Filer is entitled.” Id.

at 18. “Third Party” means “a Person other than a Party or an Affiliate of a Party.” Id. at 33, Ex. A

to License (Definitions). “‘Affiliate’ means any Person that directly or indirectly controls, is

controlled by, or is under common control with any one of the Parties.” Id. “Party” means “[e]ach

Plaintiff and Defendant” collectively “Parties” – here, Takeda Pharmaceuticals USA, Inc. and

Watson Laboratories, Inc. Id. at 15.

37 ECF Doc. No. 123-2, Ex. 3, at 2.

38 Id. at 2, 18. “Subject to the terms of this License Agreement, including without limitation

Paragraph 1.2 below, Takeda hereby grants Amneal and its respective Affiliates (and to the extent

necessary, its suppliers, distributors, and customers, as the case may be): a fully paid-up, royalty-

free, irrevocable, non-exclusive license under the Licensed Patents and any other intellectual

property rights owned or controlled by Plaintiff and its respective Affiliates as of the Effective

Date or at any time in the future, which Licensed Patents and intellectual property rights are

necessary to manufacture, have manufactured, use, import, distribute, offer to sell, have sold and

sell in or for the Territory the Amneal ANDA Product and any and all components thereof as

necessary to make, have made, manufacture, or have manufactured the Amneal ANDA Product as

described in the Amneal ANDA (the ‘License’).” Id. at 18 § 1.1.

39 “Pursuant to the License, Amneal shall be entitled to sell and distribute, without any limitation

or restriction, [Amneal’s generic of Colcrys] during the period beginning on the first to occur of

the following (each, a ‘Generic Entry Date’) and continuing until the expiration of the last to expire

of the Licensed Patents: (a) October 15, 2020; (b) [t]he date of a Final Court Decision . . . holding

that all Asserted Claims of the Licensed Patents are invalid, canceled, or unenforceable or not

infringed, where the judgment of a non-infringement is based on a label that is substantively

(c) [t]he date of a first commercial sale of a Generic Equivalent in the Territory by any third party

permitted or authorized pursuant to a license or other written authorization granted to such third

party by Takeda . . . (e) Subject to Amneal’s payment of the Profit Share as applicable, the date

that is the earlier of (i) ten (10) business days after the date of a first commercial sale in the

Territory by any Third Party without license or authorization from Takeda of a Generic

Equivalent.” Id. at 18–19 §§ 1.2(a)–(c), (e). They further agreed: “For the avoidance of doubt, all

the Generic Entry Dates in this Paragraph 1.2 are subject to any regulatory exclusivity to which

the First Filer is entitled.” Id. at 19. “Third Party” means “a Person other than a Party or an Affiliate

of a Party.” Id. at 32, Ex. A to License (Definitions). “‘Affiliate’ means any Person that directly

or indirectly controls, is controlled by, or is under common control with any one of the Parties . . .

.” Id. at 30. Party means “[e]ach Plaintiff and Defendant” collectively “Parties” – here, Takeda

Pharmaceuticals USA, Inc. and Amneal Pharmaceuticals LLC. ECF Doc. No. 123-2 at 17. We

note third party is not used as the defined term “Third Party” in Amneal’s settlement agreement.

Value Drug nonetheless concedes if Watson enters the market, so does Amneal. See ECF Doc. No.

124 at 9 n.7, 10 n.9 (Value Drug admitting Par and Amneal came in when Watson came in).

40 ECF Doc. No. 1 ¶ 48.

41 Id. ¶ 57 (“Par, Watson, and Amneal would refrain from launching their own generic versions of

Colcrys for so long as non-conspirators did so. That is, the co-conspirators agreed that if a non-

conspiring seller of generic Colcrys entered the market, Par, Watson, and Amneal could do so.”

(emphasis added)).

42 Id. ¶¶ 62, 64, 66.

43 Id. ¶ 63.

44 Id.

45 Id. ¶ 64.

46 Id. ¶ 65.

47 Id. ¶ 66.

48 Id. ¶¶ 62, 65–66.

49 Id. ¶ 7. Value Drug alleges Teva Pharmaceutical Industries Ltd. and Teva Pharmaceuticals USA,

Inc. purchased Watson and expressly assumed its liabilities in July 2015 and/or ratified Watson’s

conduct. Id. ¶¶ 12–13. At oral argument, Value Drug conceded Teva Ltd. signed the purchase

agreement in July 2015, but the sale did not close until August 2016. The date of the closing is not

plead. These facts comprise the extent of Value Drug’s allegations involving Teva Ltd. and Teva

USA. See generally ECF Doc. No. 1.

50 ECF Doc. No. 1 ¶¶ 1, 7–8, 10–14, 27. Value Drug also sued Endo Pharmaceuticals Inc. We

dismissed Endo Pharmaceuticals from the litigation upon the parties’ agreement. ECF Doc. No.

125.

51 ECF Doc. No. 1 ¶¶ 3, 60.

52 Id. ¶¶ 3(a)–(e).

53 ECF Doc. No. 103.

54 ECF Doc. No. 107.

55 ECF Doc. No. 124.

56 ECF Doc. No. 104.

57 Id.

58 ECF Doc. No. 120.

59 ECF Doc. No. 106.

60 Id.

61 Id.

62 Federal Rule of Civil Procedure 12(b)(6) requires the plaintiff state a claim upon which relief

can be granted. The purpose of the Rule is to test the sufficiency of the fact allegations. Sanders v.

United States, 790 F. App’x 424, 426 (3d Cir. 2019). If a plaintiff is unable to plead “enough facts

to state a claim to relief that is plausible on its face,” the court should dismiss the complaint. Id.

(quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Kajla v. U.S. Bank

Nat’l Ass’n as Tr. for Credit Suisse First Boston MBS ARMT 2005-8, 806 F. App’x 101, 104 n.5

(3d Cir. 2020) (quoting Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77, 84 (3d Cir. 2011)). “A

claim has facial plausibility when the plaintiff pleads factual content … allow[ing] the court to

draw the reasonable inference … the defendant is liable for the misconduct alleged.” Robert W.

Mauthe M.D., P.C. v. Spreemo, Inc., 806 F. App’x 151, 152 (3d Cir. 2020) (quoting Zuber v.

Boscov’s, 871 F.3d 255, 258 (3d Cir. 2017)). While “[t]he plausibility standard is not akin to a

‘probability requirement,’” it does require the pleading show “more than a sheer possibility … a

defendant has acted unlawfully.” Riboldi v. Warren Cnty. Dep’t of Human Servs. Div. of Temp.

Assistance & Soc. Servs., 781 F. App’x 44, 46 (3d Cir. 2019) (quoting Ashcroft v. Iqbal, 556 U.S.

662, 678 (2009)). “A pleading that merely ‘tenders naked assertion[s] devoid of further factual

enhancement’ is insufficient.” Id. (quoting Iqbal, 556 U.S. at 668).

In determining whether to grant a 12(b)(6) motion, “we accept all well-pleaded allegations as true

and draw all reasonable inferences in favor of the plaintiff” but “disregard threadbare recitals of

the elements of a cause of action, legal conclusions, and conclusory statements.” Robert W.

Mauthe, M.D., P.C., 806 F. App’x at 152 (quoting City of Cambridge Ret. Sys. v. Altisource Asset

Mgmt. Corp., 908 F.3d 872, 878–79 (3d Cir. 2018)). Our Court of Appeals requires us to apply a

three-step analysis to a 12(b)(6) motion: (1) we “‘tak[e] note of the elements a plaintiff must plead

to state a claim’”; (2) we “identify allegations that … ‘are not entitled to the assumption of truth’

because those allegations ‘are no more than conclusion[s]’”; and, (3) “‘[w]hen there are well-

pleaded factual allegations,’ we ‘assume their veracity’ … in addition to assuming the veracity of

‘all reasonable inferences that can be drawn from’ those allegations … and, construing the

allegations and reasonable inferences ‘in the light most favorable to the [plaintiff]’…, we

determine whether they ‘plausibly give rise to an entitlement to relief.’” Oakwood Lab’ys LLC v.

Thanoo, 999 F.3d 892, 904 (3d Cir. 2021) (internal citations omitted); Connelly v. Lane Constr.

Corp., 809 F.3d 780, 787 (3d Cir. 2016).

63 15 U.S.C. § 1.

64 In re Insur. Brokerage Antitrust Litig., 618 F.3d 300, 314–15, 315 n.9 (3d Cir. 2010); see also

Howard Hess Dental Lab’ys Inc. v. Dentsply Int’l, Inc., 602 F.3d 237, 253 (3d Cir. 2010) (“A

plaintiff asserting a Section 1 claim also must allege four elements: ‘(1) concerted action by the

defendants; that produced anti-competitive effects within the relevant product and geographic

markets; (3) that the concerted actions were illegal; and (4) that it was injured as a proximate result

of the concerted action.’”) (further citations omitted)).

65 In re Insur., 618 F.3d at 315 (citing In re Baby Food Antitrust Litig., 166 F.3d 112, 117 (3d Cir.

1999) (further citation omitted)).

66 Id. (citing In re Baby Food, 166 F.3d at 117 and In re Flat Glass Antitrust Litig., 385 F.3d 350,

357 (3d Cir. 2004)) (further citations omitted) (internal quotation omitted).

67 Broadcom Corp. v. Qualcomm Inc., 501 F.3d 297, 306 (3d Cir. 2007) (citing 15 U.S.C. § 2).

68 Howard Hess Dental Lab’ys Inc., 602 F.3d at 253.

69 Broadcom Corp., 501 F.3d at 307. (quoting United States v. Grinnell Corp., 384 U.S. 563, 570–

71 (1966)).

70 Id. at 308.

71 Id. (citing Verizon Commcn’s Inc. v. Law Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407

(2004)).

72 Id.

73 Takeda raises this argument in a footnote in its opening brief. ECF Doc. No. 103-1 at 12, n.4

(citing ECF Doc No. 1 ¶ 104). Value Drug evidently concedes the point, as Value Drug does not

address Takeda’s argument—rather only arguing it has adequately plead a conspiracy and

Takeda’s patents do not immunize anticompetitive conduct.

74 Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556 (2007) (discussing pleading standard for

conspiracy in Sherman Act Section 1 claim); see also In re Insur., 618 F.3d at 320 (“Twombly’s

importance to the case before us, however, goes beyond its formulation of the general pleading

standard. Twombly is also an essential guide to the application of that standard in the antitrust

context, for in Twombly the Supreme Court also had to determine whether a Sherman Act claim

alleging horizontal conspiracy was adequately pled.”). We apply the same pleading standards to a

Section 1 and Section 2 conspiracy claim. See W. Penn Allegheny Health Sys., Inc. v. UPMC, 627

F.3d 85, 99–100 (3d Cir. 2010).

75 In re Generic Pharms. Pricing Antitrust Litig., 338 F. Supp. 3d 404, 438 (E.D. Pa. 2018) (quoting

W. Penn Allegheny Health Sys., Inc., 627 F.3d at 99).

76 In re Insur., 618 F.3d at 324 (quoting Twombly, 550 U.S. at 556); see also In re Processed Egg

Prod. Antitrust Litig., 821 F. Supp. 2d 709, 717 (E.D. Pa. 2011) (quoting In re Insur., 618 F.3d at

324) (further citations omitted)).

77 In re Insur., 618 F.3d at 324 (quoting Twombly, 550 U.S. at 557).

78 Id. (quoting Twombly, 550 U.S. at 556).

79 In re Processed Egg Prod., 821 F.Supp.2d at 718–20 (E.D. Pa. 2011); see also In re Generic

Pharms.., 338 F. Supp. 3d at 438.

80 ECF Doc. No. 1 ¶ 54.

81 Id. ¶¶ 3(a)–(e).

82 Id. ¶ 54.

83 Id. ¶ 55.

84 Id.

85 Id.

86 Id. ¶ 56.

87 Id.

88 Id.

89 Id. ¶ 57.

90 Id.

91 Id.

92 Id. ¶ 58.

93 Id. (ellipses in original).

94 Id. (alterations in original).

95 Id. ¶ 59.

96 Id. ¶¶ 58–60. Value Drug posits Takeda had no unilateral interest to stop selling its generic drug

through Prasco, Par had no unilateral interest to restrict its output of generic Colcrys for several

years and agree to defined period of sales free from other generic competition, and Watson and

Amneal had no unilateral economic interests to agree to restrict their output for several years after

Par’s 180-day exclusivity elapsed. Id.

97 Id.

98 Id. ¶ 67.

99 Id. ¶ 68.

100 Id. ¶¶ 69–71.

101 In re Insur., 618 F.3d at 323–24.

102 Id. at 323–24 n.23; see also King Drug Co. of Florence, Inc. v. Cephalon, Inc., Nos. 06-1797,

06-1833, 06-2768, 2014 WL 2813312, at *6 (E.D. Pa. June 23, 2014) (deciding a motion for

summary judgment and finding “[w]hether this evidence is properly considered ‘direct’ depends

on whether the fact-finder would have to take an additional logical step in order to conclude that a

conspiracy occurred. In other words, an additional step is indicative of circumstantial evidence.

Direct evidence requires no extrapolation, as with ‘a document or conversation explicitly

manifesting the existence of the agreement in question.”) (citing In re Insur., 618 F.3d at 324

n.23)).

103 ECF Doc. No. 124 at 11–14. Value Drug argues we can take judicial admission of unplead

statements made in a different litigation in front of Judge Andrews. We need not decide whether

we can consider these statements to defeat the motion to dismiss because the statements are in

support of Value Drug’s unplead “Second Wave” theory. We further detail Value Drug’s argued

“Second Wave” theory in the circumstantial evidence section.

104 ECF Doc. No. 124 at 11–12.

105 88 F. Supp. 3d 402 (E.D. Pa. 2015).

106 F.T.C. v. Actavis, Inc., 570 U.S. 136 (2013); see also King Drug Co. of Florence, 88 F. Supp.

3d at 407–410 (detailing the terms of each settlement agreement between the brand and individual

generic manufacturers), 422 (denying defendants’ motions for summary judgment).

107 King Drug Co. of Florence, 88 F. Supp. 3d at 410 n.9. In this footnote, Judge Goldberg rejected

defendants’ argument “there exists a ‘special,’ heightened standard of review for motions for

summary judgment in the antitrust context,” distinguishing the cases the defendants relied on

because the cases addressed “the limited inferences that may be drawn from ambiguous,

circumstantial evidence in establishing concerted action . . . .” Id. Judge Goldberg found the

plaintiffs presented direct evidence of concerted action in the form of the written settlement

108 No. 09-2084, 2018 WL 2984873, at *1–4 (N.D. Ga. June 14, 2018). Solvay—the brand drug—

sued two generic manufacturers for patent infringement after they made Paragraph IV

certifications when filing their Abbreviated New Drug Applications. Id. at *2–3. The separate

litigations ran on parallel schedules, and on the same day, Solvay settled the individual cases with

the generics. Id. at *3. Each settlement agreement also contained “business promotion agreements”

wherein the brand drug and generic agreed to share profits of the brand drug and the generic agreed

to do something—here either promote the brand drug to physicians or serve as a backup supplier

of the brand drug. Id. at *4. Judge Thrash found “[t]ogether, these types of settlements are called

‘reverse payment’ settlements, and they have recently become popular in pharmaceutical

litigation.” Id. at *4. The plaintiffs alleged the defendants violated federal antitrust law by entering

into reverse settlement agreements. Id. at *5. This contrasts with our case, where the alleged

antitrust violation is a single, horizontal conspiracy among all defendants to restrict the output of

Colcrys.

109 Id. at *7.

110 Id. (further citations omitted).

111 Id. at *8.

112 Id. We note Value Drug selectively and misleadingly quotes Judge Thrash’s reasoning to

support its position here.

113 Value Drug also misplaces reliance on In re Wellbutrin XL Antitrust Litig., 133 F. Supp. 3d 734

(E.D. Pa. 2015) and United Food & Com. Workers Loc. 1776 & Participating Emps. Health &

Welfare Fund v. Teikoku Pharma USA, 296 F. Supp. 3d 1142 (N.D. Cal. 2017). In In re Wellbutrin,

the “Wellbutrin Settlement was executed on February 9, 2007” resolving various pending lawsuits

between the brand drug and various generic manufacturers and “was comprised of multiple

agreements.” In re Wellbutrin XL, 133 F. Supp. 3d at 745. Not only did the parties sign one

settlement agreement (made up of various agreements, including “the Omnibus Agreement”), one

generic took the lead initially in negotiating on behalf of all generic manufacturers. Id. This is not

what Value Drug alleges today. Value Drug alleges separate settlement agreements between

Takeda and Par, Takeda and Watson, and Takeda and Amneal. Value Drug does not allege together

these constituted a global settlement agreement, like in In re Wellbutrin, nor does it allege either

Par, Watson, or Amneal negotiated on behalf of all of them collectively. Similarly, in United Food

& Com. Workers Loc. 1776, the plaintiffs argued “the Settlement Agreement, signed by all three

defendants, satisfies the ‘contract, combination, or conspiracy’ elements” of their antitrust claims.

296 F. Supp. 3d at 1165 (emphasis added). Judge Orrick observed “Defendants do not dispute

this, although they do dispute the significance, lawfulness, and effect of the various provisions in

that Agreement” and therefore granted judgment in favor of plaintiff on the conspiracy element of

its claims. Id. (emphasis added). We do not have all defendants signing one settlement agreement

here. We have individual settlement agreements between Takeda and each generic manufacturer.

Nor do the defendants here concede the settlement agreements satisfy the conspiracy claim.

Neither of these cases provides teeth to Value Drug’s misplaced argument.

114 King Drug Co. of Florence, Inc., 2014 WL 2813312, at *6. We recognize this case involves a

motion for summary judgment and thus a different standard than the one we apply to the motion

to dismiss before us. Judge Goldberg’s reasoning as to why the bilateral settlement agreements are

not direct evidence of a single horizontal conspiracy is nonetheless persuasive.

115 Id. at *1.

116 Id. at *6.

117 Id. at *1, 6–7.

118 Id. at *6.

119 Id. at *7.

120 See, e.g., ECF Doc. No. 1 ¶¶ 53–57.

121 ECF Doc. No. 148, Tr. 26:12–27:15.

122 Id., Tr. 27:10–12.

123 Cephalon, 2014 WL 2813312, at *5 (discussing proof of conspiracy by direct evidence and

stating “[b]ecause direct evidence of an unlawful conspiracy—a ‘smoking gun’—is often

unavailable, proof by inferences drawn from circumstantial evidence is the norm.”) (citing

InterVest, Inc. v. Bloomberg, L.P., 340 F.3d 144, 159 (3d Cir. 2003)) (further citation omitted).

124 ECF Doc. No. 1 ¶¶ 58–59; see also ECF Doc. No. 124 at 13 (characterizing its pleading as

judicial admissions to Judge Andrews which “conceded the purpose and effect of the conspiracy

and the ‘joint venture.’”).

125 ECF Doc. No. 1 ¶¶ 58–59.

126 See, e.g. In re Ins., 618 F.3d at 321.

127 Id. (“Parallel conduct is, of course, consistent with the existence of an agreement; in many cases

where an agreement exists, parallel conduct—such as setting prices at the same level—is precisely

the concerted action that is the conspiracy’s object. But as the Supreme Court has long recognized,

parallel conduct is ‘just as much in line with a wide swath of rational and competitive business

strategy unilaterally prompted by common perceptions of the market.’” (quoting Twombly, 550

U.S. at 554)).

128 Id. (further citations omitted).

129 Id. (quoting Flat Glass, 385 F.3d at 360). Evidence implying a traditional conspiracy “consists

of ‘non-economic evidence that there was an actual manifest agreement not to compete,’ which

may include ‘proof that the defendants got together and exchanged assurances of common action

or otherwise adopted a common plan even though no meetings, conversations, or exchanged

documents are shown.’” Id. (quoting Flat Glass, 385 F.3d at 361) (further citation omitted).

130 In re Generic Pharm., 338 F. Supp. 3d at 448 (further citation omitted) (alteration in original).

131 Value Drug does not argue it pleads evidence implying a traditional conspiracy.

132 ECF Doc. No. 1 ¶¶ 58–60.

133 Id. ¶¶ 3(a)-(e), 54–57.

134 Id. ¶ 3(e).

135 Id. ¶ 57.

136 Id. ¶ 54.

137 ECF Doc No. 123, Ex. 1, at 16 § 1.1.

138 ECF Doc No. 123, Ex. 1, at 17 § 1.3.

139 ECF Doc. No. 123, Ex. 1, at 29, Ex. A to License Agreement (Definitions).

140 ECF Doc. No. 123-1, Ex. 2, at 16–17 § 1.2.

141 ECF Doc. No. 123-2, Ex. 3, at 18–19 §§ 1.2.

142 ECF Doc No. 123, Ex. 1, at 17 § 1.3(c); ECF Doc. No. 123-1, Ex. 2, at 16–17 § 1.2(b); ECF

Doc. No. 123-2, Ex. 3, at 18–19 § 1.2(c); see also ECF Doc. No. 124 at 9 n.7, 10 n.9 (Value Drug

admitting Par and Amneal came in when Watson came in).

143 We note under Par’s license with Takeda, if Par launched its own generic, Par could no longer

be the distributor of Takeda’s authorized generic. ECF Doc No. 123, Ex. 1, at 16 § 1.1. Even

assuming in favor of Value Drug Par decided not to launch and rather continued being Takeda’s

distributor, Watson still has no exclusivity because the market has branded Colcrys, Takeda’s

authorized generic, Watson’s generic, and Amneal’s generic. Conversely, assuming Par did launch

and Takeda chose to stop distributing its authorized generic, the market is still similarly saturated

with the brand drug and three generics. Regardless of whether Par chose to launch its own generic

or not, Watson never obtained an exclusive period of time or a scenario where the price collapse

Value Drug pleads does not occur. Amneal similarly had no exclusivity in either scenario.

144 ECF Doc No. 123, Ex. 1, at 17 § 1.3(c); ECF Doc. No. 123-1, Ex. 2, at 16–17 § 1.2(b); ECF

Doc. No. 123-2, Ex. 3, at 18–19 § 1.2(c); see also ECF Doc. No. 1 ¶ 57.

145 See, e.g., ECF Doc. No. 124.

146 Value Drug’s allegations in paragraph 57 may be subject to different interpretations. But Value

in paragraph 57 is the escape clauses in each individual settlement agreement. See, e.g. ECF Doc.

No. 124 at 7 n.1 (discussing entry dates in context of “escape clauses” in settlement agreements);

9 n.7 (same); 10 n.9; 13 n.13 (conceding Par, Watson, and Amneal would all enter at once causing

competition from three generics (instead of nine in accordance with Value Drug’s new “second

wave” theory); 19 n.21 (describing clauses providing entry dates in settlement agreements as

“escape clauses”). While we should plausibly infer facts based on the plead facts, we cannot simply

create new theories of liability based on arguments attempting to reconstruct sworn allegations.

Value Drug’s conclusions do not suffice. Its belated arguments attempting to stretch those

conclusions into facts also do not suffice.

147 See, e.g., ECF Doc. No. 124 at 17 (arguing the purpose of the conspiracy is to avoid “the

looming Second Wave” of generics).

148 Id. (“By conspiring to order their market entry, Takeda avoided competing against Par, Watson,

and Amneal for a period of time, then competed against just the three co-conspirators and avoided

a price collapse from the looming Second Wave.”).

149 ECF Doc. No. 1 ¶¶ 3(a)-(e), 4, 56–60, 71.

150 We do not take a position on whether the “Second Wave” conspiracy is plausible. We simply

note Value Drug argues against Takeda, Watson, and Amneal’s motions to dismiss arguments by

setting forth its unplead second wave theory, not its plead theory of preserving a two-entrant

market for as long as possible.

151 ECF Doc. No. 1 ¶¶ 58–60.

152 See, e.g., Petruzzi’s IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1243 (3d

Cir. 1993) (finding defendants need not share the same motive in entering a conspiracy, “[r]ather,

all that is required is that they each have a motive to conspire.” (emphasis added)).

153 See, e.g., Brunson Commc’ns, Inc. v. Arbitron, Inc., 239 F. Supp. 2d 550, 563–64 (E.D. Pa.

2002) (applying reasoning in Matsushita to motion to dismiss and quoting “if the defendants ‘had

no rational economic motive to conspire, and if their conduct is consistent with other, equally

plausible explanations, the conduct does not give rise to an inference of conspiracy.”) Because we

find it makes no economic sense to conspire to cause a price collapse upon entry to the market, we

cannot find the defendants’ conduct is not equally consistent with other plausible explanations—

i.e., each generic defendant unilaterally settled its patent litigation with Takeda for reasons other

than to restrict generic output.

154 ECF Doc. No. 106; ECF Doc. No. 1 ¶ 12 (pleading Teva Ltd.’s incorporation and principal

place of business in Israel).

155 ECF Doc. No. 117.

156 Id.

157 ECF Doc. No. 1 ¶ 12.

158 Id. ¶¶ 12, 17.

159 Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009) (quoting Pinker v.

Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002) and Dayhoff Inc. v. H.J. Heinz Co., 86 F.3d

1287, 1302 (3d Cir.1996)); see also Middleton v. Trans Union, LLC., No. 20-3756, 2021 WL

3674617, at *2 (E.D. Pa. Aug. 19, 2021) (“When reviewing a motion to dismiss for lack of personal

jurisdiction under Federal Rule of Civil Procedure 12(b)(2), I must accept the plaintiff’s allegations

as true and resolve disputed facts in favor of the plaintiff . . . However, once a defendant has raised

a jurisdictional defense, the plaintiff must ‘prove by affidavits or other competent evidence that

jurisdiction is proper.’ . . . If an evidentiary hearing is not held, a plaintiff ‘need only establish a

prima facie case of personal jurisdiction.’ . . . A plaintiff meets this burden by ‘establishing with

reasonable particularity sufficient contacts between the defendant and the forum state.’” (internal

citations omitted) (further citations omitted)); Metro Container Group v. AC&T Co., et al., No.

18-3623, 2021 WL 5804374, at *3 (E.D. Pa. Dec. 7, 2021) (“In ruling on a Rule

12(b)(2) motion to dismiss for lack of personal jurisdiction, the Court also takes the allegations of

the complaint as true . . . However, once a jurisdictional defense is raised, the plaintiff bears the

burden of proving, through affidavits or competent evidence, contacts with the forum state

sufficient to establish personal jurisdiction . . . The plaintiff must establish those contacts with

reasonable particularity . . . the plaintiff makes out a prima facie case in support

of personal jurisdiction, the burden shifts to the defendant to establish that some other

considerations exist which would render exercise of personal jurisdiction unreasonable.” (internal

citations omitted)).

160 Metcalfe, 566 F.3d at 330 (quoting O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 316 (3d

Cir. 2007)).

161 Id. (quoting Toys “R” Us, Inc. v. Step Two, S.A., 318 F.3d 446, 457 (3d Cir. 2003)).

162 Id. at 331 (quoting Carteret Sav. Bank, FA v. Shushan, 954 F.2d 141, 142 n.1 (3d Cir. 1992)).

163 Danziger & De Llano, LLP v. Morgan Verkamp LLC, 948 F.3d 124, 129 (3d Cir. 2020)

(citing 42 Pa. Cons. Stat. § 5322(b) and Kubik v. Letteri, 614 A.2d 1110, 1113–14 (Pa. 1992)).

164 Fed. R. Civ. P. 4(k)(2).

165 In re Auto. Refinishing Paint Antitrust Litig., 358 F.3d 288, 298 (3d Cir. 2004) (“We hold that

personal jurisdiction in federal antitrust litigation is assessed on the basis of a defendant’s

aggregate contacts with the United States as a whole. Our holding in Pinker and on this appeal is

consistent with the Federal Rule of Civil Procedure 4(k)(2). Personal jurisdiction therein is not

limited to the defendant’s contacts with a particular federal judicial district or the forum state. We

hold further that personal jurisdiction under Section 12 of the Clayton Act is as broad as the

limits of due process under the Fifth Amendment.”) (citations omitted) (emphasis added); see

also ECF Doc. No. 140 at 9–10 (“The parties agree that, under Third Circuit precedent, the Clayton

Act’s provision for nationwide service coupled with Federal Rule of Civil Procedure 4(k)(2) means

that the Fifth Amendment (not the Fourteenth Amendment) governs the relevant constitutional

federal antitrust litigation is assessed on the basis of a defendant’s aggregate contacts with the

United States as a whole.’”); ECF Doc. No. 117 at 14–16 (discussing jurisdiction under Fed. R.

Civ. P. 4(k)(2) and the Clayton Act).

166 See Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290, 293 (3d Cir. 1985) (discussing contacts

analysis under patent law, noting the Fifth Amendment “has been construed to impose a general

fairness test incorporating Internal Shoe’s” requirements, and acknowledging “even if the relevant

area in delineating contacts were the United States as a whole, we would nonetheless be required

to ask whether the quality and quantity of [the defendant’s] contacts were constitutionally adequate

to support personal jurisdiction. For although the present fifth amendment due process inquiry

need not address concerns of interstate federalism, it must still consider the remaining elements of

the minimum contacts doctrine as developed by International Shoe and its progeny” but declining

to adopt nationwide contacts analysis in case because no federal statute allowing nationwide

service of process within patent laws); In re Diisocyanates Antitrust Litig., No. 18-1001, 2020 WL

1140245, at *2 (W.D. Pa. Mar. 9, 2020) (applying same personal jurisdiction analysis to antitrust

case involving nationwide contacts); In re Chocolate Confectionary Antitrust Litig., 602 F. Supp.

2d 538, 558 (M.D. Pa. 2009) (same); In re Suboxone (Buprenorphine Hydrochloride & Naloxone)

Antitrust Litig., No. 13-2445, 2017 WL 4642285, at *3 (E.D. Pa. Oct. 17, 2017) (same); see also

Livnat v. Palestinian Auth., 851 F.3d 45, 54 (D.C. Cir. 2017) (“To be sure, neither the Supreme

Court nor this court has expressly analyzed whether the Fifth and Fourteenth Amendment

standards differ. But the Second, Sixth, Seventh, Eleventh, and Federal Circuits have, and all agree

that there is no meaningful difference in the level of contacts required for personal jurisdiction. The

only difference in the personal-jurisdiction analysis under the two Amendments is the scope of

relevant contacts: Under the Fourteenth Amendment, which defines the reach of state courts, the

relevant contacts are state-specific. Under the Fifth Amendment, which defines the reach of federal

courts, contacts with the United States as a whole are relevant. That difference is not at play in this

case.” (citations omitted)).

167 ECF Doc. No. 117 at 20, 23–24.

168 Value Drug argues we “should not [] ignore[]” its evidence regarding alter ego jurisdiction.

ECF Doc. No. 151 at 9 n.5. While Value Drug is correct our inquiry on a 12(b)(2) motion is not

limited to pleadings—in fact a Plaintiff may not rest on its pleading when jurisdiction is

challenged—Value Drug is incorrect it can rest on an unplead theory for personal jurisdiction

merely by providing evidence of its unplead theory once jurisdiction is challenged. The very case

Value Drug relies on for its argument illustrates this principle. See In re Chocolate Confectionary

Antitrust Litig., 641 F. Supp. 2d 367, 381 (M.D. Pa. 2009) (“Although plaintiffs bear the ultimate

burden of proving personal jurisdiction by a preponderance of the evidence, such a showing is

unnecessary at the preliminary stages of litigation . . . Rather, plaintiffs must merely allege

sufficient facts to establish a prima facie case of jurisdiction over the person. Once these

allegations are contradicted by an opposing affidavit, however, plaintiffs must present

similar evidence in support of personal jurisdiction . . . ‘[A]t no point may a plaintiff rely on

the bare pleadings alone in order to withstand a defendant’s Rule 12(b)(2) motion to dismiss for

lack of in personam jurisdiction . . . Once the motion is made, plaintiff must respond with actual

proofs, not mere allegations.’ When the plaintiff responds with affidavits or other evidence in

support of its position, the court is bound to accept these representations and defer final

determination as to the merits of the allegations until a pretrial hearing or the time of trial.” (internal

citations omitted) (emphasis added)).

169 Daimler AG v. Bauman, 571 U.S. 117, 139 (2014) (quoting Goodyear Dunlop Tires Operations,

S. A. v. Brown, 564 U.S. 915, 919 (2011)) (alteration in original).

170 Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024 (2021) (internal

citations omitted) (citing Goodyear, 564 U.S. at 919 and Daimler, 571 U.S. at 137).

171 ECF Doc. No. 1 ¶ 12.

172 Daimler, 571 U.S. at 139 n.19.

173 Chavez v. Dole Food Co., Inc., 836 F.3d 205, 223 (3d Cir. 2016) (alteration and emphasis in

original) (quoting Monkton Ins. Servs., Ltd. v. Ritter, 768 F.3d 429, 432 (5th Cir. 2014)).

174 ECF Doc. No. 117 at 19 (“Teva Ltd. cannot continuously and systematically avail itself of the

privileges of U.S. capital investment, U.S. intellectual property protections, U.S. federal courts,

and U.S. consumer market access as if at home in the U.S., as it has at all relevant times, without

also having to answer for its U.S. wrongdoings.”).

175 Ford Motor Co., 141 S. Ct. at 1024–25 (further citations omitted).

176 ECF Doc. No. 117.

177 See, e.g., Toys "R" Us, Inc., 318 F.3d at 456 (“Although the plaintiff bears the burden of

demonstrating facts that support personal jurisdiction . . . courts are to assist the plaintiff by

allowing jurisdictional discovery unless the plaintiff’s claim is ‘clearly frivolous.’ If a plaintiff

presents factual allegations that suggest ‘with reasonable particularity’ the possible existence of

the requisite ‘contacts between [the party] and the forum state, the plaintiff’s right to conduct

jurisdictional discovery should be sustained.”) (internal citations omitted). Our Court of Appeals

found “the record before the District Court contained sufficient non-frivolous allegations (and

admissions) to support the request for jurisdictional discovery.” Id.

178 ECF Doc. No. 1 ¶ 17.

179 Massachusetts Sch. of L. at Andover, Inc. v. Am. Bar Ass’n, 107 F.3d 1026, 1042 (3d Cir. 1997)

(“The district court found (at least by implication), and we agree, that [plaintiff’s] jurisdictional

claims were clearly frivolous. Our result is in accord with other cases which hold that a mere

unsupported allegation that the defendant ‘transacts business’ in an area is ‘clearly frivolous.’”);

see also Falcone v. WiredLogic, Inc., No. 06-800, 2006 WL 8459813, at *6 (E.D. Pa. Oct. 26,

2006) (“[M]ere unsupported allegations that a defendant ‘transacts business,’ has ‘contacts,’ or

‘expressly targeted Pennsylvania residents’ are clearly frivolous and discovery will be denied.”).

180 See, e.g., ECF Doc. No. 117.

181 See, e.g., id.

182 We again note Value Drug does not plead an alter ego or agency theory. Thus, Value Drug’s

inquiry must not undertake to establish jurisdiction through Teva Ltd.’s subsidiaries’ contacts with

the United States and involvement with Colcrys.

183 Because we apply Pennsylvania law to determine personal jurisdiction over Teva Ltd., and

because the parties dispute which law may apply substantively to Value Drug’s theory of successor

liability, our finding as to personal jurisdiction has no bearing on whether Teva Ltd. may be liable

as a successor under a potentially applicable law besides Pennsylvania.

184 ECF Doc. No. 1 ¶ 12 (merely pleading a legal conclusion and no further facts in the Complaint

about ratification); ECF Doc. No. 117 at 8, 26 (citing to no evidence in the record supporting its

ratification theory).

185 Falcone, 2006 WL 8459813, at *9 (quoting Huth v. Hillsboro Ins. Mgmt., 72 F. Supp. 2d 506,

510 (E.D. Pa. 1990) (citing Simmers v. Am. Cyanamid Corp., 576 A.2d 376, 381 (Pa. Super.

1990)).

186 Id. (citing Umac, Inc. v. Aqua-Gas AVK Ltd., No. 04-4022, 2005 WL 742497, at *3 (E.D. Pa.

Mar. 30, 2005)).

187 ECF Doc. No. 1 ¶ 12; see also Falcone, 2006 WL 8459813, at *9 (“Under Pennsylvania law,

‘when one company sells or transfers all of its assets to another company, the purchasing or

receiving company is not responsible for the debts and liabilities of the selling company simply

because it acquired the seller’s property.’ However, this general rule of non-liability can be

overcome if the plaintiff demonstrates that ‘(1) the purchaser expressly or implicitly agreed to

assume liability, (2) the transaction amounted to a consolidation or merger, (3) the purchasing

corporation was merely a continuation of the selling corporation, (4) the transaction was

fraudulently entered into to escape liability, or (5) the transfer was without adequate consideration

and no provisions were made for creditors of the selling corporation.’” (internal citations omitted)).

188 ECF Doc. No. 1 ¶ 11 (“Defendant Watson Laboratories, Inc. is a Nevada Corporation having

places of business at 311 Bonnie Circle, Corona, CA 92878 and Morris Corporate Center III, 400

Interpace Parkway, Parsippany, NJ 07054.” (emphasis added)).

189 In re Suboxone (Buprenorphine Hydrochloride & Naloxone) Antitrust Litig., No. 13-2445, 2017

WL 4810801, at *6 (E.D. Pa. Oct. 25, 2017).

190 Id.

191 Id. at *7 (citing Norfolk S. Ry. Co. v. Pittsburgh & W. Va. R.R., 153 F. Supp. 3d 778, 807 (W.D.

Pa. 2015)); see also In re Welding Fume Products Liab. Litig., No. 03-17000, 2010 WL 2403355,

at *7 (N.D. Ohio June 11, 2010) (“Of course, if the original entity still exists, there is no

successor—and no successor liability.”))

192 In re Suboxone, 2017 WL 4810801, at *6 (citing Lehman Bros. Holdings v. Gateway Funding

Diversified Mtg. Servs., L.P., 989 F. Supp. 2d 411, 436 (E.D. Pa. 2013)).

193 Id. (citing Norfolk, 153 F. Supp. 3d at 808).

194 Interestingly, Value Drug also cites the case the plaintiffs in In re Suboxone relied on—Town

of Lexington v. Pharmacia Corp., No. 12-11645, 2015 WL 1321457 (D. Mass. Mar. 24, 2015)—

in its sur-reply. ECF Doc. No. 136 at 11. Value Drug cites it for the proposition it is “the general

rule . . . that ‘a successor who assumes liabilities of its predecessor may not escape liability simply

because the predecessor lives on.’” Id.

195 In re Suboxone, 2017 WL 4810801, at *8 n.10.

196 See, e.g., id. at *7–8; Fend v. Allen-Bradley Co., No. 17-01701, 2019 WL 6242119, at *1 (E.D.

Pa. Nov. 20, 2019) (rejecting successor theory because predecessor entity still existed); Norfolk S.

Ry. Co. v. Pittsburgh & W. Virginia R.R., 153 F. Supp. 3d 778, 807 (W.D. Pa. 2015), aff’d, 870

F.3d 244 (3d Cir. 2017) (post-trial memorandum addressing successor liability under Pennsylvania

law and finding “[i]f the original entity still exists, however, there is no successor, and therefore,

no successor liability”); Norfolk S. Ry. Co. v. Pittsburgh & W. Virginia R.R. & Power Reit, No.

11-1588, 2014 WL 2808907, at *16 (W.D. Pa. June 19, 2014) (denying summary judgment on

successor theory when plaintiffs argued under the fraudulent purpose and de facto merger/mere

continuation exceptions to general rule (later addressing the same in Norfolk S. Ry. Co., 153 F.

Supp. 3d at 807) and noting it did not find any binding precedent on this issue but “[s]everal outside

jurisdictions have recognized that the continued existence of a predecessor forecloses the

availability of successor liability”); Hyjurick v. Commonwealth Land Title Ins. Co., No. 11-1282,

2012 WL 1463633, at *4 (M.D. Pa. Apr. 27, 2012) (“The facts alleged in the complaint, however,

do not implicate successor liability. Commonwealth is alleged to be a separate corporate entity.

Fidelity cannot be Commonwealth’s successor if Commonwealth exists as a separate corporation,

albeit one that is a wholly owned subsidiary.”); see also Phila. Elec. Co. v. Hercules, Inc., 762

F.2d 303, 307, 309 (3d Cir. 1985) (finding successor liability under Pennsylvania law when an

express assumption occurred but the predecessor entity had been dissolved).

197 Value Drug relies on Eagle Nat’l Bank v. ISCP Funding, LLC, to argue Pennsylvania law does

not require the predecessor entity to cease existence when there is an express assumption of

liabilities. No. 00685, 2011 WL 10525397, at *2–3 (Pa. Com. Pl. May 3, 2011). The case is

inapposite. It does not address successor liability, nor does it involve a claim from a plaintiff trying

to establish liability over a defendant under a successor theory. Rather, the case involved the sellers

of a company suing the purchaser seeking a preliminary injunction to enjoin the purchaser from

using certain disputed funds transferred during the sale. Id. at *1–2. In Eagle National Bank, the

sellers transferred their assets to the purchaser, “including reserve deposits held for the benefit of

the branch offices.” Id. at *2. Certain branches disclaimed affiliation with the purchaser and

requested the sellers release any funds in the reserve deposits. Id. The sellers forwarded the request

to release the funds to the purchaser—who then owned the reserve deposits. Id. The purchaser

disclaimed it had to pay the branches the deposits. Id. The sellers sought a preliminary injunction

to stop the purchaser from using the money in dispute, which the sellers transferred to the purchaser

during the sale and the sellers argued the purchaser agreed to pay in the purchase agreement when

it assumed certain liabilities. Id. Judge Bernstein issued the preliminary injunction finding the

elements satisfied. Id. at *5. The case thus did not involve the issue we have before us nor did it

address successor liability.

198 ECF Doc. No. 131 at 13–14.

199 28 U.S.C. § 1927.

200 LaSalle Nat. Bank v. First Connecticut Holding Grp., LLC, 287 F.3d 279, 288 (3d Cir. 2002)

(further citations omitted).

201 Id. (further citations omitted) (emphasis in original).

202 Id. at 289 (further citations omitted) (alteration in original).

203 Id.