Opinion

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4 UNITED STATES DISTRICT COURT

5 NORTHERN DISTRICT OF CALIFORNIA

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IN RE DEXILANT

7 (DEXLANSOPRAZOLE) ANTITRUST Master Case No. 3:25-cv-02785-JSC

LITIGATION

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ORDER RE: MOTION FOR

9 SANCTIONS

10 Re: Dkt. No. 193

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12 This antitrust lawsuit arises out of a settlement agreement (“Settlement Agreement”)

13 between the manufacturer of protein pump inhibitor Dexilant and a generics manufacturer. Now

14 before the Court is the motion for sanctions against Plaintiffs brought by Defendants TWi

15 Pharmaceuticals, Inc. and TWi Pharmaceuticals USA, Inc. (“TWi”).1 (Dkt. No. 193.)2 Having

16 carefully considered the parties’ submissions, the Court concludes oral argument is not required,

17 see N.D. Cal. Civ. L.R. 7-1(b), and DENIES TWi’s motion for sanctions. TWi’s motion

18 essentially (and improperly) asks the Court to grant summary judgment without having moved for

19 summary judgment.

20 DISCUSSION

21 TWi argues Plaintiffs have failed to allege “facts they think they can prove that plausibly

22 show how TWi would have been able to launch any generic Dexilant product [] earlier than it

23 did.” (Dkt. No. 193 at 8.) TWi contends the potential launch date offered by the Plaintiffs, June

24 15, 2020, is “objectively untenable” and Plaintiffs’ pleadings to the contrary are also “untenable.”

25 (Id.) Rather, TWi claims “the objective evidence. . . demonstrate[s]” FDA demands meant TWi’s

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1 Defendant Takeda Pharmaceuticals U.S.A., Inc. did not join the motion. (See Dkt. No. 193 at 1;

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Dkt. No. 198 at 6.)

1 original product could not be approved earlier and thus the “Settlement was procompetitive.”

2 (Dkt. No. 193 at 18.) TWi also contends “Plaintiffs have failed to conduct a reasonable and

3 competent inquiry in bringing and maintaining this action, as Plaintiffs have always possessed

4 sufficient information to disprove their allegations.” (Dkt. No. 193 at 23.)

5 TWi moves for sanctions against Plaintiffs under Federal Rule of Civil Procedure 11(b), 28

6 U.S.C. § 1927, and the court’s inherent authority. (Dkt. No. 193 at 7.) There are “[t]hree primary

7 sources of authority [that] enable courts to sanction parties or their lawyers for improper conduct.”

8 Fink v. Gomez, 239 F.3d 989, 991 (9th Cir. 2001). “Each of these sanctions alternatives has its

9 own particular requirements, and it is important that the grounds be separately articulated to assure

10 that the conduct at issue falls within the scope of the sanctions remedy.” Christian v. Mattel, Inc.,

11 286 F.3d 1118, 1131 (9th Cir. 2002). Accordingly, the Court addresses each basis for sanctions

12 raised by TWi in turn.

13 I. RULE 11 SANCTIONS

14 First, TWi moves for sanctions under Federal Rule of Civil Procedure 11(b). (Dkt. No.

15 193 at 7.) Federal Rule of Civil Procedure 11(b) states that:

16 By presenting to the court a pleading, written motion, or other

paper—whether by signing, filing, submitting, or later advocating

17 it—an attorney or unrepresented party certifies that to the best of the

person's knowledge, information, and belief, formed after an inquiry

18 reasonable under the circumstances. . . .

(2) the claims, defenses, and other legal contentions are warranted by

19 existing law or by a nonfrivolous argument for extending, modifying,

or reversing existing law or for establishing new law;

20 (3) the factual contentions have evidentiary support or, if specifically

so identified, will likely have evidentiary support after a reasonable

21 opportunity for further investigation or discovery; and

22 FED. R. CIV. P. 11(b). A court “may impose an appropriate sanction” for the violation of one of

23 these provisions. FED. R. CIV. P. 11(c)(1). “Rule 11 is an extraordinary remedy, [and] one to be

24 exercised with extreme caution.” Operating Eng'rs Pension Tr. v. A-C Co., 859 F.2d 1336, 1345

25 (9th Cir. 1988). When “the complaint is the primary focus of Rule 11 proceedings, a district court

26 must conduct a two-prong inquiry to determine (1) whether the complaint is legally or factually

27 ‘baseless’ from an objective perspective, and (2) if the attorney has conducted ‘a reasonable and

1 TWi’s motion comes down to its belief that Plaintiffs have no “evidentiary basis

2 whatsoever for their core allegation that TWi could have launched its original, amorphous ANDA

3 product by June 15, 2020.” (Dkt. No. 193 at 27.) TWi also believes that obtaining such proof is

4 impossible. (See id.) The parties disagree as to what would have happened but-for the Settlement

5 Agreement. (Compare Dkt. No. 193 at 11 (“[A]bsent the Settlement Agreement, TWi would not

6 have been able to launch a generic product until expiration of the crystalline patents in 2023.”)

7 with Dkt. No. 198 at 12 (“[T]he settlement disincentivized TWi from seeking prompt FDA

8 approval of its ANDA.”).)

9 But regardless of which party eventually prevails on these factual disputes, the Court has

10 previously determined Plaintiffs’ factual allegations to be at least plausible. (See Dkt. No. 160 at

11 30-31 (“Defendants also argue Plaintiffs do not plausibly allege their injuries flowed from

12 Defendants’ agreement because TWi did not have FDA authorization to launch its own ANDA

13 until September 2022, and so could not have launched its own generic by June 15, 2020. The

14 Court disagrees.”).) Moreover, discovery is both ongoing and, until recently, was slowed by

15 discovery disputes among the parties. (See Dkt. No. 214.) Given Plaintiffs’ allegations were

16 sufficiently plausible to survive Defendants’ motion to dismiss, and the ongoing discovery in this

17 case, TWi has not shown Plaintiffs “factual contentions” lacked “evidentiary support” in violation

18 of Rule 11(b)(3). Nor has TWi shown that Plaintiffs’ legal contentions are not “warranted by

19 existing law” in violation of 11(b)(2).

20 Instead, as Plaintiffs suggest, “TWi’s motion effectively seeks reconsideration of the

21 court’s ruling on Defendants’ motion to dismiss.” (Dkt. No. 198 at 15.) TWi lends credence to

22 this suggestion by conflating its sanctions motion with the ultimate disposition of the case. (Dkt.

23 No. 193 at 8 (“Plaintiffs should be sanctioned and this case should be brought to an end.”).) Yet,

24 as the Advisory Committee Notes on Rule 11 provide:

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Rule 11 motions should not be made or threatened for minor,

26 inconsequential violations of the standards prescribed by subdivision

(b). They should not be employed as a discovery device or to test the

27 legal sufficiency or efficacy of allegations in the pleadings; other

intimidate an adversary into withdrawing contentions that are fairly

1 debatable . . . .

2 FED. R. CIV. P. 11, Advisory Committee Notes. When this Court previously considered the

3 motion to dismiss, the Court tested the legal sufficiency of the Plaintiffs’ allegations and found

4 them “fairly debatable.” (See Dkt. No. 160.) To reconsider that conclusion under a motion for

5 sanctions would be to improperly retread the motion to dismiss.

6 TWi’s arguments in favor of applying Rule 11 sanctions notwithstanding Plaintiffs’

7 allegations having survived the motion to dismiss are unpersuasive. First, TWi argues “a motion

8 to dismiss and a Rule 11 motion serve fundamentally different purposes and apply different

9 standards.” (Dkt. No. 193 at 25.) Similarly, TWi also claims that, under Ninth Circuit law, “the

10 two standards operate independently.” (Id.) While, unlike a motion to dismiss, Rule 11 does not

11 require a court to accept “all well-plead factual allegations” as true, Ashcroft v. Iqbal, 556 U.S.

12 662, 678 (2009), nor on a Rule 11 motion should a court wade into the merits of contested factual

13 claims. See Rich v. Taser Intern, Inc., No. 2:09–cv–02450–ECR–RJJ, 2012 WL 3155137, at *3

14 (D. Nev. Aug. 2, 2012) (“A Rule 11 motion is not a proper vehicle for arguing the merits of a

15 case”); Abdo v. United States, No. 18-cv-01622, 2020 WL 1852379, at *4 (D. Colo. Apr. 13,

16 2020) (“To the extent Plaintiff is asking the court to address the merits of his claims, Rule 11 is

17 not the appropriate vehicle for such a request.”). Rather, courts regularly defer such

18 considerations of the merits to summary judgment. See, e.g., Truong v. Smith, 28 F. Supp. 2d 626,

19 633 (D. Colo. 1998) (concluding that merits arguments “are more properly presented in a motion

20 for summary judgment” than in a motion for sanctions); Safe-Strap Co., Inc. v. Koala Corp., 270

21 F.Supp.2d 407, 420 (S.D.N.Y. 2003) (concluding that a motion for sanctions to dismiss an action

22 “is an improper substitute for a motion for summary judgment”); Almac SA v. Panalpina Ltd., No.

23 2:12–cv–951-TS, 2013 WL 1701116, at *3 (D. Utah Apr. 18, 2013) (rejecting a “challenge [to]

24 the merits of Plaintiff’s claims” because “Rule 11 is not the appropriate vehicle for such

25 argument).

26 Second, TWi argues that, with the progress of discovery, Plaintiffs’ “continued

27 maintenance of their claims is sanctionable in light of the evidence in their possession” even if it

1 however, still turns on a factual disagreement about whether the lack of FDA approval for TWi’s

2 ANDA product was caused by the Settlement Agreement. (Compare Dkt. No. 193 at 27 (“There

3 is no discovery that can undo FDA’s serial CRLs or transform TWi’s unapproved, amorphous

4 ANDA product into an approved one.”) with Dkt. No. 198 at 12 (“[The regulatory history]

5 supports Plaintiffs’ allegations that the settlement disincentivized TWi from seeking prompt FDA

6 approval of its ANDA.”).) So, while TWi claims the “moment has arrived” for Plaintiffs to prove

7 the causation of their antitrust injury, (Dkt. No. 203 at 7), TWi is wrong: that moment remains a

8 motion for summary judgment.

9 In re Wellbutrin XL Antitrust Litig. Indirect Purchaser Class, 868 F.3d 132 (3rd Cir.

10 2017), which TWi discusses in detail, (Dkt. No. 193 at 22-23; Dkt. No. 203 at 9-10), merely

11 highlights the procedural impropriety of TWi’s motion. Wellbutrin involved the review of the

12 grant of summary judgment, not the imposition of sanctions. Id. at 142. Revealingly, TWi cites

13 no case imposing Rule 11 sanctions under circumstances procedurally similar to those here.

14 So, TWi’s motion for Rule 11 sanctions is DENIED.3

15 II. 28 U.S.C. § 1927 SANCTIONS

16 Second, TWi asks for sanctions under 28 U.S.C. § 1927. (Dkt. No. 193 at 7.) 28 U.S.C. §

17 1927 states “[a]ny attorney. . . who so multiplies the proceedings in any case unreasonably and

18 vexatiously may be required by the court to satisfy personally the excess costs, expenses, and

19 attorneys' fees reasonably incurred because of such conduct.” An award under this section

20 requires a finding of “subjective bad faith,” where counsel “knowingly or recklessly raises a

21 frivolous argument or argues a meritorious claim for the purpose of harassing an opponent.”

22 Blixseth v. Yellowstone Mountain Club, LLC, 796 F.3d 1004, 1007 (9th Cir. 2015) (citation

23 omitted). Whether to impose inherent power sanctions is “a determination that rests in the sound

24 discretion of the district court.” Fink, 239 F.3d at 994.

25 TWi argues that, considering the evidentiary record, Plaintiffs’ “refusal to withdraw or

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3 Plaintiffs also argue that TWi’s motion for Rule 11 sanctions is untimely. (Dkt. No. 198 at 17-

1 amend their claims. . . constitutes precisely the kind of vexatious prolongation that Section 1927

2 was enacted to prevent.” (Dkt. No. 193 at 26.) Yet, the Court previously held “Plaintiffs allege

3 facts supporting a plausible inference TWi would have—in a hypothetical world without the

4 challenged 2015 settlement—obtained ANDA approval by June 2020.” (Dkt. No. 160 at 30.)

5 TWi’s disagreement with the substance of Plaintiffs’ allegations is insufficient to support a finding

6 of recklessness or knowing bad faith, as is required under § 1927.

7 No case cited by TWi awarded sanctions in similar circumstances. In Advocates for

8 Individuals with Disabilities, LLC v. MidFirst Bank, No. cv-16-01969-PHX-NVW, 2018 WL

9 3545291 (D. Ariz. July 24, 2018), a plaintiff “pursued about 160 cookie-cutter lawsuits removed

10 to federal court and more than 1,000 such suits in Arizona state court.” Id. at *2. The court

11 awarded sanctions not because the plaintiff filed the complaint, but because, even after the

12 defendant cured the alleged defect that prompted the lawsuit, the plaintiff’s attorney “demand[ed]

13 patently excessive and unreasonable attorney fees beyond any statutory basis and (2) prolong[ed]

14 the lawsuit to extort such fees by forcing the defendant to incur its own legal expense to resist the

15 mooted case and [the plaintiff’s] fee demand.” Id. at *6. Here, however, TWi has not cured the

16 alleged violation and there is no suggestion that Plaintiffs are sustaining litigation merely to extort

17 attorney fees. TWi also cites Love v. Kardooni, No. 19-cv-04706-MMC, 2021 WL 4481928 (N.D.

18 Cal. Sept. 30, 2021), in which the court awarded § 1927 sanctions after the plaintiff continued to

19 pursue a claim based on a business’s lack of accessible parking despite stipulating that the

20 business had no parking at all. Id. at *2-4. So, it is wholly inapposite. Finally, TWi cites Wages v.

21 IRS, 915 F.2d 1230 (9th Cir. 1990) as an example of “prolonged litigation” leading to § 1927

22 sanctions. (Dkt. No. 193 at 20.) There, the pro se plaintiff tried to file an amended complaint that

23 “did not materially differ from one which the district court had already concluded did not state a

24 claim” and continued to “mov[e] for alterations in the district court’s original judgment.” Id. at

25 1235. Wages, too, is wholly inapposite.

26 So, TWi’s motion for sanctions under 28 U.S.C. § 1927 is DENIED.

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1 Wl. INHERENT AUTHORITY SANCTIONS

2 Finally, TWi asks for sanctions under the Court’s inherent authority. (Dkt. No. 193 at 7.)

3 || Under its inherent powers, a court may impose sanctions where a party has willfully disobeyed a

4 || court order, or where the party has “acted in bad faith, vexatiously, or for oppressive reasons.”

5 || Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545, 557 (2014) (citations

6 || omitted). These powers, however, “must be exercised with restraint and discretion.” Chambers v.

7 || NASCO, Inc., 501 U.S. 32, 44 (1991). Accordingly, the bad-faith requirement sets a “high

8 threshold,” Primus Auto. Fin. Servs., Inc. v. Batarse, 115 F.3d 644, 649 (9th Cir. 1997), which

9 || may be met by willful misconduct, or recklessness that is “coupled with an improper purpose.”

10 || Fink, 239 F.3d at 993-94. It is the moving party’s burden to demonstrate that the party against

11 whom it seeks sanctions acted with the requisite bad faith or improper purpose. See Burnett v.

12 Conseco, Inc., 87 F.Supp.3d 1238, 1248-49 (N.D. Cal. 2015). For the reasons explained above,

13 TWi has not come close to meeting its burden. See Fink, 239 F.3d at 994 (“[R]ecklessness

14 || suffices for § 1927, but bad faith is required for sanctions under the court's inherent power.”).

3 15 So, TWi’s motion for sanctions under the Court’s inherent authority is DENIED.

a 16 CONCLUSION

2 17 For the foregoing reasons, TWi’s motion for sanctions is DENIED. The Court sets a

Z 18 further case management conference for 2:00 PM, October 14, 2026 via Zoom video. An

19 || updated joint case management statement is due one week in advance.

20 This Order disposes of Docket No. 193.

21 IT IS SO ORDERED.

22 || Dated: September 8, 2026

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ACQUELINE SCOTT CORLE

25 United States District Judge

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