In re: Nexium Antitrust v.

United States Court of Appeals

For the First Circuit

_____________________

Nos. 15-2005, 15-2006, 15-2007

IN RE: NEXIUM (ESOMEPRAZOLE) ANTITRUST LITIGATION

AMERICAN SALES COMPANY, LLC, on behalf of itself and all others similarly situated;

VALUE DRUG COMPANY; BURLINGTON DRUG COMPANY INC.; ROCHESTER DRUG

CO-OPERATIVE, INC., on behalf of itself and others similarly situated; MEIJER, INC.;

MEIJER DISTRIBUTION, INC.; ALLIED SERVICES DIVISION WELFARE FUND;

LABORERS INTERNATIONAL UNION OF NORTH AMERICA LOCAL 17 HEALTH

CARE FUND; LABORERS INTERNATIONAL UNION OF NORTH AMERICA LOCAL 35

HEALTH CARE FUND; A.F. OF L. - A.G.C. BUILDING TRADES WELFARE PLAN;

FRATERNAL ORDER OF POLICE MIAMI LODGE 20 INSURANCE TRUST FUND; NEW

YORK HOTEL TRADES COUNCIL AND HOTEL ASSOC. OF NEW YORK CITY, INC.

HEALTH BENEFITS FUND; UNITED FOOD & COMMERCIAL WORKERS UNIONS AND

EMPLOYERS MIDWEST HEALTH BENEFITS FUND; MICHIGAN REGIONAL COUNCIL

OF CARPENTERS EMPLOYEE BENEFITS FUND; INTERNATIONAL UNION OF

MACHINISTS AND AEROSPACE WORKERS DISTRICT NO. 15 HEALTH FUND;

INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL 595 HEALTH

AND WELFARE FUND; WALGREEN CO.; THE KROGER COMPANY; SAFEWAY

INCORPORATED; SUPERVALU, INC.; HEB GROCERY CO. LP; GIANT EAGLE, INC.;

RITE AID CORPORATION; RITE AID HEADQUARTERS CORPORATION; JCG (PJC)

USA, LLC; MAXI DRUG, INC., d/b/a BROOKS PHARMACY; ECKERD CORPORATION;

CVS, INC.,

Plaintiffs, Appellants,

v.

ASTRAZENECA LP; ASTRAZENECA AB; AKTIEBOLAGET HASSLE; RANBAXY

PHARMACEUTICALS INC.; RANBAXY INC.; RANBAXY LABORATORIES LTD.,

Defendants, Appellees.

__________________

Before

Lynch, Stahl and Thompson,

Circuit Judges.

ORDER OF COURT

Entered: January 10, 2017

The various groups of plaintiffs have collectively filed three petitions for panel rehearing

and two for rehearing en banc, raising various objections to the panel opinion. This order deals

primarily with the petitions for panel rehearing. None of them has merit.

End-Payor Class's Petition

The End-Payor Class, seeking only panel rehearing, argues that we must remand the case

with regard to the permanent injunction issue because the panel rejected the sole ground on which

the district court had denied the plaintiffs' post-trial motion for permanent injunctive relief. This

argument is meritless. The End-Payor Class petitioners have waived the issue of the denial of

injunctive relief by failing to address it in their briefs on appeal. They admit that they did not brief

the issue of whether the district court erred in denying their motion for a permanent injunction.

They also do not offer any rationale for that failure. They do argue that their omission should be

excused because the Federal Trade Commission ("FTC") submitted an amicus brief, which argued

that the district court had erroneously conflated the distinct concepts of antitrust violation and

antitrust injury, and the panel then discussed that issue in the opinion.

From the fact that the panel agreed with the FTC, the End-Payor Class argues in its petition

that the class did not waive the issue of injunctive relief by not raising that issue on appeal. But

the FTC did not argue that the plaintiffs were entitled to any injunctive relief. In fact, the FTC

explicitly stated that it was filing its brief "in support of no party."

In addition, the cases that the petition cites do not explain why we should exercise our

discretion to excuse waiver under these circumstances. We recognize that the Ninth Circuit once

found that it would be "manifestly unjust" to deem waived a claim of inherently prejudicial

procedural error, where the result would have been not to reverse a criminal defendant's conviction

while reversing his co-defendant's conviction.1 See United States v. Olano, 934 F.2d 1425, 1439

(9th Cir. 1991), rev'd, 507 U.S. 725 (1993). We also recognize that the Second Circuit once

excused a litigant's failure to invoke an issue "explicitly by name." Rivkin v. Century 21 Teran

Realty LLC, 494 F.3d 99, 104 n.11 (2d Cir. 2007). Those cases have no bearing on whether we

should overlook the End-Payor Class's failure to brief the injunctive-relief issue in this particular

instance. Nor is this case like New England Surfaces v. E.I. Du Pont De Nemours & Co., 546 F.3d

1 (1st Cir. 2008), clarified on denial of reh'g, 546 F.3d 11 (1st Cir. 2008), in which we chose not

to address in the first instance an issue that the district court had not fully explored and that neither

party had developed in their arguments on appeal. Id. at 10–11. In short, these cases confirm the

inherent discretion that appellate panels have under Rule 2 of the Federal Rules of Appellate

Procedure to suspend the rules for "good cause" or if a failure to review an issue would result in

"manifest injustice." Fed. R. App. P. 2 & advisory committee's note to 1967 adoption. The cases

do not persuade us that we should exercise that discretion under the circumstances of this petition.

1

Of course, the Supreme Court subsequently reversed the Ninth Circuit's substantive

ruling that the presence of alternate jurors during jury deliberations constituted plain error. See

United States v. Olano, 507 U.S. 725, 727 (1993).

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Petitioners certainly have not shown good cause for the panel to suspend the rules. Nor

have they come close to showing a need for injunctive relief, despite their utter failure to brief the

question, in order to prevent a manifest injustice. There is no obvious threatened loss or damage

ensuing from the defendants' actions, and the plaintiffs have not presented a cogent argument for

establishing such threatened harm. As we explained in In re New Motor Vehicles Canadian Export

Antitrust Litigation, 522 F.3d 6 (1st Cir. 2008), "a plaintiff seeking relief under section 16 [of the

Clayton Act] need not show actual antitrust damages but only a 'threatened loss or damage.'" Id.

at 12 (quoting 15 U.S.C. § 26). While the requirements for standing to pursue injunctive relief are

thus "less stringent" than those for standing to pursue damages, id. at 13, plaintiffs seeking

injunctive relief must still demonstrate that they "face a threat of injury that is both '"real and

immediate," not "conjectural" or "hypothetical,"'" id. at 14 (quoting O'Shea v. Littleton, 414 U.S.

488, 494 (1974)). Critically, "[p]ast exposure to illegal conduct does not in itself show a present

case or controversy regarding injunctive relief . . . if unaccompanied by any continuing, present

adverse effects." Id. (second alteration in original) (quoting O'Shea, 414 U.S. at 495–96).

Under the rules governing petitions for panel rehearing, the petitioners must point to

something that they "believe[] the court has overlooked or misapprehended." Fed. R. App. P.

40(a)(2). In light of the plaintiffs' failure to brief the issue of the denial of their request for a

permanent injunction, the panel neither overlooked nor misapprehended that issue. See Easley v.

Reuss, 532 F.3d 592, 593–94 (7th Cir. 2008) (per curiam) ("It goes without saying that the panel

cannot have 'overlooked or misapprehended' an issue that was not presented to it. Panel rehearing

is not a vehicle for presenting new arguments, and, absent extraordinary circumstances, we shall

not entertain arguments raised for the first time in a petition for rehearing."); 16AA Wright &

Miller, Federal Practice & Procedure § 3986.1 (4th ed. 2008) ("Issues that were not presented in

the initial briefs and argument will seldom be considered when presented for the first time by

petition for rehearing.").

Direct-Purchaser Class's and Individual Retailers' Petitions

The Direct-Purchaser Class (joined by the End-Payor Class) and the Individual Retailers

petition for both panel and en banc rehearing. We deny panel rehearing. These petitions

mischaracterize the panel opinion as having required the plaintiffs to have conclusively proved

patent invalidity before being able to pursue an at-risk launch theory at trial. The panel decision

did no such thing. The opinion observed merely that, under the circumstances of this case, "the

district court . . . did not err by requiring some evidence of the patents' invalidity or

noninfringement before allowing the plaintiffs to pursue an at-risk launch theory." No per se rule

was established. The panel made this observation, furthermore, while recognizing the distinction

between evidence of absolute patent invalidity and evidence of the defendants' subjective

assessment of the risk to their patent monopoly.

The petitions erroneously assert that the panel opinion somehow created a circuit split and

that it contravened the Supreme Court's opinion in FTC v. Actavis, Inc., 133 S. Ct. 2223 (2013).

Again, the panel opinion did neither. Actavis, a case in which the FTC was the plaintiff,

recognized that reverse payment settlements "can sometimes violate the antitrust laws," id. at 2227,

and noted that "it is normally not necessary to litigate patent validity to answer the antitrust

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question . . . . In a word, the size of the unexplained reverse payment can provide a workable

surrogate for a patent's weakness, all without forcing a court to conduct a detailed exploration of

the validity of the patent itself," id. at 2236–37. The panel's opinion is faithful to this language

from Actavis. All the panel's holding did was recognize that, given the peculiarities of this case,

the district court in no way forced a "detailed exploration" of patent validity within an antitrust

case.

Likewise, all three circuit cases with which the petitions say the panel opinion is in conflict

are not actually in conflict. Those three cases evaluated the merits of antitrust violation allegations

at the Rule 12(b)(6) pleading stage. See King Drug Co. of Florence, Inc. v. Smithkline Beecham

Corp., 791 F.3d 388, 410 (3d Cir. 2015) ("[A]t the pleading stage[,] plaintiffs have sufficiently

alleged that any procompetitive aspects of the . . . arrangement were outweighed by the

anticompetitive harm from the no-AG agreement."); In re Cardizem CD Antitrust Litig., 332 F.3d

896, 900 (6th Cir. 2003) (holding, in the context of a per se illegal restraint of trade, that "[t]he

defendants' claim that [the generic manufacturer's] decision to stay off the market was motivated

not by the [reverse payment], but by its fear of damages in the pending patent infringement

litigation, merely raise[d] a disputed issue of fact that cannot be resolved on a motion to dismiss");

Andrx Pharms., Inc. v. Biovail Corp. Int'l, 256 F.3d 799, 808 (D.C. Cir. 2001) (holding that the

district court erred in dismissing with prejudice a generic manufacturer's complaint, which alleged

that its competitors violated the antitrust laws after receiving a reverse payment from a brand

manufacturer).

Contrary to the petitioners' unsupported assertions, we cannot divorce the stage of the

litigation, and the disparate evidentiary burdens that the nonmoving party faces at each stage, from

the "legal" rule. See, e.g., Fleming v. Lind-Waldock & Co., 922 F.2d 20, 23 (1st Cir. 1990) (noting

that because Rule 12(b)(6) and Rule 56 motions "place different burdens on the parties at different

times in the course of litigation . . . the correct characterization may have a substantive impact on

review").

The Direct-Purchaser Class's next argument — that the district court's summary judgment

opinion precluded them from putting on evidence of patent invalidity at trial — is also

unsupported. The district court stated at summary judgment that, at that stage, there was

insufficient evidence to support the plaintiffs' theory that Teva could have won its patent

infringement litigation against AstraZeneca. In re Nexium (Esomeprazole) Antitrust Litig., 42 F.

Supp. 3d 231, 289–90 (D. Mass. 2014). Without enough evidence, that scenario was "sheer

speculation, and the [c]ourt pa[id] it no mind." Id. at 290. The district court's statement at

summary judgment was not a ruling that precluded the petitioners from entering patent invalidity

evidence under any circumstance at trial. We will not grant rehearing so that the petitioners can

assign their failure to put on evidence to a mischaracterized summary judgment statement.

Finally, the Direct-Purchaser Class challenges the exclusion of two pieces of evidence. We

review the district court's evidentiary rulings only for abuse of discretion. See Gen. Elec. Co. v.

Joiner, 522 U.S. 136, 141–42 (1997); Correa v. Cruisers, a Div. of KCS Int'l, Inc., 298 F.3d 13,

25–26 (1st Cir. 2002). We may not substitute our intuition for that of the district court, absent a

showing that it abused its discretion. The record before the panel did not, and still does not, reveal

such abuse. That is the end of our inquiry.

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The three petitions for panel rehearing are denied. Judges Lynch and Thompson also vote

to deny both petitions for rehearing en banc.

By the Court:

/s/ Margaret Carter, Clerk

cc:

Hon. William G. Young

Robert Farrell, Clerk, United States District Court for the District of Massachusetts

William A. Zucker

Timothy C. Hester

Kannon K. Shanmugam

Nicholas W. Allen

Ashley E. Bass

Benjamin M. Greenblum

Andrew D. Lazerow

James Harris Weingarten

John E. Joiner

Michael P. Kelly

Paul B. Gaffney

James Douglas Baldridge

Thomas A. Isaacson

Adam Joshua Podoll

Heidi K. Hubbard

William Thomas Marks

Laurence Adam Schoen

Jay P. Lefkowitz

Karen Natalie Walker

Jonathan D. Janow

Leslie F. Su

Lisa Jose Fales

Danielle R. Foley

Steven J. Menashi

Amanda Elbogen

Michael T. Marcucci

Jonathan B. Berman

Kevin D. McDonald

Stephanie L. Resnik

Thomas G. Shapiro

Glen DeValerio

Bruce E. Gerstein

James R. Dugan II

Douglas Robert Plymale

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Nathaniel L. Orenstein

David Baylis Franco

Donna M. Evans

Joseph Opper

Scott E. Perwin

Gregory T. Arnold

Thomas M. Sobol

David S. Nalven

James J. Nicklaus

David F. Sorensen

Don Barrett

John D. Radice

Kristen Johnson

Elena K. Chan

Caitlin G. Coslett

Daniel C. Simons

Matthew W.H. Wessler

Kristie A. LaSalle

Brian D. Brooks

Peter S. Pearlman

Susan C. Segura

Peter R. Kohn

Archana Tamoshunas

Ellen T. Noteware

Barry L. Refsin

Richard Alan Arnold

Anna Theresa Neill

Lauren C. Ravkind

Brian C. Hill

Erin Gisbson Allen

Moira E. Cain-Mannix

Monica L. Rebuck

Linda P. Nussbaum

David P. Germaine

Steve D. Shadowen

Natalie Finkelman Bennett

Jayne A. Goldstein

J. Douglas Richards

Christopher Lometti

Sharon K. Robertson

Edward A. Wallace

Kenneth A. Wexler

Jonathan Shapiro

Christopher M. Burke

Donald A. Broggi

Walter W. Noss

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Joseph P. Guglielmo

Kevin Peter Roddy

Daniel C. Girard

Aaron David Kaufmann

Lawrence M. Kraus

Peter Dexter St. Phillip Jr.

Barbara J. Hart

Gerald Lawrence

Uriel Rabinovitz

Frank R. Schirripa

Joel R. Marcus

Mark S. Hegedus

Katherine R. Katz

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