Judge Approves Addition of NY Claims to Wellbutrin XL Indirect Purchaser Class
In a December 22, 2010 Memorandum Opinion, Judge McLaughlin of the United States District Court for the Eastern District of Pennsylvania granted and denied in part the indirect purchaser Plaintiffs’ Motion for Leave to File an Amendment to their Complaint in the In re Wellbutrin XL Antitrust Litigation.
In the motion, Wexler Wallace (as one of the Interim Co-lead counsel for the indirect purchasers), together with their co-lead counsel, asked the Court for leave to add state antitrust claims on behalf of indirect purchasers of Wellbutrin XL in New York and Illinois, claims which had previously been prohibited by statutory class action prohibitions in each state. Wellbutrin XL is a very common antidepressant, and Plaintiffs allege that defendants Biovail and GlaxoSmithKline conspired to unlawfully keep generic versions of the drug off of the market through sham patent litigation and other illegal means.
The requested amendment was based on the recent United States Supreme Court decision, Shady Grove Orthopedic Assocs. v. Allstate Ins. Co., 130 S. Ct. 1431 (2010), which addressed the applicability of state law class action restrictions in federal court. After a thorough analysis of the majority, concurring, and dissenting opinions in Shady Grove, Judge McLaughlin followed Justice Stevens’ concurring opinion, which she summarized as being the most narrow grounds announced by the Court and which instructs federal courts faced with conflicting state and federal statutes to consider whether the federal rule would displace a state law that “is so intertwined” with the right or remedy that it defines the scope of the right. (“A federal rule . . .cannot govern a particular case in which the rule would displace a state law that is procedural in the ordinary use of the term but is so intertwined with a state right or remedy that it functions to define the scope of the state-created right.”). In Shady Grove, a New York statute prohibiting class actions for cases seeking certain types of damages to be procedural and thus displaced by Rule 23.
Judge McLaughlin held that the same New York statute analyzed in Shady Grove, and which had previously been interpreted as prohibiting class antitrust claims under the Donnelly Act, was trumped by Federal Rule 23. The Court thus allowed Plaintiffs to amend their complaint to include New York among the states for which they are seeking damages on behalf of a proposed class of indirect purchasers of branded and generic Wellbutrin XL.
With respect to the request for leave to add an Illinois Antitrust Act (“IAA”) claim, Judge McLaughlin found the statutory indirect purchaser class action restrictions to be distinguishable from the provisions addressedShady Grove. Namely, she found the Illinois restrictions to be intertwined with Illinois substantive rights and remedies because (1) the restrictions apply only to the IAA, (2) they are incorporated in the same statutory provision as the underlying right, not a separate procedural rule, and (3) the restrictions appear to reflect a policy judgment about managing the danger of duplicative recoveries. Thus because the indirect purchaser restrictions of the IAA are “intertwined” with the underlying substantive right, Judge McLaughlin held that Illinois’ restrictions on indirect purchaser actions must be applied in federal court.