Case Briefing

Plaintiff Possibly Injured By Alleged Antitrust Activity

The U.S. District Court for the Eastern District of Michigan at Detroit properly denied defendants' motion to dismiss this antitrust suit, as under the U.S. Court of Appeals for the Sixth Circuit's 'necessary predicate' test, dismissal is warranted only where it is apparent from the allegations in the complaints that the plaintiffs' injury would have occurred even if there had been no antitrust violation. Cardizem CD Antitrust Litigation. Louisiana Wholesale Drug Co. v. Hoechst Mation Roussell Inc., No. 00-2483, 2003 U.S. App. LEXIS 11681; 2003 Fed. App. 0195P (6th Cir., 6/13/03).

This case arose out of an agreement entered into by the defendants, Hoescht Marion Roussel Inc. (HMR), the manufacturer of the prescription drug Cardizem CD, and Andrx Pharmaceuticals, then a potential manufacturer of a generic version of that drug. The agreement provided, in essence, that Andrx, in exchange for quarterly payments of $10 million, would refrain from marketing its generic version of Cardizem CD even after it had received FDA approval.

The plaintiffs are direct and indirect purchasers of Cardizem CD who filed complaints challenging the agreement as a violation of federal and state antitrust laws. The district court certified this question for interlocutory appeal: whether, in determining if plaintiffs had properly pled antitrust injury, the language of the Sixth Circuit's decisions in Valley Products Co. v. Landmark, 128 F.3d 398, 404 (6th Cir. 1997) and Hodges v. WSM Inc., 26 F.3d 36, 39 (6th Cir. 1994), required dismissal of plaintiffs' antitrust claims at the pleading stage where plaintiffs could not allege facts showing that defendants' alleged anticompetitive conduct was a 'necessary predicate' to their antitrust injury. In other words, the district court asked the court to clarify if dismissal is required unless plaintiffs plead facts showing that the alleged antitrust injury could not possibly have occurred absent defendants' alleged anticompetitive conduct.

The court found that Hodges and Valley Products stand for the proposition that in order to survive a motion to dismiss for failure to allege antitrust injury, a plaintiff must allege that the antitrust violation is either the 'necessary predicate' for its injury or the only means by which the defendant could have caused plaintiff's injury. Under the 'necessary predicate' option, dismissal is warranted only where it is apparent from the allegations in the complaints that the plaintiffs' injury would have occurred even if there had been no antitrust violation. Here, Andrx could have made a unilateral and legal decision to delay its market entry, but the plaintiffs have alleged it would not have done so but for the agreement and HMR's payment to it of $40 million per year. The plaintiffs' allegations therefore satisfied the 'necessary predicate' test. The defendants' claim that Andrx's decision to stay off the market was motivated not by the $40 million per year it was being paid by HMR but by its fear of damages in the pending patent infringement litigation merely raised a disputed issue of fact that could not be resolved on a motion to dismiss. Accordingly, the district court properly denied the defendants' motions to dismiss for failure to allege antitrust injury.

Attorney Had Apparent Authority to Settle Breast Implant Suit

New York's Appellate Division, First Department, reversed the Supreme Court, New York County's denial of defendant's motion to enforce a stipulation of settlement as the plaintiff's former counsel had at least apparent authority to agree to settlement on her client's behalf. Clark v. Bristol-Myers Squibb and Co., 2003 N.Y. App. Div. LEXIS, (App. Div., 1st Dept., 6/10/03).

Plaintiff sought damages for injuries sustained from her use of polyurethane-foam-covered breast implants. After negotiations between plaintiff's former attorneys and the defendants, the court was informed that the parties had agreed to settle the action for $110,000. Thereafter, plaintiff advised her former attorney's firm that, based on information she had received about a verdict in another breast implant case, she wanted to settle her case for $ 4.2 million. As a result, she refused to sign the general release and settlement agreement.

At the conclusion of a hearing on the issue, the court found that “based upon the credible evidence,” a binding settlement agreement had been reached. The court made a specific finding that plaintiff was not a credible witness. Nonetheless, it vacated the stipulation of settlement in the interest of justice.

The appellate court held that the Supreme Court erred in vacating the stipulation of settlement because even though the parties disagreed as to plaintiff's former counsel's actual authority to settle, plaintiff's conduct in allowing counsel to negotiate a settlement, both in her presence and out of it, had given rise to the appearance that such authority had been granted. In addition, she implicitly ratified the settlement by failing to object to it for months after she learned of it.

New York's Appellate Division, First Department, reversed the Supreme Court, New York County's denial of defendant's motion to enforce a stipulation of settlement as the plaintiff's former counsel had at least apparent authority to agree to settlement on her client's behalf. Clark v. Bristol-Myers Squibb and Co., 2003 N.Y. App. Div. LEXIS, (App. Div., 1st Dept., 6/10/03).

Plaintiff sought damages for injuries sustained from her use of polyurethane-foam-covered breast implants. After negotiations between plaintiff's former attorneys and the defendants, the court was informed that the parties had agreed to settle the action for $110,000. Thereafter, plaintiff advised her former attorney's firm that, based on information she had received about a verdict in another breast implant case, she wanted to settle her case for $ 4.2 million. As a result, she refused to sign the general release and settlement agreement.

At the conclusion of a hearing on the issue, the court found that 'based upon the credible evidence,' a binding settlement agreement had been reached. The court made a specific finding that plaintiff was not a credible witness. Nonetheless, it vacated the stipulation of settlement in the interest of justice.

The appellate court held that the Supreme Court erred in vacating the stipulation of settlement because even though the parties disagreed as to plaintiff's former counsel's actual authority to settle, plaintiff's conduct in allowing counsel to negotiate a settlement, both in her presence and out of it, had given rise to the appearance that such authority had been granted.

Plaintiff Possibly Injured By Alleged Antitrust Activity

The U.S. District Court for the Eastern District of Michigan at Detroit properly denied defendants' motion to dismiss this antitrust suit, as under the U.S. Court of Appeals for the Sixth Circuit's 'necessary predicate' test, dismissal is warranted only where it is apparent from the allegations in the complaints that the plaintiffs' injury would have occurred even if there had been no antitrust violation. Cardizem CD Antitrust Litigation. Louisiana Wholesale Drug Co. v. Hoechst Mation Roussell Inc., No. 00-2483, 2003 U.S. App. LEXIS 11681; 2003 Fed. App. 0195P (6th Cir., 6/13/03).

This case arose out of an agreement entered into by the defendants, Hoescht Marion Roussel Inc. (HMR), the manufacturer of the prescription drug Cardizem CD, and Andrx Pharmaceuticals, then a potential manufacturer of a generic version of that drug. The agreement provided, in essence, that Andrx, in exchange for quarterly payments of $10 million, would refrain from marketing its generic version of Cardizem CD even after it had received FDA approval.

The plaintiffs are direct and indirect purchasers of Cardizem CD who filed complaints challenging the agreement as a violation of federal and state antitrust laws. The district court certified this question for interlocutory appeal: whether, in determining if plaintiffs had properly pled antitrust injury, the language of the Sixth Circuit's decisions in Valley Products Co. v. Landmark , 128 F.3d 398, 404 (6th Cir. 1997) and Hodges v. WSM Inc. , 26 F.3d 36, 39 (6th Cir. 1994), required dismissal of plaintiffs' antitrust claims at the pleading stage where plaintiffs could not allege facts showing that defendants' alleged anticompetitive conduct was a 'necessary predicate' to their antitrust injury. In other words, the district court asked the court to clarify if dismissal is required unless plaintiffs plead facts showing that the alleged antitrust injury could not possibly have occurred absent defendants' alleged anticompetitive conduct.

The court found that Hodges and Valley Products stand for the proposition that in order to survive a motion to dismiss for failure to allege antitrust injury, a plaintiff must allege that the antitrust violation is either the 'necessary predicate' for its injury or the only means by which the defendant could have caused plaintiff's injury. Under the 'necessary predicate' option, dismissal is warranted only where it is apparent from the allegations in the complaints that the plaintiffs' injury would have occurred even if there had been no antitrust violation. Here, Andrx could have made a unilateral and legal decision to delay its market entry, but the plaintiffs have alleged it would not have done so but for the agreement and HMR's payment to it of $40 million per year. The plaintiffs' allegations therefore satisfied the 'necessary predicate' test. The defendants' claim that Andrx's decision to stay off the market was motivated not by the $40 million per year it was being paid by HMR but by its fear of damages in the pending patent infringement litigation merely raised a disputed issue of fact that could not be resolved on a motion to dismiss. Accordingly, the district court properly denied the defendants' motions to dismiss for failure to allege antitrust injury.

Attorney Had Apparent Authority to Settle Breast Implant Suit

New York's Appellate Division, First Department, reversed the Supreme Court, New York County's denial of defendant's motion to enforce a stipulation of settlement as the plaintiff's former counsel had at least apparent authority to agree to settlement on her client's behalf. Clark v. Bristol-Myers Squibb and Co., 2003 N.Y. App. Div. LEXIS, (App. Div., 1st Dept., 6/10/03).

Plaintiff sought damages for injuries sustained from her use of polyurethane-foam-covered breast implants. After negotiations between plaintiff's former attorneys and the defendants, the court was informed that the parties had agreed to settle the action for $110,000. Thereafter, plaintiff advised her former attorney's firm that, based on information she had received about a verdict in another breast implant case, she wanted to settle her case for $ 4.2 million. As a result, she refused to sign the general release and settlement agreement.

At the conclusion of a hearing on the issue, the court found that “based upon the credible evidence,” a binding settlement agreement had been reached. The court made a specific finding that plaintiff was not a credible witness. Nonetheless, it vacated the stipulation of settlement in the interest of justice.

The appellate court held that the Supreme Court erred in vacating the stipulation of settlement because even though the parties disagreed as to plaintiff's former counsel's actual authority to settle, plaintiff's conduct in allowing counsel to negotiate a settlement, both in her presence and out of it, had given rise to the appearance that such authority had been granted. In addition, she implicitly ratified the settlement by failing to object to it for months after she learned of it.

New York's Appellate Division, First Department, reversed the Supreme Court, New York County's denial of defendant's motion to enforce a stipulation of settlement as the plaintiff's former counsel had at least apparent authority to agree to settlement on her client's behalf. Clark v. Bristol-Myers Squibb and Co. , 2003 N.Y. App. Div. LEXIS, (App. Div., 1st Dept., 6/10/03).

Plaintiff sought damages for injuries sustained from her use of polyurethane-foam-covered breast implants. After negotiations between plaintiff's former attorneys and the defendants, the court was informed that the parties had agreed to settle the action for $110,000. Thereafter, plaintiff advised her former attorney's firm that, based on information she had received about a verdict in another breast implant case, she wanted to settle her case for $ 4.2 million. As a result, she refused to sign the general release and settlement agreement.

At the conclusion of a hearing on the issue, the court found that 'based upon the credible evidence,' a binding settlement agreement had been reached. The court made a specific finding that plaintiff was not a credible witness. Nonetheless, it vacated the stipulation of settlement in the interest of justice.

The appellate court held that the Supreme Court erred in vacating the stipulation of settlement because even though the parties disagreed as to plaintiff's former counsel's actual authority to settle, plaintiff's conduct in allowing counsel to negotiate a settlement, both in her presence and out of it, had given rise to the appearance that such authority had been granted.