Antitrust Law Daily Wrap Up, ANTITRUST—9^th Cir.: New trial ordered over juror disqualification in dispute between GSK, Abbott, (Jan 23, 2014)

By Linda O’Brien, J.D., LL.M.

The U.S. Court of Appeals in San Francisco has ordered a new trial in an antitrust and unfair trade practices action involving GlaxoSmithKline and Abbott over the licensing and pricing of medications for the treatment of human immunodeficiency virus (HIV). The appellate court held that the exercise of a peremptory strike to remove a potential juror based on his sexual orientation violated the Equal Protection Clause of the U.S. Constitution (SmithKline Beecham Corp. v. Abbott Laboratories, January 21, 2014, per curiam).

Global pharmaceutical company, SmithKline Beecham Corporation d/b/a/ GlaxoSmithKline (GSK) filed suit against Abbott Laboratories alleging violations of the implied covenant of good faith and fair dealing, antitrust laws and North Carolina’s Unfair Trade Practices Act (UTPA). Specifically, GSK contended that Abbott, after licensing to GSK the rights to market an Abbott HIV drug in conjunction with one of GSK’s, greatly increased the price of the Abbott drug in order to drive business to Abbott’s own HIV combination drug.

During jury selection for the trial, Abbott exercised a peremptory strike to exclude a prospective juror. GSK objected to the use of the strike arguing it was impermissibly made based on the juror’s sexual orientation. The district court denied the objection. At the conclusion of the trial, the jury held for GSK on the contract claim but for Abbott on the antitrust and UPTA claims.

The court found that the district court erred in applying the wrong legal standard in evaluating GSK’s claim of discrimination in the use of the peremptory strike. In Batson v. Kentucky, 476 U.S. 79 (1986), the U.S. Supreme Court held that the privilege of peremptory strikes in selecting a jury is subject to the provisions of the Equal Protection Clause. Under Batson, the party objecting to the strike must show a prima facie case of intentional discrimination by presenting evidence that (1) the prospective juror was a member of a cognizable group; (2) counsel used a peremptory strike against the individual; and (3) the circumstances raised the inference that the strike was motivated by discrimination.

In this case, GSK established a prima case of intentional discrimination as the prospective juror was the only juror to identify himself as homosexual on the record and the subject matter of the litigation presented an issue of consequence to the homosexual community. It was also reasonable to infer that Abbott struck the juror due to concern he would be influenced by Abbott’s decision to increase the price of its HIV drug. Moreover, Abbott offered no nondiscriminatory reason for the strike.

The court found that the analysis in Batson should be extended to prohibit peremptory strikes based on sexual orientation. In determining that classifications based sexual orientation are subject to a heightened level of scrutiny rather than a rational basis review, the court considered that heightened scrutiny is required under federal laws when state action discriminates on the basis of sexual orientation. The court also found that the Equal Protection Clause applied to peremptory strikes based on based sexual orientation in view of similar precedents involving the use of gender or race in jury selection. Finally, in rejecting Abbott’s argument that the exclusion of the juror was harmless since there was insufficient evidence to support any of GSK’s claims, the court held that it was impossible to determine whether the jury verdict would be been different had the jury been constitutionally selected and that the equal protection violation undermined the integrity of the entire trial.

The case is No. 4:07-cv-05702-CW, 11-17357.

Attorneys: Lisa S. Blatt (Arnold & Porter LLP) and Brian J. Hennigan (Irell & Manella LLP) for SmithKline Beecham Corp. Daniel B. Levin (Munger, Tolles & Olson LLP) and Krista Enn (Winston & Strawn LLP) for Abbott Laboratories.

Companies: SmithKline Beecham Corp.; Abbott Laboratories

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