Antitrust Law Daily Wrap Up, ANTITRUST—Cal. Super.: Preliminary approval given to Cipro antitrust action settlement, (Aug 18, 2016)

By Michael Menzhuber, J.D., LL.M.

Preliminary approval of a $100 million settlement of a class action suit, involving California state law antitrust and unfair competition claims brought by individuals and entities who purchased Cipro in California, was granted by the California Superior Court in San Diego. The plaintiffs’ claims arose from agreements entered into between Bayer Corporation and the generic defendants under which the generic defendants dropped challenges to Bayer’s Cipro patent in exchange for cash payments from Bayer (Cipro Cases I and II, August 15, 2016, Styn, R.).

Four years after Bayer was granted a patent for the antibiotic Cipro, Barr Laboratories filed an application to market and sell a generic version of Cipro. Litigation ensued in which Barr challenged the validity and enforceability of Bayer’s patent while Bayer claimed Barr’s generic formula infringed its patent. After Barr’s Abbreviated New Drug Application was tentatively approved, Barr, Rugby and Rugby’s subsidiary Hoechst Marion Roussel, Inc (HMR), and Watson Laboratories, Inc. entered into an agreement to jointly manufacture, sell, and distribute generic ciprofloxacin. This agreement also provided that HMR and Rugby (collectively, "HMR defendants") would help to cover Barr’s litigation costs in exchange for half the profits from selling generic ciprofloxin, or half of any settlement payment from Bayer.

Bayer subsequently entered into settlement agreements with each of generic defendants under which each generic defendant would agree to abandon all challenges to the validity of Bayer’s patent in exchange for a total payment of $398.1 million. The named plaintiffs, individually and as representatives of a certified class which included all purchasers of Cipro in California, claimed that the settlement agreements unlawfully restrained competition in California in violation of the Cartwright Act, Unfair Competition Law, and California common law.

In June 2013, the plaintiffs and Bayer entered into a settlement agreement resolving all of the plaintiff class’s claims in exchange for $74 million. On August 12, 2016, the plaintiffs requested preliminary approval of a settlement agreement against the HMR defendants that would create an all-cash settlement fund of $100 million.

Approval of settlement agreement. The court preliminarily found that the settlement appeared to be a good faith settlement and sufficiently fair, reasonable, and adequate. A hearing for final approval of the proposed settlement agreement was set for October 7, 2016, at which time the court will consider the proposed plan for allocation and the plaintiffs’ counsel application for an award of attorney fees and costs.

The case is No. S198616.

Attorneys: Eric B. Fastiff (Cabraser Heimann & Bernstein, LLP) and Dan Drachler (Zwerling, Schachter & Zwerling, LLP) for Karyn McGaughey.

Companies: Aventis, Inc.; Hoechst Marion Roussel, Inc.; Watson Laboratories, Inc.

Cases: Antitrust CaliforniaNews