Antitrust Law Daily Wrap Up, ANTITRUST—D.D.C.: Jurisdiction for 612 customers exists in action over anti-anxiety drug pricing, (Jul 31, 2014)

By Jeffrey May, J.D.

In a state-law antitrust action against generic drug maker Mylan and two other companies engaged in the business of selling chemicals used in pharmaceuticals for driving up the prices of two prescription anti-anxiety medications, the federal district court in Washington, D.C. is satisfied that diversity jurisdiction exists over 612 of the 1387 corporate and municipal self-funded customers included in a damages award proposed by the plaintiffs. The plaintiffs voluntarily dismissed claims of the remaining 775 self-funded customers who were either non-diverse from the defendants or for whom citizenship could not be established (In Re: Lorazepam & Clorazepate Antitrust Litigation, July 29, 2014, Hogan, T.).

The long-running dispute is on remand from the U.S. Court of Appeals in Washington, D.C. The appeal was based on a challenge to subject matter jurisdiction. It followed a judgment of the district court, entered after a jury trial, awarding the plaintiffs $76,823,943. Remand was deemed necessary because there were questions as to whether some of the self-funded customers on whose behalf the claims were brought were completely jurisdictionally diverse from the defendants.

The named plaintiffs—Blue Cross Blue Shield of Minnesota, Blue Cross Blue Shield of Massachusetts, Health Care Service Corporation, and Federated Mutual Insurance Company—had invoked diversity jurisdiction and alleged violations of state antitrust laws. These complaining insurance companies had sued “on behalf of themselves and as claims administrators for their self-funded customers.”

The court has now concluded that the plaintiffs averred the factual predicates necessary for the exercise of subject matter jurisdiction over 612 of the corporate and municipal self-funded customers included in the proposed damages award. The plaintiffs contended that the court had jurisdiction over 419 of Blue Cross & Blue Shield of Minnesota's self-funded customers (70 corporate customers and 349 municipal/political subdivisions); 153 of Blue Cross & Blue Shield of Massachusetts' self-funded customers (58 corporate customers and 95 municipal/political subdivisions); and 40 of Health Care Service Corporation’s self-funded customers (two corporate customers and 38 municipal/political subdivisions).

The defendants' request to dismiss the case in its entirety or to dismiss all of the self-funded customers from the case was denied. In addition, the court was unconvinced by the defendants' challenges to the plaintiffs’ jurisdictional allegations with respect to certain entities that the plaintiffs had not voluntarily dismissed from the case. The defendants' assertions that a Roman Catholic Church diocese and an energy cooperative were not corporations under Minnesota law for purposes of diversity jurisdiction were rejected. Moreover, the court rejected the suggestion that jurisdiction was lacking over the Massachusetts Bay Transportation Authority on the ground that it was an “arm of the state” and thus not a citizen of any state for diversity purposes.

The plaintiffs also had sought an Order for Remittitur. The court decided that it will take up the damages issue in a separate order.

The case is Civ. No. 01-2646 (TFH) (MDL Docket No. 1290).

Attorneys: David T. Fischer (Grant & Eisenhofer PA), and Robert T. Rhoad (Crowell & Moring LLP) for Health Care Service Corp. Eric S. Jackson (The Sack Law Firm PC), Thomas Joseph Poulin (Blank Rome, LLP), and Sarah E. Hudleston (Robins, Kaplan, Miller & Ciresi LLP) for Blue Cross Blue Shield of Minnesota, Federated Mutual Ins. Co., and Blue Cross Blue Shield of Massachusetts. Brian S. Roman (DKW Law Group, PC) for Mylan Laboratories, Inc., and Mylan Pharmaceuticals, Inc.

Companies: Health Care Service Corp.; Blue Cross Blue Shield of Minnesota; Federated Mutual Insurance Co.; Blue Cross Blue Shield of Massachusetts; Mylan Laboratories, Inc.; Mylan Pharmaceuticals, Inc.

Cases: Antitrust DistrictofColumbiaNews