Antitrust Law Daily Wrap Up, ANTITRUST—S.D. Fla.: Softgel capsule manufacturer stuck with supplemental interrogatory answers, (May 13, 2015)

By Greg Hammond, J.D.

A pharmaceutical manufacturer that could not produce any additional details concerning specific evidence of actual detrimental effects on competition, resulting from an alleged horizontal agreement to restrain trade in the softgel capsule market, was stuck with its supplemental interrogatory answers. The federal district court in Miami denied the defendant’s motion to show cause, finding it clear that the manufacturer had no other specific evidence of actual detrimental effects beyond was already disclosed, but that the manufacturer’s answers are now binding (Procaps S.A. v. Patheon, Inc., May 12, 2015, Goodman, J.).

Procaps S.A. is a Columbia-based developer and manufacturer of softgel capsules. Procaps and Patheon entered into a collaboration agreement to market softgel manufacturing and developing services. After Patheon acquired another softgel company, Banner Pharmcaps, Procaps believed that it could no longer perform under the collaboration agreement, claiming that the agreement became an illegal horizontal restraint on trade. When Patheon refused to pay Procaps to leave the agreement or to divest Banner, Procaps filed suit, alleging antitrust violations under the Sherman Act.

The case was before the court on Patheon’s motion for an order requiring Procaps to show cause why it did not comply with a previous order, mandating that it file a binding notice regarding its position on how it intends to prove anticompetitive effect in this rule of reason antitrust case. The motion requests that Procaps file a binding notice about which method of proof it will be using and confirm that it will prove anticompetitive effect only by showing that customers in the relevant markets were harmed by the withdrawal of the Banner assets because their choice of suppliers was directly impaired. Procaps responded, noting that while Patheon is entitled to know what Procaps plans to do and not do at trial, “it is not entitled to tell Procaps how to prove its case.”

The court found that, given the many opportunities Procaps had to explain its theory of the case and the evidence that supposedly supports it, “it is clear to the Court that Procaps has no other specific evidence of actual detrimental effects beyond what it has already disclosed.” The court therefore denied the motion to show cause, finding that Procaps will not need to provide an additional round of supplemental interrogatory answers. Nevertheless, the court noted that this result will “generate consequences.”

Specifically, the court held that Procaps’ theories articulated in the initial and supplemental interrogatory answers are now binding, and that the company cannot defend against summary judgment or during trial with theories not already articulated. Further, Procaps will not be able to rely on facts disclosed for the first time in a new report by an expert witness or new factual themes developed by witnesses.

“Procaps has advised that it has provided all the information in its possession,” the court noted. “Thus, Procaps cannot later amend, supplement or otherwise seek to improve the evidence and/or theories it has now advanced.” As a result of Procaps’ inability to provide more detailed discovery, the company may not be able to sustain its burden to prove anticompetitive effects, the court noted.

Procaps was also ordered to provide detail about the “general principles” it will rely upon for “anticipated” expert testimony.

The case number is 12-24356-CIV-GOODMAN.

Attorneys: Chris S. Coutroulis (Carlton Fields Jorden Burt, PA) and Karen L. Hagberg (Morrison & Foerster) for Procaps SA. David A. Vogel (Cooley, LLP) and Robert Mark Brochin (Morgan Lewis & Bockius) for Patheon, Inc.

Companies: Procaps S.A.; Patheon, Inc.

Cases: Antitrust FloridaNews