Antitrust Law Daily Wrap Up, RICO—SDNY: Voluntary Dismissal of RICO, Antitrust Claims Against Pfizer Granted, (Jun 4, 2013)

By Tobias J. Gillett, J.D., LL.M.

The federal district court in New York City has granted the motion of two employee welfare funds to voluntarily dismiss their RICO and antitrust lawsuit against Pfizer Inc. (American Federation of State County and Municipal Employees District Council 37 Health & Security Plan v. Pfizer Inc., June 3, 2013, Oetken, J.). The action will permit a similar action by a third employee welfare fund that was stayed in the Southern District of Illinois pending the outcome of the present case to proceed.

On March 7, 2012, American Federation of State County and Municipal Employees District Council 37 Health & Security Plan (“American Federation”) and Sergeants Benevolent Association Health and Welfare Fund (“Sergeants”), two employee welfare funds, filed lawsuits against Pfizer and another pharmaceutical manufacturer in the Southern District of New York asserting certain RICO and antitrust claims. Later, another employee welfare fund filed lawsuits against three pharmaceutical manufacturers, including Pfizer, cases that were later consolidated in the Southern District of Illinois. The Judge in those cases stayed the Pfizer lawsuit pending the resolution of the New York action.

Pfizer filed a motion for judgment on the pleadings in the New York court. To permit the lawsuit in Illinois to proceed, because the district was perceived to have more favorable RICO precedent, American Federation and Sergeants filed a motion to voluntarily dismiss their claims. Pfizer opposed the motion.

The court explained that a court in the Second Circuit deciding whether a motion for voluntary dismissal without prejudice should be granted must consider five factors: “(1) the plaintiff’s diligence in bringing the motion, (2) any undue vexatiousness on the plaintiff’s part, (3) the extent to which the suit has progressed, including the defendant’s efforts and expense in preparation for trial, (4) the duplicative expense of relitigation, and (5) the adequacy of the plaintiff’s explanation for the need to dismiss.”

The employee welfare funds’ diligence in bringing their motion weighed in their favor, according to the court. They filed their “motion less than a year after filing the Complaint, less than three months after filing the First Amended Complaint, and roughly two months” after the Illinois case was stayed. Moreover, Pfizer had not “acted to its detriment on any expectation created” by the funds, and the funds filed their motion before discovery, summary judgment briefing, or trial preparation.

The funds’ actions also did not constitute vexatious behavior, in the court’s view. Courts in the Second Circuit did not ordinarily consider forum shopping in reviewing motions for voluntary dismissal without prejudice. Even if they did, the funds were “merely allowing a preexisting lawsuit filed in a different district by a different plaintiff to proceed.” Nothing indicated that the funds intended to refile the present lawsuit elsewhere.

The court found that the extent to which the suit had progressed also weighed in favor of the employee welfare funds. The case had only reached the stage of a motion on the pleadings, and there had been no discovery, summary judgment briefing, or trial briefing. The court noted that if Pfizer had not filed its answer simultaneously with its motion to dismiss the funds would have been able to voluntarily dismiss their complaint as a matter of right.

The lack of potential duplicative expense of relitigation also supported the funds’ position. The parties had not engaged in discovery, and Pfizer’s efforts to that point could “remain of value” to it in defending similar cases elsewhere.

Finally, the court did find that the adequacy of the employee welfare funds’ explanation for filing their motion weighed in favor of Pfizer. The funds’ desire to litigate the case in a forum with more favorable RICO precedent amounted to a “questionable” justification, in the court’s view. However, the court observed that the final factor was “not dispositive,” and concluded that “any shortcomings in plaintiff’s explanation are not sufficient to overcome the other four factors.” Therefore, the court granted the motion for voluntary dismissal.

The case is No. 12 Civ. 2237 (JPO).

Attorneys: Lauren Guth Barnes (Hagens Berman Sobol Shapiro LLP) for American Federation of State County and Municipal Employees District Council 37 Health & Security Plan. Katherine Anne Armstrong (Quinn Emanuel Urquhart & Sullivan LLP) for Pfizer, Inc.

Companies: American Federation of State County and Municipal Employees District Council 37 Health & Security Plan; Sergeants Benevolent Association Health and Welfare Fund; Pfizer, Inc.

Cases: RICO Antitrust NewYorkNews