Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—S.D. Fla.: Softgel capsule manufacturer unable to revive deceptive trade practices claim, (Oct 6, 2014)

By Greg Hammond, J.D.

A pharmaceutical manufacturer was unable to overturn the federal district court in Miami’s previous decision, dismissing the manufacturer’s Florida Deceptive and Unfair Trade Practices Act (FDUTPA) claim. In denying the motion for reconsideration, the court determined that the manufacturer failed to pinpoint any legal or factual errors in the court’s FDUTPA ruling (Procaps S.A. v. Patheon Inc., October 2, 2014, Goodman, J.).

Background. Procaps S.A. is a Columbia-based developer and manufacturer of softgel capsules—an oral dosage form of medications and nutritional supplements. Procaps and Patheon entered into a collaboration agreement to market softgel manufacturing and developing services. Although the agreement allocated markets and customers among the horizontal competitors, the companies agreed that it was lawful, as it brought a new competitor and product into the territory and field. However, after lackluster performance, Patheon decided to acquire another horizontal competitor, Banner Pharmcaps Europe B.V.

After the Banner acquisition, Procaps believed that it could no longer perform under the collaboration agreement, claiming that the agreement became an illegal horizontal restraint on trade. After Patheon refused to pay Procaps to leave the agreement or to divest Banner, Procaps filed suit, alleging antitrust violations under the Sherman Act, and violations of the FDUTPA. Both Patheon and Procaps filed motions for summary judgment. The court granted Patheon summary judgment over the FDUTPA claim, finding that Procaps failed to meet the requisite showing that Patheon disclosed confidential information to a third party. Procaps moved for reconsideration on the FDUTPA claim, and the parties filed three discovery motions.

FDUTPA claim. In support of its motion for reconsideration, Procaps argued: (1) the court misinterpreted FDUTPA in requiring Procaps to show misuse or disclosure of its confidential information; (2) if the court does not find that it erred in applying FDUTPA, it should allow Procaps leave to amend its complaint; and (3) the court’s summary judgment on the FDUTPA claim was premature because discovery remains ongoing and outstanding. Procaps also sought to clarify certain factual errors made in the court’s order.

Specifically, Procaps alleged four factual errors made in the court’s previous order regarding: the date of the proposals submitted under the collaboration agreement; when Patheon began to consider Banner; why Procaps filed the lawsuit; and a proposal made to another competitor. However, the court found that none of the facts Procaps pointed to were actually incorrect, and nothing needed to be corrected or clarified.

With regard to the reconsideration arguments, the court first determined that it did not misinterpret the FDUTPA in requiring Procaps to show misuse or disclosure of its confidential information. Specifically, the court noted that Procaps’ argument would turn every breach of contract with a confidentiality provision into a FDUTPA claim, which the Florida Supreme Court previously declared was not the intent behind the statute. Procaps’ request to amend its complaint was consequently denied as moot, and further denied because the deadline to amend its complaint passed over a year ago.

Finally, the court concluded that summary judgment on the FDUTPA claim was not premature, finding that: (1) Procaps failed to preserve this argument, as the manufacturer failed to raise the argument in its pleadings or at the summary judgment hearing; (2) the manufacturer’s argument was too speculative; and (3) Procaps failed to provide any concrete basis demonstrating that forthcoming discovery from DSM Pharmaceutical Products will support its FDUTPA claim. However, the court will allow a renewed motion, provided the DSM discovery or potential forensic analysis discover from Patheon produces substantial and bona fide evidence that supports Procaps’ FDUTPA claim.

Discovery motions. The court also denied the parties’ three motions to compel discovery, reasoning that: (1) discovery closed on March 10, 2014; (2) the parties’ agreement to hold discovery in abeyance without the court’s approval or knowledge is legally insufficient; and (3) the parties delayed bringing the discovery disputes to the court’s attention until long after the presumptive deadline established by the local rule expired. However, the court did make an exception, stating that if: (1) the discovery provided by Procaps to Patheon as part of the court-ordered forensic analysis of Procaps’ electronically stored information, (2) any similar discovery which might be provided in connection with Procaps’ motion to compel a forensic analysis of Patheon’s ESI, or (3) the DSM Pharmaceutical Products-provided discovery yields any substantively significant evidence warranting further discovery, then the party or parties receiving the evidence may file a motion for additional discovery, limited to issues arising out of the newly-provided evidence.

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

Attorneys: Chris S. Coutroulis (Carlton Fields Jorden Burt, PA) for Procaps S.A. David A. Vogel (Cooley, LLP) for Patheon Inc.

Companies: Procaps S.A.; Patheon Inc.

Cases: Antitrust StateUnfairTradePractices FloridaNews