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13-3981; 13-4096
United States Court of Appeals
for the
Third Circuit
ENDO PHARMACEUTICALS INC.,
Plaintiff-Appellant/Cross-Appellee,
v.
ACTAVIS, INC. and
ACTAVIS SOUTH ATLANTIC LLC,
Defendants-Appellees/Cross-Appellants.
____________________________________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________________________________
Appeal from the United States District Court
for the District of New Jersey in case no. 12-cv-7591
____________________________________________________________________________________________________________________________________________________________
____________________________________________________________________________________________________________________________________________________________
REPLY BRIEF OF DEFENDANTS-APPELLEES
ACTAVIS, INC., AND ACTAVIS SOUTH ATLANTIC LLC
Charles A. Weiss
Samuel Spital
HOLLAND & KNIGHT LLP
31 West 52nd Street
New York, New York 10019
(212) 513-3200
Attorneys for Defendants-Appellees
Case: 13-3981 Document: 003111752207 Page: 1 Date Filed: 09/30/2014
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES .................................................................................... ii
I. ACTAVISS ARGUMENT THAT ENDOS LANHAM ACT
CLAIM WAS PRECLUDED UNDER SANDOZ BECAUSE A
DETERMINATION OF FALSITY WOULD IMPROPERLY
REQUIRE ADJ UDICATION OF ISSUES RESERVED TO THE
FDA UNDER THE FOOD, DRUG & COSMETIC ACT, AND BE
AN END-RUN AROUND THE ABSENCE OF A PRIVATE
RIGHT OF ACTION UNDER THAT STATUTE, GOES TO THE
MERITS AND THUS SHOULD RESULT IN DISMISSAL OF
ENDOS CLAIMS WITH PREJ UDICE, AS ACTAVIS MADE
CLEAR IN BOTH THE DISTRICT COURT AND THIS COURT .............. 2
II. ACTAVISS ALTERNATIVE ARGUMENTS, WHICH ACTAVIS
ALSO RAISED IN THE DISTRICT COURT, GO TO THE
MERITS AND WOULD REQUIRE (IF ACCEPTED) DISMISSAL
WITH PREJ UDICE ......................................................................................... 5
A. Endos Failure to Allege a False Statement .......................................... 5
B. Endos Failure to Make a Plausible Allegation that Actavis Used
the Challenged Advertisements After May 2012 .................................. 8
C. Endos Failure to Present Competent Summary J udgment
Evidence that Actavis Used the Challenged Advertisements After
May 2012 ............................................................................................... 8
D. This Court Should Reach Actaviss Alternative Arguments if It
Concludes that a Sandoz Dismissal Is Without Prejudice................... 13
III. CONCLUSION .............................................................................................. 15
Case: 13-3981 Document: 003111752207 Page: 2 Date Filed: 09/30/2014
TABLE OF AUTHORITIES
Page(s)
CASES
Brown v. U.S. Steel Corp.,
462 F. Appx 152 (3d Cir. 2011) ........................................................................ 12
Burella v. City of Philadelphia,
501 F.3d 134 (3d Cir. 2007) ............................................................................... 13
Chase Manhattan Bank, N.A. v. American Natl Bank & Trust Co. of
Chicago,
93 F.3d 1064 (2d Cir. 1996) ............................................................................... 14
Dial-A-Car, Inc. v. Transportation, Inc.,
82 F.3d 484 (D.C. Cir. 1996) ................................................................................ 2
Fullman v. Potter,
480 F. Supp. 2d 782 (E.D. Pa. 2007) .................................................................... 9
Howard Johnson Intl v. Cupola Enters., LLC,
117 F. Appx 820 (3d Cir. 2004) ....................................................................... 11
Hudson United Bank v. LiTenda Mortgage Corp.,
142 F.3d 151 (3d Cir. 1998) ......................................................................... 13, 14
In re Ben Franklin Hotel Assocs.,
186 F.3d 301 (3d Cir. 1999) ............................................................................... 13
In re Mercedes-Benz Anti-Trust Litigation,
364 F. Supp. 2d 468 (D.N.J . 2005) ..................................................................... 10
Intl Union of Bricklayers & Allied Craftsmen v. Gallante,
912 F. Supp. 695 (S.D.N.Y. 1996) ....................................................................... 9
Jones v. Hashagen,
512 F. Appx 179 (3d Cir. 2013) ........................................................................ 11
ii
Case: 13-3981 Document: 003111752207 Page: 3 Date Filed: 09/30/2014
Kingman Park Civic Assn v. Williams,
No. 01-02675, 2002 U.S. Dist. LEXIS 15254 (D.D.C. Aug. 16,
2002) ................................................................................................................... 10
Kingman Park Civic Assn v. Williams,
348 F.3d 1033 (D.C. Cir. 2003) ...................................................................... 9, 10
Lunderstadt v. Colafella,
885 F.2d 66 (3d Cir. 1989) ................................................................................. 12
Montrose Med. Group Participating Savings Plan v. Bulger,
243 F.3d 773 (3d Cir. 2001) ......................................................................... 13, 14
Morrow v. Balaski,
719 F.3d 160 (3d Cir. 2013) ............................................................................. 6, 7
New Eng. Health Care Employees Union v. Mount Sinai Hospital,
65 F.3d 1024 (2d Cir. 1995) ................................................................................. 9
Old Bridge Owners Cooperative Corp. v. Township of Old Bridge,
981 F. Supp. 884 (D.N.J . 1997) .......................................................................... 10
Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc.,
653 F.3d 241 (3d Cir. 2011) ................................................................................. 7
Ramsgate Court Townhome Assn v. West Chester Borough,
313 F.3d 157 (3d Cir. 2002) ............................................................................... 14
San Lucio, S.R.L. v. Import & Storage Servs., LLC,
No. 07-3031, 2009 WL 1010981 (D.N.J . Apr. 20, 2009) .................................. 10
Sandoz Pharmaceuticals Corp. v. Richardson-Vicks, Inc.,
902 F.2d 222 (3d Cir. 1990) ........................................................................passim
Serbin v. Consolidated Rail Corp.,
140 F. Appx 336 (3d Cir. 2005) ........................................................................ 12
Unger v. Natl Residents Matching Program,
928 F.2d 1392 (3d Cir. 1991) ............................................................................... 4
United States v. Davis,
41 F. Appx 566 (3d Cir. 2002) ............................................................................ 6
iii
Case: 13-3981 Document: 003111752207 Page: 4 Date Filed: 09/30/2014
RULES
FED. R. CIV. P. 12 ......................................................................................... 4, 6, 8, 14
Fed. R. Civ. P. 56 ............................................................................................... 11, 12
iv
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Endo recognizes that claims which fail on the merits should be dismissed
with prejudice. See Yellow Br. at 36. That is precisely the situation here, and the
reason for Actaviss cross-appeal. Because Endo did not state a claim for relief
under the Lanham Act, its case failed on the merits and should have been
dismissed with prejudice. In the alternative, the case should be dismissed with
prejudice because Actavis is entitled to summary judgment.
Contrary to Endos assertions, a with-prejudice dismissal is fully consistent
with Actaviss substantive arguments on the merits of Endos appeal, and with
Actaviss position throughout these proceedings. Id. Actavis has consistently
argued that it is entitled to judgment on the merits. Again, contrary to Endos
assertions, Actavis did not argue (and does not argue) that the district court lacked
the authority to even make a decision on the merits. Id.
As set forth below, Actaviss grounds for dismissal under Sandoz
Pharmaceuticals Corp. v. Richardson-Vicks, Inc., 902 F.2d 222 (3d Cir. 1990), and
its three alternative grounds for dismissal, are all arguments on the merits, which if
accepted, require dismissal with prejudice. Actavis disagrees with Endos
response concerning the substance of those arguments, but recognizes that
engaging on the substance is beyond the scope of this reply brief.
1
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I. Actaviss Argument that Endos Lanham Act Claim Was Precluded
Under Sandoz Because a Determination of Falsity Would Improperly
Require Adjudication of Issues Reserved to the FDA Under the Food,
Drug & Cosmetic Act, and Be an End-Run Around the Absence of a
Private Right of Action Under that Statute, Goes to the Merits and Thus
Should Result in Dismissal of Endos Claims with Prejudice, as Actavis
Made Clear in both the District Court and this Court
Actavis has demonstrated that Endos suit is barred by Sandoz and its
progeny. See Red Br. at 21-39. If this Court agrees, Endos claims fail on the
merits because Sandoz makes it impossible for Endo to prove its case.
Sandoz held that a plaintiff does not state a claim for false advertising when
adjudicating the question of falsity would require a court to usurp the FDAs
authority to interpret its own rules or standards. See Sandoz, 902 F.2d at 231.
Under these circumstances, the plaintiff cannot prove its claim that the defendants
advertising violated the Lanham Act. Id. at 231-32; see also Dial-A-Car, Inc. v.
Transportation, Inc., 82 F.3d 484, 489-90 (D.C. Cir. 1996) (applying Sandoz and
affirming district courts with-prejudice dismissal of plaintiffs Lanham Act
claim), affg, 884 F. Supp. 584, 593 (D.D.C. 1995).
Actaviss position is that this case falls squarely within Sandoz because it
presents an issue at the core of the FDAs responsibility to determine the meaning
and effect of the agencys own regulatory activities. The FDA approved Actaviss
tablets as AB rated to Opana ER. Endo later voluntarily withdrew Opana ER and
replaced it with a bioequivalent formulation it calls Opana ER with Intac. Endo
2
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then tried but failed to have the FDA determine that Endo had withdrawn Opana
ER for lack of safety, and to rescind existing generic approvals such as the
approval held by Actavis. Now, Endo claims that Actaviss tablets are not AB
rated to Opana ER because Endo withdrew it in favor of Opana ER with Intac. See
Yellow Br. at 13-14. Actaviss argument under Sandoz is that Endos suit fails on
the merits because it asks the judiciary to usurp the FDAs authority to determine
the regulatory status of the Actavis product by ruling on the effect (if any) on a
generics AB rating when the manufacturer of the reference listed drug voluntary
discontinues that drug (for reasons unrelated to safety or efficacy) in favor of a
new formulation that is itself bioequivalent. See Red Br. at 21, 30-34. This might
be an extra-credit exam question in an advanced class on food and drug law, but it
is not a matter to be decided by the courts.
To be sure, if the FDA were to some day rescind the AB rating of the
Actavis product, whether on Endos theory or some other rationale, and Actavis
again asserted that its tablets were AB rated to Opana ER, then Endo could file a
new Lanham Act suit that would not be barred by res judicata. See Red Br. at 51
n.11. But unless and until that happens, Sandoz makes clear that Endos suit fails
on the merits as the facts exist today. The hypothetical possibility that (i) the FDA
may in the future rescind the AB rating of the Actavis product, and (ii) Actavis will
thereafter resume use of old advertisements with the AB rated statement in the
3
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teeth of the FDAs action, is not reason to dismiss the current case without
prejudice.
This has been Actaviss position throughout these proceedings. As Endo
previously acknowledged, Actavis did not argue that the district court should
dismiss based on the primary jurisdiction doctrine. See Blue Br. at 14, 19-20.
Rather, Actavis argued that under Sandoz, Lanham Act claims are prohibited if
(as here) adjudication would be bound-up with matters under the authority and
expertise of FDA, and that, [u]nder such circumstances, the Lanham Act claims
are precluded as a matter of law. A301. Plainly, a claim that is precluded as a
matter of law fails on the meritsand should be dismissed with prejudice
because the facts alleged by the plaintiff do not give rise to a legally cognizable
cause of action. See, e.g., Unger v. Natl Residents Matching Program, 928 F.2d
1392, 1401 (3d Cir. 1991) (affirming with-prejudice dismissal of a claim that was
not cognizable under the law).
1
1
Contrary to Endos assertions on reply, see Yellow Br. at 31, 36, a claim that is
not cognizable fails on the merits and should be dismissed with prejudice. Endo
appeared in its opening brief to recognize the distinction between dismissing a
claim as not cognizable and dismissing it under the primary jurisdiction doctrine
when it presented them as different grounds for dismissal. See Blue Br. at 19-20
([I]t is unclear whether the district court dismissed the Complaint (a) based on
FED.R.CIV.P. 12(b)(6), because it agreed with Actavis that Endo[s] claims are not
cognizable under the Lanham Act (or related state law claims) because they are
bound up with determinations that can only be made by FDA under the Food,
Drug & Cosmetic Act, which does not authorize a private right of (contd . . . )
4
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II. Actaviss Alternative Arguments, Which Actavis Also Raised in the
District Court, Go to the Merits and Would (if Accepted) Require
Dismissal with Prejudice
Actaviss alternative grounds for dismissal are indisputably merits-based.
Actavis raised them in both the district court and this Court, contrary to Endos
spurious assertion that a with-prejudice dismissal would be inconsistent with
Actaviss position throughout these proceedings, Yellow Br. at 36.
A. Endos Failure to Allege a False Statement
Endo acknowledges that an adjudication that Actavis had not engaged in
any false advertising, would constitute a merits-based determination warranting
dismissal with prejudice. Yellow Br. at 36. But Endo simply ignores Actaviss
showing that it did not engage in false advertising. As Actavis explained, the FDA
approved its product as AB rated to Opana ER, and (despite Endos efforts) has not
revoked its approval or changed the therapeutic equivalence rating of Actaviss
product. Therefore, the statement in Actaviss advertisements challenged by
Endothat Actaviss tablets are AB rated to Opana ERis true. See Red Br. at
40-41.
(. . . contd) action (A3), or (b) based on a determination that, under the doctrine
of primary jurisdiction, it was declining to exercise the authority it had to resolve
Endos claims.).
5
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Actavis made this argument in both the district court and this Court. See id.;
A308. Indeed, Endo acknowledged below that one of the grounds Actavis relied
on in moving to dismiss was that its advertising is true. A516.
It is Endo, not Actavis, that is changing its theory. In its reply brief, Endo
argues that this Court must accept as true, inter alia, Endos position that the
statement in Actaviss advertisements would be understood as a representation
that Actaviss Tablets are FDA-approved as being therapeutically equivalent to,
and listed by the FDA as having an AB therapeutic code/rating with respect to
Opana ER with Intac. Yellow Br. at 1; see also id. at 11, 13-14. But Endo only
argued in its opening brief that the advertisements would be understood in this
manner, not that this was a well-pled factual allegation that must be accepted as
true. See Blue Br. at 25. This Court should thus disregard and strike those
portions of Endos reply brief which make that argument for the first time. See
United States v. Davis, 41 F. Appx 566, 573 n.9 (3d Cir. 2002) (unpublished)
(citing Kost v. Kozakiewicz, 1 F.3d 176, 182 n.3 (3d Cir. 1993)).
In any event, Endos contention about how the advertisements would be
understood is not a factual allegation that must be accepted as true. On a Rule
12(b)(6) motion, a court is not required to accept unsupported conclusions and
unwarranted inferences, or a legal conclusion couched as a factual allegation.
Morrow v. Balaski, 719 F.3d 160, 165 (3d Cir. 2013) (en banc) (citation omitted).
6
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Endo now argues that the Court must accept Endos interpretation of the
advertisements. Endo claims it is self-evident that . . . physicians, pharmacists,
and others would understand Actaviss statement that its Tablets are AB rated to
Opana