New Jersey District Court Denies Motion To Dismiss Opt-Out Action – Litigation, Mediation & Arbitration

United States:

The New Jersey District Court denies the motion to dismiss the opt-out

October 07, 2021

Shearman & Sterling LLP

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On September 30, 2021, Judge Katherine S. Hayden of the United States District Court for the District of New Jersey dismissed a motion to dismiss an “opt-out” lawsuit based on a pending class action lawsuit involving claims under the Securities Exchange Act of. alleged 1934 against a pharmaceutical company, some of its executives and alleged “co-conspirators” in connection with an alleged price fixing for generic drugs. TIAA-CREF Large-Cap Growth Fund v Allergan PLC, No. 17-CV-11089-KSH-CLW, 2021 WL 4473156 (DNJ September 30, 2021). The opt-out also added claims under the Securities Act of 1933 and related to an illegal “market allocation” program. The court denied defendants’ motion to dismiss the opt-out lawsuit and found the lawsuit to be submitted in a timely manner and reasonably well.

The court ruled that the Securities Act lawsuits were timely because they were filed exactly one year after media reports that federal prosecutors were “suppressing generic drug companies” – including the defendant in the opt-out lawsuit “Have a full criminal investigation into the suspicion of price fixing” and that charges may be imminent. ID identified by some represented by the same lawyers represented in the opt-out lawsuit), the court found that those matters did not involve alleged violations of securities law resulting from the same pricing system used in the opt-out lawsuit. legal action was claimed. The court concluded that the “more plausible conclusion” is that plaintiffs only knew of their claims through a company-specific media report, which suggests that charges against the company may be imminent. ID card. The court also found that the plaintiffs’ attorney’s involvement in a previous litigation, without alleging that the plaintiffs themselves were aware of that previous litigation, was “inconclusive”. ID card.

For similar reasons, the court rejected the defendants’ arguments that the claims under the Stock Exchange Act were late because the plaintiffs should have been informed of their claims due to previously filed antitrust proceedings. ID card. at 9. In addition, the court found that even if plaintiffs had been notified of their claims beforehand, their claims under American Pipe v. Constr. Co v. Utah, 414 US 538 (1974), based on the filing of the original class action lawsuit. ID card. In that ruling, the court found that defendants had withdrawn their argument that American Pipe Tolling was not triggered until a class certification decision was issued, given the Third Circuit’s recent determination that “the filing of a class action is the relevant event that Toll Charges “the statute of limitations.” ID. (Citing Aly v. Valeant Pharmaceuticals International Inc., 1 F.4th 168, 175 (3rd Cir. 2021). Aly of Third Circuit’s decision was the subject of an earlier post.

The court also dismissed defendants’ argument that plaintiffs failed to adequately assert scientists in relation to the market sharing claims. The court found that it had previously applied a “core business” theory in dismissing a motion to dismiss the class action, thereby allowing scientists to be attributed to individual defendants since the alleged price-fixing system involved “core business” activities. Allergan, 2021 WL 4473156 at * 11. The court found it appropriate to apply the “core operations” theory to market allocation claims as the plaintiffs had adequately linked those allegations as “features of a single conspiracy” to the price-fixing scheme. ID card. Specifically, the court stated that two of the five “key products” at issue in the alleged pricing scheme, which accounted for a significant portion of the company’s profits, were also included in the market-sharing allegations, and the plaintiffs had a “host” of allegations “in Regarding communications between certain company executives and suspected co-conspirators ID: From a “holistic” view of the allegations relating to academics, the court ruled that the fact that a number of different government agencies continued to conduct both the company and the anti-competitive Investigate prices in the industry, ‘part of the puzzle’ and ‘provide'[] Support – at this stage of the dispute – for a scientist’s conclusion. “Id.

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