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In re Flonase Antitrust Litigation

United States Court of Appeals, Third Circuit

December 22, 2017

IN RE: FLONASE ANTITRUST LITIGATION Smithkline Beecham Corporation, d/b/a GlaxoSmithKline; n/k/a GlaxoSmithKline LLC, including GlaxoSmithKline, PLC, Appellant

          Argued June 7, 2017

         On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civ. No. 2-08-cv-03301) District Judge: Honorable Anita B. Brody

          Lisa S. Blatt [ARGUED] R. Stanton Jones Sarah M. Harris Robert Leider Sally L. Pei Arnold & Porter LLP Stephen J. Kastenberg Burt M. Rublin Jessica M. Anthony Ballard Spahr LLP Counsel for Appellant.

          Richard A. Samp Mark S. Chenoweth Washington Legal Foundation Counsel for Amicus Appellants National Association of Manufacturers and Washington Legal Foundation.

          William S. Consovoy Thomas R. McCarthy Carmeron T. Norris Consovoy McCarthy Park Kate Comerford Todd Steven P. Lehotsky Janet Galeria U.S. Chamber Litigation Center Counsel for Amicus Appellant Chamber of Commerce of the United States of America.

          Cary Silverman Shook Hardy & Bacon H. Sherman Joyce Lauren Sheets Jarrell American Tort Reform Association Counsel for Amicus Appellant American Tort Reform Association.

          Bart D. Cohen Nussbaum Law Group PC John Alden Meade [ARGUED] Young Cotter & MeadeCounsel for Appellee.

          Before: CHAGARES, GREENAWAY, JR., and VANASKIE, Circuit Judges.

          OPINION

          GREENAWAY, JR., Circuit Judge.

         In this case, SmithKline Beecham Corporation, doing business as GlaxoSmithKline ("GSK"), seeks to enforce a court-approved settlement agreement and enjoin the State of Louisiana, through its Attorney General, from bringing allegedly released claims against GSK in the Louisiana state courts. Louisiana protests this enforcement action on the theory that the Eleventh Amendment to the Constitution of the United States bars its involuntary inclusion in the settlement agreement.

         To resolve this dispute, we must answer two questions: First, does a motion for approval of a class action settlement qualify as a suit against a state for Eleventh Amendment purposes if the requested settlement agreement enjoins a state from suing in a state court? Second, if the Eleventh Amendment does cover this motion for settlement approval, may GSK avoid the Eleventh Amendment's prohibition by showing that Louisiana waived its sovereign immunity? We find that the Eleventh Amendment covers this motion and that GSK may not avoid its bar.

         In addition to this claim, GSK asserts that the District Court abused its discretion in denying Rule 60(b) relief from a final judgment. We find this argument unavailing. On these two grounds, we will affirm.

         I.

         On July 14, 2008, private indirect purchasers of Flonase, a brand-name prescription drug, sued GSK in the United States District Court for the Eastern District of Pennsylvania. They alleged that: (a) GSK had filed sham citizen petitions with the Food and Drug Administration to delay the introduction of a generic version of Flonase, and (b) this delay forced the private indirect purchasers to pay more for Flonase than they would have if the generic version were available. The private indirect purchasers sued on behalf of themselves and a class of other indirect purchasers. For the purpose of the case at bar, two motions matter.

         First, in the primary suit, the private indirect purchasers moved for final approval of settlement on April 1, 2013, after the District Court had certified the class, and had approved of the notice to settlement class members. The State of Louisiana, an indirect Flonase purchaser, qualified as a potential class member but did not receive the approved notice. Instead, it only received a Class Action Fairness Act ("CAFA") Notice. This notice, "serve[d] upon the appropriate State official of each State in which a class member resides, " included: (1) "a copy of the complaint, " (2) "notice of any scheduled judicial hearing in the class action, " (3) "any proposed or final notification to class members, " (4) "any proposed . . . class action settlement, " and (5) an estimate of the number of class members in each state. 28 U.S.C. § 1715(b) (2012). The notice includes this information because Congress "designed [this notice requirement] to ensure that a responsible state and/or federal official receives information about proposed class action settlements and is in a position to react if the settlement appears unfair to some or all class members or inconsistent with applicable regulatory policies." S. Rep. No. 109-14, at 31 (2005), as reprinted in 2005 U.S.C.C.A.N. 3, 32. It made clear, however, that state officials "will not be required" to "get involved." Id. at 33.

         The requested court order "permanently enjoined" all members of the settlement class, including Louisiana, from bringing released claims against GSK, even in Louisiana's state court. Pls.' Mot. Final Approval Settlement and Plan Allocation, Award Att'ys' Fees, Reimbursement Expenses and Incentive Awards Named Pls. at 9-10, In re Flonase Antitrust Litig., No. CV 08-3301, 2015 WL 9273274 (E.D. Pa. Dec. 21, 2015), ECF No. 574 [hereinafter Motion for Final Approval of Settlement Plan]. The proposed settlement agreement, among other things, provided compensation to the plaintiffs and class members, released the plaintiffs' and class members' claims, "reserv[ed] exclusive and continuing jurisdiction over the Settlement and this Settlement Agreement" for the District Court, and gave GSK the power to enforce the settlement. App. 98-107. On June 19, 2013, the District Court approved the final settlement.

         Second, in the ancillary suit, GSK filed a motion to enforce the settlement agreement against the Louisiana Attorney General because, according to GSK, Louisiana violated the settlement agreement. In its motion, GSK argued that "Louisiana did not opt-out of the Settlement Class, and thus is bound by the release and covenant not to sue provisions in the Settlement Agreement and Final Order and Judgment." App. 314. As a result, GSK "respectfully submit[ted] that this Court should enjoin the Louisiana ...


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