Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-01142/USCOURTS-cand-3_07-cv-01142-5/pdf.json

Nature of Suit Code: 320
Nature of Suit: Assault, Libel, and Slander
Cause of Action: 28:1332 Diversity-Libel,Assault,Slander

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SCHERING CORPORATION,

Plaintiff,

 v.

FIRST DATABANK INC.,

Defendant. /

No. C 07-01142 WHA

ORDER DENYING SPECIAL

MOTION TO STRIKE

INTRODUCTION

In this tort action, defendant First DataBank Incorporated moves to strike the complaint

under California’s anti-SLAPP (Strategic Lawsuit Against Public Participation) statute. This

order holds that California’s anti-SLAPP statute does not apply to the instant action. 

Furthermore, even if it did apply, the motion would be denied. Accordingly, for the

below-stated reasons, First DataBank’s motion to strike is DENIED. 

STATEMENT

By order dated April 10, 2007, the Court denied plaintiff Schering Corporation’s motion

for a preliminary injunction. See Schering Corp. v. First Databank Inc., No. C 07-01142 WHA,

2007 WL 1068206 at *1 (N.D. Cal. Apr. 10, 2007). The full procedural and factual history of

this action is set forth there and is recounted here only in brief. 

First DataBank creates a database called the National Data Drug File Plus (“NDDF”),

which it disseminates to licensed purchasers. The NDDF database contains pricing and clinical

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 1 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

information about nearly every Food and Drug Administration-approved pharmaceutical

product. First DataBank has its principal place of business in California (Breen Decl. ¶¶ 6, 7,

9). 

Schering develops and manufactures pharmaceutical products. It operates in New

Jersey. One of Schering’s products is Proventil HFA, an albuterol sulfate metered-dose inhaler. 

Proventil HFA is approved by the Food and Drug Administration for patients aged four to

eleven for the treatment and prevention of brochospasm with reversible obstructive airway

disease and the prevention of exercise-induced brochospasm (Kowalski Decl. ¶¶ 12, 14).

There are two other comparable FDA-approved albuterol sulfate metered-dose inhalers

on the market: Ventolin HFA, manufactured by GlaxoSmithKline, and ProAir HFA,

manufactured by IVAX Pharmaceuticals. Ventolin HFA has been approved by the FDA for

adults and children aged four and older for the treatment of brochospasm with reversible

obstructive airway disease and prevention of exercise-induced bronchospasm. ProAir HFA has

been approved as safe and effective for patients aged twelve and older who suffer from the same

conditions (Breen Decl. Exhs. B, C; Kowalski Decl. Exh. B at 6, Exh. C). In addition, unlike

Proventil HFA, Ventolin HFA does not include any other excipients such as ethanol and oleic

acid. And ProAir HFA, unlike Proventil HFA, does not include oleic acid as an excipient

(Kowalski Decl. Exhs. A, B).

The FDA publishes a guide entitled Approved Drug Products with Therapeutic

Equivalence Evaluations, commonly referred to as the Orange Book. The Orange Book lists

FDA-approved drugs and notes whether the FDA has determined if pharmaceutically equivalent

drugs available from different suppliers are therapeutically equivalent. Because the three

products have the same active ingredients, dosage form, route of administration, and strength,

they are considered to be pharmaceutical equivalents. Drug products are considered

therapeutic equivalents, however, “only if they are pharmaceutical equivalents and if they can

be expected to have the same clinical effect and safety profile when administered to patients

under the conditions specified in the labeling” (Kowalkski Decl. Exh. D at v–vi).

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 2 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

The FDA has assigned all three of the HFA products a “BX” code. This indicates that,

due to insufficient information, the FDA considers the three products to be pharmaceutically

equivalent but currently presumes them not to be therapeutically equivalent (Kowalski

Decl. Exh. D at xvi, xviii; Breen Decl. Exh. F). 

Included in the information published in First DataBank’s NDDF database are a

“generic indicator,” a “generic code number,” and a “generic code sequence number.” The

generic indicator for the HFA products indicates that the products are “multi-source.” This

means that the three products — with the same active ingredient, dosage form, route of

administration, and strength — are available from several manufacturers. The generic code

number groups together pharmaceutically equivalent products with the same “ingredients,

strength, dosage form and route.” Somewhat relatedly, the generic code sequence number

groups together products that are pharmaceutically equivalent but are “marketed by multiple

manufacturers.” The generic code sequence number “excels at generating lists of candidates for

substitution,” although it alone is not sufficient to determine generic or therapeutic

substitutability. First DataBank has assigned all three HFA products the same generic code

sequence number and generic code number (Fine Decl. ¶¶ 8–9; Breen Decl. ¶¶ 33, 43; Exh. D;

Exh. I at 52, 141–42; Mot. for Preliminary Injunction Exh. 3).

Schering filed the complaint in this case in the District of New Jersey on October 23,

2006. Schering’s complaint alleges that First DataBank publishes false information indicating

that all three HFA products are therapeutically substitutable when the FDA has made no such

determination. Under that theory, Schering asserts claims for trade libel, negligent publication,

and tortious interference with economic advantage. 

On January 24, 2007, Magistrate Judge Ronald Heges transferred the action to this

district pursuant to 28 U.S.C. 1404(a). See Schering Corp. v. First Databank, Inc., __ F. Supp.

2d __, 2007 WL 831637 at *1 (D.N.J. Jan. 24, 2007). Following the transfer, an order dated

April 10, 2007, denied Schering’s motion for a preliminary injunction. This order addresses

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 3 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

First DataBank’s motion to strike Schering’s complaint pursuant to the California anti-SLAPP

statute. 

ANALYSIS

First DataBank specially moves to strike plaintiff’s complaint under California’s

anti-SLAPP statute. 

In 1992, responding to the “disturbing increase in lawsuits

brought primarily to chill the valid exercise of the constitutional

rights of freedom of speech and petition for the redress of

grievances,” the California Legislature enacted the Anti-Strategic

Lawsuit Against Public Participation (anti-SLAPP) statute. Cal.

Civ. Proc. Code § 425.16(a). The statute was intended to

“encourage continued participation in matters of public

significance” and to prevent the chilling of such participation

through abuse of the judicial process. To that end, the statute

directs courts to construe the statute broadly. 

The statute is designed to allow for early dismissal of

non-meritorious cases aimed at chilling First Amendment

expression through costly, time-consuming litigation. Under the

statute, a civil defendant, at the infant stages of the litigation, may

move to strike a plaintiff's SLAPP complaint, which is defined as

a non-meritorious action brought against a person arising “from

any act of that person in furtherance of the person’s right of

petition or free speech under the United States or California

Constitution in connection with a public issue.” Cal. Civ. Proc.

Code § 425.16(b)(1).

New.Net, Inc. v. Lavasoft, 356 F. Supp. 2d 1090, 1098–99 (C.D. Cal. 2004) (some citations and

quotations omitted). At issue in this case are the anti-SLAPP statute’s provision for special

motions to strike, Cal. Civ. Proc. Code 425.16(b)(1), and the provision entitling a party

prevailing on a special motion to strike to fees and costs, Cal. Civ. Proc. Code 425.16(b)(1). 

The Ninth Circuit has “determined that California anti-SLAPP motions to strike and entitlement

to fees and costs are available to litigants proceeding in federal court, and that these provisions

do not conflict with the Federal Rules of Civil Procedure.” Thomas v. Fry’s Electronics, Inc.,

400 F.3d 1206, 1206–07 (9th Cir. 2005) (citing United States ex rel. Newsham v. Lockheed

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 4 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

 In Metabolife International Inc. v. Wornick, 264 F.3d 832, 846 (9th Cir. 2001), the Ninth Circuit held

that Section 425.16(f) — limiting the time for filing a motion to strike — and Section 425.16(g) — staying

discovery pending resolution of the motion — do not apply in federal court. Those statutory provisions are not

at issue in the present motion.

5

Missiles & Space Co., 190 F.3d 963, 970–73 (9th Cir. 1999)).1 One may well ask how a

California statute can regulate the federal exercise of judicial power. One explanation may be

that the Ninth Circuit has generally approved such a restriction only in diversity cases where

California substantive law was being applied. See Bosley Med. Institute, Inc. v. Kremer,

403 F.3d 672, 682 (9th Cir. 2005); Thomas, 400 F.3d at 1206; Vess v. Ciba-Geigy Corp. USA,

317 F.3d 1097, 1109 (9th Cir. 2003); Lockheed Missiles & Space Co., 190 F.3d at 970–73; but

see Batzel v. Smith, 333 F.3d 1018, 1025–26 (9th Cir. 2003) (considering federal substantive

law).

Although provisions of California’s anti-SLAPP statute can be available in federal

court, whether those provisions are available in this action implicates a unique choice-of-law

question: whether New Jersey would apply California’s anti-SLAPP statute to cases properly

brought in New Jersey. This case was transferred to this district from the District of New Jersey

pursuant to 28 U.S.C. 1404(a), which permits transfer for “the convenience of parties and

witnesses” and “in the interest of justice.” When a case is transferred on grounds of

convenience pursuant to 28 U.S.C. 1404(a), the transferee court must apply the original

transferor court’s choice-of-law rules. See S.A. Empresa De Viacao Aerea Rio Grandense

(Varig Airlines) v. The Boeing Co., 641 F.2d 746, 749 (9th Cir. 1981). In diversity cases,

federal courts must apply the conflict-of-law principles of the forum state. See

Sarlot-Kantarjian v. First Penn. Mortgage Trust, 599 F.2d 915, 917 (9th Cir. 1979). Thus all

choice-of-law questions herein must be resolved under New Jersey choice-of-law rules.

1. WHETHER CALIFORNIA’S ANTI-SLAPP STATUTE APPLIES 

UNDER NEW JERSEY CHOICE-OF-LAW RULES.

This order must now determine whether the New Jersey courts would apply California’s

anti-SLAPP statute to this action. New Jersey courts “employ a flexible

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 5 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

 New Jersey courts have held that SLAPP suits may satisfy the “special grievance” element of a

malicious prosecution suit arising out of a civil lawsuit “because of the chilling effect . . . upon [a person’s] First

Amendment freedom of speech and right to protest.” Turner v. Wong, 832 A.2d 340, 351 (N.J. Super. Ct. App.

Div. 2003). In another decision, the Appellate Division of the New Jersey Superior Court evinced a strong

disfavor for SLAPP suits. See LoBiondo v. Schwartz, 733 A.2d 516, 518 (N.J. Super. Ct. App. Div. 1999) (“Our

careful scrutiny of this voluminous record persuades us that plaintiffs’ complaint should have been promptly

dismissed with prejudice on defendants’ motion for summary judgment. . . . Defendants were exercising their

constitutional right to participate in public debate, to express themselves regarding matters of public concern,

and to petition governmental agencies and officers for redress of their legitimate grievances. Their speech was

privileged, and they did not abuse their privilege.”). 

6

‘governmental-interest’ analysis to determine which state has the greatest interest in governing

the specific issue that arises in the underlying litigation.” Erny v. Estate of Merola, 792 A.2d

1208, 1212–13 (N.J. 2002). “Ordinarily, choice-of-law determinations are made on an

issue-by-issue basis, with each issue receiving separate analysis.” Id. at 1213. “It is thus

conceivable that the law of one jurisdiction may apply to one issue in a matter and the law of a

second jurisdiction to another.” Grossman v. Club Med Sales, Inc., 640 A.2d 1194, 1199 (N.J.

App. Div. 1994). 

In the first prong of the governmental-interest test, the Court must “determine whether

there is an actual conflict between the laws of the states involved.” Erny, 792 A.2d at 1216. 

Here, there appears to be an actual conflict. The California legislature has enacted an

anti-SLAPP statute to prevent lawsuits that are “brought primarily to chill the valid exercise of

the constitutional rights of freedom of speech and petition for the redress of grievances.” 

Cal. Civ. Proc. Code 425.16(a). There does not appear to be, nor has either party identified, any

similar provision in New Jersey.2

“The second prong of the governmental-interest analysis requires the Court to determine

the interest that each state has in applying its” law to the parties in the instant litigation. Erny

792 A.2d at 1216. For this second prong, New Jersey relies heavily on the various principles

set forth in the Restatement (Second) Conflict of Laws. See id. at 1216–18; Fu v. Fu, 733 A.2d

1133, 1140–41 (N.J. 1999). Specifically, five factors drawn from Section 145 of the

Restatement guide the governmental-interest analysis in tort cases: “(1) the interests of

interstate comity; (2) the interests of the parties; (3) the interests underlying the field of tort law;

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 6 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

(4) the interests of judicial administration; and (5) the competing interests of the states.” Erny,

792 A.2d at 1217. 

The most important factor is the competing interests of the states. Thus, “the initial

focus should be on what policies the legislature or court intended to protect by having that law

apply to wholly domestic concerns, and then, whether these concerns will be furthered by

applying that law to the multi-state situation.” Ibid. (quotations and alterations omitted). 

New Jersey courts also follow the Restatement’s guidance as to the other four factors:

When considering the interests of interstate comity, a court must

determine whether application of a competing state’s law would

frustrate the policies of other interested states. When determining

the interests underlying the field of tort law, a court must consider

the degree to which deterrence and compensation, the

fundamental goals of tort law, would be furthered by the

application of a state’s local law. Because every tort rule, to some

extent, is designed both to deter and to compensate, it is necessary

to evaluate on a case-by-case basis the relative weight of those

underlying purposes with respect to a specific rule.

The remaining two factors are less significant for the purpose of

making choice-of-law determinations in tort actions. The

interests of the parties plays a small role because a person who

causes an unintentional injury is not necessarily aware of the law

that may be applied to the consequences of his actions. The

interests of judicial administration afford courts a chance to

consider the practicality of applying a specific law in a given

situation; however, to the extent that that factor conflicts with a

strong state policy, the factor yields. 

Ibid. (quotations and citations omitted). 

A. General Principle.

This order acknowledges the Restatement’s principle that in cases involving “multistate

defamation,” when a “corporation, or other legal person, claims that it has been defamed by an

aggregate communication, the state of most significant relationship will usually be the state

where the corporation, or other legal person, had its principal place of business at the time, if

the matter complained of was published in that state.” Restatement (Second) Conflict of Laws

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 7 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

 It is generally recognized that the torts of trade libel and defamation are distinct torts. See Black &

Yates v. Mahogany Ass'n, 129 F.2d 227, 235–36 (3d Cir. 1941) (“There is a clear line of demarcation between

the two torts which is often overlooked.”); Restatement (Second) of Torts 623A, cmt. g. The two torts,

however, are similar enough that they operate identically for choice-of-law analyses. Indeed, “[b]oth involve

the imposition of liability for injuries sustained through publication to third parties of a false statement affecting

the plaintiff.” Restatement (Second) of Torts 623A cmt. g. This is supported by Section 151 of the Restatement

(Second) Conflict of Laws, which provides that “[t]he choice-of-law rules involving injurious falsehood are the

same as those involving defamation.”

8

150(3). Here, a viable claim by Schering is its trade libel claim.3 Schering alleges that

First DataBank has disseminated false statements about Schering’s product, Proventil HFA, in

First DataBank’s nationally-distributed NDDF database. Applying Section 150 to this case,

Schering’s “principal place of business,” New Jersey, should be presumed the “state of most

significant relationship” to this action. 

B. States’ Competing Interests and Interstate Comity.

This order now turns to the factors to be considered in the governmental-interest

analysis. The most important factor is the competing interests of the states. In addition, in this

case, the competing-interest consideration implicates another factor — the interests of interstate

comity. On balance, these factors tip toward refusing to apply California’s anti-SLAPP statute

in a New Jersey lawsuit.

The California legislature has expressed a strong policy against the “disturbing increase

in lawsuits brought primarily to chill the valid exercise of the constitutional rights of freedom of

speech and petition for the redress of grievances.” Cal. Civ. Proc. Code 425.16(a). To that end,

the anti-SLAPP statute was enacted to prevent the chilling of those rights through “abuse of the

judicial process.” In the Court’s view, implicit in this policy is the legislature’s intent to stem

the influx of meritless lawsuits brought in California courts. It is doubtful whether California’s

policies were intended to have a substantive effect on potential abuses of the judicial process in

other states. 

The New Jersey state policy is not entirely antithetical to California’s interests. Indeed,

the New Jersey Supreme Court has “repeatedly encouraged the use of summary judgment as a

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 8 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

 Schering erroneously contends that New Jersey’s competing interest is in allowing New Jersey

citizens access to New Jersey courts to bring meritorious tort actions. The purpose of the anti-SLAPP statute is

to curtail meritless claims designed only to chill protected speech. The anti-SLAPP procedure, even if applied

here, would not result in the dismissal of a legitimate lawsuit.

9

technique to dispose expeditiously of meritless defamation actions, thereby to lessen the chill

that the institution of such actions inevitably has on the exercise of free speech.” LoBiondo,

733 A.2d at 529; see also Fu, 733 A.2d at 1142 (“The ‘law’ can be either the decisional or

statutory law of a state.”).4 Notwithstanding that court-recognized policy, the New Jersey

legislature has chosen not to enact an anti-SLAPP statute. Anti-SLAPP proposals were

introduced in the New Jersey legislature in 1996 and 1998. See California Anti-SLAPP Project,

at http://www.casp.net/statenj.html. Those were never enacted into law. More recently,

identical proposals for an anti-SLAPP statute were introduced in the New Jersey state assembly

and senate during the 2006–07 legislative session. See S697 and A2652, available at

http://www.njleg.state.nj.us/bills/BillsByNumber.asp. No action has been recorded since early

2006. Those proposals are still before judiciary committees. 

The application of California’s anti-SLAPP statute here would frustrate New Jersey’s

current policy of using summary judgment — rather than a legislatively-constructed

device — to dismiss groundless actions designed to chill protected speech. How individual

states choose to prevent the abuse of process within their own courts is best left to individual

states to decide for themselves. And while “California has a great interest in determining how

much protection to give California speakers,” Competitive Techs. v. Fujitsu Ltd., 286 F. Supp.

2d 1118, 1158 (N.D. Cal. 2003), California’s legislative policies designed to deter baseless tort

actions should have no bearing on actions filed in New Jersey. California’s domestic concerns

alone are insufficient to overcome New Jersey’s interest in regulating its own courts. Nothing

First DataBank has offered on the governmental-interest factor would justify the extra-territorial

application of California’s anti-SLAPP statute. The California anti-SLAPP statute should apply

only to “wholly domestic concerns” and not the “multi-state situation.” Fu, 733 A.2d at 1142.

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 9 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

 The Court doubts, however, whether such interests are served where, as here, the parties are two

sophisticated corporations with enormous resources. 

10

C. Interests Underlying the Field.

The interests served by an anti-SLAPP statute are ostensibly the deterrence of frivolous

lawsuits designed to chill speech and the prevention of the abuse of judicial processes. The

LoBiondo court in New Jersey echoed those considerations when it held that the SLAPP case

before it “should have been promptly dismissed with prejudice on defendants’ motion for

summary judgment.” LoBiondo, 733 A.2d at 518. In contrast, in a true SLAPP action (which

this is not) a special motion to strike is favored. The anti-SLAPP statute “establishes a

procedure where the trial court evaluates the merits of the lawsuit using a summary

judgment-like procedure at an early stage of the litigation,” which limits the costs of defending

against such a lawsuit given the short time frame for hearings and the automatic stay of

discovery. Varian Med. Sys., Inc. v. Delfino, 106 P.3d 958, 966 (Cal. 2005). This certainly

serves to deter and prevent the prototypical SLAPP suit, in which the plaintiff does not hope to

win the lawsuit and instead “tries to wear down the other side by forcing it to spend time,

money, and resources battling the SLAPP instead of the protected activity.” Visher v. City of

Malibu, 23 Cal. Rptr. 3d 816, 819 (2005).5

 This factor tips toward applying the more efficient

anti-SLAPP statute’s procedure to this action.

D. Interests of the Parties and Interests of Judicial Administration.

When considering the interests of the parties, courts “focus on [the parties’] justified

expectations and their needs for predictability of result.” Fu, 733 A.2d at 1141. In this case,

this factor overlaps with the inquiry into the “interests of judicial administration,” which

requires a court “to consider the relative ease in determination and application of the choice of

law regarding a specific issue, a factor that in turn furthers the values of uniformity and

predictability of result.” Id. at 1142 (citing Restatement (Second) Conflict of Laws 145, cmt.

b). Both parties had a justified expectation that California’s anti-SLAPP statute would not be

applied anywhere other than California. Neither party has identified any decision applying

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 10 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

11

California’s anti-SLAPP statute extra-territorially. Thus, First DataBank, even as a California

defendant, could not have had any expectation that it would have had the benefit of the

anti-SLAPP procedure when being sued in New Jersey. Moreover, restricting the anti-SLAPP

mechanism to courts sitting in California would advance the values of “uniformity and

predictability of result.”

First DataBank relies on Global Relief Foundation v. New York Times Co., No. 01 C

8821, 2002 WL 31045394, at *12 (N.D. Ill. Sept. 11, 2002). That decision did not consider

whether the anti-SLAPP statute could apply outside of California, contrary to what

First DataBank argues. Instead it only assumed arguendo that the anti-SLAPP statute applied

and concluded that the complaint would not have been stricken under the statute. Id. at *12

(“Assuming that the Anti-SLAPP statute may be applied in this case, this Court is unconvinced

that it requires dismissal of this action.”). Global Relief is inapplicable. 

E. Contacts.

Further case-specific reasons justify a rejection of the anti-SLAPP procedure under

New Jersey conflict-of-law principles. New Jersey courts consider other factors set forth in

Restatement Section 145 that relate to the “contacts that are most germane to the

governmental-interest test” and add context to the analysis. Erny, 792 A.2d 1217. Those

factors are “(1) the place where the injury occurred; (2) the place where the conduct causing the

injury occurred; (3) the domicile, residence, nationality, place of incorporation, and place of

business of the parties; and (4) the place where the relationship, if any, between the parties is

centered.” Ibid. This order holds that New Jersey possesses the contacts most relevant to the

instant choice-of-law question, weighing in favor of not applying the anti-SLAPP statute to this

action.

Here, First DataBank has its principal place of business in California and is incorporated

in Missouri. Schering is incorporated in and has its principal place of business in New Jersey. 

Although First DataBank compiles the NDDF database in California, the database is published

in other states, including New Jersey. In a situation such as this, the Restatement recognizes

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 11 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

 Appendix 1 to this order is the parties’ full agreement, including all exhibits, provided to the Court

by counsel after oral argument.

12

that “if the aggregate communication disparages, or otherwise causes pecuniary loss to, the

plaintiff's trade or business, the applicable law will usually be the local law of the state where

the plaintiff has his principal place of business.” Restatement (Second) Conflict of Laws 151,

cmt. c. Here, that location is New Jersey.

Finally, this order considers the “place where the relationship, if any, between the

parties is centered.” At oral argument, First DataBank contended that the parties’

California-based licensing agreement applied to this action and dictated the law to be applied. 

This order rejects that contention. Although First DataBank has licensed the limited use of the

NDDF database to Schering, the relevant provisions of that contractual agreement were never

intended to apply to a tort action such as this. 

The agreement upon which First DataBank relies is that which the magistrate judge in

New Jersey considered when transferring the action to this district. The licensing agreement

permitted Schering to use the NDDF database, as a “Licensed Product” only “for pricing and

competitive analysis” (App. 1).6

 The agreement contained a choice-of-law clause and

forum-selection clause that defendants contend should fully apply to this action. The

choice-of-law clause stated: “This Agreement shall be governed by and construed in

accordance with the laws of the United States and the State of California, as applied to

Agreements entered into and to be performed entirely within California and between California

residents” (Breen Decl. Exh. J at 5). This action is based on allegations that First DataBank is

making false statements about Schering’s Proventil HFA. It does not require any consideration

of how the agreement should be construed. In both the opposition to the preliminary injunction

motion and the briefs in support of the instant motion, First DataBank did not rely on any

defenses based on the agreement. It is clear that the choice-of-law clause does not apply to this

action. 

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 12 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

13

The forum-selection clause stated: “In the event of any dispute concerning this

Agreement or the Licensed Products, suit may be brought only in a court of competent

jurisdiction in the U.S. District Court of the Northern District of California or in the California

Superior Court for the County of San Mateo” (Breen Decl. Exh. J at 5). In light of the

forum-selection clause, First DataBank argues that Schering engaged in improper forum

shopping and violated the agreement by filing the action in New Jersey. Indeed, the New Jersey

district court found that the forum-selection clause did apply and accordingly transferred this

action to this district. The Court respectfully disagrees with the New Jersey district court and

First DataBank’s broad construction of the scope of the forum-selection clause.

In this tort action, Schering does not allege that First DataBank violated the parties’

licensing agreement or otherwise prevented Schering from benefitting from the licensing

agreement. Although the action “concerns” the NDDF database, it would inappropriately

extend the parties’ agreement to hold that the parties contemplated that tort claims wholly

divorced from the existence of the agreement would also be governed by the forum-selection

clause. With respect to the alleged misrepresentations at issue, the fact of the parties’ ongoing

agreement has no bearing on the claims. The NDDF database contains representations about

products manufactured by many drug companies. For purposes of this action, Schering is

simply a drug manufacturer whose products may have been disparaged by First DataBank’s

database. The agreement played no role in giving rise to these claims. Indeed, Schering never

had access to the generic code sequence number, one of the key disputed fields in this case,

until early February 2007, months after this case was initiated. Schering still does not have

access to the generic code number, another field at issue. In sum, this is not a case where

Schering is “avoiding a forum selection clause by simply pleading non-contractual claims in

cases involving the terms of a contract containing the parties’ choice of forum.” Crescent

Intern., Inc. v. Avatar Communities, Inc., 857 F.2d 943, 945 (3d Cir. 1988) (emphasis added). 

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 13 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

 There is no point in sending the case back to New Jersey. This Court will go ahead and preside over

its adjudication.

14

This action is not governed by the forum-selection clause and Schering did not violate it by

filing in New Jersey.7

***

This order holds that, after considering New Jersey’s governmental-interest

choice-of-law analysis, the factors weigh strongly against applying California’s anti-SLAPP

statute to the present action. California’s domestic concerns would not be significantly

advanced by applying California’s anti-SLAPP statute in other jurisdictions. The motion may

be denied for this reason alone.

2. WHETHER THE ACTION IS COVERED BY THE ANTI-SLAPP STATUTE.

Even assuming arguendo that the anti-SLAPP statute applies, the motion to strike would

be denied.

A court considering an anti-SLAPP motion must engage in a

two-part inquiry. First, in order to prevail on a motion to strike,

the moving party must make an initial prima facie showing that

the claimant’s suit arises from an act in furtherance of its rights of

petition or free speech in connection with a public issue. “An act

in furtherance” includes, but is not limited to, “any written or oral

statement or writing made in a place open to the public or a public

forum in connection with an issue of public interest, or any other

conduct in furtherance of the exercise of . . . the constitutional

right of free speech in connection with a public issue or an issue

of public concern.” Cal. Civ. Proc. Code § 425.16(e)(3).

Second, once the defendant has made a prima facie showing, the

burden shifts to the plaintiff to demonstrate a probability of

prevailing on the challenged claims. To do this, the plaintiff must

demonstrate that the complaint is legally sufficient and supported

by a prima facie showing of facts to sustain a favorable judgment

if the evidence submitted by the plaintiff is credited. 

New.Net, Inc., 356 F. Supp. 2d at 1098–99 (some citations and quotations omitted). This order

need not consider the first prong of the analysis — whether First DataBank’s publication of the

NDDF database is an “act in furtherance” of its right to free speech. Schering has satisfied the

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 14 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

15

second prong of the analysis by making a prima facie showing of facts to sustain a favorable

judgment. At all events, the motion to strike would have to be denied for that reason.

In the second prong of the anti-SLAPP analysis,

[o]nce it is determined that an act in furtherance of protected

expression is being challenged, the plaintiff must show a

“reasonable probability” of prevailing in its claims for those

claims to survive dismissal. To do this, the plaintiff must

demonstrate that “the complaint is legally sufficient and

supported by a prima facie showing of facts to sustain a favorable

judgment if the evidence submitted by the plaintiff is credited.” 

This burden is “much like that used in determining a motion for

nonsuit or directed verdict,” which mandates dismissal when “no

reasonable jury” could find for the plaintiff. Thus, a defendant’s

anti-SLAPP motion should be granted when a plaintiff presents an

insufficient legal basis for the claims or “when no evidence of

sufficient substantiality exists to support a judgment for the

plaintiff.” 

Metabolife Intern., Inc., 264 F.3d at 840. 

In the order denying Schering’s motion for a preliminary injunction, the Court

considered Schering’s substantive claims and found it unlikely that Schering would prevail. For

purposes of the motion to strike, however, the probability-of-success standard is much more

lenient in favor of Schering. While for its preliminary injunction motion Schering had to

demonstrate a “strong likelihood of success on the merits,” Johnson v. Cal. State Bd. of

Accountancy, 72 F. 1427, 1430 (9th Cir. 1995), Schering now only has to prove that a

“reasonable jury” could find in its favor, Metabolife Intern., Inc., 264 F.3d at 840. “In ruling on

a motion to strike, the trial court does not weigh the evidence or determine questions of

credibility; instead the court accepts as true all of the evidence favorable to the plaintiff.” 

Nagel v. Twin Labs., Inc., 134 Cal. Rptr. 2d 420, 424 (2003). Indeed, the California Supreme

Court has recognized that the anti-SLAPP “statute poses no obstacle to suits that possess

minimal merit.” Navellier v. Sletten, 52 P.3d 703, 712 (Cal. 2002). This order holds that

Schering’s trade-libel claim possesses more than “minimal merit.”

In New Jersey, the “elements of trade libel [or product disparagement] are: (1)

publication; (2) with malice; (3) of false allegations concerning its property, product or

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 15 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

 At oral argument, the parties agreed that there was no substantive difference between the laws of

California and New Jersey for a claim of trade libel. In California, to “prove trade libel, Plaintiff must show: 

(1) a statement that (2) was false, (3) disparaging, (4) published to others in writing, (5) induced others not to

deal with it, and (6) caused special damages.” New.Net, Inc., 356 F. Supp. 2d at 1113 (citation and quotations

omitted).

16

business, and (4) special damages, i.e. pecuniary harm.” Mayflower Transit, LLC v. Prince, 314

F. Supp. 2d 362, 378 (D.N.J. 2004).8

 For purposes of the instant motion, this order accepts as

true all of the evidence favorable to Schering and holds that a reasonable jury could find in

Schering’s favor. 

First DataBank conveys information to its subscribers concerning Schering’s Proventil

HFA and the other HFA products. First DataBank describes the clinical formulation for

Proventil HFA as “multi-source” and has assigned to it a non-unique generic code number and

generic code sequence number. Thus, each of the codes generated by First DataBank with

respect to the three HFA drugs are identical. In contrast, Medi-Span, one of First DataBank’s

competitors, classifies each of the HFA products as “single source” items (Fine Decl. ¶¶ 7–10). 

Furthermore, First DataBank has continued to publish its information while the FDA has

assigned the HFA products a “BX” code, meaning that they are presumed to be therapeutically

inequivalent because of insufficient data on the drugs’ potential equivalence (Kowalski Decl.

Exh. D. at xviii).

Schering offered evidence regarding what occurs at pharmacies subscribing to either the

NDDF or Medi-Span databases. Pharmacists at Rite-Aid, for example, a pharmacy relying on

the NDDF database, understand the NDDF information to indicate that the HFA products are

appropriately substitutable for each other. Schering contends that this has induced those

pharmacists to inappropriately substitute other HFA products for Proventil HFA when Proventil

HFA is prescribed. Pharmacists at Walgreens Pharmacy, however, which relies on

Medi-Span’s database, understand the database display to mean that only Proventil HFA may be

dispensed when Proventil HFA is prescribed. Schering argues that at those pharmacies

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 16 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

17

subscribing to Medi-Span’s database, pharmacists only dispense Proventil HFA when that drug

is prescribed (Fine Decl. ¶¶ 11–12). 

According to Schering, this has led to pecuniary harm because patients who have been

prescribed Proventil HFA have been provided with either ProAir HFA or Ventolin HFA. 

Considering that pharmacists have written 40,000 prescriptions per month for Proventil HFA,

this translates to potentially great pecuniary harm for Schering. Indeed, between June and

August 2006, approximately forty percent of the prescriptions written for Proventil HFA were

filled with another HFA product (Grote Decl. ¶ 9).

First DataBank principally contends that Schering cannot prove that the NDDF database

contained false information. In the order denying Schering’s motion for a preliminary

injunction, the undersigned held it to be unlikely, based on the declarations and exhibits filed,

that Schering could prove falsity. Schering has put forth enough facts, however, to demonstrate

that its claim of falsity — while perhaps not likely to succeed — is not frivolous. It is true that

First DataBank publishes the FDA’s BX code for the HFA products, thereby indicating the

FDA’s position that the drugs are to be presumed not therapeutically equivalent. All the other

fields created by First DataBank, however, are identical for all three HFA products. One

important field, for example, is the generic code sequence number, which identifies “candidates

for substitution.” This order cannot find as a matter of law that these identical codes do not

communicate to a pharmacist that the drugs are therapeutically equivalent and substitutable. 

Indeed, an article co-authored by the director of the Division of Medication Errors and

Technical Support of the FDA’s Office of Drug Safety stated: “Although all three products

contain the same active ingredient and propellant (HFA), they are not substitutable products. 

Differences in excipients such as oleic acid and alcohol — in addition to actual differences in

device components, such as the canister and size of valve — may affect performance, resulting

in different clinical responses” (Mot. for Prelim. Inj. Exh. 2). To the extent that First DataBank

may be implying the products are substitutable, a reasonable jury might find that First DataBank

is communicating false, product-disparaging information.

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 17 of 18
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

18

***

In sum, this order holds that Schering’s claim for trade libel is not frivolous. The

motion to strike based on California’s anti-SLAPP statute would be denied even if the statute

applied to this case.

CONCLUSION

For the foregoing reasons, First DataBank’s motion to strike is DENIED.

IT IS SO ORDERED.

Dated: April 20, 2007. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

Case 3:07-cv-01142-WHA Document 40 Filed 04/20/07 Page 18 of 18