Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_14-md-02521/USCOURTS-cand-3_14-md-02521-27/pdf.json

Nature of Suit Code: 410
Nature of Suit: Antitrust
Cause of Action: 28:1331 Fed. Question

---

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

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

UNITED FOOD AND COMMERCIAL 

WORKERS LOCAL 1776 & 

PARTICIPATING EMPLOYERS HEALTH 

AND WELFARE FUND, et al.,

Plaintiffs,

v.

TEIKOKU PHARMA USA, et al.,

Defendants.

Case No. 14-md-02521-WHO 

ORDER RE DISCOVERY DISPUTE 

WITH RETAILER PLAINTIFFS

Re: Dkt. No. 444

Defendants contend that Retailer Plaintiffs (who are proceeding as direct purchaser 

plaintiffs on claims assigned from wholesalers) should be required to produce unredacted copies 

of their contracts with the wholesalers. Dkt. No. 444. Defendants argue that information is 

relevant and necessary to allow defendants: (i) to understand the contractual relationship between 

the wholesalers and Retailers; (ii) to understand the transactional data regarding Retailer 

purchases; and (iii) to inform “the nature” of the Retailer purchasers in the “but for” world absent 

the challenged settlement. Id. at 1-2. Defendants also argue that the discovery is potentially 

relevant to a “cost-plus” “pass-on” defense left open by the Supreme Court in Hanover Shoe, Inc. 

v. United Machinery Corp., 392 U.S. 481, 494 (1968). 

Retailer Plaintiffs object to producing this “downstream” discovery, arguing it is legally 

irrelevant because the measure of damages in this case will be the overcharges suffered by the 

wholesalers and, therefore, the profits of the wholesales and whether they “passed along” and 

overcharges to the Retailers is irrelevant. The Retailers also argue that the information sought is 

“among its most competitively sensitive trade secrets,” and should not be produced when it is 

legally irrelevant. Dkt. No. 444 at 5. The Retailers assert that they have produced data showing 

their purchases of Lidoderm from the wholesalers and are in the process of producing the 

Case 3:14-md-02521-WHO Document 446 Filed 04/18/16 Page 1 of 2
2

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

United States District Court

Northern District of California

provisions in the supply contracts that obligated the wholesalers to make the assignments to the 

Retailers. 

On the record before me, I DENY defendants’ motion to compel the production of the 

unredacted contracts. Despite having taken at least two Retailer Plaintiffs’ depositions, defendants 

do not explain exactly how they have been put at a disadvantage by the Retailers’ failure to 

disclose the full terms of the contracts between Retailers and wholesalers. Moreover, as to any 

potential relevance to damages, courts (including courts handling similar pay-for-delay generic 

pharmaceutical cases) have uniformly denied the type of downstream discovery sought here from 

DPPs. See, e.g., In re Skelaxin Antitrust Litigation, 292 F.R.D. 544, 552 (E.D. Tenn. 2013); In re 

K-Dur Antitrust Litigation, 2007WL 5302308, *12 (D.N.J. 2007). If defendants intend to argue 

that the “cost-plus” exception to the otherwise blocked off pass-on defense applies in this case, 

defendants may separately brief that issue and I will revisit whether the contracts at issue are 

therefore relevant.1

 

IT IS SO ORDERED.

Dated: April 18, 2016 

______________________________________ 

WILLIAM H. ORRICK 

United States District Judge 

 

1

 I note that defendants do not cite any decisions, much less decisions arising in the pay-for-delay 

context, and the cases relied on by the Retailers question the “narrow” exception’s continued 

viability. See, e.g., In re K-Dur Antitrust Litigation, 2007WL 5302308, *7 (D.N.J. 2007) 

(explaining that the “narrow” cost-plus exception” requires “essential elements” of “fixed 

quantity, fixed price and pre-existing contracts.”); see also In re Niaspan Antitrust Litig., No. 13-

md-2460, 2015 WL 4197590, *1-*2 (E.D. Pa. July 9, 2015) (rejecting request for downstream 

discovery as to the “generic bypass” defense, because DPP “sales, profits and revenues is not 

relevant under Federal Rule of Civil Procedure”); In re Skelaxin (Metaxalone) Antitrust Litig., No. 

12-md-2343, 2014WL 2002887, *5 (E.D. Tenn. May 15, 2014) (same). 

Case 3:14-md-02521-WHO Document 446 Filed 04/18/16 Page 2 of 2