Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-md-01761/USCOURTS-cand-3_06-md-01761-14/pdf.json

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

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

IN RE: DITROPAN XL ANTITRUST

LITIGATION 

This Order Relates to:

ALL CASES

 /

CASE NO. M:06-CV-01761-JSW

MDL No. 1761

NOTICE OF TENTATIVE

RULING AND QUESTIONS

TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD, PLEASE TAKE

NOTICE OF THE FOLLOWING TENTATIVE RULING AND QUESTIONS FOR THE

HEARING SCHEDULED ON JULY 27, 2007:

The Court TENTATIVELY grants Defendants’ motion to dismiss the second amended

complaint filed by American Sales Company, Inc. (“ASC”). The Court has reviewed the

parties’ memoranda of points and authorities and, thus, does not wish to hear the parties reargue

matters addressed in those pleadings. If the parties intend to rely on authorities not cited in their

briefs, they are ORDERED to notify the Court and opposing counsel of these authorities

reasonably in advance of the hearing and to make copies available at the hearing. If the parties

submit such additional authorities, they are ORDERED to submit the citations to the authorities

only, without argument or additional briefing. Cf. N.D. Civil Local Rule 7-3(d). The parties

will be given the opportunity at oral argument to explain their reliance on such authority.

Case 3:06-md-01761-JSW Document 94 Filed 07/26/07 Page 1 of 3
United States District Court

For the Northern District of California

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Each party will have twenty minutes to address the following questions:

(1) The Supreme Court recently clarified the pleading requirements to state an antitrust

claim under Section 1 of the Sherman Act. See Bell Atlantic Corp. v. Twombly, 127

S.Ct. 1955 (2007). To state a Section 1 claim, a plaintiff must allege “enough factual

matter (taken as true) to suggest that an agreement was made. ... [A]n allegation of

parallel conduct and a bare assertion of conspiracy will not suffice.” Id. at 1965, 66, 71

n.10 (finding allegations of conspiracy insufficient where “the pleadings mentioned no

specific time, place, or person involved in the alleged conspiracies”). 

(a) Where, specifically, in the second amended complaint, does ASC allege facts

that suggest Alza Corporation (“Alza”) and Ortho-McNeil Pharmaceutical, Inc.

(“Ortho-McNeil”) entered into an agreement? 

(b) If given leave to amend, what additional facts, if any, could ASC allege to state a

Section 1 claim?

(2) It appears to the Court that the instant motion to dismiss will not fully resolve this

matter. First, if the Court were to find, as the Court is tentatively inclined, that the

assignment from Cardinal Health, Inc. (“Cardinal”) to ASC dated April 28, 2006, does

not cover claims against Ortho-McNeil, ASC did not have standing to sue Ortho-McNeil

at the time it filed the second amended complaint. Second, assuming ASC alleges a

vertical conspiracy to circumvent Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977), case

law suggests that ASC must join both the direct and indirect sellers as defendants in the

lawsuit. See In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust

Litig., 1992-2 Trade Cases P 69,915, 1992 WL 220753, * 5 (C.D. Cal. July 16, 1992);

see also In re Coordinated Pretrial Proceedings in Petroleum Products Antitrust Litig.,

681 F.2d 1335, 1342 (9th Cir. 1982) (“if a proper vertical conspiracy is alleged, joinder

of [direct sellers] is required to prevent a serious risk of multiple liability”). In this case,

Ortho-McNeil is the direct seller. Thus, if the Court concludes ASC did not have

standing to sue Ortho-McNeil at the time the second amended complaint was filed, it

appears as though the claims against Alza must be dismissed as well. However, the

latter issue might be “cured” if ASC obtains an fully executed assignment from Cardinal

that includes claims against Ortho-McNeil. Ortho-McNeil, however, contends that ASC

could not obtain such an assignment from Cardinal because any such assignment would

be barred by the Distribution Performance Agreement. It appears to the Court, however,

that the argument regarding the validity of the assignment under the Distribution

Performance Agreement is premised upon facts that cannot be considered on a motion to

dismiss. With that preface, the Court has the following questions, and requests that the

parties take into consideration the goals of judicial economy and efficiency when they

are responding:

Case 3:06-md-01761-JSW Document 94 Filed 07/26/07 Page 2 of 3
United States District Court

For the Northern District of California

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(a) Does ASC contend that it is not required to name Ortho-McNeil as a defendant

in order to bring a Sherman Act claim against Alza, an indirect seller? If so,

based on what facts and authority?

(b) Does ASC intend to obtain an executed assignment to sue Ortho-McNeil? If so,

how does it intend to proceed, i.e. does it intend to dismiss and re-file or will it

seek to file a third amended complaint? What is Defendants’ response to ASC’s

proposal?

(c) Given Defendants’ position on the validity of any assignment based upon the

Distribution Performance Agreement, and the Court’s tentative view that it

cannot resolve this issue in connection with the instant motion to dismiss, what

are the parties’ respective positions as to best to proceed with any future

responsive pleadings?

(3) Do the parties have anything further to add?

Dated: July 26, 2007 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

Case 3:06-md-01761-JSW Document 94 Filed 07/26/07 Page 3 of 3