2000 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

5-30-2000

In Re: Warfarin Sodium Anti-trust Case

Precedential or Non-Precedential:

Docket 99-5034

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Recommended Citation

"In Re: Warfarin Sodium Anti-trust Case" (2000). 2000 Decisions. Paper 111.

http://digitalcommons.law.villanova.edu/thirdcircuit_2000/111
Filed May 30, 2000 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 99-5034 

IN RE: WARFARIN SODIUM ANTITRUST LITIGATION 

JOHN KUSNERIK; SARA ALTMAN; SAMUEL GORDON 

TISCHLER; MARIE A. STECKEL; ROBERT BAREISS; 

JOHN CIVATTE, JR.; MARY BANTEN, 

 Appellants 

Appeal from the United States District Court 

for the District of Delaware 

(D.C. Civ. No. 98-cv-01232) 

District Judge: Honorable Sue L. Robinson 

Argued 

March 24, 2000 

Before: MANSMANN, GREENBERG and BARRY, 

Circuit Judges. 

(Filed: May 30, 2000) 

 Bernard Persky, Esquire (Argued) 

 Barbara J. Hart, Esquire 

 Ngozi Okaro, Esquire 

 Goodkind, Labaton, Rudoff & 

 Sucharow LLP 

 100 Park Avenue 

 New York, NY 10017 
 Pamela S. Tikellis, Esquire 

 Robert J. Kriner, Jr., Esquire 

 Chimicles & Tikellis 

 One Rodney Square 

 Wilmington, DE 19801 

 Marvin A. Miller, Esquire 

 Jennifer Winter Sprengel, Esquire 

 Michael C. Dell'Angelo, Esquire 

 Miller, Faucher, Cafferty 

 and Wexler, LLP 

 One Penn Square West 

 Suite 2500 

 Philadelphia, PA 19102 

 Michael A. Hanzman, Esquire 

 Michael A. Criden, Esquire 

 Alan H. Rolnick, Esquire 

 Hanzman, Criden, Chaykin & 

 Ponce, P.A. 

 2100 First Union Financial Center 

 200 South Biscayne Boulevard 

 Miami, FL 33131 

 James R. Capretz, Esquire 

 Capretz & Associates, LLP 

 5000 Birch Street 

 Suite 2500, West Tower 

 Newport Beach, CA 92660 

 Mel Lifshitz, Esquire 

 Mary Hoover, Esquire 

 Bernstein Liebhard & Lifshitz, LLP 

 10 East 40th Street 

 New York, NY 10016 

 Paul Goltz, Esquire 

 840 Allegheny Building 

 Pittsburgh, PA 15219 

 Counsel for Appellants 

 2 
 George D. Ruttinger, Esquire 

 (Argued) 

 Jeane A. Thomas, Esquire 

 Crowell & Moring, LLP 

 1001 Pennsylvania Avenue, N.W. 

 Washington, D.C. 20004 

 Donald J. Wolfe, Esquire 

 Potter Anderson & Corroon LLP 

 Hercules Plaza 

 1313 North Market Street 

 Wilmington, DE 19801 

 Counsel for Appellee 

OPINION OF THE COURT 

MANSMANN, Circuit Judge. 

Consumers of the prescription drug Coumadin, anxious 

to purchase its generic equivalent, ask us to determine if 

complaints filed by them sufficiently state a claim for 

injunctive relief under section 16 of the Clayton Act against 

Coumadin's manufacturer. We find that in dismissing the 

complaints under Fed. R. Civ. P. 12(b)(6), the District Court 

improperly referred to matters beyond the complaints and 

did not correctly analyze the legal standard for antitrust 

standing. For these reasons, we will reverse and remand. 

I. 

Coumadin, known generically as warfarin sodium, is the 

brand name of a blood-thinning drug prescribed for the 

prevention and treatment of blood clots.1 Treating

physicians carefully monitor patients taking the drug 

because, as the parties stipulated, too little a dose can lead 

to a stroke or cardiac arrest and too much can cause 

internal bleeding. 

_________________________________________________________________ 

1. We accept as true the facts as alleged in the complaint. Bald Eagle 

School District v. Keystone Financial, Inc., 189 F.3d 321, 327 n.7 (3d 

Cir. 

1999). 

 3 
The defendant, DuPont Pharmaceuticals Company, 

manufactures Coumadin. Although the patent protection 

for Coumadin expired in April 1962, DuPont has dominated 

the oral anti-coagulant market for over 30 years. Until one 

of the plaintiffs to this action, Barr Laboratories, Inc., 

introduced its generic tablets, no equivalent product 

competed with DuPont's Coumadin. 

Barr Laboratories and the present plaintiffs filed lawsuits 

alleging that DuPont, anticipating a loss of market share 

resulting from the introduction of a cheaper generic 

substitute for Coumadin, orchestrated a campaign 

disparaging generic substitutes generally, and Barr

Laboratories' warfarin sodium particularly. The cumulative 

effect of these attacks was to raise Barr Laboratories' cost 

to enter the anti-coagulant market and to disable its 

market penetration. The by-product claim brought by the 

individual plaintiffs is that, due to DuPont's effort to derail 

generic competition, they have paid inflated prices for 

Coumadin. 

The specific allegations of DuPont's anti-competitive 

activity in the relevant market concern DuPont's attempt to 

prevent and/or delay Food and Drug Administration 

approval of warfarin sodium in a generic form, publication 

and dissemination of false and misleading information to 

the public regarding generic warfarin sodium, undertaking 

aggressive public relations efforts involving the circulation 

of deceptive information and increasing Coumadin's 

marketing efforts by feeding misinformation to doctors and 

other medical professionals. 

Citing these unlawful attempts to monopolize, Barr 

Laboratories filed suit against DuPont, alleging various 

antitrust law violations. Barr Laboratories also asserted 

claims under the Lanham Act, New York state law and

common law. Four named individuals, each claiming to 

represent a nationwide class of 1.8 million Coumadin 

users, filed separate complaints for monetary damages and 

injunctive relief, alleging that DuPont violated section 2 of 

the Sherman Act and various state laws. These class

plaintiffs also sought treble damages under section 4 of the 

Clayton Act and injunctive relief under section 16 of the 

Clayton Act. 

 4 
DuPont filed a motion to dismiss both Barr Laboratories' 

and the class plaintiffs' claims for failure to state a claim 

upon which relief could be granted under Fed. R. Civ. P. 

12(b)(6). 

The District Court granted in part and denied in part 

DuPont's motion to dismiss Barr Laboratories' lawsuit.2 The 

class complaints were dismissed in their entirety. 

The only issue relevant to this appeal is the District 

Court's decision that the class plaintiffs lack standing to 

seek injunctive relief under section 16 of the Clayton Act. 

The District Court summarily concluded that because the 

class had not sufficiently alleged either antitrust injury or 

a causal connection between DuPont's alleged unlawful 

activity and the supposed injury of Coumadin users, it 

failed to assert injury of the type the Sherman Act was 

designed to prevent. As such, the class did not have 

standing to request injunctive relief. 

Our jurisdiction to review this dismissal is authorized by 

28 U.S.C. S 1291. 

II. 

Rule 12(b)(6) 

We first explore whether the District Court erroneously 

considered matters beyond the scope of the complaints in 

rendering its antitrust standing determination. Our review 

of a District Court's decision to dismiss a lawsuit for failure 

to state a claim upon which relief can be granted under 

Fed. R. Civ. P. 12(b)(6) is plenary. Port Authority of New 

York and New Jersey v. Arcadian Corp., 189 F.3d 305, 311 

(3d Cir. 1999). The motion to dismiss should be granted 

only if "after accepting as true all of the facts alleged in the 

complaint, and drawing all reasonable inferences in the 

plaintiff 's favor, no relief could be granted under any set of 

facts consistent with the allegations in the complaint." 

_________________________________________________________________ 

2. The Barr Laboratories' case was subsequently remanded to the 

Southern District of New York. At oral argument, counsel represented 

that this portion of the litigation has settled. 

 5 
Trump Hotels and Casino Resorts, Inc. v. Mirage Resorts, 

Inc., 140 F.3d 478, 483 (3d Cir. 1998). 

Although the District Court recited this Rule 12(b)(6) 

standard in making its decision, the court impermissibly 

cited and relied on facts beyond the corners of the

complaints. Excerpts from the District Court opinion 

illustrate this point: 

 Although class plaintiffs do not discuss third party 

 payor arrangements, it is almost certain that most of 

 the 1.8 million class members had some sort of health 

 insurance. 

 * * * 

 If defendants' monopolization of the oral anticoagulant 

 market resulted in supracompetitive prices for 

 Coumadin, the insurance and third party payor 

 organizations most likely absorb some or all of that 

 overcharge. 

 * * * 

 Moreover, the sheer variety of third party payor plans 

 would render the apportionment of damages among the 

 class plaintiffs incredibly complex. 

(Emphasis added.) 

While these factors loomed large in the District Court's 

conclusion regarding the absence of a significant nexus 

between DuPont's activity and the classes' injury, the 

complaints are notably silent regarding the impact of third 

party payor and prescription drug insurance plans on the 

price paid for Coumadin. The complaints instead alleged 

that the class members paid inflated prices for Coumadin 

because DuPont thwarted the generic's market entry. The 

District Court should have accepted this as true, analyzed 

if DuPont's preclusive conduct was violative of antitrust 

laws, and then decided whether to dismiss the complaints. 

Instead, in granting the motion, the District Court

considered facts gleaned from counsel's argument and from 

its own experience, factors not contemplated by the dictates 

of Rule 12(b)(6). 

 6 
DuPont submits a number of reasons why the District

Court's consideration of factual assumptions de hors the 

complaints were properly considered. DuPont urges that 

the allegations concerning third party payors are within 

everyday knowledge and that the District Court could easily 

infer the presence of such entities from the pleadings. 

Alternatively, DuPont asserts that the District Court could 

take judicial notice of such facts. These contentions are not 

persuasive. First, Rule 12(b)(6) instructs that the District 

Court draw inferences in favor of plaintiffs, not the 

proponent of the motion. Second, the types of facts of 

which courts take judicial notice are of a different nature 

than those relied upon by the District Court here-- that 

the class members are most likely being reimbursed to 

some extent for the amount spent to purchase Coumadin. 

A judicially noticed fact is "one not subject to reasonable 

dispute in that it is either (1) generally known . .. . or (2) 

capable of accurate and ready determination" through 

unquestionably reliable sources. See Fed. R. Evid. 201(b); 

United States v. Carr, 25 F.3d 1194, 1202 n.3 (3d Cir. 

1994). The facts cited by the District Court concerning third 

party payors not contained in the complaints do notfit the 

criteria of Rule 201(b). 

Because these findings were integral to the District 

Court's standing decision, we must now determine whether 

the District Court's erroneous application of Rule 12(b)(6) 

caused a misinterpretation of the substantive standing 

issue. 

III. 

Section 16 Antitrust Standing 

Section 16 of the Clayton Act, authorizing suits for 

injunctive relief, provides in part: 

 Any person, firm, corporation, or association shall be 

 entitled to sue for and have injunctive relief, in any 

 court of the United States having jurisdiction over the 

 parties, against threatened loss or damage by a 

 violation of the antitrust laws, . . . when and under the 

 same conditions and principles as injunctive relief 

 7 
 against threatened conduct that will cause loss or 

 damage is granted by courts of equity. 

15 U.S.C. S 26 (1976). 

Recovery under section 16 is best understood in how it 

differs from recovery under section 4 of the Clayton Act. 

While relief sought pursuant to section 4 of the Clayton Act 

requires proof of loss and any damages proven are trebled, 

injunctive relief under section 16 only requires a threat of 

loss. See Cargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 

104, 109-111 (1986). An antitrust plaintiff proceeding 

under section 16 must, however, still demonstrate that the 

injury in question is "injury of the type the antitrust laws 

were intended to prevent." Brunswick Corp. v. Pueblo BowlO-Mat, Inc., 429 U.S. 477, 489 (1977). A section 4 plaintiff 's 

standing is tested by an application of a number of factors 

designed to determine if the asserted damage goes beyond 

speculation and, that if there is cognizable damage, the 

plaintiff is the appropriate person to assert it for antitrust 

purposes. Associated General Contractors, Inc. v. California 

State Council of Carpenters, 459 U.S. 519, 538 (1983), 

("Associated General"). Section 16 is not as demanding, but 

it does require a showing that there is "a significant threat 

of injury from [a] . . . violation of the antitrust laws . . . ." 

Zenith Radio Corp. v. Hazeltine Research, Inc., 395 U.S. 

100, 130 (1969). 

In dissecting the Coumadin classes' section 4 claim, the 

District Court conducted a standing test under thefive 

Associated General factors: (1) the causal connection 

between the antitrust violation and the harm to the

plaintiff; (2) whether the plaintiff 's alleged injury is of the 

type that the antitrust laws were intended to redress; i.e., 

did the plaintiff suffer antitrust injuries; (3) the directness 

of the injury; (4) the existence of more direct victims of the 

violation; and (5) the potential for duplicative recovery or 

complex apportionment of damages. 459 U.S. at 535-46. 

Regarding factors one and three, which required the class 

to show that DuPont's monopolization of the anticoagulant 

market directly caused their injuries, the District Court 

identified the consumers' "third" position in the chain of 

distribution from DuPont to user and the influence of 

 8 
managed care on what consumers pay for prescription

drugs as reasons for holding that the class plaintiffs' 

alleged injury and DuPont's alleged conduct was too

attenuated to justify antitrust standing. Specifically, the 

District Court opined that the class plaintiffs' ability to 

trace their overpayment to the alleged anticompetitive 

conduct " `traverses several somewhat vaguely defined 

links.' AGC, 456 U.S. at 540." The District Court thus 

concluded that the case described a "typical indirect 

purchaser scenario" and that, from the complaints, "it was 

unclear whether the class suffered any antitrust injury at 

all." 

As to the class plaintiffs' request for injunctive relief 

under section 16, the District Court summarily concluded, 

by relying upon its section 4 discussion, that the class had 

not sufficiently alleged the required antitrust injury or the 

causal connection between DuPont's alleged unlawful

activity and their purported injury. Thus, the District Court 

decided that the class failed to allege injury of the type the 

Sherman Act was designed to prevent; the class, therefore, 

did not have standing to request injunctive relief.

The Coumadin class fits the stereotypical indirect 

purchaser mold. Indirect purchaser status, however, is not 

fatal to a plaintiff 's request for injunctive relief under 

section 16 of the Clayton Act. 

In Mid-West Paper Products Co. v. Continental Group, Inc., 

596 F.2d 573 (3d Cir. 1979), we explained how the 

difference between sections 4 and 16 claims influences the 

question of standing as it relates to indirect purchaser 

status: 

 in contrast to the treble damage action, a claim for 

 injunctive relief does not present the countervailing 

 considerations -- such as the risk of duplicative or 

 ruinous recoveries and the spectre of a trial burdened 

 with complex and conjectural economic analyses -- 

 that the Supreme Court emphasized when limiting the 

 availability of treble damages. 

Id. at 590. Accordingly, we held that the plaintiffs did not 

have to satisfy the direct purchaser requirement as a 

condition of seeking injunctive relief. Id. at 594. See also 

 9 
Schoenkopf v. Brown & Williamson Tobacco Corp., 637 F.2d 

205, 210 (3d Cir. 1980) (Section 16 relief more 

encompassing because language is less restrictive than 

section 4 and because injunctive remedy is flexible, 

adaptable tool for enforcing antitrust laws). 

While direct purchaser status is not mandated, the class 

must still make a showing of entitlement to injunctive relief 

requiring the demonstration of: (1) threatened loss or injury 

cognizable in equity; (2) proximately resulting from the 

alleged antitrust injury. See McCarthy v. Recordex Service, 

Inc., 80 F.3d 842, 856 (3d Cir. 1996). The narrow question 

before us then is whether the allegations of the class 

members' complaints, that DuPont's conduct precluded 

competition which caused Coumadin users to pay inflated 

prices for the drug, meet this standard. 

We turn first to guidance from the United States 

Supreme Court. The threatened injury to the class here 

resembles that of the plaintiff in Blue Shield of Virginia v. 

McCready, 457 U.S. 465 (1982). In McCready , the plaintiff 

complained of a conspiracy among psychiatrists and Blue 

Shield to shield psychiatrists from competition. McCready's 

visits to her psychologist were not covered by Blue Shield, 

although visits to psychiatrists were reimbursed. 

In deciding McCready, the Supreme Court addressed the 

relationship between the indirect purchaser doctrine and 

antitrust injury. The Court stated that whether a particular 

injury is too remote from the alleged violation to confer 

section 4 Clayton Act standing, depends upon the 

relationship of the injury alleged and the types of injury 

that Congress was targeting when it legislated particular 

anticompetitive conduct as unlawful. Id. at 476-78. The 

Court first determined that, in the absence of a risk of 

duplicative recovery, a plaintiff is not barred from bringing 

a claim under section 4 if he is a foreseeable victim of the 

antitrust violation. Id. at 475. Then the Court decreed that 

McCready's injury was "inextricably intertwined with the 

injury the conspirator sought to inflict," and had standing 

to pursue her section 4 claim. Id., 457 U.S. at 484. 

As in McCready, the class alleges injury by an unlawful 

restraint on competition in the market, and McCready is 

 10 
thus instructive. First, McCready reinforces our holding in 

McCarthy that the Coumadin class cannot be barred from 

bringing suit simply based on its indirect purchaser status. 

McCready held that due to the absence of duplicative 

recovery, McCready and her class could maintain their suit 

for treble damages. Similarly, here, there is no risk of 

duplicative recovery because the class only seeks section 16 

injunctive relief. 

Next, concerning remoteness, the high price paid by

consumers for Coumadin clearly resulted in " `the type of 

loss that the claimed violations . . . would be likely to 

cause,' " id. at 479, (quoting Brunswick, 429 U.S. at 489). 

The class members here, like McCready, were "foreseeable 

and necessary victims" of DuPont's efforts to exclude the 

generic drug from the market. Indeed, if McCready, who 

voluntarily sought uncovered treatment from psychologists 

did not suffer from remoteness, then the purchasers of 

Coumadin, who have no choice in which warfarin sodium 

they purchased, were more predictable and more 

compelling victims of antitrust violations. 

Finally, McCready determined that an antitrust injury 

occurred because the higher cost for services paid by 

McCready was so "inextricably intertwined" with the true 

target of the conspiracy, the psychologists, that McCready 

also suffered antitrust injury. Utilizing this same rationale, 

we find that Coumadin consumers clearly suffer antitrust 

injury. Coumadin purchasers were the target of DuPont's 

antitrust violation. Regardless of the existence of the 

various links of middlemen, if there were no ultimate 

consumer of Coumadin, prices charged for the drug by 

DuPont to distributors, pharmacies, etc., would be 

irrelevant. The excess amount paid by Coumadin users not 

only is "inextricably intertwined" with the injury DuPont 

aimed to inflict, the overcharge was the aim of DuPont's 

preclusive conduct. It is difficult to imagine a more 

formidable demonstration of antitrust injury. 

The District Court's refusal to recognize standing to 

pursue this relief is also, as alluded to above, contrary to 

our jurisprudence. 

The authority of McCarthy v. Recordex, 80 F.3d at 845, 

 11 
strongly supports a favorable standing determination. In 

McCarthy, the plaintiffs had complained that they paid 

inflated prices for photocopies of their medical records due 

to a conspiracy between hospitals and copy centers to 

inflate the cost of records. The plaintiffs were clients of the 

lawyers who were the direct purchasers of the fixed price 

copies. Despite the plaintiffs' status as indirect purchasers, 

we refused to view the multifaceted chain of distribution as 

too attenuated to support a finding of causation. 3

Finally, decisions from our court which negated antitrust 

standing are distinguishable. In City of Pittsburgh v. West 

Penn Power Co., 147 F.3d 256 (3d Cir. 1998), the city 

brought suit against two electric companies seeking

damages and an injunction precluding the merger of the 

companies. The City claimed that the merger would void 

the possibility of lower-priced electric service charged to city 

residents. We held that the City's injunctive relief claim 

failed to meet section 16 standing requirements due to a 

lack of causal connection between the defendant's injuries 

and the alleged harm and because of the absence of 

antitrust injury. We arrived at this conclusion, however, 

because an intervening regulatory scheme precluded the 

companies from competing, i.e., the merger was not the 

cause of the injury. No significant antitrust injury inquiry 

was required to reach this conclusion and none was 

undertaken. We can reasonably posit, however, that if not 

for this regulatory quirk, the City would have been entitled 

to section 16 relief because the proposed merger would 

have eradicated competition, a result prohibited under the 

Clayton Act, and detrimental to the City's electrical 

customers. 

In Steamfitters Local Union No. 420 Welfare Fund v. Philip 

Morris, Inc., 171 F.3d 912 (3d Cir. 1999), union health and 

welfare funds brought class actions against tobacco

companies under antitrust laws to recover for the funds' 

cost of treating fund participants who had smoking related 

diseases. We concluded that the funds' injuries were too 

_________________________________________________________________ 

3. In McCarthy, we acknowledged the appropriateness of injunctive relief, 

but remanded because the District Court had not expressly addressed 

the question of indirect purchaser standing. 

 12 
remote from the tobacco company's antitrust activity to 

satisfy the Associated General causal connection 

requirement, because the tobacco companies could have 

achieved their alleged aim to preclude marketing of safer 

tobacco products without the existence of the funds or the 

relationship between the funds and the smokers. The

existence of smokers would be sufficient reason for such an 

alleged conspiracy. 

In this case, the purchasers of Coumadin are akin to the 

smokers in Steamfitters. DuPont's efforts to keep the 

generic drug off the market emanate from the fact that the 

introduction of the generic product would force down the 

price paid for the anti-coagulant. The higher prices paid 

were the raison d'etre of DuPont's antitrust conduct. 

We, therefore, conclude, under the controlling 

jurisprudence, that this class has satisfied the 

requirements of standing for injunctive relief under section 

16 of the Clayton Act. The facts as alleged in the 

complaints plainly establish the required causal connection 

between DuPont's exclusionary anticompetitive conduct and 

the direct harm to Coumadin purchasers. Unless enjoined, 

DuPont's unlawful conduct will continue unchecked and 

the class will continue to bear the financial brunt of the 

antitrust violations. 

IV. 

We will reverse the order of the District Court dismissing 

the class complaints based on lack of antitrust standing 

and remand for continued proceedings. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 13