Source: http://pa.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20180420_0000994.EPA.htm/qx
Timestamp: 2019-04-25 16:46:29+00:00

Document:
FindACase | Teva Pharmaceutical Industries, Ltd. v. Unitedhealthcare Services, Inc.
Teva Pharmaceutical Industries, Ltd. v. Unitedhealthcare Services, Inc.
This case arises out of a set of antitrust actions, brought pursuant to FTC v. Actavis, Inc., 570 U.S. 136 (2013), which involve reverse settlement payments between the brand name manufacturer of the drug Provigil® and various generic drug manufacturers. Following my denial of class certification for the end-payor plaintiffs in the case of Vista Healthplan v. Cephalon, Inc., et al., Civil Action No. 06-1833, the putative class plaintiffs and a separate group of third-party payers-of which Defendant United Healthcare Services, Inc. (“UHS”) was a part-allegedly reached a settlement agreement with brand manufacturer Cephalon, Inc. and two generic manufacturers Teva Pharmaceutical Industries/Teva Pharmaceuticals USA, Inc. and Barr Pharmaceuticals, Inc. (collectively, the “Cephalon Parties”). UHS has renounced the settlement, claiming that the terms set out in the Memorandum of Understanding (“MOU”) do not constitute a binding contract and are unenforceable. UHS also asserts that even if the MOU is valid, its lawyers were not authorized to enter into such an agreement. The Cephalon Parties have sued to enforce the MOU.
The Cephalon Parties have moved for partial summary judgment on the sole issue of whether the contract is binding and enforceable as written (the question of the lawyers’ authority involves factual issues not appropriate for disposition under Federal Rule of Civil Procedure 56). For the reasons set forth below, I find that the MOU sets forth the essential terms of a settlement and constitutes a binding, enforceable, and unambiguous contract.
In connection with their briefing on the Motion for Partial Summary Judgment, the parties submitted lengthy recitations of the underlying facts accompanied by numerous supporting exhibits. I provide a synopsis of these facts only for the purpose of lending context to the dispute giving rise to this litigation. This summary is not necessary to determine, as I do below, that the four corners of the MOU at issue create a legally binding and enforceable contract, are unambiguous, and clearly define the parties’ mutual obligations.
Beginning in 2006, a series of antitrust suits were brought alleging that delayed entry of generic versions of the branded drug Provigil® resulted in various entities and individuals overpaying for the drug. These lawsuits were consolidated into multiple subcategories, including: cases filed by direct purchasers of Provigil from Cephalon for re-distribution, King Drug Company of Florence, Inc., et al. v. Cephalon, Inc., et al., Civil Action No. 06-1797; cases brought by end-payors that purchased Provigil indirectly, Vista Healthplan, Inc. et al. v. Cephalon, Inc., et al., Civil Action No. 06-1833; a case filed by the Federal Trade Commission (“FTC”), Federal Trade Commission v. Cephalon, Inc., Civil Action No. 08-2141, and a case brought by a separate generic drug company, Apotex v. Cephalon, Inc., et al., Civil Action No. 06-2768.
Cephalon, Inc. reached a settlement with the FTC in May 2015, resulting in a Stipulated Order for Permanent Injunction and Equitable Monetary Relief, which I entered on June 17, 2015. That settlement required Cephalon, Inc. to deposit $1.2 billion, less amounts already paid out in related case settlements, into an FTC-administered account. I also ordered that the FTC Settlement Fund be held in trust to satisfy the amount of any settlement or judgment regarding other Provigil claims. Subsequently, the Cephalon Parties reached settlements with other plaintiffs, all of which have been or will be paid from the FTC Settlement Fund.
As noted above, a class action was brought by the end-payors of Provigil (“end-payor plaintiffs”) in Vista HealthPlan, Inc. et al. v. Cephalon Inc., et al. Civ. A. No. 06-1833. The lead lawyers for that proposed putative class included, among others, Jeffrey Kodroff and John Macoretta of Spector Roseman Kodroff & Willis, P.C. (Decl. of Abby Dennis (“Dennis Decl.”), Ex. 1, at UHS-EDPa-0000420.) I denied class certification on June 1, 2015.
The intent is to have a discussion and make a unified demand on Cephalon for payment out of the disgorgement fund. Cephalon has indicated (n[o]t surprisingly) that they need “global peace”, meaning something with us, the independently represented plans and a “class” to act as the “clean-up” for any potential remaining parties. We plan to present a united front to Cephalon (our respective firms and the class). The next step (mentioned above), and which will occur next week, is to get all the groups together and begin discussing what we would like to collectively present as our demand.
A. What I understand by this last sentence is that all of the groups, including, you know, the groups represented by other law firms, were going to get together and make a collective demand.
A. Not that there would be a demand presented on behalf of United, per se.
Q. But United was-you understood that United was one of the members of the group that would be making a demand to the Cephalon defendants to settle Provigil, right?
During this time, Mr. Cohen and Mssrs. Lefkowitz and Skidmore negotiated a tolling agreement. This agreement was first executed by Mr. Cohen on July 8, 2015, on behalf of the approximately twenty health plans his firm represented, with additional lawyers signing on behalf of different clients at later dates. (Dennis Decl., Exs. 14–16.) Mr. Sandmann and Mr. Rhoad, on behalf of UHS, signed the tolling agreement on July 22, 2015. (Id.) These health plans, through lead counsel Mr. Cohen, eventually became known as the Settling Health Plans (“SHPs”).
Nobody-nobody was-never was a number discussed with Jay without everybody-all the counsel who had signed the tolling agreements for A, B, and C being consulted and approving.
And we-we had robust discussions, disagreements, and ultimately consensus on each number that we communicated to Jay and on the final number to which we agreed.
In early December 2015, counsel for the putative class members, the SHPs, and the Cephalon Parties signed a Memorandum of Understanding (“MOU”), which, according to its language, “memorializes the principal terms of a settlement agreement reached on October 22, 2015 by and between” the putative class plaintiffs, the SHPs, and the Cephalon Parties. (Pls.’ Mot. Summ. J., Ex. A (“MOU”), 1.) UHS is a “Schedule C” party to the MOU, and outside counsel, Rhoad, Sandmann, and Slate all signed the MOU on UHS’s behalf.
This memorandum of understanding (“MOU”) memorializes the principal terms of a settlement agreement reached on October 22, 2015 by and between the following persons and entities (collectively, “the Parties”) and to be incorporated into a written settlement agreement that will be presented to the Court for approval with respect to the End Payor Plaintiffs and End-Payor Settlement Class (“End-Payor Class Settlement Agreement”), and a separate written settlement agreement with the Settling Health Plans listed on the attached A–D (“SHP Settlement Agreement”), which agreements together will result in a comprehensive settlement between the Cephalon Defendants and Plaintiffs.
We understand that there have been settlement discussions between you and counsel seeking to represent the class of indirect purchasers (at Lowey Dannenberg Cohen & Hart), as well with other counsel purporting to represent a group of large indirect purchasers (Crowell & Moring). As UnitedHealth has informed you, none of those lawyers ever received authorization to make any offer of settlement, or to agree to any offer of settlement, by or on behalf of UnitedHealth. Thus, any memorandum of understanding or other agreement you may have with those lawyers does not affect UnitedHealth.
On July 28, 2016, UHS commenced an individual antitrust action against the Cephalon Parties, and several other Defendants, in the United States District Court for the District of Minnesota, captioned United Healthcare Services, Inc. v. Cephalon, Inc., et al., Civil Action No. 16-0263. The claims raised in that action were substantially similar to those raised in the Vista HealthPlan action, but for the fact that they were brought under a Minnesota antitrust statute. That case was subsequently transferred to this Court on February 6, 2017.
On September 9, 2016, the Cephalon Parties initiated this action against UHS alleging that UHS breached the MOU by failing to abide by its terms. On December 18, 2017, and following discovery, the Cephalon Parties filed a dispositive motion solely on the issue of whether the MOU is binding and/or ambiguous. UHS responded on January 26, 2018, and the Cephalon Parties filed their reply brief on February 16, 2018.
A party may move for summary judgment, identifying each claim or defense-or the part of each claim or defense-on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. The court should state on the record the reasons for granting or denying the motion.
Fed. R. Civ. P. 56(a). “Through summary adjudication, the court may dispose of those claims that do not present a ‘genuine dispute as to any material fact’ and for which a jury trial would be an empty and unnecessary formality.” Capitol Presort Servs., LLC v. XL Health Corp., 175 F. Supp. 3d 430, 433 (M.D. Pa. 2016).

References: v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v. 
 v.