Opinion ID: 4517506
Heading Depth: 2
Heading Rank: 1

Heading: Same Question

Text: The first sub-part of the collateral-estoppel test speaks of the “same question” or the “precise issue.” United Techs., 782 F.3d at 726 (emphasis removed in part); Ark. Coals, 739 F.3d at 320 (emphasis added). When a court asks this first question, it seeks to confirm that the prior court considered and ruled on the exact issue that now confronts the court. (This is one of the things that separates issue preclusion from claim preclusion, which looks at the universe of claims that could have been raised but were not.) Thus, we must turn to the language of the Georgia district court’s opinion on the partial-summary-judgment motion, 267 F. Supp. 3d. 1364. Unfortunately, as we have already hinted, this opinion contains language that provides strong evidence for both sides. In favor of Merial’s position—which is that the court did not actually rule on the question of whether Sergeant’s had breached its obligations under the Sergeant’s Agreement—the best argument begins with how the Georgia court itself identified the rule of the case: [T]he proper rule must be that when a company . . . steps into the shoes of different parties . . . to two contracts at -11- No. 19-1133, Merial, Inc. v. Sergeant’s Pet Care Products, Inc. different times, the terms (and rights and obligations) of the later contract control . . . . 267 F. Supp. 3d at 1374 (emphasis added). The “company” here can only be Perrigo; Sergeant’s did not step into Velcera’s shoes, but rather Perrigo did; and moreover Sergeant’s is one of the “different parties” to one of the contracts. Sergeant’s could not be stepping into its own shoes.8 Thus, by its own terms, the rule fashioned in this case applies to Perrigo and other similarly situated companies. Sergeant’s is not Perrigo, notwithstanding that one owns the other. Moreover, throughout most of the opinion the Georgia court speaks of Perrigo and only Perrigo. See, e.g., 276 F. Supp. 3d at 1369 (describing the motion the court is addressing purely in terms of Perrigo versus Merial.) This makes sense, because Perrigo was standing in for Velcera, and it was the Velcera Agreement that was at issue there. But that implies, rather strongly, that it is not addressing Sergeant’s rights and responsibilities in the ruling. The Michigan district court, as we have seen, rejected this argument. In its eyes, the Georgia court referred to Sergeant’s separately only “to set the background leading up to Perrigo’s acquisition of Sergeant’s” and to discuss the different parties’ intent in negotiating the various contracts. Otherwise, “[h]aving recognized that Sergeant’s assets (including the Sergeant’s Agreement) were transferred to Perrigo via the asset purchase, the Georgia Court had no need to continually refer to Perrigo and Sergeant’s together.” The two become one, in other words, and so every mention of Perrigo necessarily includes a mention of—and ruling as to—Sergeant’s. This is not a tenable reading of the Georgia opinion. For one thing, Sergeant’s continues to have an independent corporate existence. (See infra, pp. 20–22.) For another, even at the very end of the ruling, the Georgia district court still 8 We can see this very clearly when we look at the Georgia court’s order on Merial’s motion for reconsideration, which states that “Perrigo stepped into Sergeant’s and Velcera’s shoes for the purposes of the Sergeant’s and Velcera Agreements.” Perrigo Co. v. Merial Ltd., No. 1:15-CV-3674-SCJ, 2017 WL 5236106, at  n.2 (N.D. Ga. Mar. 23, 2017). -12- No. 19-1133, Merial, Inc. v. Sergeant’s Pet Care Products, Inc. speaks separately of Perrigo and Sergeant’s, see 267 F. Supp. 3d at 1375 n.6. Therefore, Sergeant’s cannot either logically or linguistically be assumed to be silently included every time Perrigo is mentioned in the opinion. And since that is true, the maxim of expressio unius est exclusio alterius, applied to the repeated mentions of Perrigo and only Perrigo, strongly suggests that the court was not speaking to Sergeant’s rights and responsibilities throughout its opinion. Indeed, were that consistently so, Merial would win on this element of the collateral-estoppel test. However, as we are about to see, it is not consistently so. In favor of Sergeant’s there is first and foremost the penultimate line of the court’s analysis: The limited assignment exception the Velcera Agreement in fact contained created—because the right to sell under the Velcera Agreement flowed to Perrigo and its affiliates, including Sergeant’s—the opening for Perrigo to legally circumvent the Sergeant’s Agreement’s sales ban. No genuine factual dispute calls that conclusion into question. 267 F. Supp. 3d at 1374–75 (first emphasis in original; second emphasis added). It is hard to ask for more precise language speaking to the “same question” we have than this. Other language also supports Sergeant’s, albeit with a caveat. In particular, the court writes: After Perrigo’s Velcera purchase, then, Perrigo and its affiliates possessed both the obligation to not sell infringing product (per the Sergeant’s agreement), and the right to sell that product after November 30, 2014 (per the Velcera Agreement). 267 F. Supp. 3d at, 1373 (N.D. Ga. 2017) (emphasis added). Thus, Sergeant’s, as an affiliate of Perrigo, has both the “obligation not to sell infringing product[s]” and the “right to sell that product after November 30, 2014”—and is therefore included within the rule laid down that the latter superseded the former, no? Not so fast. There appears to be an internal contradiction within the -13- No. 19-1133, Merial, Inc. v. Sergeant’s Pet Care Products, Inc. opinion. The district court, earlier in the opinion, gives a definition of the word “affiliate,” contained in both the Sergeant’s and Velcera Agreements: [These agreements] defined “affiliate” of a corporation or business entity as “any other corporation or business entity which controls ... that corporation or business entity.” “Control” in turn exists if the other company “owns, directly or indirectly, more than fifty percent” of such corporation or business entity. 267 F. Supp. 3d at 1366 (record citations omitted) (ellipses in original). In other words, the definition of “affiliate,” contrary to its normal meaning, traveled up to include owners, but not down to subsidiaries, or horizontally to sibling corporations under the same corporate umbrella. This definition would support Merial’s view. Or so it would seem. But two facts contradict that conclusion. First, in one of the most crucial and contested sentences in the opinion, the court speaks of “Perrigo and its affiliates, including Sergeant’s”—thus reverting back to the more usual definition of the word, by explicitly sweeping in a subsidiary under “affiliate.” Id. at 1374. Moreover, on the day before our oral argument, the Georgia district court unsealed a document, Perrigo’s response in opposition to Merial’s request for partial summary judgment. N.D. Ga. Dkt. 181. This document, as “Doc. 181,” is referenced fifteen times in the Georgia district court decision.9 The Georgia court ruling on which we have been focusing does not reference Doc. 181 for the definition of affiliate common to both the Sergeant’s and Velcera Agreements, but Doc. 181 does contain more information on that definition. In addition to the language quoted above, “affiliate,” per Doc. 181, turns out to include “any other person or business entity which directly or indirectly controls, is controlled by or is under common control with that Party.” N.D. Ga. Dkt. 181-36 at 2–3. This expanded 9 It was to understand some of these references that our court asked Judge Jones to unseal it. We thank him for his assistance. -14- No. 19-1133, Merial, Inc. v. Sergeant’s Pet Care Products, Inc. definition seems to show that the new Sergeant’s/Perrigo Animal Health in fact would have been an “affiliate” under the Velcera Agreement, and thus a party to it once Velcera merged with Perrigo (and thus Sergeant’s “[was] controlled by” it), or by virtue of their both eventually becoming subsidiaries (“under common control”) of Perrigo. This substantially bolsters the argument that the Northern District of Georgia’s rule (and perhaps ruling) applies to Sergeant’s. We hesitate to reach a conclusion by relying on this document, for four reasons. First, this is Perrigo’s filing, not a court ruling. While the Georgia district court ruling references “Doc. 181” repeatedly, it does not incorporate it. Nor does it reference it for the definition of affiliate.10 Doc. 181, in other words, does not itself have preclusive effect. It does, to be sure, reinforce the argument that the “same question” that is in play in this lawsuit was raised, in the broadest sense, in the earlier litigation. But (and here we come to our second point), on the other hand, the very fact that the Georgia district court omitted this part of the definition of affiliate suggests that the issue of Sergeant’s rights and responsibilities (as an affiliate) may not have been particularly strongly litigated. Thirdly, this is Perrigo’s document, the response to which is still not unsealed; it may contain counterarguments to which we are not privy.11 That encourages caution. Finally, and most importantly, we are mindful that this analysis goes to the merits of Perrigo’s case, whereas what we are after is the details of the Georgia court’s holding. Some overlap is inevitable, especially in the inquiry as to whether the same question was actually litigated. But we must be careful not to blur the two questions too much. It is still genuinely somewhat unclear, notwithstanding Doc. 181, how the Georgia court had defined “affiliate” when it wrote, “[a]fter 10 Rather, the Georgia court referenced “Doc. 176,” Merial’s motion for Partial Summary Judgment to which Doc. 181 was opposed. 267 F. Supp. 3d at 1366; N.D. Ga. Dkt. 176. Doc. 176 is still sealed. 11 For this reason, we carefully note that our analysis—looking into what this language suggests is true as Sergeant’s rights under the Velcera Agreement—applies only for the purposes of determining collateral estoppel. We make no holding as to the merits, leaving that to the district court afresh after full briefing. -15- No. 19-1133, Merial, Inc. v. Sergeant’s Pet Care Products, Inc. the Velcera purchase, Perrigo and its affiliates had, simultaneously, the obligation to not sell . . . infringing product . . . (pursuant to the Sergeant’s Agreement), and the obligation to not sell that product until November 30, 2014 . . . (pursuant to the Velcera Agreement).” 267 F. Supp. 3d at 1372. Did the district court hold that Sergeant’s had a license after the Velcera merger, as Sergeant’s now argues? The question remains. Ultimately, the issue of whether the same question was raised and actually litigated in the previous case is an exceedingly close call—so much so that Merial may have a good claim under our precedents addressing the preclusive effect of a prior decision that is ambiguous or unclear. See Part III.C, infra. However, because the Georgia court mentions so explicitly in at least one part of its ruling the right of Sergeant’s to produce infringing products, we hold that the Georgia court did speak to the precise issue before us. Sergeant’s narrowly passes this part of the test.