Amphastar Pharmaceuticals Inc v. Aventis Pharma SA et al

Filing 380

SUPERSEDING DECISION RE: JURISDICTION by Judge Marvin J. Garbis. (See document for specifics) (mrgo)

IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF CALIFORNIA
EASTERN DIVISION
AMPHASTAR PHARMACEUTICALS INC.
Plaintiff
vs.

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AVENTIS PHARMA SA, et al.

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Defendants

EDCV-09-0023 MJG

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SUPERSEDING1 DECISION RE: JURISDICTION
Plaintiff Amphastar Pharmaceuticals Inc.(“Amphastar”) filed
this qui tam action against a competitor,2 Defendant SanofiAventis S.A. (“Aventis”)3 pursuant to the False Claims Act
(“FCA”), 31 U.S.C. § 3729 (2006 ed.4).
1

The instant Superseding Decision Re: Jurisdiction
supersedes the Decision Re: Jurisdiction [ECF No. 378] by
correcting two immaterial errors.
On page 3 of the superseded decision there was an
inadvertent reference to “the conduct of counsel for Aventis”
that should have referred to “the conduct of counsel for
Amphastar.”
The superseded decision was issued July 13, 2015 referring
to the Hartpence decision in footnote 12 as a pending en banc
proceeding. In fact, the decision had been issued July 7, 2015.
United States ex rel. Hartpence v. Kinetic Concepts, Inc., --F.3d ---- 2015 WL 4080739 (9th Cir. July 7, 2015).
2
At all times relevant hereto, the parties have been
competitors in the pharmaceutical industry.
3
It appears that Defendants, Aventis Pharma S.A. (a French
corporation) and Aventis Pharmaceuticals, Inc. (the American
subsidiary), merged with and into Sanofi-Aventis S.A., which is
the surviving company although it continues to do business under
the names of the predecessor companies. For purposes of this

Aventis contends that the Court lacks subject matter
jurisdiction.

The Court, finding that the jurisdictional

question presents issues of fact, conducted an evidentiary
hearing.
The Court has heard testimony, reviewed the exhibits, and
had the benefit of the arguments of counsel.

The Court now

issues this Memorandum of Decision as its findings of fact and
conclusions of law in compliance with Rule 52(a) of the Federal
Rules of Civil Procedure. The Court finds the facts stated
herein based upon its evaluation of the evidence, including the
credibility of witnesses, and the inferences that the Court has
found it reasonable to draw from the evidence.
As set forth in the instant decision, the Court has
determined that Amphastar failed to prove that the Court had
jurisdiction over its claims and, by virtue of that decision,
Judgment shall be entered herewith dismissing the case.

memorandum, Defendants are referred to collectively as
“Aventis.”
4
The 2010 amendments to the FCA did not apply retroactively
to presentation of false claims occurring before its effective
date. Since the Complaint in the instant case was filed in
2009, the pre-amendment text is controlling. See Graham Cty.
Soil & Water Conservation Dist. v. United States ex rel. Wilson,
559 U.S. 280, 283 n.1 (2010). Accordingly, all references to
the FCA herein refer to the 2006 edition.

2

There appear to be substantial questions regarding the
validity of the underlying theory of Amphastar’s case.

As

stated in a recent law review article:5
Amphastar’s FCA suit was based on the novel
theory that Aventis defrauded the government
when it fraudulently acquired its patent by
engaging in inequitable conduct while
prosecuting its patent application before
the United States Patent and Trademark
Office (“USPTO”). . . . This lawsuit is
currently being litigated and it is unclear
whether Amphastar’s theory of FCA liability
based on inequitable conduct is even valid,
let alone whether Amphastar will prevail.
However, because the Court finds that the instant case must
be dismissed for lack of jurisdiction, there is no discussion
herein of the potential validity of an FCA claim based upon
Aventis’ alleged inequitable conduct in the prosecution of a
patent application.
Furthermore, while the discussion herein refers to certain
aspects of the conduct of counsel for Amphastar in regard to the
evidentiary hearing, the instant decision does not resolve the
issues presented by such conduct.

The Court shall issue a

separate decision regarding the action to be taken – including
the possible imposition of sanctions – by virtue of Amphastar’s
counsel’s conduct.
5

Gregory Michael, William Newsom, & Matthew Avery, The New
Plague: False Claims Liability Based on Inequitable Conduct
During Patent Prosecution, 25 Fordham Intell. Prop. Media & Ent.
L.J. 747, 749-50 (2015)(footnotes omitted).

3

I.

PROCEDURAL BACKGROUND6
In 1995, Aventis obtained United States Patent No.

5,318,618 (“the ‘618 Patent”) for an anticoagulant drug,
enoxaparin.

In March 2003, Amphastar filed an Abbreviated New

Drug Application (“ANDA”) with the Food and Drug Administration
(“FDA”), requesting the right to manufacture and sell a generic
version of enoxaparin.
On August 4, 2003, Aventis sued Amphastar, alleging
infringement of the ‘618 Patent by virtue of the filing of the
ANDA.7 Civil No. 03-0887 MRP (“the Patent Case”).

After

extensive litigation in this Court and the United States Court
of Appeals for the Federal Circuit, the case concluded on
September 25, 2008.

On that date, the Federal Circuit affirmed

this Court’s (Judge Pfaelzer’s) decision that the ‘618 Patent
was unenforceable due to inequitable conduct in regard to the
prosecution.8

Aventis Pharma S.A. v. Amphastar Pharms., Inc.,

525 F.3d 1334 (Fed. Cir. 2008).
6

For additional background, see Memorandum and Order Re:
Motion to Dismiss, ECF No. 78.
7
When an ANDA applicant files a certification of invalidity,
unenforceability, or noninfringement, this action constitutes a
constructive act of infringement. This provides the patent
holder standing to file an infringement action within 45 days
after notice. Filing suit prevents the FDA from approving the
ANDA for 30 months from the notice date, thereby excluding the
would-be entrant from the market. This consequence may, in
some circumstances, present antitrust issues.
8
Aventis contends that, by virtue of subsequent Federal

4

On December 31, 2008, Amphastar (by its counsel) sent a
letter to the United States and several states, disclosing its
intention to file a qui tam action, stating:
During Amphastar’s litigation against
Aventis, Amphastar discovered that Aventis
has committed frauds against both the United
States Patent & Trademark Office and the
United States Food & Drug Administration,
which have resulted in false claims for
overpayment from the government, including
Medicare and Medicaid.
Ltr. 1, Dec. 31, 2008, provided to the Court and
Aventis under seal, ECF No. 186-1.
On January 7, 2009, Amphastar filed the qui tam Complaint
[ECF No. 1] on behalf of the United States (“the Government”)
and several States (“the States”).

Amphastar alleges that, by

virtue of fraud perpetrated vis-à-vis the USPTO and the FDA,
Aventis fraudulently inflated the price of enoxaparin charged to
the Government and the States.
On October 21, 2011, the United States and the States
declined to intervene in the case.

ECF Nos. 30, 31.

Complaint was unsealed on October 28, 2011.

The

ECF No. 32.

Amphastar elected to proceed with the case pursuant to 31 U.S.C.
§ 3730 (c)(3).
On January 19, 2012, Aventis filed Defendants’ Motion to
Dismiss False Claims Act Qui Tam Complaint [ECF No.43-1],
Circuit decisions and other grounds, the inequitable conduct
finding should not be considered binding in the instant case.

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contending (1) pursuant to Rule 12(b)(6),9 that the Complaint did
not adequately plead the submission of false claims, and (2)
pursuant to Rule 12(b)(1), that the case should be dismissed on
jurisdictional grounds.

The Court ruled on the motion, granting

dismissal on Rule 12(b)(6) grounds, granting Amphastar leave to
file an amended complaint to cure the pleading problem, and
recognizing that that there was a potential jurisdiction
question.

As stated in Decision on Pending Motions:
If Plaintiff can amend the Complaint so as
to avoid dismissal pursuant to Rule
12(b)(6), the Defendant may, nevertheless,
have a valid Rule 12(b)(1) defense. However,
the question of subject matter jurisdiction
may present issues of fact that will best be
resolved on a more complete record at the
dismissal stage (with further evidence) or
at the summary judgment or trial stage.

ECF No. 77, 2.
On December 3, 2013, Amphastar filed the Amended Complaint
[ECF No. 81].

The case proceeded pursuant to the Initial

Scheduling Order [ECF No. 89].
On February 28, 2014, Aventis filed Defendants’ Motion for
Summary Judgment for Lack of Jurisdiction Pursuant to 31 U.S.C.
§ 3730(e)(4)(B)’s Disclosure Requirement [ECF No. 204].

9

Aventis

All Rule references herein refer to the Federal Rules of
Civil Procedure.

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asserted that the Court had determined10 that the case was “based
upon the public disclosure of allegations or transactions in a
. . . civil . . . hearing.”

Therefore, by virtue of 31 U.S.C. §

3730(e)(4)(A), the suit could have been brought by Amphastar
only if it were an “original source.”11

Since there was no

factual question as to the contents of Amphastar’s prefiling
disclosure letter, Aventis sought summary judgment dismissing
the case, because, it alleged, the disclosure letter was not
adequate to comply with 31 U.S.C. § 3730(e)(4)(A).
On April 4, 2014, the Court denied Aventis summary
judgment, stating:
In view of the conflicting judicial
decisions in other circuits and the absence
of clear guidance from the United States
Court of Appeals for the Ninth Circuit, I
will not dismiss the case based upon the
alleged inadequacy of the December 31, 2008
letter. Aventis has, most definitely,
presented a non-frivolous contention that is
preserved for appellate review.
The matter shall proceed through the
evidentiary hearing and a decision whether
Amphastar is “an individual who has direct
and independent knowledge of the information

10

In the Memorandum and Order Re: Motion to Dismiss, ECF No.

78.
11

The FCA defines an “original source” as one who “has direct
and independent knowledge of the information on which the
allegations are based and has voluntarily provided the
information to the Government before filing an action under this
section which is based on the information.” 31 U.S.C. §
3730(e)(4)(B).

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on which the allegations are based.”
U.S.C. § 3730(e)(4)(B).

31

Letter Order, ECF No. 232.
On June 9, 2014, the Court – at the request of Aventis
- certified the issue of the adequacy of Amphastar’s
disclosure for interlocutory appeal pursuant to 28 U.S.C. §
1292(b). Cert. Order, ECF No. 262.

The United States Court

of Appeals for the Ninth Circuit accepted the interlocutory
appeal which, at this writing, remains pending.

II.

THE JURISDICTIONAL PREREQUISITES
Amphastar, as a qui tam plaintiff (often referred to as a

“relator”), has the burden of proving by a preponderance of the
evidence that the court has subject matter jurisdiction.

United

States v. Alcan Elec. & Eng’g, Inc., 197 F.3d 1014, 1018 (9th
Cir. 1999).
The FCA provides, in pertinent part, that:
No court shall have jurisdiction over an
action under this section based upon the
public disclosure of allegations or
transactions in a . . . civil . . . hearing
unless the action is brought by the Attorney
General or the person bringing the action is
an original source of the information [on
which the allegations are based].
31 U.S.C. § 3730(e)(4)(A) (emphasis added).
An “original source” for FCA purposes is defined as:

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an individual12 who has direct and
independent knowledge of the information on
which the allegations are based and has
voluntarily provided the information to the
Government before filing an action under
this section which is based on the
information.
31 U.S.C. § 3730(e)(4).13
III. DISCUSSION
Aventis contends that Amphastar has not established that
the Court has subject matter jurisdiction. In particular,
Aventis contends that Amphastar has failed to prove that it:
Voluntarily provided the information on which the case
is based to the Government before filing the action
and,
Had direct and independent knowledge of the
information on which the allegations are based.14
This Court has, albeit expressing “serious doubts about the
issue,”15 declined to dismiss the case by virtue of the asserted

12

It appears undisputed that the term “individual” as used
herein would include a corporate person such as Amphastar.
13
In United States ex rel. Hartpence v. Kinetic Concepts,
Inc., --- F. 3d ----, 2015 WL 4080739 (9th Cir. July 7, 2015),
the Ninth Circuit held that a relator did not need to have “had
a hand in the public disclosure of allegations that are a part
of . . . [the] suit” as had been required in United States ex
rel. Meyer v. Horizon Health Corp., 565 F.3d 1195, 1201 (9th
Cir. 2009).
14
Aventis also contended that Amphastar did not have a hand
in the public disclosure of allegations, based on Horizon
Health, 565 F.3d at 1201, a contention mooted by the decision in
Hartpence, 2015 WL 4080739.

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inadequacy of Amphastar’s pre-filing disclosure. As noted above,
this decision is the subject of a pending interlocutory appeal
and will not be addressed herein.
Therefore, the instant decision addresses the question of
whether Amphastar has proven that it had direct and independent
knowledge of the allegations on which the action is based.

A.

Direct and Independent Knowledge

A relator must prove both direct and independent knowledge
of the information on which its allegations are based.

Horizon

Health, 565 F.3d at 1202.16
To have had direct knowledge to satisfy the FCA
jurisdictional requirement, a relator must have had firsthand
knowledge of the alleged fraud and have obtained this knowledge
through its own labor unmediated by anything else.

Id. (citing

Alcan, 197 F.3d at 1020); see also United States ex rel. Devlin
v. California, 84 F.3d 358, 360-61 (9th Cir. 1996)(citing
cases); United States ex rel. Aflatooni v. Kitsap Physicians
Servs., 163 F.3d 516, 524-25 (9th Cir. 1999)(citing cases).
The knowledge is independent if the relator had evidence on
which the allegations were based before the public disclosure of

15

See Memorandum and Order Re: Summary Judgment (Disclosure)
13, ECF No. 245.
16
Overruled on other grounds by Hartpence, 2015 WL 4080739.

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any allegations.

Devlin, 84 F.3d at 361 n.5; Horizon Health,

565 F.3d at 1202; Wang v. FMC Corp., 975 F.2d 1412, 1417 (9th
Cir. 1992).

Suspicions and speculation do not constitute

independent knowledge under § 3730(e)(4)(B).

Malhotra v.

Steinberg, 770 F.3d 853, 860 (9th Cir. 2014).

B.

The Allegations

In the Amended Complaint [ECF No. 81], Amphastar alleged
that:
Aventis fraudulently obtained the ‘618 Patent by
misrepresenting to the USPTO the superior half-life
properties of the claimed pharmaceutical. Compl. ¶¶
11-17.
Aventis falsely reported to the FDA that its
manufacturing process had not changed since 1981, and
represented that a generic drug manufacturer must show
that its process was equivalent. Compl. ¶ 25.
1.

The Alleged Fraud on the USPTO

In 1980, Aventis obtained a French patent, FR 8010791,
relating to mixtures of low molecular weight heparin. Aventis
then filed related applications in the European Patent office
and the USPTO.

In 1984, the application in the USPTO was

abandoned after Aventis failed to oppose the USPTO’s prior-art
rejections.
In 1981, European Patent No. 40,144 (“the European Patent”)
was published.

In 1985, an opposition to the European Patent

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was filed, resulting in the patent’s revocation for
insufficiency of disclosure and lack of reproducibility.
In 1991, Aventis filed a New Drug Application (“NDA”) with
the FDA to obtain marketing approval for enoxaparin in the
United States.

Also in 1991, Aventis filed a patent application

in the USPTO relating to mixtures of low molecular weight
heparin.

The application resulted in the 1995 issuance of the

‘618 Patent.
The ‘618 Patent prosecution history included successive
rounds of rejection and appeal relating to the assertion that
the claimed mixtures had a longer plasma half-life than those
disclosed in the known prior art, particularly Aventis’ own
patent, the European Patent.

In the course of the USPTO

proceedings, Aventis presented what became Example 6 of the ‘618
Patent, purporting to show half-life improvement over enoxaparin
produced pursuant to the European Patent.
In support of its arguments, Aventis submitted to the USPTO
declarations of its employee, Dr. Andre Uzan (“Dr. Uzan”),
comparing the half-life data between the ‘618 compounds and the
European Patent compounds and asserting that the differences
were statistically significant. The data presented in Example 6,
however, did not include complete dosage information – the

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unspecified dose amount for the European Patent compound was 60
mg., compared to a disclosed 40 mg. dose of the ‘618 product.
The USPTO ultimately accepted Aventis’ responses to
the office actions – claimed by Amphastar to have been
fraudulent - and issued the ‘618 Patent in 1995.

Thus,

Amphastar claims, Aventis obtained the ‘618 Patent by
virtue of a fraud on the USPTO.17

a.

Amphastar’s Product Development

Amphastar, a generic pharmaceutical firm, was founded in
1999 by its President, Yong Feng Zhang (“Zhang”), and his wife,
Dr. Mary Luo, a scientist and Amphastar’s Chief Operating
Officer.
Zhang sought to find a branded pharmaceutical on which to
base a generic product.

He researched the market, patent

status, and technical complexity of the various options
considered.

He decided that enoxaparin produced by Aventis and

sold under the brand name Lovenox® was a good prospect for a
generic product.

Zhang found Aventis’ enoxaparin listed in the

FDA Orange Book and saw that the ‘618 Patent cited the European
Patent as prior art.

He believed that it might be possible to

create a generic enoxaparin by utilizing the disclosure in the

17

Aventis denies that there was any such fraud.

13

European Patent and obtained an English translation of it –
Irish Patent 51283.
Zhang assigned an Amphastar employee, Jeff Ding (“Ding”),
as project manager.
began in 2000.

The development of a generic enoxaparin

Robert Fei (“Fei”), working under Ding,

performed experiments in connection with the product
development. These experiments led to the ability of Amphastar
to manufacture a generic enoxaparin and submit its ANDA
application to the FDA on March 4, 2003.

b.

Amphastar’s Alleged Knowledge

Amphastar’s contention regarding its alleged direct and
independent knowledge was acknowledged by its counsel during
closing arguments as follows:
THE COURT:
The plaintiff’s contention is that Dr.
Fei conducted these experiments in order to
ascertain, or in order to develop a product
based upon the 144 patent. He did produce
such a product. He compared that product,
relevant result, particularly this half-life
study, and found that it did not improve or
that it was just as good as the results of
what Aventis had from this 618 patent.
That Dr. Zhang was informed -- and we
can get into the details -- of the
experiments, et cetera. And he then knew
that the example 6 was a false statement.
And that, therefore, that’s original source.

14

Is that from a 100,000 feet, Mr. Weir,
that’s essentially where it is?
MR. WEIR:

Yes.

Hr’g Tr., Closing, 64:11-23.18
Amphastar sought to prove its contention through testimony
presented by Zhang.
the experiments.

Zhang said that he received oral reports of

He said that, at some unspecified time from

2001 through March 200319 (“about 2002”20), he came to believe
that the ‘618 Patent included a fraudulent misrepresentation to
the USPTO as to the half-life benefit of the invention.

Zhang

testified that he had concluded that Example 6 in the ‘618
Patent was false.

He testified that he made this discovery

based on his belief that Amphastar had created a bioequivalent
enoxaparin with the same molecular weight and half-life
properties as Lovenox® by following the European Patent.

18

The Court held an evidentiary hearing lasting four days
from July 7, 2014 to July 10, 2014. After post-hearing briefs
were submitted, the Court then heard closing arguments on
October 10, 2014. For ease of reference herein, the hearing
transcripts are referenced by the number of the day and AM or
PM, i.e., “Day 1 AM” refers to July 7, 2014 morning session,
“Day 2 PM” refers to July 8, 2014 afternoon session, etc. The
hearing transcript for October 10, 2014 closing arguments is
referenced as “Closing.”
19
When Amphastar filed its ANDA application.
20
“In last deposition, I was asked many times what time. I
said not exactly remember. I said about 2002.” Zhang, Hr’g
Tr., Day 3 AM, 81:2-3. See also Hr’g Tr., Day 3 AM, 63:17-64:7;
79:17-82:10; Hr’g Tr., Day 3 PM, 5:21-6:2.

15

There is no documentation of this purported discovery.

Nor

did Zhang testify at trial that he communicated this discovery
to anyone except for a reference to his deposition testimony in
which he had said that he had talked to Ding about it in 2002
and to his wife.

Hr’g Tr., Day 3 AM, 64:2-5.

Neither Ding nor

Zhang’s wife testified confirming the existence of the
conversations.

No witness – neither Zhang, his wife, Ding, nor

anyone else - testified regarding the content of these purported
conversations.
The Court does not accept as true, Zhang’s testimony that
he reviewed results of the experiments and comparisons of the
generic enoxaparin to Aventis’ Lovenox® and the claims of the
‘618 Patent and concluded that Example 6 of the ‘618 Patent
presented false statements.

The Court does not believe Zhang’s

testimony that, prior to the filing of the Patent Case, he had
the knowledge of the alleged fraud that he claims.

i.

Inconsistent Actions

Amphastar’s contention that it, by Zhang, had discovered
Aventis’ fraud on the USPTO by March 2003 is refuted by
inconsistent actions taken by, and on behalf of, Amphastar.
In the Patent Case, filed August 4, 2003, Aventis sued
Amphastar and Teva Pharmaceuticals USA, Inc. (“Teva”) for

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infringement of the ‘618 Patent, based on the ANDA applications
they had filed.

Although Amphastar now contends that, prior to

the commencement of the suit, Zhang (its President) had
discovered that the ‘618 Patent included a material false
statement, neither it nor its co-defendant, Teva, presented any
defense based thereon.

It was not until June 7, 2004, after

discovery in the Patent Case was underway, that Amphastar filed
a Motion for Leave (After the Fact)to File its Amended Answer
and Counterclaim (“Amend Motion”). Defs.’ Ex. 14.21

In this

motion, Amphastar stated:
Pursuant to Federal Rules of Civil
Procedure, Rule 15(a) and based on facts
recently developed in this litigation,
Amphastar has added new affirmative defenses
and several antitrust claims to its answer
and counterclaim against Plaintiffs.
Amend Motion 2 (emphasis added).
Aventis promptly filed a motion to strike the amended
answer and counterclaim.

Amphastar responded on June 14, 2004,

stating:
As to the unenforceability of the ‘618
patent based on inequitable conduct, all of
the facts and evidence upon which this
affirmative defense is based are in the
possession and control of Aventis.

21

Amphastar had already filed, without the required leave of
the court, its Amended Answer and Counterclaim on May 21, 2004.
See Civil Minutes – General 5-6, Case 5:03-cv-00887-MRP-PLA,
ECF. 286, August 4, 2004.

17

Defendant Amphastar’s Memorandum of Points and
Authorities in Opposition to Aventis’ Motion to Strike
Amended Answer and Counterclaim 2, Defs.’ Ex. 15
(emphasis added).
If Amphastar had believed that the experiments on which
Zhang purportedly relied demonstrated – or were even relevant to
– fraud by Aventis, this would have been a false statement.
Amphastar, moreover, listed evidence on which it based its
contention, stating:
This evidence includes the Declaration
of Andre Uzan filed in 1994 in connection
with the prosecution of the ‘618 patent. The
Uzan declaration includes data purportedly
regarding studies of the compound claimed in
the ‘618 patent, but which data was included
in an article published in 1988, two years
before the earliest priority date of the
‘618 patent. The evidence of inequitable
conduct also includes Aventis’ recent USPTO
filings in a proceeding seeking reissuance
of the ‘618 patent, which filings admit
inaccuracies in the original prosecution of
the patent.
Id. (internal citations omitted).

Amphastar did not mention the

supposedly significant experiments.
Shortly after the patent litigation ended on September 25,
2008, Amphastar proceeded to prepare the instant qui tam
lawsuit.
On December 31, 2008, Amphastar – by Jan Weir, Esquire, its
counsel in the instant case – sent its disclosure letter to
comply with the FCA obligation “voluntarily [to provide] the

18

information to the Government before filing an action under this
section which is based on the information.”
3730(e)(4)(B).

31 U.S.C. §

The letter stated, in pertinent part:

We write to inform you that Amphastar plans
on bringing an action as a qui tam relator
on behalf of both the United States
government and various state governments
under the federal False Claims Act (“FCA”)
and the respective state False Claims Acts
against Aventis Pharmaceuticals, Inc.
(“Aventis” or “Defendant”). During
Amphastar’s litigation against Aventis,
Amphastar discovered that Aventis has
committed frauds against both the United
States Patent & Trademark office and the
United States Food & Drug Administration,
which have resulted in false claims for
overpayment from the government, including
Medicare and Medicaid.
Ltr. 1, Dec. 31, 2008, ECF No. 186-1, provided to the Court and
Aventis under seal (emphasis added).
At the post-hearing argument on October 10, 2014,
Amphastar’s counsel - author of the disclosure letter – stated
that his statement in the December 31, 2008 letter that “during
Amphastar’s litigation against Aventis, Amphastar discovered”
did not mean learned through discovery.

Rather it meant only

that the knowledge was obtained during the litigation.
MR. WEIR:
And, finally, with respect to the
letter that I wrote, we said during
litigation, I didn’t say from discovery. It
just was during litigation. And I don’t
believe I was saying something that cut it

19

off and narrowed it. It was just a
reference that during litigation this is
what we came up with. I don’t think I was
limiting it to any particular time.
Hr’g Tr., Closing, 157:19-25.
However, the Patent Case was filed August 4, 2003, well
after the purported discovery by Zhang.

Amphastar’s counsel was

asked about the fact that Zhang’s purported (pre-March 2003)
“discovery” allegedly occurred prior to the commencement of the
Patent Case.

He then stated that when he said “during

litigation,” he was not referring to the time that the
litigation was pending.
THE COURT: You said discovered during
litigation.
MR. WEIR: During this litigation we
discovered, I didn’t say we discovered from
Aventis, I didn’t say -- it was just a -THE COURT: Where did you discover it from
in the litigation other than from Aventis?
MR. WEIR:

The -- as I said --

THE COURT: Was that after the litigation
started is when you did the experiments?
You were finished with those.
MR. WEIR: I think that litigation entails a
presuit investigation, it includes the ANDA
letters, the ANDA filing. It included
broadly, the effort to invalidate the patent
or to -Hr’g Tr., Closing, 158:1-13.

20

Amphastar’s counsel did not address his June 7, 2004
representation to this Court on behalf of Amphastar in the
Patent Case.

In that statement, he said that the information on

which Amphastar based its affirmative defenses, including
inequitable conduct, was “based on facts recently developed in
this litigation.”

Amend Motion 2 (emphasis added).

The Court rejects Mr. Weir’s creative definitional
arguments.
The Court finds that Amphastar’s actions are inconsistent
with, and refute, the contentions it now presents to establish
its alleged direct and independent knowledge.

ii.

Fei Did Not Produce Enoxaparin By
Following the European Patent22

Amphastar’s basic premise is that Fei produced enoxaparin
utilizing the disclosure in the European Patent – without
following the teachings of the ‘618 Patent – and proved that the
half-life characteristics of Fei’s product were not inferior to
those claimed to result from the process in the ‘618 Patent.
However, the Court finds that Fei produced enoxaparin for
Amphastar by varying from the methods described in the European

22

Accordingly, there was no meaningful comparison of product
half-lives.

21

Patent and substantially utilizing the teachings of the ‘618
Patent.
Fei, at his deposition, testified that Ding gave him the
‘618 Patent,23 but in the evidentiary hearing, Fei testified that
he paid it little attention.24

Nevertheless, Fei admitted that

he obtained and followed specific directions from Ding.

The

evidence establishes that Fei utilized teachings in the ‘618
Patent that are not found in the European Patent.

Ding,

although an Amphastar employee, and not shown to be unavailable
for the hearing, did not testify.

The Court finds that Ding

utilized the teachings of the ‘618 Patent to direct Fei’s
actions.

(a)

Fei’s Notebooks

During the time Fei was working to produce a generic
enoxaparin for Amphastar, he maintained two sets of notebooks.
There was a set of “preliminary” yellow notebooks and a set of
“final” blue notebooks.

Fei testified:

23

Hr’g Tr., Day 2 AM, 20:16-22.
Asked at the hearing whether he recalls Ding giving him the
‘618 Patent, Fei said: "Give me only -- Ding can give me because
he’s my supervisor, but I just said I’m not interested for that
patent because I’m concentrate on the Irish patent, so maybe he
give me, I just take a look. I didn’t pay more attention on
this patent. So I have many work to do on the Irish patent.
There’s a lot example to try. That’s it.” Hr’g Tr., Day 2 AM,
21:8-18.
24

22

One is yellow book, one is blue book. Blue
book is formally. One is roughly. Yellow
book is roughly. I just wrote only the raw
data on the yellow book. Yeah. Is very
roughly. Not -- not very -- very complete
or detailed. Not in detail.
Hr’g Tr., Day 2 AM, 40:11-15.
The contents of these notebooks were critical evidence in
the evidentiary hearing.

There were proceedings relating to the

notebooks prior to the evidentiary hearing.

On February 12,

2014, Amphastar stated:
Amphastar did conduct experiments that
exposed Aventis’s fraud and that qualify
Amphastar as an original source, but
Amphastar has already produced those
documents.
Joint Stipulation Regarding Defendants’ Motion to Compel
Responses to Defendants’ Second Set of Requests for Production
32, ECF No. 200 (sealed).
However, the purported copies of Fei’s notebooks that
Amphastar produced, and stipulated as exhibits that were used in
the evidentiary hearing, were not complete copies of the
original documents in Amphastar’s possession.

Unknown to

Aventis, Amphastar had, in its possession, original notebooks
that included contents relevant to the evidentiary hearing that
were omitted from the copies stipulated in evidence.

23

(b)

Amphastar’s Counsel’s Conduct

Serious issues are presented by the conduct of Amphastar’s
counsel in regard to Fei’s notebooks.25
The copies of the notebooks stipulated in evidence did not
contain certain pages.

Of course, this much was known to

Aventis’ counsel who believed – as did the Court – that the
exhibits were the same as the original documents.

I.e., the

Court and Aventis believed that the originals in Amphastar’s
possession had the same pages missing as the copies in evidence
and that every page in the stipulated exhibits was a true and
complete copy of the corresponding page in the original notebook
in Amphastar’s possession.

Hence, Aventis’ counsel were

contending that because exhibits were missing pages that might
contain relevant information, the Court should infer that the
missing contents would include evidence adverse to Amphastar.26

25

These issues shall be addressed in a separate decision
regarding the action to take in light of Amphastar’s counsel’s
conduct.
26
In addition, certain of Fei’s notebooks for the relevant
period were somehow “lost.” Presumably, the Court could draw an
inference that the contents of the lost notebooks not produced
would be adverse to Amphastar’s position. However, the evidence
that was produced present ample indicia that Fei did not produce
the enoxaparin sold by Amphastar by merely following the method
of the European Patent and that the disclosure of ‘618 Patent
was a substantial source of guidance for his experimental
actions. Hence, the Court need not rely upon any inferences
based on “lost” notebooks.

24

Neither the Court nor Aventis’ counsel were aware (1) that
the originals from which the exhibits had been copied contained
some of the pages missing from the exhibits, and (2) that one
notebook copy stipulated in evidence included what appeared to
be a copy of a blank page and/or a page with a blank space that
was not blank in the original – but contained relevant contents.
In argument, Amphastar’s counsel admitted that, prior to
the evidentiary hearing, he knew that among the exhibits
stipulated to be copies of Fei’s notebooks were incomplete
copies.
THE COURT: . . . Are you saying you were not
aware that there was anything in evidence,
where you had an original that was not
perfectly consistent with what was in
evidence? You’re saying you were totally
unaware of it or you were aware of it. Now
we can talk about –
MR. WEIR:

I was aware.

Hr’g Tr., Closing, 19:23-20:3.
THE COURT: [Y]ou knew you had an original
[of Exhibit 39, Fei’s yellow notebook from
2001] with page 92.
MR. WEIR: I -- I knew I had the original.
Page 92 was in it, in the original, and it
was not in the copy. I knew about that
before the hearing.
Hr’g Tr., Closing, 43:19-22.

25

Even if, as Amphastar’s counsel contends,27 he knew of only
one stipulated exhibit that lacked content that was in the
original in his possession, his conduct was inexcusable.

He

claims that, despite having this knowledge prior to the hearing,
he did not check the other stipulated notebook exhibits28 to
ascertain – as was the case – that there was more than one
incomplete copy.

Nor did he notify the Court or opposing

counsel that at least one of the stipulated exhibits lacked
contents that were in an original document in his possession.
Rather, Amphastar’s counsel misled the Court (and Aventis)
into proceeding with the evidentiary hearing on the false
premise that the copies of Fei’s notebooks stipulated as
evidence were not different from the original notebooks.

He

said, in his opening statement:
MR. WEIR
We are going to show you contemporaneously - sorry for the mispronunciation of that -notebooks that were done by Mr. Robert Fei.
He was the scientist at enoxaparin who did
the synthesis work. I have the originals of
the notebooks with us. We have produced in
the case copies and the copies are all
marked. I’ve provided the originals to
counsel for inspection, and they’ll be here
27

The Court will consider Amphastar’s counsel’s veracity on
this, and other matters, in a separate decision regarding his
conduct to be issued hereafter.
28
The Court, while stating what Amphastar’s counsel has said
in this regard, is not addressing herein the veracity of his
statement.

26

throughout the case for inspection, but the
original notebook – they’re all bound
notebooks. The original notebook is old,
more than 10 years old, and it’s falling
apart, but they’re all here in their
original form.
Hr’g Tr., Day 1 AM, 11:25-12:9 (emphasis added).
Amphastar’s counsel’s statement that “I have the originals
of the notebooks with us.

We have produced in the case copies

and the copies are all marked. . . .” gave the false impression
that the copies Amphastar had produced and stipulated in
evidence were true and complete copies of the original
documents.
By the time of argument – when the fact that the notebook
copies in evidence lacked relevant contents that were in the
original notebooks in Amphastar’s possession was known –
Amphastar’s counsel sought to disavow his statement that, at the
beginning of the evidentiary hearing, “they’re all here in their
original form.”
THE COURT:
Mr. Weir states in his opening statement, “I
have the originals of the notebooks with
us.” I assume, Mr. Weir, you had the
originals.
MR. WEIR: At that moment I did not have all
the originals. I had the originals that I
believe that I was going to present to the
Court and -- during the direct examination
of our witnesses.

27

. . . .
THE COURT: Okay. All right. So you said,
“I have the originals,” but you meant “I had
some originals”?
MR. WEIR:

Yes.

Hr’g Tr., Closing, 10:24-11:6, 12:22-24.
In the course of the hearing, it became perfectly clear
that the Court and Aventis’ counsel had been and were proceeding
on the false premise – known to be false by Amphastar’s counsel
- that the stipulated exhibits were true and complete copies of
the originals.
For example, on the fourth and final day of the evidentiary
hearing:
THE COURT:
On this original notebook
business, I don’t know the fuss we’re making
about it. Unless there is some question of
legibility -- and I haven’t heard any
question that the copies that are in
evidence are inaccurate copies of what’s in
the original.
. . . .
They’re [Aventis’ counsel are] not making a
contention that, if I understand it, the
copies of these -- of all notebooks that are
in evidence are in any way inaccurate copies
of original notebooks that are in the
possession of Amphastar. They are making an
issue, as I understand it, that the absence
of certain things means they couldn’t look
at it and they want to make arguments based
on the absence of those things.
MR. DAWSON [AVENTIS’ COUNSEL]:

28

Thank you. Correct.
Hr’g Tr., Day 4 AM, 103:9-18, 108:2-11.
It was only after the completion of all of the testimony
from Amphastar’s fact witnesses (including all of the testimony
of Fei and Zhang), at the very end of Aventis’ presentation of
evidence, that the Court ascertained that the stipulated
notebook exhibits were not complete copies and that relevant
information absent from the exhibits was contained in original
documents that Amphastar’s counsel had in his possession.
In Amphastar’s counsel’s re-cross-examination of Aventis’
last witness, Amphastar’s counsel asked a question indicating
that he had an original notebook that contained a page missing
from one of the stipulated exhibits.

He did this to show that

the content of one of the missing pages that Aventis had been
speaking about was, in fact, irrelevant.

He did not, however,

indicate that – as was the situation - he had in his possession
other originals that contained relevant evidence missing from
the stipulated exhibits.
Immediately upon ascertaining that at least one of the
stipulated exhibits was not a true and complete copy of the
original, the Court took action.

The Court directed Amphastar’s

counsel forthwith to provide Aventis’ counsel with all of the
original notebooks for a rapid comparison with stipulated

29

exhibits during the lunch break.

In that brief review, Aventis’

counsel was able to determine, and report to the Court, that
several of the stipulated exhibits omitted contents that were
present in the original notebooks just obtained from Amphastar.
One of these, Exhibit 2229 discussed below, included purported
blank pages and/or spaces that were not blank in the original
notebook that Amphastar’s counsel had just produced.

Rather,

where the stipulated exhibit had blank spaces, blank pages, or
missing pages, the original had pages with relevant test results
data taped thereon.

(c)

Use of the ‘618 Patent

The Court’s finding that Fei’s actions in the course of
producing Amphastar’s enoxaparin product were guided by the
teachings of the ‘618 Patent is supported by indicia in Fei’s
notebooks.

A few illustrative examples suffice.

(i)

Esterification Testing

The ‘618 Patent teaches that controlling for a degree of
esterification in a range of 9.5% and 14% ensures that the
depolymerization step can be consistently reproduced for
29

Amphastar’s counsel, in closing argument, stated that the
first time he knew of the omission of the testing data from
Exhibit 22 was when Aventis counsel told it to the Court on the
last day of the hearing. Hr’g Tr., Closing, 15:12-25.

30

achieving the desired low molecular weight targets.

The

European Patent did not disclose controlling for the degree of
esterification.
Fei tested for the degree of esterification and could not
state the source for his doing such testing.

In the

evidentiary hearing, Aventis sought to establish that Fei did
this testing because it was presented in the ‘618 Patent:
CROSS EXAMINATION OF FEI
Q.
. . . And the Irish patent [the
European Patent]does not teach testing for
the degree of esterification, does it?
A. It is very simple to testing because it’s
hydrolysis and test it. It’s very easy to
test.
Q. Mr. Fei, my question was does the Irish
patent, Defense Exhibit 46, teach -A.

It doesn’t say that.

Q.

It doesn’t say that.

Okay.

But the ‘618 patent from Aventis does say
that, doesn't it?
I don’t know the ‘618 say that or not,
but I -- we just test it.
A.

Hr’g Tr., Day 2 AM, 49:24-50:10.
Aventis sought to establish that the esterification testing
results had been reported to Ding, supporting the contention
that Ding directed the testing.

As Fei testified, if the test

31

results had been recorded in the blue (final) notebook, the
results would be communicated to Ding.
Q.

Important things you will not copy?

A.
Yeah. Not important and something
is not necessary so I’m not copy everything.
Q.

Okay.

A.
Most of them, the important thing I
would copy and write on blue book.
Q.
Okay. And are the blue notebooks
supposed to be reviewed by your supervisor?
A.

I give to Jeff Ding my supervisor.

Hr’g Tr., Day 1 PM, 79:3-11.
Aventis’ counsel found a reference to testing for
esterification in Fei’s yellow (preliminary) notebook but did
not find the test results in the stipulated marked exhibit,
Exhibit 22, the blue (final) notebook.
Aventis’ counsel, at the time unaware that the original
notebook contained test results absent from Exhibit 22, crossexamined Fei.
Q. Okay. And if you could look back at
Exhibit 22, the second [the blue final] set
of notebooks for this period of time at the
beginning, does it reflect that you
conducted degree of esterification
experiments?
A. I just sent this sample to testing.
Someone test it. I not testing. I just
make some sample.

32

Q. And you didn’t record the results in the
second [blue final] set of books, did you,
Mr. Fei?
A. No. I didn't see -- where is it? On
the blue book, where is it? Which page?
Q. It’s Defense Exhibit 22, and I guess my
question is the same as your question:
Where is it? I don’t see it in this
exhibit.
Your question is where this
esterification testing data -- where is it
on the blue book, right?
A.

Q.

Yes, sir.

I have to check all the page. I cannot
find it right now. Maybe somewhere. I think
-- if they have the result, they will tell
me or give me a copy or give me some result.
I will write down. But I -- I don’t think
it’s very important. Just for reference.
A.

Q.

I see.

Not very important. This -- we do the
esterification to test how much ester is -is on the heparin after esterification, but
it’s not important.
A.

Hr’g Tr., Day 2 AM, 50:14-51:13.
As discussed above, on the last day of the evidentiary
hearing, Aventis and the Court discovered that the original blue
notebook, from which Exhibit 22 had been copied, actually had
the test results.

Thus – contrary to Fei’s testimony – the test

results were considered important enough to present in the blue
(final) notebook for Ding’s review.
The Court finds that – as to the degree of esterification

33

testing, Fei did the testing at the direction of Ding pursuant
to the teaching of the ‘618 Patent.

(ii) The Temperature and Ratio
The European Patent provides several examples of
esterification reactions with differing reagent ratios and
reaction temperatures.

However, there is no example in the

European Patent that uses the reagent ratios of 1 to 5 to 1.
Nor is there an example that describes carrying out an
esterification reaction at 35 degrees Celsius (95 degrees
Fahrenheit).

See, e.g., Hr’g Tr., Day 1 PM, 112:22-113:16.

Fei utilized the precise temperature that is taught in the
‘618 Patent, the temperature of 35 degrees Celsius.
Day 1 PM, 121:24-122:18.

Hr’g Tr.,

Amphastar’s counsel, during closing

argument, – without any testimony to that effect from Fei –
misstated the evidence and argued that the temperature of 35
degrees Celsius used by Fei had come from the European Patent.
Counsel stated:
MR. WEIR:
Now, as far as 35 degrees is concerned,
the EP [European Patent], again, 144
provides that the esterification reaction
can take place between 20 degrees C to 60
degrees C. And 35 degrees falls right in
the middle of it.
Hr’g Tr., Closing, 111:6-9.

34

However, the European Patent defines the range as minus 20
degrees Celsius to plus 60 degrees Celsius.

European Patent,

Pl.’s Ex. 6, 15:10-11; Hr’g Tr. Day 1 AM, 64:17-65:12.

The

middle of the range is not 35 degrees Celsius (95 degrees
Fahrenheit) but 20 degrees Celsius (68 degrees Fahrenheit).30
The Court finds that Fei did not use the European Patent
temperature range, but the precise teaching of the ‘618 Patent.
In the esterification reaction conducted by Fei, he used a
ratio of reagents of 1 to 5 to 1, the same ratio taught in the
‘618 Patent.

Fei did not identify any possible source for the

ratio other than the teaching of the ‘618 Patent, directly or
through Ding.31

The Court finds that Fei obtained the ratio

directly from the ‘618 Patent or indirectly by virtue of
direction from Ding.

(iii)

Purification of Heparin

Prior to October 2001, Fei had not been purifying the
heparin used. Then, Fei began to purify the heparin, a process
30

Even if the European Patent range had been plus 20 degrees
Celsius to 60 degrees Celsius as counsel stated, the middle of
range would have been 40 degrees, not 35.
31
Amphastar has found the ratio of 1 to 5 to 1 in an example
contained in U.S. Patent No. 4,440,926, a patent that was
related to the European Patent. There is no evidence, however,
that Fei looked at any such patent or that he got his 1 to 5 to
1 ratio from any source other than from the ‘618 Patent directly
or from Ding.

35

not described in the European Patent but disclosed in the ‘618
Patent.

Fei testified on cross examination that this was

directed by Ding:
CROSS EXAMINATION
Q. But my question for you right now is the
Irish patent does not teach purifying the
heparin starting material, does it?
A.

It doesn’t say that.

Q. Okay. And this procedure that you used
is the same procedure that’s taught in
Aventis’s ‘618 patent except you doubled the
amount of the reagents; is that correct?
A. I don’t know because my supervisor let
me do that. Just according -- he let me do
something, I just do it.
Q. Your supervisor asked to you [sic]
conduct this experiment?
A. He let me do something. I just
according to his advice I do something and
report to him. Just that’s it.
Hr’g Tr., Day 1 PM, 105:9-20.
2.

Alleged Fraud on the FDA

In the Citizen Petition filed with the FDA on February 19,
2003, Aventis requested that the FDA refrain from approving any
generic enoxaparin unless the manufacturing process was
determined to be equivalent to Aventis’ process.
1.

36

Pl.’s Ex. 8,

In support of its position, Aventis stated:
Aventis utilizes a process of βelimination of uronic benzylic esters to
manufacture enoxaparin. This process creates
a distinct drug product with a unique
chemical structure that is sensitive to
specified temperature, base concentration,
and duration factors in the reaction. . . .
Since the initial development of enoxaparin
in 1981, the steps of the manufacturing
process have remained unchanged. Clinical
supplies used in a few of the initial
clinical studies, however, were made from
batches where some of the conditions (e.g.,
time and temperature) were modified.
Aventis conducted pivotal clinical trials on
batches with and without those
modifications. All of those pivotal trials
were included in enoxaparin’s NDA and formed
the basis for enoxaparin’s approval by FDA.
Id. at 10-11 (emphasis added).
In the Complaint, Amphastar alleged that Aventis falsely
reported to the FDA that its manufacturing process had not
changed since 1981, and falsely represented the importance of
the process, requiring that any generic drug manufacturer must
show that its process was equivalent.

Amphastar thereafter

contended that it was false for Aventis to state that the
process was sensitive to certain reaction conditions such as
time, temperature, and concentration.

See Opp’n to Defs.’ Mot.

to Dismiss, ECF. No. 54, 3.
While the Court is not herein addressing the substantive
merits of Amphastar’s claims, it must note that the evidence now

37

of record does not indicate that Aventis made any such false
statements to the FDA.

Indeed, the testimony of the Amphastar

witnesses in the evidentiary hearing indicates that pertinent
reactions are, as stated by Aventis to the FDA, sensitive to
time, temperature, and concentration.32
Even assuming that Aventis had made false statements to the
FDA as alleged, Amphastar did not prove that it had direct and
independent knowledge of that supposed falsity.

Indeed, in

argument, Amphastar acknowledged that its only witness regarding
its supposed “direct and independent knowledge,” Zhang, did not
offer such evidence.
MR. WEIR: . . . So regardless of how you
vary the reaction conditions, they fell
within the scope of the 618 claims. So the
representations to the FDA, Your Honor, was
that enoxaparin is sensitive to quote,
specified time and temperature reactions. So
they -- in the presentations they provide
the Court they always omit the word
“specified.”
THE COURT: [Ha]s Zhang testified in this
case, that he became aware of, using your
concept, that that was a false statement?
MR. WEIR:
THE COURT:
MR. WEIR:

No.
I don’t think he did.
He has not.

32

See, e.g., Defs.’ Ex. 137 at 77:1-4; Hr’g Tr., Day 1 AM,
78:23-82:1; Hr’g Tr., Day 1 PM, 128:13-15; Hr’g Tr., Day 3 PM,
105:20-106:23.

38

THE COURT:

That’s fine.

That’s that.

Hr’g Tr., Closing, 161:2-14.
Accordingly, the Court finds that Amphastar did not have
direct and independent knowledge of the information upon which
it based its claims regarding alleged false statements to the
FDA.

IV.

JUDICIAL ESTOPPEL
Aventis contends that Amphastar should be estopped from

denying that it obtained the information on which the instant
case is based through proceedings in the Patent Case.
“[W]here a party assumes a certain position in a legal
proceeding, and succeeds in maintaining that position, he may
not thereafter, simply because his interests have changed,
assume a contrary position . . . .” New Hampshire v. Maine, 532
U.S. 742, 749 (2001) (internal quotation marks omitted).
“Judicial estoppel applies to a party’s stated position whether
it is an expression of intention, a statement of fact, or a
legal assertion.” Wagner v. Prof’l Engineers in Cal. Gov’t, 354
F.3d 1036, 1044 (9th Cir. 2004)(citing Helfand v. Gerson, 105
F.3d 530, 535 (9th Cir. 1997)).

Judicial estoppel is a

discretionary equitable doctrine, applied on a case-by-case

39

basis.

Ah Quin v. Cnty. of Kauai Dep’t of Transp., 733 F.3d

267, 270 (9th Cir. 2013)(citing New Hampshire, 532 U.S. at 750).
The fact that Amphastar took positions in the Patent Case
inconsistent with its contentions in the instant case may
warrant consideration of the doctrine of judicial estoppel.
However, in the instant case, the Court has conducted an
evidentiary hearing and decided – on the merits - that Amphastar
has failed to prove that it had the jurisdictionally requisite
direct and independent knowledge.
This decision renders moot the question of whether
Amphastar should be estopped from presenting its contentions.

V.

LEGAL FEES AND COSTS
A.

Legal Fees Under the FCA

The FCA provides, in regard to a qui tam action:
If the Government does not proceed with the
action and the person bringing the action
conducts the action, the court may award to
the defendant its reasonable attorneys’ fees
and expenses if the defendant prevails in
the action and the court finds that the
claim of the person bringing the action was
clearly frivolous, clearly vexatious, or
brought primarily for purposes of
harassment.
31 U.S.C. § 3730(d)(4).
The Ninth Circuit has stated, in the context of reversing
an award of attorney’s fees against an attorney under the FCA:

40

In qui tam cases, a court may award
attorneys’ fees against the plaintiff if the
“action was clearly frivolous, clearly
vexatious, or brought primarily for purposes
of harassment.” This standard tracks our
formulation as to when fees are appropriate
under 42 U.S.C. § 1988 to a prevailing
defendant. “A court may grant attorney’s
fees to a defendant under § 1988 only under
the limited circumstances where the action
is frivolous, unreasonable, or without
foundation.” As such, § 1988 cases are
instructive in deciding whether fees are
appropriate under the False Claims Act.33
Pfingston v. Ronan Eng’g Co., 284 F.3d 999, 1005-06 (9th Cir.
2002) (first quoting 31 U.S.C. § 3730(d)(4); then quoting Maag
v. Wessler, 993 F.2d 718, 719 (9th Cir. 1993))(footnote in
original).
In Branson v. Nott, 62 F.3d 287, 293 (9th Cir. 1995), a
case filed pursuant to 42 U.S.C. § 1983, the Ninth Circuit
quoted a Second Circuit decision34 stating “[w]here there is no
subject matter jurisdiction to proceed with the substantive
claim, as a matter of law ‘[t]hat lack of jurisdiction bar[s] an
award of attorneys fees under section 1988.’”

The Branson court

further stated:
[A]ttorney’s fees are only available under
that provision [28 U.S.C. § 1988] to a party
33

The False Claims Act’s legislative history also indicates
that Congress viewed the § 1988 standard as analogous. See
S.Rep. No. 99–345, at 29 (“[The False Claims Act] standard
reflects that which is found in § 1988 ...”), reprinted in 1986
U.S.C.C.A.N. 5266, 5294.
34
W.G. ex rel. D.G. v. Senatore, 18 F.3d 60, 64 (2d Cir.
1994)(quoting Keene Corp. v. Cass, 908 F.2d 293, 298 (8th Cir.
1990)).

41

who has “prevailed” on the merits. Where, as
here, dismissal is mandated by a lack of
subject matter jurisdiction, a defendant is
not a “prevailing” party within the meaning
of § 1988. “Where a complaint has been
dismissed for lack of subject matter
jurisdiction, the defendant has not
“prevailed” over the plaintiff on any issue
central to the merits of the litigation.”
Id. (quoting Keene Corp. v. Cass, 908 F.2d 293, 298 (8th Cir.
1990)).
The Court concludes, therefore, that it is unable to award
Aventis its attorneys’ fees and expenses pursuant to 31 U.S.C. §
3730(d)(4).

B.

Costs – Rule 54(d) and 28 U.S.C. § 1919
1.

Rule 54(d)

“[C]osts under Rule 54(d) may not be awarded where an
underlying claim is dismissed for lack of subject matter
jurisdiction, for in that case the dismissed party is not a
‘prevailing party’ within the meaning of Rule 54(d).”

Miles v.

State of California, 320 F.3d 986, 988 (9th Cir. 2003).
Therefore, the Court shall not award Aventis costs pursuant
to Rule 54(d).

42

2.

28 U.S.C. § 1919

Pursuant to 28 U.S.C. § 1919, “[w]henever any action or
suit is dismissed in any district court . . . for want of
jurisdiction, such court may order the payment of just costs.”
“In determining ‘just costs’ under 28 U.S.C. § 1919, a
district court should consider what is most fair and equitable
under the totality of the circumstances.”

Otay Land Co. v.

United Enters. Ltd., 672 F.3d 1152, 1157 (9th Cir. 2012).

A

“just costs” award is within the trial court’s discretion and
must be decided depending on the circumstances and equities of
each case. Id.
The Ninth Circuit has articulated four factors for district
courts to consider, none of which are definitive:
(1)

The role played by exigent circumstances, such as
hardship or culpable behavior by the parties;

(2)

The strength of the plaintiff’s jurisdictional claim;

(3)

The significance of pending parallel litigation in
state court;

(4)

Other equitable considerations.

Id. at 1157-59.

There is no presumption of the award of

just costs, and the district court has broad discretion.

Id. at

1158-59.
Upon consideration of the Otay factors in the instant case,
the Court finds that an award of just costs is warranted.

43

Plaintiff’s jurisdictional claim lacked any strength in regard
to the “direct and independent knowledge” jurisdiction
requisite.

There was no role played by exigent circumstances,

i.e., no undue hardship would result from requiring Amphastar to
pay Aventis’ just costs.35

There are no relevant parallel

proceedings and no other equitable considerations that would
tend to favor a denial of just costs to Aventis.
Finding that an award of just costs is warranted, the Court
shall exercise its discretion to award such just costs to
Defendants.
Defendants may submit a bill of costs, using 28 U.S.C. §
1920 as guidance for the types of costs that may be awarded.
See id. at 1160.

35

The Court is not considering the conduct of Amphastar’s
counsel in regard to its 28 U.S.C. § 1919 decision.

44

VI.

CONCLUSION
For the reasons stated herein:
1.

The Court decides that Plaintiff Relator,
Amphastar Pharmaceuticals Inc., has failed to
prove that it was an “original source of the
information” on which the suit is based pursuant
to 31 U.S.C. § 3730(e)(4)(A).

2.

The Court shall dismiss this case for lack of
jurisdiction by separate Order.

3.

The Court shall award Defendants their “just
costs” pursuant to 28 U.S.C. § 1919.

4.

The Court shall retain jurisdiction to issue a
decision and Order with respect to the conduct of
Amphastar’s counsel in regard to the evidentiary
hearing.

SO ORDERED, on Monday, July 20, 2015.

/s/__________
Marvin J. Garbis
United States District Judge

45