Amphastar Pharmaceuticals Inc v. Aventis Pharma SA et al

Filing 78

MEMORANDUM AND ORDER by Judge Marvin J. Garbis RE MOTION to Dismiss 43 : (see document image for further details). For the foregoing reasons: 1. Defendants Request for Judicial Notice [Document 44] is GRANTED; 2. Defendants Motion to Dismiss False Claims Act Qui Tam Complaint [Document 43-1] is GRANTED IN PART. a. The False Claims Act Qui Tam Complaint [Document 43-1] is DISMISSED WITH LEAVE TO AMEND. b. Plaintiff may file an Amended Complaint to add allegations pertaining to the filing of false claims18 by November 30, 2012; 3. Plaintiff shall arrange a telephone conference tobe held by November 30, 2012, to discuss the scheduling of further proceedings. SO ORDERED. (ad)

O
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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MEMORANDUM AND ORDER RE: MOTION TO DISMISS
The Court has before it Defendants’ Motion to Dismiss False
Claims Act Qui Tam Complaint [Document 43-1], Defendants’
Request for Judicial Notice [Document 44], and the materials
submitted relating thereto.

The Court has held a hearing and

has had the benefit of the arguments of counsel.

I.

BACKGROUND
A.

The First Suit

At all times relevant hereto, Amphastar Pharmaceuticals,
Inc. (“Amphastar”) and Sanofi-Aventis S.A. (“Aventis”)1 have been
competitors in the pharmaceutical industry.

1

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

In 1995, Aventis received U.S. Patent No. 5,318,618 (“the
‘618 Patent”) for an anti-coagulant drug, referred to as
enoxaparin.
Lovenox®.2

Aventis sold the drug under the brand name
The drug can be used to prevent potentially fatal

blood clot formation.

Aventis lodged a Food and Drug

Administration (“FDA”) citizen petition in February 2003,
arguing that enoxaparin is highly sensitive to Aventis’s
manufacturing process and that generics should be approved only
if shown to be the same as Lovenox.
Later in 2003, Amphastar filed an Abbreviated New Drug
Application (“ANDA”) with the FDA, requesting the right to
commercially manufacture a generic enoxaparin in competition
with Aventis, and certifying that Aventis’s patents were
invalid, unenforceable, or not infringed.

Aventis then filed a

patent infringement suit against Amphastar (Civil No. 03-0887
MRP filed August 4, 2003) (“the First Suit”).

This triggered a

30-month stay on FDA approval of Amphastar’s ANDA.3

In the First

Suit, Aventis filed an antitrust counterclaim.

memorandum, Defendants are referred to collectively as
“Aventis.”
2
A European patent was issued in 1984 on the drug, but it
was revoked in October 1990 as a result of a novelty opposition.
3
When an ANDA applicant makes a certification of
invalidity, unenforceability, or noninfringement, this action
constitutes a constructive act of infringement, which gives the
patent holder standing to sue within 45 days after notice.
Filing suit prevents the FDA from approving the ANDA for 30

2

In the First Suit, Amphastar was granted summary judgment
on its affirmative defense and counterclaim of inequitable
conduct and the antitrust counterclaim was stayed pending appeal
of the infringement claim dismissal.

Aventis Pharma S.A. v.

Amphastar Pharm., Inc., 390 F. Supp. 2d 952 (C.D. Cal. 2005).
On appeal, the Federal Circuit reversed and remanded for the
district court to find whether Amphastar could prove intent to
deceive by clear and convincing evidence. Aventis Pharma S.A. v.
Amphastar Pharm., Inc., 525 F.3d 1334 (Fed. Cir. 2008).
On remand, Judge Pfaelzer of this Court held a bench trial,
made the requisite finding, and found the patents unenforceable
on the grounds of inequitable conduct.
affirmed by the Federal Circuit.

This decision was

Thereafter, the stay of the

antitrust counterclaim was lifted.

In January 2009, Aventis

filed a motion to dismiss the antitrust counterclaim in the
First Suit.

In February 2009, Aventis’s motion to dismiss the

antitrust counterclaim was granted because the antitrust
allegations that survived Noerr-Pennington immunity failed to
allege antitrust injury, a necessary element. See Mot. Ex. 1,
Aventis v. Amphastar, No. 03-cv-0887 (C.D. Cal. May 15, 2009).

months from the notice date. Unlike an ordinary infringement
suit, this type of infringement suit bars the FDA from approving
an ANDA, thereby excluding the would-be entrant from the market.
This consequence frequently engenders antitrust claims.

3

B.

The Instant Case

In January 2009,4 Amphastar commenced the instant litigation
by filing the sealed qui tam Complaint under the False Claims
Act (“FCA”), 31 U.S.C. § 3729 [Document 1] on behalf of the
United States (“the Government”) and several states.
In the instant case, Amphastar claims that Aventis:
(1)

made false representations to the U.S.
Patent & Trademark Office (“PTO”) while
prosecuting its U.S. patents;

(2)

improperly listed its ‘618 patent and
another Aventis patent, U.S. Patent No.
4,692,435 (“the ‘435 patent”), in the
FDA’s “Orange Book”5 indicating that
both patents covered Lovenox;

(3)

engaged in baseless litigation against
Amphastar that triggered the 30-month
stay of its ANDA;

(4)

made false representations and material
omissions to the FDA; and

(5)

attempted to control the supply of
components necessary for market
approval or marketing of enoxaparin.

Mot. 10.
Amphastar alleges that Aventis thereby fraudulently
inflated the price of enoxaparin, thus overcharging the federal
4

The same month in which Aventis filed its motion to
dismiss the antitrust counterclaim in the First Suit.
5
An ANDA must include the patent numbers and the expiration
dates of any patents which claim the drug and methods of using
the drug. After approval, these patents are listed in a
publication commonly known as the “Orange Book.” Drugs with
ANDA approval are known as “brand-name” drugs.

4

and various state governments.

The Government and the states

elected to decline intervention6 on October 19, 2011. [Documents
30 and 31].

The Complaint was unsealed on October 28, 2011.

[Document 32].
By the instant motion, Aventis seeks dismissal of all
claims on three grounds:
(1)
(2)

failure to state an FCA claim upon the
alleged antitrust violations; and

(3)

II.

lack of subject matter jurisdiction;

failure to meet the minimum standards
required for FCA qui tam claims.

DISMISSAL STANDARD
A.

Lack of Subject Matter Jurisdiction, Rule 12(b)(1)7

A motion to dismiss filed under Rule 12(b)(1) addresses the
court’s subject matter jurisdiction.

A federal court has

federal-question subject matter jurisdiction over an action that
arises under federal law and diversity jurisdiction when there
is complete diversity of citizenship between the parties and the
amount in controversy exceeds $75,000. See 28 U.S.C. §§ 1331,
1332(a).

In the instant case, the existence vel non of

6

Because any rulings in this case could affect the
Government’s ability to bring future FCA cases, it maintains a
continuing interest in this matter and filed an amicus brief
[Document 59] in response to the instant motion.
7
All Rule references herein refer to the Federal Rules of
Civil Procedure unless otherwise indicated.

5

diversity jurisdiction is immaterial.

Amphastar can obtain

federal-question jurisdiction only if it has a viable case under
the FCA.
The plaintiff bears the burden of proving jurisdiction to
survive a Rule 12(b)(1) motion to dismiss.

Kokkonen v. Guardian

Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).

The applicable

standard depends on the nature of the jurisdictional challenge.
A jurisdictional attack may be either facial or factual.
Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir.
2004).

In a facial attack, the movant “asserts that the

allegations contained in a complaint are insufficient on their
face to invoke federal jurisdiction.”

Id.

The court considers

the complaint’s allegations to be true, and “the plaintiff
enjoys safeguards akin to those applied when a Rule 12(b)(6)
motion is made.” Doe v. Schachter, 804 F. Supp. 53, 57 (N.D.
Cal. 1992).
A factual attack occurs when the movant “disputes the truth
of the allegations that, by themselves, would otherwise invoke
federal jurisdiction.”

Safe Air, 373 F.3d at 1039.

The court

is not restricted to the face of the pleadings when there is a
fact-based challenge to jurisdiction, but may consider evidence
outside the four corners of the Complaint and must resolve
material issues of fact.

See id.

6

In a Rule 12(b)(1) dismissal context, “where the
jurisdictional issue is separable from the merits of the case,
the court may hear evidence regarding jurisdiction, resolve
existing factual disputes, and rule on that issue.”

Doe, 804 F.

Supp. at 57 (citing Thornhill Pub. Co. v. General Tel. & Elecs.
Corp., 594 F.2d 730, 733 (9th Cir. 1979)).

When jurisdictional

and substantive issues are intertwined, such that the question
of jurisdiction is dependent on resolving factual issues going
to the merits, the court should reserve determination of the
issue to a motion on the merits or trial.

Id. (citing Augustine

v. United States, 704 F.2d 1074, 1077 (9th Cir. 1983)).

B.

Failure to State a Claim, Rule 12(b)(6)

A motion to dismiss filed under Rule 12(b)(6) tests the
legal sufficiency of a complaint.

A complaint need only contain

“a short and plain statement of the claim showing that the
pleader is entitled to relief, in order to give the defendant
fair notice of what the . . . claim is and the grounds upon
which it rests.”

Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007) (citations omitted).
When evaluating a Rule 12(b)(6) motion to dismiss, a
plaintiff’s well-pleaded allegations are accepted as true and
the complaint is viewed in the light most favorable to the

7

plaintiff.

Broam v. Bogan, 320 F.3d 1023, 1028 (9th Cir. 2003).

However, conclusory statements or a “formulaic recitation of the
elements of a cause of action” will not suffice.
U.S. at 555.

Twombly, 550

A complaint must allege sufficient facts to cross

“the line between possibility and plausibility of entitlement to
relief.”

Id. at 557.

Inquiry into whether a complaint states a plausible claim
is “a context-specific task that requires the reviewing court to
draw on its judicial experience and common sense.”

Chavez v.

United States, 683 F.3d 1102, 1109 (9th Cir. 2012)(quoting
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009)).

Thus, if the

well-pleaded facts contained within a complaint “do not permit
the court to infer more than the mere possibility of misconduct,
the complaint has alleged – but it has not shown – that the
pleader is entitled to relief.”

Iqbal, 556 U.S. at 679 (quoting

Fed. R. Civ. P. 8(a)(2)) (internal quotation marks omitted).

III. DISCUSSION
A.

Judicial Notice

Defendants request the Court to take judicial notice of 16
documents under Fed. R. Evid. 201.

The documents in question

are publicly available filings, transcripts, and regulatory

8

submissions associated with four prior legal proceedings between
the parties.8
Judicial notice may be taken of a fact “not subject to
reasonable dispute in that it is capable of accurate and ready
determination by resort to sources whose accuracy cannot
reasonably be questioned.”

Fed. R. Evid. 201.

A court “may take notice of proceedings in other courts,
both within and without the federal judicial system, if those
proceedings have a direct relation to matters at issue.”

United

States ex rel. Robinson Rancheria Citizens Council v. Borneo,
Inc., 971 F.2d 244, 248 (9th Cir. 1992).
Under the judicial notice doctrine, a court may consider
matters of public record, such as court filings, but it may not
do so for the truth of the facts recited therein.

See Lee v.

City of Los Angeles, 250 F.3d 668, 690 (9th Cir. 2001). “When a
court takes judicial notice of another court’s opinion, it may
do so ‘not for the truth of the facts recited therein, but for
the existence of the opinion, which is not subject to reasonable
dispute over its authenticity.’”

Id. (citation omitted); see

also Wright & Graham, Federal Practice and Procedure: Evidence
2d § 5104 (“one of the major abuses of judicial notice, albeit

8

A list of the 16 documents can be found in Appendix A to
Defendants’ Motion [Document 44].

9

perhaps unwitting, is courts allowing the use of judicial notice
of court records to evade the hearsay rule”).
The Court, therefore, shall take judicial notice of the
existence and filing of the documents in question but shall
limit the extent of reliance thereon consistent with hearsay
considerations.

B.

Qui Tam Jurisdiction

A district court’s jurisdiction over qui tam actions is
limited by the FCA “public disclosure” provision stating:
No court shall have jurisdiction over an
action under this section based upon the
public disclosure of allegations or
transactions in a criminal, civil, or
administrative hearing, in a congressional,
administrative, or Government Accounting
Office report, hearing, audit, or
investigation, or from the news media, unless
the action is brought by the Attorney General
or the person bringing the action is an
original source of the information.
31 U.S.C. § 3730(e)(4)(A)(2006 ed.);9 see also Rockwell Int’l
Corp. v. United States, 549 U.S. 457, 468 (2007)(“[T]he
jurisdictional nature of the original-source requirement is

9

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 County
Soil & Water Conservation District v. United States ex rel.
Wilson, 130 S. Ct. 1396, 1400 n.1 (2010).

10

clear ex visceribus verborum. Indeed, we have already stated
that § 3730(e)(4) speaks to ‘the power of a particular court’ as
well as ‘the substantive rights of the parties.’” (quoting
Hughes Aircraft Co. v. United States ex rel. Schumer, 520 U.S.
939, 951 (1997))).
Aventis contends that the complaint is based on information
publicly disclosed in prior litigation and regulatory
proceedings.

Aventis further argues that Amphastar, a

competitor, is not an original source of the information.

The

FCA defines an “original source” as
an individual 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)(2006 ed.).
As discussed herein, the Court finds that:
(1)
(2)

1.

The instant case was based on “public
disclosures” within the meaning of the FCA.
On the current state of the record, Aventis is
not entitled to dismissal on the basis that
Amphastar was not an “original source.”

Public Disclosure

“The FCA is designed to reward those individuals who
provide the government with information regarding fraud which

11

has not been publicly disclosed.”

United States ex rel.

Aflatooni v. Kitsap Physicians Servs., 163 F.3d 516, 523 (9th
Cir. 1999).

If the allegations of fraud are public knowledge

prior to informing the government, the government receives no
benefit from the allegations being repeated in the relator’s
complaint. United States ex rel. Biddle v. Bd. of Trustees of
Leland Stanford, Jr. Univ., 161 F.3d 533, 539 (9th Cir. 1998);
see also United States ex rel. Springfield Terminal Ry. Co. v.
Quinn, 14 F.3d 645, 651 (D.C. Cir. 1994)(explaining the “twin
goals of rejecting suits which the government is capable of
pursuing itself, while promoting those which the government is
not equipped to bring on its own”).
Resolving the public disclosure question requires a court
to make two distinct, but related, determinations: (1) whether
the public disclosure originated in one of the sources
enumerated in the statute, and (2) “whether the content of the
disclosure consisted of the ‘allegations or transactions’ giving
rise to the relator’s claim, as opposed to ‘mere information.’”
United States ex rel. Meyer v. Horizon Health Corp., 565 F.3d
1195, 1199 (9th Cir. 2009)(quoting A-1 Ambulance Serv., Inc. v.
California, 202 F.3d 1238, 1243 (9th Cir. 2000)).

12

a.

Was There Public Disclosure?

“Public disclosure may occur in only three categories of
fora: (1) in a criminal, civil, or administrative hearing; (2)
in a congressional, administrative, or Government Accounting
Office report, hearing, audit, or investigation; or (3) in the
news media.” Meyer, 565 F.3d at 1200 (citing § 3730(e)(4)(A); A1 Ambulance, 202 F.3d at 1243 (internal quotation marks
omitted)).

Thus, documents filed with an agency or court during

an administrative proceeding or civil litigation are considered
publicly disclosed.

A-1 Ambulance, 202 F.3d at 1244.

Aventis contends that the disclosures in the First Suit (in
Amphastar’s May 21, 2004 antitrust counterclaim, its
December 31, 2008 amended counterclaim, its May 13, 2004
response to Aventis’s citizen petition) and generally to other
FDA submissions, public court filings, and judicial decisions
predating the instant complaint were “public disclosures.”
Except for the sealed 2008 amended counterclaim in the First
Suit,10

the balance of the documents at issue were “public

disclosures.”

10

This pleading was sealed upon filing and was not public at the
time of filing the instant complaint. See United States ex rel.
Stinson, Lyons, Gerlin & Bustamante, P.A. v. Prudential Ins.
Co., 944 F.2d 1149, 1160 n.9 (3d Cir. 1991)(holding that
documents filed under seal are not publicly disclosed for
purposes of the False Claims Act).

13

b.

Were the Claims Based on Public Disclosures?

Since there were public disclosures, the Court must
determine whether the content of the public disclosures was
sufficient to give rise to the relator’s claim.

See Meyer, 565

F.3d at 1199.

i.

Public Disclosure Standard

The parties disagree as to the standard a court should use
to decide if the suit is based on the “public disclosures.”
Aventis argues that prior disclosures are sufficient to
raise the bar as long as they provide notice to enable the
government to pursue an investigation.

See United States ex

rel. Harshman v. Alcan Elec. & Eng’g, Inc., 197 F.3d 1014, 1019
(9th Cir. 1999) (discussing the triggering of the jurisdictional
bar when “the prior public disclosures contained enough
information to enable the government to pursue an investigation”
and when public disclosures “already enable the government to
adequately investigate the case and to make a decision whether
to prosecute”).
Amphastar contends that prior disclosures must be detailed
and specific enough to allow the government to go forward on its
own with a false claims action.

14

In Springfield, the D.C. Circuit stated:
[I]f X + Y = Z, Z represents the allegation
of fraud and X [true facts] and Y [the
misrepresented facts] represent its
essential elements. In order to disclose the
fraudulent transaction publicly, the
combination of X and Y must be revealed,
from which readers or listeners may infer Z,
i.e., the conclusion that fraud has been
committed . . . . [Q]ui tam actions are
barred only when enough information exists
in the public domain to expose the
fraudulent transaction (the combination of X
and Y), or the allegation of fraud (Z). When
either of these conditions is satisfied, the
government itself presumably can bring an
action under the FCA . . . .
14 F.3d at 654.
In brief, “[f]raud requires recognition of two elements: a
misrepresented state of facts and a true state of facts. The
presence of one or the other in the public domain, but not both,
cannot be expected to set government investigators on the trail
of fraud.”

Id. at 655.

“The question, properly, then, is whether the information
conveyed [in the public disclosure] could have formed the basis
for a governmental decision on prosecution, or could at least
have alerted law-enforcement authorities to the likelihood of
wrongdoing . . . .” Id. at 654 (citations omitted).
Accordingly, if the elements of the fraudulent transaction
were already public, the plaintiff’s additional evidence does
not “suffice to surmount the jurisdictional hurdle.”

15

Id. at

655.

Moreover, the public disclosure need not present the

elements of fraud in a form readily comprehensible to
nonexperts.

As long as the information is made available, even

if not readily understood, the jurisdictional bar is raised.
Id.
The analysis of the Springfield Court was adopted by the
Ninth Circuit.

See United States ex rel. Found. Aiding the

Elderly v. Horizon West, 265 F.3d 1011, 1015 (9th Cir. 2001).
The Ninth Circuit, in Horizon West, held that the information
the government had in that case was not “sufficient to enable it
adequately to investigate the case and to make a decision
whether to prosecute.”

Id. at 1016.

The Court, consistent with the view of the Ninth Circuit,
holds that the public disclosures create a potential
jurisdictional bar if they present the essential elements of the
fraud sufficiently to have permitted the Government to have
adequately conducted an investigation so as to decide whether to
prosecute.

Id.; see also A-1 Ambulance, 202 F.3d at 1243

(“[T]he jurisdictional bar is raised so long as the material
elements of the allegedly fraudulent transaction are disclosed
in the public domain.”); Hagood v. Sonoma County Water Agency,
81 F.3d 1465, 1473 (9th Cir. 1996)(“[T]he jurisdictional bar may

16

be raised by public disclosure unaccompanied by an explicit
allegation of fraud.”).

ii.

Application of the Standard

The “public disclosure” standard is met if there were
either (1) public allegations of fraud “substantially similar”11
to the one described in the FCA complaint, or (2) enough
information publicly disclosed regarding fraudulent transactions
so that the government is on notice to either investigate
further or to make a decision to proceed with its own claim.

It

is not necessary for the public disclosures to have specifically
named a defendant, to have provided explanatory details, or to
have alleged overcharging, false-invoicing, false certification,
or any other specific fraud.

See Alcan, 197 F.3d at 1018-20

(citing cases); A-1 Ambulance, 202 F.3d at 1245.

However, the

prior disclosures of a fraudulent transaction must disclose both
“a misrepresented state of facts and a true state of facts.”
Horizon West, 265 F.3d at 1016.
The “public disclosure” standard is not intended to be
difficult to meet. Hagood, 81 F.3d at 1476 n. 18 (noting that
courts often treat the “based upon public disclosure” step as a

11

See United States ex rel. Lujan v. Hughes Aircraft Co.,
162 F.3d 1027, 1033 (9th Cir. 1998).

17

“quick trigger” to arrive at the more exacting “original source”
inquiry).
The FCA prohibits submitting false or fraudulent claims for
payment to the United States.

U.S.C. § 3729(a)(1)(A),(B).

In

the instant case, Amphastar alleges that the fraudulent
transactions included, in pertinent part, transactions in which
Aventis overcharged the United States and its agencies by
fraudulently obtaining a patent for Lovenox and by making false
representations to the U.S. Food and Drug Administration that
delayed approval of generic equivalents to Lovenox, which also
resulted in overcharging.

As such, the misrepresentation was

that the Lovenox patent was valid and deserving of premium
pricing when, in actuality, the patent was void so that the
government purchasers were overcharged.
The allegations and transactions set forth in the public
disclosures12 are sufficiently definite to give the Government
enough information to investigate the claims at issue - they
specifically mention the Lovenox patent, the misrepresentations
to the PTO including the allegations of missing studies and

12

Primarily, the inequitable conduct lawsuit commencing in
2004 with a counterclaim by Amphastar against Aventis. Aventis
sets out a detailed chart of the FCA allegations compared to
documents in prior lawsuits between the parties, which
demonstrates the prior public disclosure of the fraudulent
transactions and allegations of fraud, excluding the 2008
Amended Counterclaim that was filed under seal. See Mot. 7-8.

18

prior art (although not the details), the improper listing in
the FDA Orange Book, and delays to approval of generic
equivalents.

These material elements of the fraudulent

transaction raise a reasonable inference of fraud.

It is true

that the public disclosure did not state that the government was
paying brand-name prices for a non-patented drug, or that false
claims were submitted to the government.

However, fraud need

not be explicitly alleged to constitute public disclosure
adequate to raise the jurisdictional bar.

A-1 Ambulance, 202

F.3d at 1243; Alcan, 197 F.3d at 1019-20.
Accordingly, the Court finds that Amphastar’s FCA claim is
based on public disclosures.

Hence, the instant case must be

dismissed unless Amphastar is an “original source” within the
meaning of the FCA.

2.

Is Amphastar an Original Source?

To qualify as an “original source,” a relator must
establish that:
(1)

It has direct and independent knowledge of the
information on which the allegations are based,

(2)

It has voluntarily provided the information to
the government before filing the qui tam action,
and

19

(3)

It had a hand in the public disclosure of
allegations that are a part of the suit.

Meyer, 565 F.3d at 1201 (quoting Lujan, 162 F.3d at 1033).13

a.

Direct and Independent Knowledge

To have had direct knowledge, Amphastar must have had
firsthand knowledge of the alleged fraud and have obtained this
knowledge through its own labor unmediated by anything else.
Meyer, 565 F.3d at 1202 (citing Alcan, 197 F.3d at 1020); see
also United States ex rel. Devlin v. State of California, 84
F.3d 358, 360-61 (9th Cir. 1996)(citing cases); Aflatooni, 163
F.3d at 524-25 (citing cases).

Certainly, the knowledge is

independent if the relator had evidence on which the allegations
were based before the public disclosure of any allegations.
Id.; see also Meyer, 565 F.3d at 1202 (“A relator has
independent knowledge when he knows about the allegations before
that information is publicly disclosed.”).
There is no doubt that Amphastar had independent knowledge.
However, Aventis argues that Amphastar’s knowledge was indirect,
second-hand, and mediated.

Certainly, Amphastar is not the

typical relator – an insider – but a competitor.

13

Nevertheless,

As discussed herein, the Court questions the continuing
validity of the third requirement in light of the Supreme
Court’s decision in Rockwell. See 549 U.S. 457, 471-72
(construing § 3730(e)(4)(A)’s original source exception).

20

Amphastar asserts that it conducted its own investigation to
discover the fraud through independent research into enoxaparin
and the patents, i.e., it obtained the knowledge through its own
labor, unmediated by anything or anyone else.
Amphastar presents a version of the pertinent facts that,
if accepted, would suffice to establish that it had direct and
independent knowledge sufficient to be an original source.

The

Court will, for purposes of the instant dismissal motion, accept
the facts as asserted by Amphastar.

However, the Court does not

foreclose Aventis from seeking a factual determination based
upon an appropriate evidentiary hearing (or summary judgment).
Thus, the Court accepts the following version of the facts
for purposes of the instant motion:
Amphastar’s independent research was more than
simply using expertise to understand the
significance of information acquired through
public sources. Nor did it merely assemble
existing information. Rather, Amphastar
conducted scientific experiments, researched the
manufacturing process, and determined that
enoxaparin could be manufactured by a process
different than disclosed in the Lovenox patent.
Amphastar discovered that an Aventis patent
example was false based on reproducing the study
itself. Through these efforts, Amphastar
uncovered the fraud on the PTO. Thus, Amphastar
had direct, first-hand, independent knowledge of
the alleged fraud and provided additional facts
about the alleged fraud that were not available
previously. The fact that Amphastar gained
additional knowledge through the discovery
process in prior civil proceedings does not

21

preclude it being an original source of the
publicly disclosed information.
Aventis contends that, even on these facts, Amphastar still
falls short of having direct and independent knowledge.

Aventis

would have the Court read Rockwell to hold that an original
source must have direct and independent knowledge of the
information on which all allegations are based.

Mot. 9 (citing

549 U.S. at 476). However, the Supreme Court explained in
Rockwell that a relator must qualify as an original source for
each distinct kind of claim or scheme alleged,14 and that the
original source status hinges on whether the relator has direct
and independent knowledge of the information underlying the
relator’s own allegations in the FCA action, not the information
underlying the public disclosure.

549 U.S. at 470–72, 476.

Moreover, as stated by the Springfield Court, Ҥ
3730(e)(4)(B) does not require that the qui tam relator possess
direct and independent knowledge of all of the vital ingredients
to a fraudulent transaction . . . . [but] refers to direct and
independent knowledge of any essential element of the underlying
fraud transaction . . . .”

14 F.3d at 656-57. See also

Minnesota Ass’n of Nurse Anesthetists v. Allina Health System
Corp., 276 F.3d 1032, 1050 (8th Cir. 2002)(“[T]o qualify as an
14

In the instant case, Amphastar alleges only one kind of
scheme, although presented in multiple counts due to a multiple
of alleged governmental victims.

22

original source, a relator does not have to have personal
knowledge of all elements of a cause of action.”); United States
ex rel. Dhawan v. N.Y. Med. Coll., 252 F.3d 118, 121 (2d Cir.
2001)(holding relator must be source of “core information” upon
which the complaint is based).
In sum, on the facts accepted as true for purposes of the
instant motion, the Court cannot find that Amphastar failed to
have direct and independent knowledge of information upon which
it based the allegations of fraud presented in the Complaint.

b.

Voluntarily Provided to Government

There appears to be no doubt that Amphastar voluntarily
provided the pertinent information to the Government before
filing the qui tam action.

A disclosure is not considered

voluntary if the individual is paid to perform the function of
reporting fraudulent activity, i.e., “an employee should not
receive a windfall for merely doing his job.”
at 542.

Biddle, 161 F.3d

The parties do not dispute that Amphastar provided the

information voluntarily and had no pre-existing duty to do so.

c.

A Hand in the Disclosure

The Ninth Circuit has held that to be an original source, a
relator must have “had a hand in the public disclosure of the

23

allegations that are a part of his suit.”

Meyer, 565 F.3d at

1201 (citations and alterations omitted).

There is a split

among the Circuits regarding the existence of this requirement.15
However, the issue is moot inasmuch as Amphastar played a part
in the public disclosures relating to the allegations made in
the Complaint.

C.

Failure to State an FCA Claim

Aventis contends that Amphastar has failed to state a
viable FCA claim for two main reasons: (1) the underlying
conduct that is the basis of Amphastar’s allegations is an
antitrust violation and, as such, has incurable defects; and (2)

15

See Schindler Elevator Corp. v. United States ex rel.
Kirk, 131 S. Ct. 1885, 1895 n. 8 (2011). For example, the
Fourth, D.C., and First Circuits require “only that the relator
. . . voluntarily provide the information to the government
before filing his qui tam action.” United States ex rel. Siller
v. Becton Dickinson & Co., 21 F.3d 1339, 1351 (4th Cir. 1994);
United States ex rel. Duxbury v. Ortho Biotech Prods., L.P., 579
F.3d 13, 22 (1st Cir. 2009); United States ex rel. Davis v.
District of Columbia, 679 F.3d 832, 838 (2012). Prior to
Rockwell, two circuits (the Second Circuit and the Ninth
Circuit) had adopted this third requirement. See United States
ex rel. Dick v. Long Island Lighting Co., 912 F.2d 13, 16 (2d
Cir.1990); Wang, 975 F.2d at 1418. But in Rockwell, the Supreme
Court directly rejected these cases’ particular interpretation
of the public disclosure bar. 549 U.S. at 471-72. Given that
rejection, at least one District Court in the Second Circuit has
recently reached the conclusion that the third requirement has
been abrogated. United States v. Huron Consulting Group, Inc.,
843 F. Supp. 2d 464, 471 (S.D.N.Y. 2012).

24

Amphastar has failed to plead with particularity and has not
sufficiently pleaded materiality or scienter.

1.

Antitrust Violations and Immunity

Aventis contends that the FCA claim is based on alleged
antitrust violations and, as such, a viable antitrust claim must
be pleaded but has not been.

Further, Amphastar’s antitrust

allegations against Aventis in the First Suit were dismissed
based on the Noerr-Pennington16 doctrine.

Therefore, Aventis

argues that the First Suit precludes using the antitrust claims
as a basis for an FCA complaint.

See, e.g., United States ex

rel. Bunk v. Birkart Globistics GmbH & Co., Nos.
1:02cv1168(AJT/TRJ), 1:07cv1198(AJT/TRJ), 2011 WL 5005313, at *4

16

Under the Noerr-Pennington doctrine, a party is immune
from antitrust liability for petitioning any branch of the
government even if there is an improper purpose or motive.
Eastern Railroad Presidents Conference v. Noerr Motor Freight,
Inc., 365 U.S. 127, 135 (1961); United Mine Workers v.
Pennington, 381 U.S. 657, 670 (1965). There are two exceptions
to this immunity. One exception is a “sham” lawsuit in which a
plaintiff uses the judicial process itself, as opposed to the
outcome of the process, to harm competition. See Prof. Real
Estate Investors, Inc. v. Columbia Pictures Inds., Inc., 508
U.S. 49 (1993)(setting out a two-part test for defining a sham
lawsuit). The second exception to the doctrine denies immunity
for “conduct in which a party knowingly and willfully makes
false representations to the government.” In re Busiprone
Patent Litig., 185 F. Supp. 2d 363, 369-70 (S.D.N.Y. 2002)
(citing Walker Process Equipment, Inc. v. Food Mach. & Chem.
Corp., 382 U.S. 172 (1965)). This exception applies narrowly to
acts of fraud. Norton v. Curtiss, 433 F.2d 779, 792-93
(C.C.P.A. 1970).

25

(E.D. Va. Oct. 19, 2011)(ruling that because the underlying
conduct “enjoyed . . . immunity” from antitrust liability, “it
could not constitute an unlawful conspiracy under the False
Claims Act”). Noerr-Pennington issues are also raised by the
allegations of fraud on the FDA, a government administrative
body.
First, Amphastar is not pleading an antitrust cause of
action but rather has pleaded a violation of the False Claims
Act under 31 U.S.C. 3729.

It is that FCA cause of action that

the Court will analyze for viability.
Second, while Noerr-Pennington immunity may, at first
glance, appear to broadly protect government petitioning in
direct antitrust violations, its applicability to fraudulent
patent listings appears to be very limited.

See In re

Busipirone Patent Litig., 185 F. Supp.2d 363, 372 (S.D.N.Y.
2002)(finding that the request for listing its patent in the
FDA’s Orange Book was not an example of government petitioning
as required by Noerr-Pennington).
Certainly, Noerr-Pennington immunity has been extended to
prohibit claims other than for violations of the antitrust laws
where the cause of action is based on the defendant’s exercise

26

of its right to petition the government.17

In the instant case,

however, Amphastar is seeking to impose liability for falsely
charging the government a higher price than the drug supplied
would otherwise render if Aventis had not fraudulently acquired
a patent on the drug or delayed the entrance of generic drugs
into the marketplace.

Amphastar is not seeking to impose

liability for the act of petitioning the government.
Even if the conduct at issue could be described as
“petitioning,” Aventis would not have the right to knowingly and
willfully make false representations to the government.

See

United States ex rel. Wilson v. Maxxam, Inc., No. C 06-7497CW,
2009 WL 322934, *6 (N.D. Cal. Feb. 9, 2009)(“While citizens have
a First Amendment right to petition the government, they do not
have a First Amendment right to lie while doing so.

Were it

otherwise, application of the False Claims Act itself would, in
many cases, be unconstitutional.”).
Accordingly, the Court finds that Noerr-Pennington immunity
does not bar the FCA claims at issue.

17

Petitioning, in this context, is protected by the First
Amendment of the United States Constitution, which provides,
“Congress shall make no law . . . abridging . . . the right of
the people . . . to petition the Government for a redress of
grievances.” U.S. Const. amend. I.

27

2.

Minimum Pleading Standards

The FCA is “intended to reach all types of fraud, without
qualification, that might result in financial loss to the
Government.”

United States ex rel. Hendow v. Univ. of Phoenix,

461 F.3d 1166, 1170 (9th Cir. 2006).

To meet the pleading

requirements of an FCA claim, the complaint must allege: “(1) a
false statement or fraudulent course of conduct, (2) made with
scienter, (3) that was material, causing (4) the government to
pay out money or forfeit moneys due.”

Id. at 1174, 1177-78.

An action brought under the FCA must also fulfill the
particularity requirements of Rule 9(b).

Bly-Magee v.

California, 236 F.3d 1014, 1018 (9th Cir. 2001).

“Rule 9(b)

requires a party to ‘state with particularity the circumstances
constituting fraud or mistake,’ including ‘the who, what, when,
where, and how of the misconduct charged.’” Ebeid ex rel. United
States v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010)(quoting
Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th Cir.
2003)).
In the Ninth Circuit, pleading representative examples of
false claims is one way, but not the only way, to meet the Rule
9(b) pleading requirement.

See id. at 998-99 (“[I]t is

sufficient to allege particular details of a scheme to submit

28

false claims paired with reliable indicia that lead to a strong
inference that claims were actually submitted.”).

a.

Fraud Enforcement Recovery Act of 2009

The Fraud Enforcement and Recovery Act of 2009 (“FERA”),
signed into law on May 20, 2009, expanded the scope of conduct
for which persons and organizations can be liable under the FCA.
FERA, PL 111-21, 123 Stat. 1617.

This enactment potentially

impacts the instant case.
FERA amended provisions for liability from any person who
“knowingly makes, uses, or causes to be made or used, a false
record or statement to get a false or fraudulent claim paid or
approved by the Government” to any person who “knowingly makes,
uses, or causes to be made or used, a false record or statement
material to a false or fraudulent claim.” Id. § 4(a).

The

amendment effectively abrogated the Supreme Court’s decision in
Allison Engine Co. v. United States ex rel. Sanders, 553 U.S.
662 (2008), which held that proof of intent to defraud is an
element of a false statement claim.

Rather, liability now

attaches merely so long as a false statement is material to a
false or fraudulent claim.
Congress included a retroactive provision for this part of
the Act: “subparagraph (B) of section 3729(a)(1) . . . shall

29

take effect as if enacted on June 7, 2008, and apply to all
claims under the False Claims Act (31 U.S.C. 3729 et seq.) that
are pending on or after that date.” Id. § 4(f)(1).

Whether the

retroactivity provision applies to the initial case is
uncertain.

The District Court, in the Allison Engine case,

specifically found on remand that the term “claim” was defined
in the FCA as a claim made to the government for money or
property and that the claims in that case had been submitted a
number of years before the lawsuit was filed, so were not
pending on June 7, 2008.

United States ex rel. Sanders v.

Allison Engine Co., Inc., 667 F. Supp. 2d 747, 751-52 (S.D. Ohio
2009).
The Allison Engine court also found that because the FCA is
a punitive statute, it could not be applied retroactively
because it would violate the ex post facto clause of the
Constitution.

Id. at 758.

But see United States ex rel. Miller

v. Bill Harbert Int’l Constr., Inc., 608 F.3d 871, 878 (D.C.
Cir. 2010)(holding that the ex post facto clause does not apply
to the FCA because it is not penal); United States ex rel. Drake
v. NSI, Inc., 736 F. Supp. 2d 489, 502 (D. Ct. 2010)(finding
that the FCA is not sufficiently punitive in nature and effect
so as to warrant application of the ex post facto clause).

30

Amphastar alleges, in general terms, that it is seeking
recovery for claims filed before and after June 7, 2008.

Hence,

it appears that some, if not all, of the claims at issue will be
subject to FERA.

b.

Falsity

The FCA does not limit liability to facially false or
fraudulent claims for payment.

The term “false or fraudulent

claim” has been construed broadly, and “has given rise to two
doctrines that attach potential False Claims Act liability to
claims for payment that are not explicitly and/or independently
false: (1) false certification (either express or implied); and
(2) promissory fraud.” Hendow, 461 F.3d at 1171.

Aventis argues

that it is unclear whether Amphastar is alleging “false
certification” or “promissory fraud” or both.

However, under

either theory, the essential elements to be pleaded do not
change.

Id. at 1174.

Amphastar alleges that Aventis knowingly made false
representations to the PTO, made false representations to the
FDA, fraudulently concealed from the FDA Aventis’s change in
manufacturing process, used the illegally-obtained monopoly to
overcharge the federal and state governments by as much as five
times the amount it charges for the same drug in Europe, and

31

submitted fraudulent billings, records, and certifications to
the governments to secure payments.

Compl. ¶¶ 14-21, 24-25, 28-

29, 33-34.
Thus, Amphastar’s allegations that Aventis engaged in a
fraudulent scheme to charge an inflated price for its drug is
plausible and specific enough to give Aventis notice of the
particular misconduct alleged to constitute the fraud charged.

c.

Scienter

Scienter requires knowledge of the falsity with the intent
to deceive.

United States ex rel. Hopper v. Anton, 91 F.3d

1251, 1265 (9th Cir. 1996).
Amphastar alleges that Aventis knowingly submitted
fraudulent billings to secure payments and knowingly presented
to the government a false claim, such that the government was
billed a higher price than it should have been. Compl. ¶¶ 29,
34.

Further, Amphastar alleges that Aventis “set out to obtain

patent protection . . . in order to prevent generic competition
. . . and thereby knowingly and unlawfully gaining monopoly
power . . . ” and knowingly included false data in its patent
applications in order to misrepresent results.

Compl. ¶¶ 13-19.

Amphastar also alleges that Aventis concealed the best mode for

32

manufacturing its drug “in willful violation” of the patent and
antitrust laws.

Compl. ¶ 19.

Amphastar’s allegations that Aventis acted with knowledge
and intent to deceive is sufficient to meet Rule 9(b)’s
requirement since scienter may be alleged generally.

d.

Materiality

Although § 3729 did not expressly contain a materiality
requirement before FERA added one in 2009, the Ninth Circuit and
at least five other circuit courts have held that the government
must also prove that the false statement was material.

United

States v. Bourseau, 531 F.3d 1159, 1170-71 (9th Cir. 2008).

A

false statement is material if “it has a natural tendency to
influence, or [is] capable of influencing, the decision of the
decision-making body to which it was addressed.”

Id. at 1171.

The natural tendency test “focuses on the potential effect of
the false statement when it is made rather than on the false
statement’s actual effect after it is discovered.” Id.

The

Court finds that the Complaint adequately alleges materiality.
See, e.g., Compl. ¶ 30, 34.

33

e.

Allegation of Claims

Plaintiff must allege an actual claim, or request to the
government for payment.

This is self-evident from the statutory

language, which requires a “claim paid or approved by the
Government.” 31 U.S.C. § 3729(a)(2).

Amphastar does not,

however, allege with particularity that Aventis filed false
claims that were paid or approved.
Aventis compares the instant case to an unpublished case,
United States ex rel. Promega Corp. v. Hoffman-La Roche, Inc.,
Civil Action No. 03-1447-A (E.D. Va. Sep 29, 2004)(Mot. Ex. B),
in which the plaintiff alleged overpayments by the government
due to fraudulently obtained patents.

The court found that the

complaint was not pleaded with sufficient particularity to
satisfy Rule 9(b) because the allegations of higher prices were
vague and generalized, failing to specify when and where the
false claims were made, and there was a disconnect between the
alleged misrepresentations to the PTO and the invoices submitted
to the government. Aventis argues the same result is called for
in the instant case because Amphastar’s allegations are
conclusory and speculative, based on “information and belief,”
without allegations of facts to support the conclusion.
While it is certainly possible that the alleged false
statements pleaded would be relevant to, or be capable of

34

influencing, the government’s decision to enter contracts or
make payments, Amphastar supplied no representative examples of
false claims to support its conclusory allegation of fraudulent
billings.

Amphastar did not allege facts that would provide any

“reliable indicia that would lead to a strong inference that
claims were actually submitted.”

Ebeid, 616 F.3d at 999.

At least in the present context, the allegations, on
“information and belief,” are insufficient to satisfy the
particularity requirements of Rule 9(b) without factual
allegations of the information on which the belief is plausibly
based.

It is not necessary to provide exact dollar amounts,

billing numbers, or dates, but at a minimum, Amphastar must
allege the particular details of a scheme to submit false claims
and details leading to a strong inference that those claims were
submitted.

See id.

It may be sufficient to allege facts

establishing that the payments in issue necessarily (or almost
certainly) were based on false claims submitted by Aventis.
Accordingly, the Court will dismiss the Complaint but will
provide Amphastar with the opportunity to file an Amended
Complaint that will cure the problem.

35

IV.

CONCLUSION
For the foregoing reasons:
1.

Defendants’ Request for Judicial Notice [Document
44] is GRANTED.

2.

Defendants’ Motion to Dismiss False Claims Act
Qui Tam Complaint [Document 43-1] is GRANTED IN
PART.
a.

b.

3.

The False Claims Act Qui Tam Complaint
[Document 43-1] is DISMISSED WITH LEAVE TO
AMEND.
Plaintiff may file an Amended Complaint to
add allegations pertaining to the filing of
false claims18 by November 30, 2012.

Plaintiff shall arrange a telephone conference to
be held by November 30, 2012, to discuss the
scheduling of further proceedings.

SO ORDERED, on Wednesday, November 14, 2012.

/s/___
__ _
Marvin J. Garbis
United States District Judge

18

Amphastar is hereby given leave to amend the Complaint
only to the limited extent necessary to include allegations
sufficient to create a plausible contention that Aventis filed
claims in violation of the FCA.

36