Allied Services Division Welfare Fund v. Merck & Co., Inc.

Filing 36

MEMORANDUM AND ORDER Granting 18 MOTION to Transfer Case , Stay, or Dismiss filed by Merck & Co., Inc.; ORDER TRANSFERRING CASE TO OTHER DISTRICT: Case transferred to United States District Court for the District of New Jersey. Signed by Judge J. Phil Gilbert on 11/9/12. (bkl)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
ALLIED SERVICES DIVISION WELFARE
FUND, individually and on behalf of all others
similarly situated,
Plaintiff,
v.

No. 3:12-cv-766-JPG-SCW

MERCK & CO., INC.,
Defendant.

MEMORANDUM AND ORDER
This matter comes before the Court on the Motion to Transfer, Stay, or Dismiss this action
brought by Defendant Merck & Co., Inc. (“Merck”) pursuant to the “first-filed” or “first-to-file”
rule or, alternatively, pursuant to 28 U.S.C. § 1404(a) (Doc. 18). Plaintiff Allied Services
Division Welfare Fund (“the Fund”) has responded to the motion (Docs. 26 & 31).
I.

Background
This case involves allegations that Merck wrongfully offered customers discount coupons

for its brand-name prescription drugs that effectively negated the Fund’s efforts to steer its
members into using therapeutic alternatives that were cheaper for the Fund. Essentially, Merck
was erasing the incentive for the Fund’s members to seek lower cost alternative treatments. The
Fund filed this suit on July 6, 2012, on behalf of a putative plaintiff class of private health benefit
providers.
Earlier this year, on March 7, 2012, another employee welfare fund filed a class action
lawsuit in the District Court for the District of New Jersey on behalf of private health benefit
providers and making identical allegations against Merck. See Plumbers & Pipefitters Local 572
Health & Welfare Fund v. Merck & Co., Inc., No. 3:12-cv-01379-MAS-LHG (D.N.J.). Again on

June 15, 2012, a third employee welfare fund filed a class action based on the same alleged
wrongful conduct by Merck (although asserting different legal theories), also in the District of
New Jersey and on behalf of the same putative class. See United Food & Commercial Workers
Int’l, Local 464A Health & Welfare Fund v. Merck & Co., Inc., No. 3:12-cv-03652-MAS-LHG
(D.N.J.). The presiding judge has informally consolidated Plumbers and United Food for the
purposes of briefing a motion to dismiss filed by Merck, which is due to be fully briefed on
November 30, 2012. See Plumbers, 3:12-cv-01379-MAS-LHG, Doc. 40 (D.N.J. Sept. 7, 2012).
Merck asks the Court to dismiss, stay or transfer this action based on the “first-filed” rule,
which it believes creates a presumption that, where duplicate cases are filed, the first filed should
be allowed to proceed and the second should be abated. See Asset Allocation & Mgmt. Co. v.
Western Employers Ins. Co., 892 F.2d 566, 573 (7th Cir. 1989). It argues that the Fund’s counsel
(although not acting on behalf of the Fund at the time) admitted in proceedings before the Judicial
Panel on Multidistrict Litigation that the District of New Jersey is the most convenient forum for
the cases brought against Merck. Merck also believes that the District of New Jersey is more
convenient to the parties (Merck is headquartered in New Jersey) and witnesses, is the cite of
many relevant events, is better suited to obtaining evidence than the Southern District of Illinois,
and is, in the interests of justice, the appropriate forum to hear this case. It argues that the Fund’s
sales within the Southern District of Illinois (such sales occur in numerous districts) and its choice
of forum (not its own home forum) do not outweigh the factors favoring a transfer to the District
of New Jersey.
In response, the Fund argues that any “first-filed” rule requiring dismissal of a later-filed
action should not be rigidly applied but instead applied in the discretion of the Court after
consideration of the differences in the suits and any special factors that counsel for or against

2

applying the rule. It further argues that a transfer pursuant to § 1404 is inappropriate because
venue is proper in the Southern District of Illinois, the Fund chose to bring the suit in the Southern
District of Illinois, Merck’s conduct targeted some Illinois consumers, and the District of New
Jersey is not clearly more convenient than the Southern District of Illinois in light of the
inconveniences of litigating a multi-state case in any forum. It further argues the interests of
justice favor keeping the case in the Southern District of Illinois because this Court is familiar
with federal law, statistics suggest the case is more likely to proceed more quickly in this district,
and the Court has an interest in protecting the citizens within its district. In the alternative, the
Fund suggests a stay of this action pending a decision on anticipated motions to dismiss in the
Plumbers case.
II.

Analysis
The Court begins with the “first-to-file” rule. The Court of Appeals for the Seventh

Circuit has most recently addressed this doctrine in Research Automation, Inc. v. SchraderBridgeport International, Inc., 626 F.3d 973 (7th Cir. 2010). In that case, the court provided
explicit guidance in the situation where “two parties file identical lawsuits, each a mirror-image of
the other, in different federal districts.” Id. at 975.1 It held that the “first-to-file” rule did not
control a district court’s decision to transfer, enjoin or dismiss a case based solely on which of two
suits was filed first. Id. at 980. On the contrary, it held the order of filing does not create a
preference for the forum in which the first case was filed and, instead, is only one of many factors
to consider in a traditional transfer analysis under § 1404(a). Id. at 982.
Under § 1404(a), a district court may transfer a civil action to any other district where the

1

Research Automation involved mirror- image lawsuits, but the same principles apply with
equal force to identical lawsuits.

3

action might have been brought originally “[f]or the convenience of parties and witnesses, in the
interest of justice.” 28 U.S.C. § 1404(a). The decision to transfer a case is left to the discretion of
the district court. Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988); Van Dusen v.
Barrack, 376 U.S. 612, 622 (1964); Research Automation, 626 F.3d at 977-78; see Norwood v.
Kirkpatrick, 349 U.S. 29, 32 (1955).
In deciding a § 1404(a) motion to transfer, the Court should consider a number of casespecific factors such as the convenience of the potential transferee forum to the parties and
witnesses, the fairness of the transfer in light of any forum selection clause and the parties’
relative bargaining power, and the interests of justice in general. Stewart, 487 U.S. at 29-30; see
Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219 (7th Cir. 1986) (citing Van Dusen , 376 U.S. at
622). The Court may also consider the location of the relevant events and the access to evidence
provided by each potential forum. Research Automation, 626 F.3d at 978. It must also give some
weight in favor of the forum in which the plaintiff chose to file the complaint. Heller Fin., Inc. v.
Midwhey Powder Co., 883 F.2d 1286, 1294 (7th Cir. 1989); Macedo v. Boeing Co., 693 F.2d 683,
688 (7th Cir. 1982). “The movant . . . has the burden of establishing, by reference to particular
circumstances, that the transferee forum is clearly more convenient.” Coffey, 796 F.2d at 219-20.
Notwithstanding the convenience analysis, the Court may grant or deny a transfer request
in the interest of justice. Id. at 220; Van Dusen, 376 U.S. at 625. “Factors traditionally
considered in an ‘interest of justice’ analysis relate to the efficient administration of the court
system.” Coffey, 796 F.2d at 221; accord Van Dusen, 376 U.S. at 626-27. Those factors include
where the litigants are more likely to receive a speedy trial, which court is more familiar with the
relevant law, the comparative desirability of resolving the conflict in a particular district, and the
relationship of each of the districts to the controversy. Id.

4

In this case, the convenience factor slightly favors a transfer to the District of New Jersey.
Although venue is proper in the Southern District of Illinois because the Fund has participants
within this district who presumably have used the drug discount programs offered by Merck, the
Fund itself is not located here. Its headquarters is in Arlington Heights, Illinois, in the Northern
District of Illinois. In light of the convenience of air travel, it is not appreciably less convenient to
travel to New Jersey from Arlington Heights than it is to travel more than 300 miles by car to
Benton, Illinois, where the Court sits (and which is more than 100 miles from the nearest major
airport). Furthermore, a substantial number of witnesses and sources of evidence in this case
relating to the drug discount program are likely to be in New Jersey, where Merck has its
headquarters. Other major witnesses and sources of evidence about the agreements between the
Fund and Merck are likely to be in Arlington Heights in the Northern District of Illinois or in New
Jersey. Only a few witnesses and a minuscule portion of the evidence, if any, that will likely be
used in this case are located in the Southern District of Illinois. The Court gives some weight to
the Fund’s decision to file this lawsuit in the Southern District of Illinois, but that weight is
diminished in light of the scarcity of connections between the dispute and this district. All things
considered, the convenience factor weighs slightly in favor of a transfer to the District of New
Jersey.
The interests of justice, however, strongly weigh in favor of a transfer. The Court does not
give much weight to statistics regarding the length of time it takes a case to go to trial in each
district. Such statistics often have more to do with the type of cases filed in each district than the
expediency of a particular court with respect to a particular case. The Court is confident that the
District of New Jersey, which is already farther along in the first-filed Plumbers case dealing with
identical issues, will afford the Fund an efficient resolution of its case. Furthermore, because of

5

the Plumbers case, the District of New Jersey is more likely to be familiar with the law applicable
to this case; it would be inefficient for this Court to go over ground the District of New Jersey has
already plowed. Additionally, should Plumbers be certified as a class action as proposed, the
Fund would be subsumed in the proposed class, and the case at bar would be completely
duplicative. Finally, as noted above, the Southern District of Illinois is only tangentially related to
the controversy in this case, while the District of New Jersey has a strong interest in the conduct of
businesses located within its borders. In light of these factors, the Court finds that the efficient
administration of the court system counsels strongly in favor of a transfer to the District of New
Jersey and warrants a transfer despite the only slightly greater convenience of the District of New
Jersey forum.
III.

Conclusion
For the foregoing reasons, the Court GRANTS Merck’s motion to transfer (Doc. 18) and

DIRECTS the Clerk of Court to transfer this case to the United States District Court for the
District of New Jersey pursuant to 28 U.S.C. § 1404(a) for the convenience of the parties and in
the interest of justice.
IT SO ORDERED.
DATED: November 9, 2012
s/ J. Phil Gilbert
J. PHIL GILBERT
DISTRICT JUDGE

6