Pharmaceutical Research and Manufacturers of America et al v. Sandoval et al

Filing 72

ORDER. IT IS ORDERED that 48 non-party Culinary Health Fund's motion to intervene is DENIED. Signed by Magistrate Judge Carl W. Hoffman on 11/7/17. (Copies have been distributed pursuant to the NEF - MR)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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PHARMACEUTICAL RESEARCH AND
MANUFACTURERS OF AMERICA, et al.,

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Plaintiffs,
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v.
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BRIAN SANDOVAL, et al.,
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Defendants.
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_______________________________________ )

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Case No. 2:17-cv-02315-JCM-CWH

ORDER

Presently before the Court is non-party Culinary Health Fund’s motion to intervene (ECF No.

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48), filed on October 6, 2017. Plaintiffs filed a response (ECF No. 56) on October 10, 2017, and

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Culinary Health Fund (“CHF”) filed a reply (ECF No. 58) on October 11, 2017.

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I.

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Introduction
This case was brought by the Pharmaceutical Research and Manufacturers of America, and

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the Biotechnology Innovation Organization, two trade groups representing pharmaceutical and

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biotechnology companies. (Compl. (ECF No. 1).) Plaintiffs’ complaint named Brian Sandoval, the

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Governor of the State of Nevada, and Richard Whitley, the Director of the Nevada Department of

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Health and Human Services, as defendants. (Id.) The Court subsequently granted the Nevada

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Legislature’s unopposed motion to intervene as a defendant. (Order (ECF No. 43).) CHF, a multi-

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employer healthcare-plan provider for hotel and hospitality workers in Las Vegas, now moves to

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intervene in this case as a defendant as well.

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Plaintiffs claim that a recently passed law, Nevada Senate Bill No. 539 (“SB 539”), conflicts

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with federal trade-secret law, violates the Commerce Clause, would constitute a regulatory taking,

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and interferes with Congress’ authority to set national patent policy. SB 539 seeks to control the cost

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of certain essential diabetes drugs, such as insulin, by requiring companies that manufacture them to

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provide the State of Nevada with an annual report detailing the costs of production and marketing of
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these drugs. The State of Nevada is required to analyze and then publish a report on the data

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provided, explaining the reasons for, and effects of, any increases in spending on prescription drugs

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in Nevada.

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CHF moves to intervene in this case as a matter of right under Federal Rule of Civil

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Procedure 24(a), or alternatively, with the Court’s permission under 24(b). CHF argues that the fund

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has a protectable interest in this lawsuit that would be impaired if Plaintiffs claims were to succeed,

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and that its interests are not adequately represented by the current Defendants. Plaintiffs oppose

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intervention as a matter of right, arguing that CHF’s interest are adequately protected by the current

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Defendants, and are not materially different than the interests of any Nevada citizen. Plaintiffs

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further oppose permissive intervention, arguing that allowing CHF to join this case would create

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unnecessary complexity and delay. Plaintiffs suggest granting amicus curiae status in lieu of

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granting intervention, which would be an inadequate remedy, according to CHF.

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II.

Analysis

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A.

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A movant is entitled to intervention of right upon a timely application, when it “claims an

Intervention under Fed. R. Civ. P. 24(a)

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interest relating to the property or transaction that is the subject of the action, and is so situated that

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disposing of the action may as a practical matter impair or impede the movant’s ability to protect its

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interest, unless existing parties adequately represent that interest.” Fed. R. Civ. P. 24(a). Courts in

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this Circuit construe motions to intervene under Rule 24(a) in favor of proposed intervenors, and

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“are guided primarily by practical considerations.” United States ex. rel. McGough v. Covington

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Techs. Co., 967 F.2d 1391, 1394 (9th Cir. 1992) (internal citation and quotation marks omitted).

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A prospective intervenor bears the burden of showing “that (1) the interest asserted is

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protectable under some law, and (2) there is a relationship between the legally protected interest

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and the claims at issue.” Nw. Forest Res. Council v. Glickman, 82 F.3d 825, 837 (9th Cir. 1996)

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(punctuation and citation omitted). The interest must be “direct, non-contingent, substantial and

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legally protectable, and one not adequately represented by existing parties.” Dilks v. Aloha Airlines,

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642 F.2d 1155, 1157 (9th Cir. 1981) (citation omitted). “[A]n undifferentiated, generalized interest

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in the outcome of an ongoing action is too porous a foundation on which to premise intervention as
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of right.” S. Cal. Edison Co. v. Lynch, 307 F.3d 794, 803 (9th Cir. 2002) (quotation marks and

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citation omitted).

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Proposed intervenors normally face a heavy burden when seeking to intervene on the same

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side as a state. “In the absence of a ‘very compelling showing to the contrary,’ it will be presumed

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that a state adequately represents its citizens when the applicant [for intervention] shares the same

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interest.” Arakaki v. Cayetano, 324 F.3d 1078, 1086 (9th Cir. 2003) (quotation marks and citations

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omitted). Intervention in such cases depends on establishing that existing parties will not pursue the

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same objectives as a proposed intervenor. See id. “Where the parties share the same ultimate

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objective, differences in litigation strategy do not normally justify intervention.” Id.

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Here, the parties appear to concede that CHF has a legally protected interest in the outcome

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of this litigation. The parties do not agree, however, as to whether CHF’s interests are distinct from

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those of the existing parties, or whether those parties adequately represent CHF’s interests. CHF

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argues that it has a narrower interest in defending against Plaintiffs’ claims than either the Governor

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or the Legislature, in that it is primarily motivated in preserving the right of public access to drug

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manufacturer’s pricing information. According to CHF, this narrow interest is related to its role as a

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healthcare benefit provider, retail pharmacy and medical provider, and is not shared by the other

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Defendants in this case. CHF further argues that the current Defendants have indicated they are

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willing to make serious concessions to Plaintiffs regarding SB 539’s requirements to publicize drug

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costs. In support of this argument, CHF points out that the Governor’s response to Plaintiffs’ motion

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for preliminary injunction was less than six pages long and did not address every argument made by

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Plaintiffs. CHF also finds fault with the Legislature’s response, in that it did not meaningfully

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engage with the Plaintiffs’ constitutional arguments against SB 539. According to CHF, the existing

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Defendants would concede important issues regarding publication of drug costs and thereby

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seriously compromise SB 539.

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However, CHF’s reliance on the responses by the Legislature and the Governor to Plaintiffs’

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motion for preliminary injunction is inadequate to make the “very compelling showing” that is

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required to allow an intervenor to join an action along with a state party. CHF may be correct that

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not every argument presented by Plaintiffs has been vigorously disputed at this point, but the failure
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to make a particular argument in a response to a motion for preliminary injunction

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does not prove that the argument has been conceded for the entire case. Further, it is not clear at this

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point that CHF and the State of Nevada have differing objectives in this legislation. It appears that

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the State of Nevada is willing and prepared to defend the law, including the portions CHF focuses

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on. The Court cannot at this point make a meaningful inference regarding the Governor or the

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Legislature’s strategy, or whether they might concede any issues to Plaintiffs. It would therefore be

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premature to conclude that the State of Nevada is not adequately representing CHF’s, or any other

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party’s, interests. The Court will therefore deny CHF’s motion to intervene as a matter of right.

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B.

Intervention under Fed. R. Civ. P. 24(b)

In the alternative to intervention as a matter of right, CHF moves for permissive intervention,

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which as both parties note, requires proof of three threshold requirements: “(1) a common question

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of law or fact; (2) timeliness; and (3) the Court’s independent jurisdiction.” Donnelly v. Glickman,

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159 F.3d 405, 412 (9th Cir. 1998). Whether or not to allow permissive intervention is “committed to

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the broad discretion of the district court.” Orange Cty. v. Air California, 799 F.2d 535, 539 (9th Cir.

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1986). A court making this determination may consider “the nature and extent of the intervenors’

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interest, their standing to raise relevant legal issues, the legal position they seek to advance, and its

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probable relation to the merits of the case.” Spangler v. Pasadena City Bd. of Ed., 552 F.2d 1326,

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1329 (9th Cir. 1977). Further factors to consider may include “whether changes have occurred in the

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litigation so that intervention that was once denied should be reexamined, whether the intervenors’

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interests are adequately represented by other parties, whether intervention will prolong or unduly

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delay the litigation, and whether the parties seeking intervention will significantly contribute to full

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development of the underlying factual issues in the suit and to the just and equitable adjudication of

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the legal questions presented.” Id.

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Here, there is no reasonable argument that CHF’s motion is untimely or that the Court would

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not retain independent jurisdiction over this matter were CHF added as a Defendant. However,

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Plaintiffs argue that permissive intervention would dramatically undermine judicial efficiency, and

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create increased complexity and risk of delay without any benefit. Given that there are already two

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Defendants actively litigating this matter, the addition of a third independent Defendant would
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almost certainly slow the litigation process and create additional burdens on Plaintiffs. CHF has

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failed to show that its participation would outweigh this prejudice. At this point in the litigation, its

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potential to bring about more development of the underlying issues in this suit is speculative, since

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CHF has failed to show that the Governor and the Legislature will inadequately defend SB 539, or

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that they will neglect CHF’s concerns or the concerns of any other member of the public. Nor does it

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appear that CHF’s perspective is materially different from the present Defendants’ perspectives.

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Even assuming that the prejudice to Plaintiffs from granting CHF’s motion would be modest, it is

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not clear that there would be any benefit to counterbalance that prejudice. The Court will therefore

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deny CHF’s motion for permissive intervention.

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IT IS THEREFORE ORDERED that non-party Culinary Health Fund’s motion to intervene
(ECF No. 48) is DENIED.
DATED: November 7, 2017

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_________________________________
C.W. Hoffman, Jr.
United States Magistrate Judge

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