ENDO PHARMACEUTICALS INC. v. ACTAVIS INC. et al

Filing 79

MEMORANDUM AND OPINION. Signed by Judge Kevin McNulty on 12/13/16. (cm )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
ENDO PHARMACEUTICALS, INC.,
Civ. No. 1 2-cv-759 1 (KM)

Plaintiff,
V.

MEMORANDUM OPINION

ACTAVIS, INC. and ACTAVIS SOUTH
ATLANTIC LLC,
Defendants.

KEVIN MCNULTY, U.S.D.J.:
The plaintiff, Endo Pharmaceuticals, Inc. (“Endo”) brought this action
against Defendants Actavis, Inc. and Actavis South Atlantic LLC (collectively,
“Actavis”) alleging that Actavis falsely marketed a generic form of oxymorphone
hydrochloride extended-release tablets. Endo asserts violations of the Lanham
Act, 15 U.S.C. § 1125(a) and the New Jersey Fair Trade Act, N.J. Stat. Ann.
56:4-1 et seq. On March 21, 2016, I filed an opinion and order for the most
part denying Actavis’s motion to dismiss the Complaint, while noting that
intervening FDA action had rendered Endo’s claims problematic. (ECF nos. 64,
65)
Now before the Court is the motion of Endo to dismiss its own Complaint
without prejudice. (“Endo Brf.”, ECF no. 73) Actavis opposes the motion as
presented, arguing that any dismissal should be with prejudice. In the
alternative, says Actavis, should the dismissal be without prejudice, then
conditions to secure its position must be imposed. (“Actavis Brf.”, ECF no. 76)
Endo has filed a reply (“Endo Reply”, ECF no. 77), in which its states that the
decision whether to dismiss with or without prejudice is within the court’s
discretion. Critically, Endo concedes that it “is willing to accept the Court’s
exercise of discretion in this regard, but either way, it is clear that there is no
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reason to continue litigating Endo’s claims at this time.” Endo adds that any
dismissal should be without costs or fees.’
The parties’ positions seem to have converged to some extent. For the
reasons stated herein, I will grant the motion to dismiss the action with
prejudice. Because I write for the parties, I dispense with any elaborate
discussion of the facts or background.
Actavis markets a generic version of Endo’s drug. The claim asserted by
Endo in this case is that Actavis’s marketing of “Generic Oxymorphone ER
Tablets” as “AB Rated to Opana® ER’” became misleading after May 2012, once
Endo had stopped selling what I have called Old Opana® ER in favor of
Opana® ER with Intac, a crush-resistant formulation.
Meanwhile, however, the parties have been litigating a patent
infringement action involving the same drug in the U.S. District Court for the
Southern District of New York, Endo Pharmaceuticals Inc. v. Actavis Inc., et al.,
No. 12-cv-8985 (TPG). Following a five-week trial, Judge Thomas P. Griesa
ruled that Endo’s patents were valid and that Actavis’s sale of its generic
equivalent was infringing. (A copy of the SDNY amended judgment, dated June
29, 2016, is attached to Endo’s motion here, ECF no. 74-3.) Judge Griesa
enjoined Actavis from making or selling its generic tablets during the life of
Endo’s patent, which expires in 2023. The damages phase of that case has
been bifurcated and stayed pending the outcome of Actavis’s appeal of the
liability/injunctive judgment to the U.S. Court of Appeals for the Second
Circuit.
As a result, Endo concedes, the relief it seeks in this DNJ action is moot
or duplicative. Any injunction against Actavis’s sale of its generic tablets with
misleading advertising would be entirely subsumed by the SDNY injunction,
which prohibits Actavis from selling the tablets at all. Claimed damages in this
DNJ case, consisting of lost profits for sales of tablets with misleading
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Endo’s motion brief, citing no authority, suggests in the alternative that this
case be stayed pending the outcome of the SDNY case and appeal. Its reply omits all
mention of the alternative request for a stay.

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advertising, would likewise be subsumed; the SDNY damages phase (which has
been bifurcated and stayed) seeks lost profits for all sales of the Actavis
generic.
Endo therefore seeks to dismiss this DNJ action, pursuant to Fed. R. Civ.
P. 41(a)(1). Such a motion, it urges, should ordinarily be granted absent a
showing of substantial prejudice to the defendant that goes beyond the mere
prospect of a renewed lawsuit. See Pappas v. Twp. Of Galloway, 565 F. Supp.
2d 581, 593—94 (D.N.J. 2008). Endo prefers dismissal without prejudice, given
the possibility, however unlikely, that the Second Circuit would reverse the
SDNY judgment. Actavis responds that the dismissal should be with prejudice,
cataloguing various forms of prejudice it might suffer if, after a without2
prejudice dismissal, Endo should someday reinstate this lawsuit.
In its rely, Endo falls back somewhat. It notes that the nature of the
dismissal lies within the Court’s discretion. (Endo Reply at 1—2 (citing Quality
Improvement Consultants, Inc. v. Williams, 129 Fed. App’x 719, 722 (3d Cir.
2005) (citing Ferguson v. Eakle, 492 F.2d 26, 28 (3d Cir. 1974)). Endo says that
it will therefore “accept the Court’s exercise of discretion” as to whether to
dismiss the case without prejudice or with prejudice. (Endo Reply at 2)
“[E]ither way,” says Endo, “it is clear that there is no reason to continue
litigating Endo’s claims at this time. And, whether dismissed with or without
prejudice, it is evident any such dismissal should be without assessment of
any costs or fees, as the merits of Endo’s claims [in this DNJ action have] yet to
be determined.” (Endo Reply at 2) I take that to mean that Endo wishes to
dismiss the case, preferably without prejudice, but that it desires a dismissal in
any case. In short, Endo (quite sensibly, in my view) has concluded that

Among these are the possibility of lost insurance coverage. Actavis therefore
proposes various security devices, such as requiring Endo to stand surety in the event
the insurance carrier declines coverage, or continuing to litigate while having Endo
bear both sides’ expenses.
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continued litigation of this DNJ case is too steep a price for the privilege of
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keeping open a highly contingent option.
I have considered prudential factors, such as the ongoing and duplicative
expense of this litigation, the expense already incurred by defendant in
preparing for trial, the extent to which this case has progressed, and Endo’s
diligence in moving to dismiss. See generally 9 C.A. Wright & A.R. Miller,
Federal Practice and Procedure

§ 2364. For the reasons already expressed, this

DNJ action has become duplicative, and perhaps wholly moot. Significant
expense has surely been incurred, but we are not close to trial. Discovery, for
example, has not begun. While there has been significant motion practice, trial
preparation as such lies in the future. And finally, Endo acted with reasonable
dispatch to file its motion to dismiss after obtaining a favorable ruling in the
Southern District of New York.
As for the question of dismissing with or without prejudice, I consider the
following. First, Endo, as outlined above, has pronounced itself willing, however
reluctantly, to abide by a with-prejudice dismissal. Second, Endo has
seemingly all but abandoned its awkward alternative proposal for a stay. Third,
Endo states that a reversal on appeal in the Second Circuit is highly unlikely,
and it is not structuring its affairs in relation to such a ruling. Fourth, should
marketing of the generic drug resume, and should the complained-of
advertising reappear, an action for forward-looking relief, at least, should
remain viable. Fifth, Actavis points to a large expenditure of fees over the four
years this litigation has been pending, and cites the weaknesses of Endo’s case.
Permitting Endo to simply walk away with all its options open, Actavis implies,
would be inequitable. Sixth, Actavis cites the possibility of prejudice, however

Endo’s reply omits all mention of its half-hearted alternative request for a stay.
Even in its main brief, Endo conceded that a stay “seems unnecessary,” but proposed
it as a “more sensible alternative” to “forcing the Court and the parties to litigate.”
(Endo Brf. at 7) A dismissal with prejudice, of course, is likewise an alternative to
forcing the parties to litigate, and in its reply, Endo seemingly accepts it as a secondbest alternative.
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remote—such as loss of insurance coverage— and states that it should not be
exposed to that possibility for the convenience of Endo.
All of these factors point to a with-prejudice dismissal that will bring this
already lengthy litigation to an end.
CONCLUSION
Accordingly, the motion of Plaintiff Endo for leave to voluntarily dismiss
the complaint, pursuant to Fed. R. Civ. P. 41(a)(1), is GRANTED. For the
reasons set forth above, I will exercise my discretion to declare that the
dismissal is with prejudice. Each party shall bear its own costs and fees.
Dated: December 13, 2016

ft

KE INMCNULTY
United States District Judge

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