The People of The State of New York v. Actavis plc et al
Filing
43
OPINION re: 37 MOTION to Seal / Notice of Defendants' Motion to Seal 35 MEMORANDUM OF LAW. filed by Forest Laboratories, L.L.C., Actavis plc. The motion of the Defendants to maintain the sealing of the redacted portions of the Complaint is granted in part and denied in part as set forth above. It is so ordered. (See Order.) (Signed by Judge Robert W. Sweet on 10/21/2014) (ajs)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
--------------------------------------x
THE PEOPLE OF THE STATE OF NEW YORK,
Plaintiff,
-against-
14 Civ. 7473
OPINION
ACTAVIS, PLC, and
FOREST LABORATORIES, LLC,
Defendants.
--------------------------------------x
A P P E A R A N C E S:
Attorneys for Plaintiff
NEW YORK STATE OFFICE OF THE ATTORNEY GENERAL
120 Broadway, 26th Floor
New York, NY 10271
By:
Elinor R. Hoffmann, Esq.
Attorneys for Defendants
WHITE & CASE LLP
1155 Avenue of the Americas
New York, NY 10036
By:
Jack Pace, Esq.
Martin Michael Toto, Esq.
Peter J. Carney, Esq.
Sweet, D.J.
Defendants Forest Laboratories, LLC ("Forest") and
Actavis, PLC ("Actavis")
(collectively, the "Defendants") have
moved to maintain under seal, as confidential, cornrnerciallysensitive information, portions of the Complaint filed by the
People of the State of New York (the "State" or the
"Plaintiff") .
Based on the conclusions set forth below, the
motion is granted in part and denied in part.
Prior Proceedings
On February 28, 2014, the Antitrust Bureau of the
Office of the Attorney General of the State of New York (the
"Bureau") opened an investigation into Forest's business plans
regarding the pharmaceutical product Namenda, an FDA-approved
therapy to treat Alzheimer's disease.
million pages of documents
Forest produced over 1.7
(pursuant to three subpoenas), three
executives to provide investigational testimony, written
interrogatory responses, and additional items that the Bureau
requested informally.
Forest produced this information
designated as "Highly Confidential" and requested that any of
1
the produced information used in any proceeding be filed under
seal.
On September 15, 2014, the State filed its Complaint
relating to the Bureau's investigation, referencing documents
and testimony provided by Forest during the investigation.
Counsel for Defendants immediately notified the Bureau of the
Defendants' confidentiality concerns and requested that the
Complaint be refiled with the proposed redactions.
The State agreed to file its Complaint on September 19
with the redactions requested by the Defendants.
The Complaint alleges that Defendants violated federal
and state antitrust laws by attempting to improperly maintain
and extend a monopoly over the drug they developed to treat
Alzheimer's disease.
The Complaint seeks injunctive relief
requiring Defendants to keep the original form of the drug,
Namenda lR, on the market and to prevent the Defendants from
seeking to switch patients to a new patent-protected form,
Namenda XR.
2
The Complaint describes: the parties
(Compl.
~~
12-
15); the regulatory framework and relevant federal regulations,
including the Food Drug and Cosmetic Act, 21 USC§ 301 et seq.,
the Drug Price Competition and Patent Term Restoration Act of
1984, Pub. L. No.
98-417,
98 Stat. 1585, the Food and Drug
Administration Modernization Act of 1997, Pub. L. No. 105-115,
111 Stat. 2296 (Compl.
Laws (Compl.
~~
~~
16-20); the State Generic Substitution
21-27); and the effect of generic competition
and brand name manufacturers' tactics to evade them (Compl.
~~
28-43), including the practice of "product hopping," which the
Defendants are alleged to be contemplating in order to avoid the
"patent cliff."
The Complaint also describes: Alzheimer's disease and
the relevant products
(Compl.
~~
46-63)
(Compl.
44-45); and the relevant market
~~
including Memantine that is branded and
marketed as Namenda by Defendants, Namenda's recent sales of
$1.5 billion in the United States, the extension of the Namenda
patents, and the anticipated entry of generic competition in
July 2015.
The Complaint further alleges that the Defendants
have made efforts to stall the effects of generic entry in the
market
(Compl.
~~
64-97), including the launch of Namenda XR in
June 2013 and the effort to convert patients from Namenda IR to
3
Namenda XR and the plan to force switches.
The Complaint
alleges the anticompetitive effect of the conduct of the
Defendants (Compl. ]] 98-104) and their conduct in exaggerating
the imminence of the plan to force switches
(Compl.
Five causes of action are alleged:
in violation of Section 2 of the Sherman Act;
~~
105-117).
(1) monopolization
(2) attempted
monopolization in violation of Section 2 of the Sherman Act;
(3)
violation of the Donnelly Act, New York General Business Law
Section 340 et seq.;
(4) repeated or persistent illegality in
violation of Section 63(12) of the New York Executive Law; and
(5) repeated or persistent fraud,
in violation of Section 63(12)
of New York Executive Law.
The Defendants' motion to maintain the sealed portions
of the Complaint was heard and marked fully submitted on
September 24, 2014.
The Standard for Sealing
In re James, Hoyer, Newcomer, Smiljanich and
Yanchunis, P.A., illustrates the policy considerations at the
heart of this motion:
4
[A producing party ("Party")] requested at the
time the documents were produced to the [Office
of the Attorney General ("OAG") ], that all the
documents be maintained as confidential and
exempt from disclosure under FOIL.
[The Party's]
expectation of confidentiality was specifically
discussed with the OAG at the time.
This
expectation of confidentiality for these
documents was very important in the [Party's]
decision to cooperate with the OAG's
investigation.
It would violate that
expectation, and probably deter future
cooperation by [the Party] and other affected
entities, if any of [the Party's] documents were
now released.
[But in] today's era .
free access to information is even more critical
as a fundamental step in protecting consumers.
Index No. 114184/09, 2010 WL 1949120, at *1, *6 (N.Y. Sup. Ct.
Mar. 31, 2010) .
On the one hand, as the court in In re Crowley Food,
Inc. noted:
There is a sound rationale for the requirement of
confidentiality.
If there were no
confidentiality in antitrust investigations,
those who were the subjects of an investigation
would be 'tarred with the taint' of having
violated the antitrust laws even though that may
not be the case.
It would be analogous to
announcing the empaneling of a grand jury to
investigate one's activities.
It implies a
suspicion of guilt.
5
Index No. 119316, 1979 WL 18648, at *6 (N.Y. Sup. Ct. Mar. 10,
197 9) .
Similarly, in federal antitrust cases, the government
regularly filed documents under seal or with confidential
information redacted.
See, e.g., Br. for Appellant United
States of America (Redacted), United States v. AMR Corp., 335
F.3d 1109 (2002)
(No. 01-3202)
(available at
Permission to File Competitively Sensitive Information under
Seal and for an Interim Protective Order, United States v.
Sungard Data Sys., Inc., 172 F. Supp.2d 172
0219 6)
(2001)
(No. 01-
(available at
File under Seal, United States v. The Home City Ice Co.
(No. 07-140)
(2007)
(available at
h"ttE://www. ustice.
/atr cases/f234200/234206.htm).
...
-. ...............................................
-
···········································
......
On the other hand, there is a strong presumption of
public access to federal court filings under the common law and
the First Amendment.
See Lugosch v. Pyramid Co. of Onondaga,
435 F.3d 110, 120-21 (2d Cir. 2006)
(for judicial documents, "a
strong presumption of access attaches, under both the common law
6
and the First Amendment").
Once First Amendment protection
extends to a court filing, "continued sealing of the documents
may be justified only with specific, on-the-record findings that
sealing is necessary to preserve higher values and only if the
sealing order is narrowly tailored to achieve that aim."
Id. at
124; see also In re Parmalat Sec. Litig., 258 F.R.D. 236, 244
(S.D.N.Y. 2009)
(sealing requires "particular and specific
demonstration of fact showing that disclosure would result in an
injury sufficiently serious to warrant protection; broad
allegations of harm unsubstantiated by specific examples or
articulated reasoning fail to satisfy the test")
(internal
citations and quotations omitted).
A party wishing to seal materials has the burden to
show good cause as to why the material should be concealed from
the public.
See Parmalat, 258 F.R.D. at 241.
Courts can seal
"business information that might harm a litigant's competitive
standing" in the market.
See id. at 244.
However, "the fact
that business documents are secret or that their disclosure
might result in adverse publicity does not automatically warrant
a protective order."
Id.; see also Salomon Smith Barney, Inc.
v. HBO & Co., 98 Civ. 8721, 2001 WL 225040, at *2
7, 2001)
(S.D.N.Y. Mar.
(denying motion to remove documents from the public
7
court file where "[the movant]'s real concern is the possibility
of public embarrassment.").
Internal documents and unpublished drafts that contain
non-public strategies and financial information constitute
"confidential commercial information" under Federal Rule
26 (c) (1) (g), particularly where the disclosing company is
engaged in a highly competitive industry and deliberately has
shielded such information from its competitors.
See, e.g., Fox
News Network v. U.S. Dep't of Treas., 739 F. Supp. 2d 515, 571
(S.D.N.Y. 2010)
(withholding draft containing proposed financial
and risk reporting strategy); Brittain v. Stroh Brewery Co., 136
F.R.D. 408, 415-416 (M.D.N.C. 1991)
("Such commercial
information, which encompasses strategies, techniques, goals and
plans, can be the lifeblood of a business [and] may also be
particularly deserving of protection if the disclosing
corporation is vulnerable to competitors.").
Cost data is sensitive and potentially damaging if
shared with competitors.
See Vesta Corset Co. v. Carmen
Founds., Inc., 97 Civ. 5139, 1999 WL 13257, at *2
13, 1999)
(S.D.N.Y. Jan.
(noting protocol to treat parties' cost information as
confidential and holding, "Pricing and marketing information are
8
widely held to be 'confidential business information' that may
be subject to a protective order"); Support Sys. Assocs. Inc. v.
Tavolacci, 135 A.D.2d 704, 522 N.Y.S.2d 604, 605-06 (N.Y. App.
Div. 1987)
("pricing and cost information provided to
[defendant] was ... confidential because if it were known to
competitors, they would be in a position to underbid the
plaintiff").
Marketing and promotional expenses are sensitive
and can be damaging if shared with competitors and customers,
depending "upon: 1) the extent to which information is known
outside the business; 2) the extent to which information is
known to those inside the business; 3) the measures taken to
guard the secrecy of the information; and 4) the value of the
information to the business and its competitors."
Vesta, 1999
WL 13257, at *2.
Applying the standard set forth above, courts grant
confidential treatment under circumstances where trade secrets
and material that would place a party at a competitive
disadvantage are being used in public filings.
9
Confidential Treatment is Granted in Part and Denied in Part
As described above, certain allegations which the
Defendants have asserted are confidential have been redacted in
the Complaint filed by the State.
The Defendants now seek to
have those redactions maintained under seal while, in the main,
the State contends that the public interest requires the
redactions to be made public.
As in Parmalat, 258 F.R.D. at 244, the party seeking
the sealing has the burden of establishing the competitive
disadvantage.
The Defendants have submitted the
2~
page
somewhat conclusory affidavit of William Kane, the Vice
President Marketing Internal Medicine at Forest for that
purpose.
The Complaint establishes that the conduct which is
challenged here is part of a complicated mosaic resulting from
the exclusivity granted to patents, the FDA and state
regulations, and the complications of competition between
branded drugs and generics in the drug industry.
The
competition at issue appears to be that between the Defendants
and those who may seek to offer to patients generic versions of
the Defendants' branded drugs.
A complicating factor is that
10
the Defendants' plans for that very competition are the gravamen
of the State's Complaint.
As to the specific paragraphs at issue:
1
Paragraph 69
The second sentence dealing with profit projections is
confidential, the disclosure of which will competitively
disadvantage the Defendants.
It will be sealed.
Paragraph 73
The first bulleted indented paragraph contains a
business plan, the disclosure of which could competitively
disadvantage the Defendants.
It will be sealed.
Paragraph 74
The Kane Affidavit fails to establish that this
allegation would competitively disadvantage the Defendants.
Determinations with respect to redacted allegations in the Complaint do
not constitute rulings on evidence relating to substantive issues.
11
Paragraph 75
The redacted portion of the allocation of promotional
budget funds,
Defendants.
if disclosed, would competitively disadvantage the
It will be sealed.
Paragraph 79
The first sentence contains internal projections, the
disclosure of which will competitively disadvantage the
Defendants.
It will be sealed.
Paragraph 82
The State did not oppose this redaction.
It will be
sealed.
Paragraph 83
The disclosure of financial projections of alternative
plans would be a competitive disadvantage.
12
It will be sealed.
Paragraph 84
The Defendants have contended that the information
reflected in this material was later determined to be largely
unfounded.
No competitive disadvantage has been established.
Paragraph 85
No competitive disadvantage has been established.
Paragraph 86
The last sentence contains a projection, the
publication of which would put the Defendants at a competitive
disadvantage.
It will be sealed.
Paragraph 93
Although the Defendants classify this email as part of
their regulatory strategy, and as reflecting confidential
information, the disclosure of which would damage customer and
contract relations, Kane Aff.
~~
5-7, no competitive
disadvantage has been established.
13
Paragraph 101
These redactions deal with income projections the
publication of which would competitive disadvantage the
Defendants.
They will be sealed.
Paragraph 103
The redaction deals with a manufacturing process which
must be viewed as common knowledge.
No competitive disadvantage
to Defendants has been established.
Paragraph 108
The redactions concern future plans for the
discontinuance of Namenda IR, the publication of which could
competitively disadvantage the Defendants.
They will be sealed.
The Donnelly Act Confidentiality Does Not Warrant Redaction
The Defendants also contend that the Donnelly Act (the
"Act") requires continued confidentiality with respect to
documents they have produced to the State, and the sealing of
14
----------------------------------------
the redacted portions of the Complaint.
The Act provides as
follows:
Any officer participating in such inquiry [i.e.,
an antitrust investigation] and any person
examined as a witness upon such inquiry who shall
disclose to any person other than the attorney
general the name of any witness examined or any
other information obtained upon such inquiry,
except as so directed by the attorney general
shall be guilty of a misdemeanor.
Such inquiry
may upon written authorization of the attorney
general be made public.
N.Y. Gen. Bus. Law§ 343.
The Act permits the "inquiry" to be
made public, upon written authorization, but not the
"information obtained" in the inquiry.
See also id.
(authorizing the Bureau to issue subpoenas for "books or papers"
that the Bureau deems "relevant or material to the inquiry").
With respect to the Defendants' repeated requests for
confidentiality, Plaintiff responded as follows:
Finally pertaining to your concerns about
protections for trade secrets and certain
commercially sensitive information, New York's
Freedom of Information Law expressly exempts such
material from disclosure - as well as information
compiled for law enforcement purposes, e.g.,
during investigations by our office, N.Y. Public
Officer Law, 87 (2) (d), (e).
(Ex. 1 to Defs.' Order to Show Cause Sealing Compl.)
15
This provision was not violated during the
investigation by the Bureau and did not cloak all the material
produced with confidentiality for all time.
When the Complaint
was filed, N.Y. Gen. Bus. Law§ 343 provided that information
and documents obtained in a Donnelly Act investigation may "be
made public" upon "authorization of the attorney general."
New
York courts have affirmed this statutory authority, holding that
"[t]he Attorney General ... is expressly authorized by statute,
to reveal ... information [obtained in a Donnelly Act
investigation] at any time."
Ragusa v. New York State Dep't of
Law, 578 N.Y.S.2d 959, 963 (N.Y. Sup. Ct. 1991).
This is
consistent with the Attorney General's power in other areas,
such as under the Martin Act.
Misc.3d 377, 383
See e.g., New York v. Thain, 24
(N.Y. Sup. Ct. 2009)
("The case law is uniform
that the Martin Act vests in the Attorney General the authority
to decide whether the information he gathers as part of his
investigation should be kept secret or public.").
Therefore, the Donnelly Act argument does not alter
the analysis as described above.
16
Conclusion
The motion of the Defendants to maintain the sealing
of the redacted portions of the Complaint is granted in part and
denied in part as set forth above.
It is so ordered.
NJ
New York~
October ~f' 2014
ROBERT W. SWEET
U.S.D.J.
17
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?