APOTEX, INC. v. CEPHALON, INC. et al
Filing
1164
MEMORANDUM OPINION. SIGNED BY HONORABLE MITCHELL S. GOLDBERG ON 5/31/2017. 5/31/2017 ENTERED AND COPIES MAILED AND E-MAILED.(amas)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
__________________________________________ ___________________________________
:
APOTEX, INC.,
:
CIVIL ACTION
Plaintiff,
:
:
v.
:
No. 2:06-cv-2768
:
CEPHALON, INC., et al.,
:
Defendants.
:
__________________________________________:___________________________________
:
GIANT EAGLE, INC.,
:
CIVIL ACTION
Plaintiff,
:
:
v.
:
No. 2:10-cv-5164
:
CEPHALON, INC., et al.,
:
Defendants.
:
__________________________________________:___________________________________
:
WALGREEN CO., et al.,
:
CIVIL ACTION
Plaintiffs,
:
:
v.
:
No. 2:09-cv-3956
:
CEPHALON, INC., et al.,
:
Defendants.
:
__________________________________________:___________________________________
:
RITE AID CORPORATION, et al.,
:
CIVIL ACTION
Plaintiffs,
:
:
v.
:
No. 2:09-cv-3820
:
CEPHALON, INC., et al.,
:
Defendants.
:
__________________________________________:___________________________________
1
Goldberg, J.
May 31, 2017
MEMORANDUM OPINION
This ongoing antitrust case involves four Hatch-Waxman reverse-payment settlement
agreements entered into by Cephalon, Inc., the manufacturer of the brand-name pharmaceutical
Provigil, and four generic drug companies. These companies are Barr Pharmaceuticals, Inc.;
Mylan Laboratories, Inc. and Mylan Pharmaceuticals, Inc. (“Mylan”); Teva Pharmaceutical
Industries, Ltd. and Teva Pharmaceuticals USA, Inc.; and Ranbaxy Laboratories, Ltd. and
Ranbaxy Pharmaceuticals, Inc. (“Ranbaxy”). Plaintiffs allege that these settlements unlawfully
delayed the market entry of generic Provigil in violation of the Sherman Act.
The parties have submitted numerous motions in limine in anticipation of the liability
trial scheduled for June 12, 2017. The only plaintiffs in the upcoming trial are Apotex, Inc., a
generic competitor, and a group of owners and operators of retail pharmacies who filed their own
separate actions and were excluded from the definition of the Direct Purchaser Litigation Class. 1
The only defendants in the June trial are Mylan and Ranbaxy.2
This opinion addresses the omnibus motion filed on behalf of all Plaintiffs, which
contains ten separate motions in limine.3 For the reasons that follow, the motions will be granted
in part and denied in part.
Over the course of this litigation, these plaintiffs have been referred to as “Individual
Plaintiffs,” “Retailer Plaintiffs,” “Opt-Out Plaintiffs” and “Merchant Plaintiffs.”
1
2
Use of “Defendants” in this opinion is intended to refer to Mylan and Ranbaxy only.
3
The omnibus motion was filed on November 15, 2015 before the United States Court of
Appeals for the Third Circuit stayed the initial trial date. Subsequent to the omnibus motion
being filed, Cephalon, Teva and Barr settled with Apotex. (See Dkt. 06-2768, Doc. No. 1057.)
As noted where appropriate, some of the arguments raised in the omnibus motion are now moot
as a result of that settlement.
2
I.
FACTUAL BACKGROUND
In 1997, Cephalon was issued U.S. Patent No. 5,618,845, covering specific formulations
of modafinil, the active pharmaceutical ingredient (“API”) in Provigil. Cephalon was granted a
reissue patent on modafinil, U.S. Patent No. RE 37,516 (“the RE ‘516 patent”) in 2002.
Modafinil is a wakefulness-promoting agent used to treat narcolepsy and other sleep disorders.
On December 24, 2002, the Generic Defendants each filed an Abbreviated New Drug
Application (“ANDA”) seeking to market a generic version of Provigil along with a Paragraph
IV certification indicating that Cephalon’s RE ‘516 patent was either invalid or the generic
products did not infringe the patent. In 2003, Cephalon filed suit against the Generic Defendants
for patent infringement (“the Paragraph IV litigation”).
The Paragraph IV litigation between Cephalon and the Generic Defendants settled
between December 2005 and February 2006, with the Generic Defendants agreeing to forego
releasing their generic modafinil products until April 6, 2012. Plaintiffs in the antitrust case
allege that in return for the Generic Defendants agreeing to settle the Paragraph IV litigation and
stay off of the market until 2012, Cephalon paid the Generic Defendants millions of dollars in
violation of various antitrust laws. This type of settlement—referred to as a reverse-payment
settlement—was analyzed by the United States Supreme Court in Federal Trade Commission v.
Actavis, Inc., 133 S. Ct. 2223 (2013).
II.
STANDARD OF REVIEW
The purpose of a motion in limine is “to narrow the evidentiary issues for trial and to
eliminate unnecessary trial interruptions.” Bradley v. Pittsburgh Bd. of Educ., 913 F.2d 1064,
1069 (3d Cir. 1990). The moving party bears the burden of demonstrating that the challenged
evidence is inadmissible “on any relevant ground, and the court may deny a motion in limine
3
when it lacks the necessary specificity with respect to the evidence to be excluded.” Leonard v.
Stemtech Health Scis., Inc., 981 F. Supp. 2d 273, 276 (D. Del. 2013). “Evidentiary rulings,
especially ones that encompass broad classes of evidence, should generally be deferred until trial
to allow for the resolution of questions of foundation, relevancy, and potential prejudice in
proper context.” Id.
III.
DISCUSSION
a. Motion in Limine Number 1
In their first motion, Plaintiffs request that Defendants be precluded from offering direct
or indirect evidence of their subjective beliefs regarding the merits of the RE ‘516 Patent because
Defendants asserted the attorney-client privilege to block inquiry into those subjective views.
Plaintiffs state that it would be unfair to allow Defendants to waive the privilege at the eleventhhour because Plaintiffs have prepared their case without the benefit of knowing the content of the
privileged information.
As an example, Plaintiffs urge that Defendants should be prevented from offering
evidence suggesting that their pleadings in the Paragraph IV litigation were “mere advocacy or
lawyer arguments” because such evidence would suggest that Defendants’ subjective beliefs
differed from the positions their attorneys took in court. (Pls.’ Mot. pp. 3-4.)
Defendants respond that they do not intend to introduce testimony or evidence previously
withheld as privileged. Rather, Defendants state that they intend to present non-privileged
information that was made available to Plaintiffs during discovery. For example, Defendants
state that they will offer testimony from fact witnesses regarding actions they took during the
Paragraph IV litigation and subsequent settlement. Defendants contend that such evidence is
relevant to their defense that the outcome of the Paragraph IV litigation was uncertain and that
4
legitimate considerations motivated their decision to settle. Defendants argue that there is no
legal authority to support Plaintiffs’ request to preclude Defendants from introducing nonprivileged evidence in this manner.
I conclude that Defendants may present this type of non-privileged evidence despite their
invocation of the attorney-client privilege. In fact, Plaintiffs themselves have argued that they are
entitled to offer expert testimony on the absence of non-privileged documents concerning
Defendants’ due diligence and what that means in terms of the reasonableness of the side
agreements. (See Pls.’ Resp. to Defs.’ Mot. to Exclude Testimony of Thomas Hoxie, pp. 16-17.)
I agree with Plaintiffs that this type of evidence is admissible and, as such, Defendants may
present relevant non-privileged information to rebut Plaintiffs’ arguments in this manner.
Although Plaintiffs have failed to support their broad request for a sweeping pre-trial
prohibition, their concerns can, if necessary, be addressed in the context of a developed record
and with the benefit of a concrete understanding of the proffered testimony as well as the
purpose for which it is being presented. If Plaintiffs believe that Defendants are attempting to
present evidence previously withheld as privileged, I will certainly entertain objections to
specific lines of questioning at trial. Defendants are directed to question their witnesses with
careful attention to these issues and any attempts to introduce evidence previously withheld will
not be countenanced. For the foregoing reasons, Plaintiffs’ Motion in Limine Number 1 will be
denied.
b. Motion in Limine Number 2
Plaintiffs seek an order precluding Defendants from presenting opinion evidence from
fact witnesses that I previously precluded Defendants’ experts from offering in the November 5,
2015 Daubert Opinion and Order. See King Drug Co. of Florence, Inc. v. Cephalon, Inc., 2015
5
WL 6750899, at *2 (E.D. Pa. Nov. 5, 2015). Plaintiffs urge that Defendants should not be able to
elicit the following previously excluded expert opinions through fact witnesses:
1. [A]ny expert opinion contrary to [the] holdings [that ‘(1) the
RE ‘516 patent is invalid due to the on-sale bar, derivation and
obviousness; and (2) the materiality prong of Walker Process
fraud has been established’] will not be permitted.
2. Cephalon [cannot] attempt to justify the reverse-payment
settlement agreements with evidence that it sought to avoid the
risk of invalidation of the RE ‘516 patent.
3. [A]n expert will not be permitted to testify at trial that certain
legal arguments made during the Paragraph IV litigation were
‘reasonable’ or that Cephalon could have reasonably had a
realistic expectation of success on the merits.
4. [T]he validity experts will not be permitted to testify as to any
legal standard that was explicitly rejected by this Court during
the Apotex litigation.
5. Cephalon’s experts will not be permitted to opine that the
Generic Defendants’ products presently infringe the RE ‘516
patent.
6. Dr. Bugay’s conclusions stemming from his testing of the
Generic Defendants’ generic Provigil API and tablets using the
Hiac/Royco brand light obscuration system are excluded as
unreliable.
7. Infringement opinions put forth by other experts that rely upon
Dr. Bugay’s testing and results will also be excluded as
unreliable.
8. [A]n expert cannot simply assume that bioequivalence results
in infringement under the doctrine of equivalents.
(Pls.’ Mot. pp. 4-5 (alterations in original, internal citations omitted.))
Plaintiffs urge that because these expert opinions were excluded as unreliable and/or as
likely to confuse the jury they are equally improper if offered by fact witnesses. Additionally,
Plaintiffs contend that Defendants may not present expert testimony from its fact witnesses on
6
these issues because none of Defendants’ fact witnesses have submitted an expert report or
disclosure as required by Federal Rule of Civil Procedure 26(a)(2)(A)-(C).
Defendants respond that Plaintiffs’ request should be denied because it is overly vague
and does not account for what purposes the challenged evidence may be offered. Defendants
further object on the grounds that a Daubert ruling which sets limits on expert testimony does not
apply to fact witnesses because different standards govern the admissibility of expert and lay
witness testimony.
Regarding the first category of challenged testimony, I conclude that Defendants may not
elicit an opinion from a fact witness that the RE ‘516 patent is valid. I already decided that expert
opinions of this type are inadmissible, see King Drug, 2015 WL 6750899, at *3, 8-10, and the
fact that they may be presented by a lay witness has no impact on the analysis underlying my
decision.
Regarding the second category of testimony, Plaintiffs seek to preclude Cephalon from
offering evidence from lay witnesses that it settled the Paragraph IV litigation to avoid the risk
that the RE ‘516 patent would be invalidated. As Cephalon is no longer part of the case, this
challenge appears to be moot. That said, under Actavis, a patent holder may not justify a reversepayment settlement agreement with reference to its “litigation uncertainty” and, to the extent that
Defendants intend to introduce evidence of Cephalon’s litigation uncertainty, I conclude that
such evidence is inadmissible regardless of the form that the evidence takes.
Regarding the third category of challenged testimony, Defendants may not elicit from lay
witnesses an opinion that the legal arguments advanced during the Paragraph IV litigation were
reasonable. As I explained, in the November 5, 2015 Daubert ruling, testimony of this nature
would constitute an impermissible legal opinion and usurp the role of the jury. See King Drug
7
Co. of Florence, 2015 WL 6750899, at *18-20. The reasoning set forth in that opinion applies
regardless of whether the witness is testifying under Rule 701 as a lay witness or under Rule 702
as an expert.
However, as I have explained, Defendants may present “evidence aimed at convincing
the jury that their positions were reasonable, such as explanation of the arguments made and
opinions presented during the Paragraph IV litigation.” Id. at *9 n.9 (emphasis in original).
Defendants may present such evidence through the testimony of expert or lay witnesses so long
as the witnesses “do not directly opine upon reasonableness.” Id.
Regarding the fourth category of challenged testimony, Defendants may not elicit fact
witness testimony as to any legal standard that was explicitly rejected during the prior patent
litigation. Such testimony would be clearly inappropriate on multiple grounds. That said, it is
unclear why Plaintiffs believe such a ruling to be necessary – they do not point to specific lay
witness testimony designated by Defendants that would fall within this category.
The fifth category of challenged testimony appears to pertain to evidence that Cephalon
may have sought to offer and, therefore, is likely moot. To the extent that the issue still needs
resolution, I conclude that it would be inappropriate, under Federal Rule of Evidences 701 and
702, for a lay witness, not previously qualified as an expert, to offer an opinion on the technical
question of infringement. See Carpenter Tech. Corp. v. Allegheny Techs., Inc., 2012 WL
5507959, at *1 (E.D. Pa. Nov. 14, 2012) (Collecting cases holding that lay witnesses may not
opine on questions of validity and infringement because such opinions require technical or
specialized knowledge and Rule 701 explicitly bars lay witnesses from giving opinions based on
such knowledge).
8
Regarding the sixth and seventh categories of challenged testimony, I conclude that
Defendants may not present testimony from lay witnesses which references or relies, either
directly or indirectly, upon Dr. Bugay’s conclusions stemming from his testing of the Generic
Defendants’ API and tablets. I previously excluded these conclusions as unreliable, Id. at *13,
and denied Cephalon’s motion for reconsideration on this issue. (See Order, Jan. 22, 2016, Doc.
No. 1051.) As such, it would be inappropriate for Defendants to circumvent these rulings by
presenting Dr. Bugay’s excluded opinions through lay witness testimony.
Regarding the eighth category of challenged testimony, I conclude that Defendants may
not elicit from lay witnesses an opinion regarding infringement under the doctrine of equivalents.
As noted above, witnesses who have not submitted expert reports or disclosures may not opine
on the technical issues of infringement.
For the foregoing reasons, Plaintiffs’ Motion in Limine Number 2 will be granted in part
and denied in part as set forth above.
c. Motion in Limine Number 3
Plaintiffs urge that Defendants should be precluded from referring to or presenting any
evidence regarding Cephalon’s “risk aversion or litigation uncertainty.” (Pls.’ Mot. pp. 6-7.)4 As
Cephalon is no longer part of the case, this issue appears to be moot. To the extent that
Defendants nonetheless intend to introduce evidence regarding Cephalon’s litigation uncertainty,
such evidence is inadmissible. See King Drug Co. of Florence, Inc. v. Cephalon, Inc., 2015 WL
4
It is unclear whether Plaintiffs are using the term “risk aversion” synonymously with the term
“litigation uncertainty” or whether they understand the terms to connote two discrete concepts.
As Plaintiffs fail to offer a definition of “risk aversion” and, at points, use the terms
interchangeably, I construe them as such. As I understand it, the term “litigation uncertainty”
refers to “the risk of Cephalon losing the infringement litigation against the Generic Defendants
and the RE ‘516 patent being declared invalid or not infringed.” King Drug Co. of Florence, Inc.
v. Cephalon, Inc., 2015 WL 5783603, at *8 (E.D. Pa. Oct. 5, 2015).
9
5783603, at *8 (E.D. Pa. Oct. 5, 2015) (“opinions that the reverse payments were made to avoid
Cephalon’s ‘litigation uncertainty’—that is, the risk of Cephalon losing the infringement
litigation against the Generic Defendants and the RE ‘516 patent being declared invalid or not
infringed—[are] not relevant for the purposes of explaining or justifying the reverse payments.”)
d. Motion in Limine Number 4
Next, Plaintiffs seek an order precluding Defendants from introducing evidence or
argument relating to U.S. Patent No. 7,297,346 (the “’346 Patent”).5 According to Plaintiffs, in
exchange for Defendants being relieved of discovery obligations related to the ‘346 Patent, the
parties stipulated:
1. Defendants will not argue that the ‘346 patent would be
infringed by the Generic Defendants’ Generic Provigil
products;
2. Defendants will not argue that the ‘346 patent would have
prevented the Generic Defendants from launching or
continuing to market (should entry have occurred) their
Generic Provigil products in the “but for” world;
3. Defendants will not argue that the ‘346 patent could have been
an obstacle to the Generic Defendants launching or continuing
to market (should entry have occurred) their Generic Provigil
products in the “but for” world in that they would have had to
consider potential liability arising from the ‘346 patent with
respect to such a launch or continued marketing (should entry
have occurred).
(Pls.’ Mot. Ex. G pp. 1-2.) Based on this stipulation, Plaintiffs argue that Defendants should be
precluded from introducing any evidence or argument relating to the ‘346 Patent because
Defendants have successfully avoided discovery concerning the ‘346 Patent by agreeing to
“stipulate it out of the case.” (Pls.’ Mot. p. 9.) Defendants respond that Plaintiffs mischaracterize
the scope of the stipulation.
5
The ‘346 Patent issued on November 20, 2007 – after the Paragraph IV litigation was settled.
(Pls.’ Mot. p. 8.)
10
From the parties’ submissions it is unclear what, if any, evidence or argument concerning
the ‘346 Patent Defendants will seek to introduce. Without the benefit of a developed record, it
would be premature to decide what hypothetical evidence or argument would violate the terms of
the parties’ stipulation. Plaintiffs may, if necessary, renew their objections at trial.
e. Motion in Limine Number 5
Plaintiffs seek to prevent Defendants from presenting evidence or arguing at trial that
they lacked the capacity to manufacture generic Provigil. Citing to letters from Defendants,
Plaintiffs note that Defendants stated that they would not assert that they lacked the capacity to
manufacture generic Provigil and, therefore, Plaintiffs’ requests for discovery on those issues
were moot.
Defendants respond that Plaintiffs’ request is impermissibly vague because it does not
identify with specificity the evidence they seek to exclude. Additionally, Defendants assert that
Plaintiffs seeks to exclude evidence beyond the scope of the agreements. According to
Defendants, while they agreed not to pursue as a defense that they lacked capacity to
manufacture generic Provigil, they did not broadly agree to refrain from introducing evidence or
argument concerning their capacity to manufacture for other purposes. For example, Defendants
argue that, under the terms of the parties’ agreement, they are permitted to introduce capacity
evidence for the purpose of establishing the timing and ability of Defendants to launch.
I conclude that Defendants’ narrow reading is inconsistent with the broad language of the
parties’ agreements. In a letter to Plaintiffs, Ranbaxy affirmed that it “will not assert as a defense
that it could not launch its generic Provigil product due to capacity constraints or cGMP [current
good manufacturing practice] issues.” (Pls.’ Mot. Ex. I.) Mylan similarly stated that it was not
pursuing a “capacity defense.” (Pls.’ Mot. Ex. K.) If Defendants had intended to preserve the
11
right to present evidence of manufacturing capacity issues for some purpose, the stipulation
should have stated as much.
Furthermore, if Defendants are permitted to present evidence and argument regarding
their manufacturing capacity, Plaintiffs would be prejudiced. Defendants expressly stated that
discovery on these issues was unnecessary as they did not intend to present this evidence in their
defense. Plaintiffs were entitled to rely on these representations in completing discovery and
preparing for trial. As such, Plaintiffs’ Motion in Limine Number 5 will be granted.
f. Motion in Limine Number 6
Next, Plaintiffs note that Defendants have indicated that they intend to argue that they
litigated and later settled the Paragraph IV litigation in “good faith.” According to Plaintiffs,
courts have held that an assertion by a party that it acted in good faith constitutes a waiver of the
attorney-client privilege. Plaintiffs urge that Defendants should be precluded from presenting
testimony to support such a defense because Defendants withheld discovery of the privileged
communications which the jury would need to consider in order to assess the credibility of that
testimony.
Defendants correctly respond that this argument conflates an assertion of “good faith”
with an “advice of counsel” defense. In the cases Plaintiffs cite, waiver was only found after the
party took an affirmative act which placed the privileged information at issue – such as testifying
that they believed that their actions were legal. See, e.g., United States v. Bilzerian, 926 F.2d
1285, 1292 (2d Cir. 1991).
Furthermore, in their response, Defendants reiterate that they do not intend to present
privileged information or rely on an “advice of counsel” defense. Rather, Defendants state that
they will introduce non-privileged evidence to outline the reasons behind the settlements. A party
12
does not waive the attorney-client privilege by presenting non-privileged evidence to suggest that
actions were taken in good faith. Plaintiffs do not cite to any binding authority to the contrary.
However, if Defendants seek to introduce evidence previously withheld as privileged or present
argument that even implicitly suggests reliance on the advice of counsel, Plaintiffs are free to
renew their objections. For the foregoing reasons, Plaintiffs’ Motion in Limine Number 6 will be
denied.
g. Motion in Limine Number 7
Plaintiffs move to preclude Defendants from arguing or offering evidence to justify the
allegedly “supracompetitive pricing” of Provigil on the basis that it (a) allowed Defendants to
recoup research and development (“R&D”) costs or further invest in future R&D; or
(b) otherwise benefitted Defendants or the public. Plaintiffs argue that a patent holder may not
artificially extend the term of a patent beyond what it ought to be under a justification that such
illegal conduct is necessary to incentivize future innovation or was beneficial to the public in
some way.
Defendants respond that Plaintiffs’ motion is fatally vague as it does not identify any
proposed testimony or documents to be excluded. I agree. Without specific reference to the
challenged evidence or an opportunity to review the purpose for which it is presented, I cannot
resolve Plaintiffs’ objections. Therefore, Plaintiffs’ Motion in Limine Number 7 will be denied
without prejudice. At trial, Plaintiffs may renew their objections with specific reference to
documents or proposed testimony.
h. Motion in Limine Number 8
Next, Plaintiffs seek an order precluding Defendants from referring to or presenting
evidence regarding their “alleged good character or reputation, e.g., evidence of being a good
13
corporate citizen, having internal corporate governance, spending money on socially valuable
research and development efforts, working to increase access to pharmaceuticals or other
healthcare, and/or other charitable works.” (Pls.’ Mot. p. 17.) According to Plaintiffs, all such
evidence is irrelevant, prejudicial or inadmissible character evidence under Federal Rule of
Evidence 404(a)(1).
Plaintiffs’ motion seeks to exclude a broad category of evidence but fails to describe the
supposedly objectionable evidence with sufficient specificity to enable a ruling prior to trial. See
Leonard, 981 F. Supp. 2d at 276 (“[t]he movant bears the burden of demonstrating that the
evidence is inadmissable [sic] on any relevant ground, and the court may deny a motion in limine
when it lacks the necessary specificity with respect to the evidence to be excluded.”) While
Plaintiffs accurately note that character evidence is inadmissible to prove that a person acted in
conformity with their purported character on a particular occasion, see Fed. R. Civ. P. 404(a)(1),
I, however, cannot make the evidentiary ruling that Plaintiffs seek in a vacuum. These types of
rulings require evaluation of the specific piece of challenged evidence or line of questioning and
the purpose for which it is being offered. For these reasons, Plaintiffs’ Motion in Limine Number
8 will be denied without prejudice and Plaintiffs are free to renew these objections at trial.
i. Motion in Limine Number 9
Plaintiffs seek an order precluding Defendants from referring to or presenting evidence
regarding any unrelated current or past litigation involving any Plaintiff. According to Plaintiffs,
such evidence is entirely irrelevant to a determination of the questions before the jury – i.e.,
whether Defendants engaged in unlawful anticompetitive activity and issues of antitrust injury.
Plaintiffs urge that any de minimis probative value such evidence may have is substantially
outweighed by a danger of unfair prejudice, confusion of the issues and/or misleading the jury.
14
Defendants respond that some prior litigation involving certain Plaintiffs may be relevant
to certain issues. For example, Defendants contend that evidence regarding Apotex’s prior at-risk
launch experience is relevant to whether it is reasonable to assume that Defendants or Apotex
would have entered the market at risk.
Although I am skeptical that evidence regarding Plaintiffs’ involvement in prior unrelated
litigation is relevant and otherwise admissible, Plaintiffs’ request for a broad pretrial categorical
prohibition on such evidence is premature. Particular evidence of prior litigation and objections
thereto must be evaluated on a case-by-case basis. Therefore, Plaintiffs’ Motion in Limine
Number 9 will be denied without prejudice.
j. Motion in Limine Number 10
Lastly, Plaintiffs seek an order precluding Defendants from offering into evidence
hearsay statements made during the Federal Trade Commission’s investigative hearings (“FTC
hearings”). Plaintiffs contend that the portions of the FTC hearings that Defendants have
designated for introduction at trial do not fall within any of the exceptions to the rule against
hearsay.
Defendants respond that they have no intention of offering the FTC hearing testimony of
witnesses who are available to testify at trial. However, Defendants argue that the FTC hearing
testimony of unavailable witnesses is probative, reliable and admissible against all Plaintiffs
under Federal Rule of Evidence 804(b)(1). Rule 804(b)(1) provides an exception to the rule
against hearsay if the declarant is unavailable at trial and the former testimony:
(A) was given as a witness at a trial, hearing, or lawful deposition,
whether given during the current proceeding or a different one; and
(B) is now offered against a party who had--or, in a civil case,
whose predecessor in interest had--an opportunity and similar
motive to develop it by direct, cross-, or redirect examination.
15
Defendants contend that the FTC is a predecessor in interest to the Plaintiffs. Citing Lloyd v.
American Export Lines, Inc., 580 F.2d 1179 (3d Cir. 1978), Defendants urge that “predecessor in
interest” does not require that the prior case involve identical issues so long as liability is based
upon the “same condemned behavior thought to have occurred.” Id. at 1186-87. According to
Defendants, under this broad standard, the FTC is Plaintiffs’ predecessor in interest because they
shared similar motives to develop the testimony – i.e., determining whether the settlement
agreements represent unlawful restraints of trade.
I conclude that the FTC is the Plaintiffs’ predecessor in interest under the Third Circuit’s
broad formulation of that concept.6 The FTC and Plaintiffs challenged the same allegedly
unlawful conduct by the Defendants and those challenges involved a substantial identity of
issues. See Lloyd, 580 F.2d at 1187 (“the previous party having like motive to develop the
testimony about the same material facts is, in the final analysis, a predecessor in interest to the
present party”); Pfizer, Inc. v. Mylan Laboratories, Inc., 2006 WL 3198951, at *2 (W.D. Pa.
Nov. 3, 2006) (“[a]lthough the trial strategies and financial stakes may differ, it is hard to deny
that Apotex and Mylan have a ‘similar’ motive to cross-examine [the deponent]-both Apotex and
Mylan allege that the . . . patent is invalid because it is obvious and unenforceable for inequitable
conduct.”)
Defendants also correctly note that Plaintiffs at times entered prior FTC hearing
testimony as an exhibit at the depositions conducted in this case and confirmed with the
deponent that the testimony they gave during the FTC hearings was taken under oath and given
6
Plaintiffs argue that “predecessor in interest” requires actual privity. The Third Circuit has
expressly held the opposite. See New Jersey Turnpike Auth. v. PPG Industries, Inc., 197 F.3d 96,
110 n.21 (3d Cir. 1999) (citing Lloyd, 580 F.2d at 1185–87) (“Privity or a common property
interest is not required to establish a predecessor in interest relationship, rather, a shared interest
in the material facts and outcome of the case will create such an interest.)
16
truthfully. In light of the foregoing, I conclude that the FTC hearing testimony falls within the
hearsay exception set forth under Federal Rule of Evidence 804(b)(1) so long as the declarant
satisfies the test for unavailability under Federal Rule of Evidence 804(a). 7 That said, where
appropriate, objections to particular portions of testimony from the FTC hearings on other
grounds will be entertained at trial. For the foregoing reasons, Plaintiffs’ Motion in Limine
Number 10 will be denied.
IV.
CONCLUSION
For the foregoing reasons, Plaintiffs’ Motions in Limine will be denied in part and
granted in part. An appropriate order follows.
7
In accordance with my ruling on Plaintiffs’ Motion in Limine Number 13, such testimony
should be introduced generically as testimony from a prior proceeding. Care should be taken by
both parties to not reference the fact that the testimony was given in connection with the FTC’s
investigation or subsequent litigation. (See Order Granting Mot. in Limine No. 13, Jan. 8, 2016.)
17
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