THE KROGER CO. et al v. ACTAVIS HOLDCO U.S., INC. et al

Filing 367

MEMORANDUM AND/OR OPINION. SIGNED BY DISTRICT JUDGE CYNTHIA M. RUFE ON 3/5/25. 3/25/25 ENTERED AND COPIES E-MAILED TO LIAISON COUNSEL.(mbh)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
IN RE: GENERIC PHARMACEUTICALS
PRICING ANTITRUST LITIGATION

MDL 2724
16-MD-2724

THIS DOCUMENT RELATES TO:

HON. CYNTHIA
M. RUFE

CERTAIN END-PAYER PLAINTIFFS ACTIONS
In Re: Amitriptyline Cases
In Re: Benazepril HCTZ Cases
In Re: Desonide Cases
In Re: Fluocinonide Cases
In Re: Levothyroxine Cases
In Re: Lidocaine-Prilocaine Cases
In Re: Pravastatin Cases
1199seiu National Benefit Fund v. Actavis Holdco U.S., Inc.
1199seiu National Benefit Fund v. Actavis Holdco U.S., Inc.

16-AM-27242
16-BZ-27242
16-DS-27242
16-FL-27242
16-LV-27242
16-LD-27242
16-PV-27242
18-cv-2401
19-cv-6011

CERTAIN INDIRECT RESELLER PLAINTIFFS ACTIONS
In Re: Amitriptyline Cases
In Re: Benazepril-HCTZ Cases
In Re: Clobetasol Cases
In Re: Clomipramine Cases
In Re: Desonide Cases
In Re: Levothyroxine Cases
In Re: Lidocaine-Prilocaine Cases
In Re: Pravastatin Cases
West Val Pharmacy v. Actavis Holdco U.S., Inc.
Reliable Pharmacy v. Actavis Holdco U.S., Inc.
Reliable Pharmacy v. Actavis Holdco U.S., Inc.

16-AM-27243
16-BZ-27243
16-CB-27243
16-CM-27243
16-DS-27243
16-LV-27243
16-LD-27243
16-PV-27243
18-cv-2533
19-cv-6044
20-cv-6291

CERTAIN DIRECT ACTION PLAINTIFFS ACTIONS
The Kroger Co. v. Actavis Holdco U.S. Inc.
Humana Inc. v. Actavis Elizabeth, LLC
United Healthcare Services, Inc. v. Actavis Holdco U.S., Inc.
Humana Inc. v. Actavis Elizabeth LLC
United Healthcare Services, Inc. v. Teva Pharmaceuticals USA, Inc.
Health Care Service Corp. v. Actavis Elizabeth, LLC
MSP Recovery Claims, Series LLC v. Actavis Elizabeth, LLC
Molina Healthcare, Inc. v. Actavis Elizabeth, LLC

18-cv-284
18-cv-3299
19-cv-629
19-cv-4862
19-cv-5042
19-cv-5819
20-cv-231
20-cv-695

Cigna Corp. v. Actavis Holdco US, Inc.
Rite Aid Corporation v. Actavis Holdco U.S., Inc.
J M Smith Corporation v. Actavis Holdco U.S. Inc.
Walgreen Company v. Actavis Holdco U.S., Inc.
Winn-Dixie Stores, Inc. v. Actavis Holdco U.S.
Humana Inc. v. Actavis Elizabeth, LLC, et al.
CVS Pharmacy, Inc. v. Actavis Elizabeth, LLC
United HealthCare Services, Inc. v. Sandoz, Inc.
Providence St. Joseph Health v. Actavis Holdco U.S., Inc.

20-cv-2711
20-cv-3367
20-cv-4370
20-cv-6258
20-cv-6290
20-cv-6303
20-cv-6310
20-cv-6557
23-cv-3636

CERTAIN DIRECT ACTION PLAINTIFFS (SELF-INSURED)
County of Nassau et al. v. Actavis Holdco U.S., Inc.
County of Suffolk v. Actavis Holdco US, Inc.
County of Albany v. Actavis Holdco U.S., Inc.
County of Westchester v. Actavis Holdco U.S., Inc.

20-cv-65
20-cv-4893
21-cv-1875
21-cv-4474

MEMORANDUM OPINION
Rufe, J.

March 5, 2025

Plaintiffs in the above-captioned cases have filed motions for leave to amend and
supplement their Complaints to add two new Defendants, Novartis AG and Sandoz AG. 1
The proposed amendments stem from a corporate transaction in which Novartis AG, then the
parent of existing Defendant Sandoz Inc., launched Sandoz Group AG as an independent
publicly traded company. Plaintiffs now seek to allege veil-piercing or direct liability
theories against Novartis AG and Sandoz AG, to include allegations as to the intermingling
of operations of Sandoz Inc. as well as allegations that recent transactions undermine the
ability of Sandoz Inc. to satisfy any judgment in the MDL. 2

The motion has been withdrawn as to the End-Payer Plaintiffs’ Pravastatin action, 16-PV-27242. See
MDL Doc. No. 3247.

1

2

Plaintiffs have not sought to amend and supplement the initial bellwether cases.
2

I.

LEGAL STANDARDS
Resolution of the motions turns on several Federal Rules of Civil Procedure. Under

Rule 15, leave to amend should be “freely give[n] when justice so requires,” 3 and denial “is
justified only on the grounds of bad faith, undue delay, prejudice, or futility.” 4 “[T]he burden
is generally on the non-moving party to demonstrate why leave to amend should not be
granted.” 5 The decision whether to grant leave to amend under Rule 15(a)(2) is within the
“sound discretion” of the Court. 6
Allegations concerning events that occurred after a complaint was filed are governed
by Rule 15(d), which provides that “[o]n motion and reasonable notice, the court may, on
just terms, permit a party to serve a supplemental pleading setting out any transaction,
occurrence, or event that happened after the date of the pleading to be supplemented.” 7
“Because it refers to events that occurred after the original pleading was filed, a
supplemental pleading differs from an amendment, which covers matters that occurred
before the filing of the original pleading but were overlooked at the time.” 8 “The standards

3

4

Fed. Rule Civ. P. 15(a)(2).

Alston v. Parker, 363 F.3d 229, 236 (3d Cir. 2004) (citation omitted).

Rizzo v. PPL Serv. Corp., No. 03-5779, 2005 WL 1397217, at *3 (E.D. Pa. June 10, 2005)
(citing Foman v. Davis, 371 U.S. 178, 182 (1962)).
5

In re Allergan ERISA Litig., 975 F.3d 348, 356 n. 13 (3d Cir. 2020) (quoting Cureton v. Nat’l Collegiate
Athletic Ass’n, 252 F.3d 267, 272 (3d Cir. 2001)).
6

7

Fed. R. Civ. P. 15(d).

8

Owens-Illinois, Inc. v. Lake Shore Land Co., 610 F.2d 1185, 1188 (3d Cir. 1979).
3

for amendment and supplementation are similar, but they do not conform exactly as more
lenience is afforded to amendment.” 9
“By contrast, where a party seeks to amend its pleadings after a deadline set by court
order, the decision whether to allow the amendment is controlled by Rule 16(b).” 10 “Under
Rule 16(b), the party seeking the amendment is effectively asking the court not only for leave
to amend its pleadings, but also the scheduling order. Because the party’s request now
implicates the effective administration of justice, the party must show good cause in order to
procure the court’s consent.” 11
II.

DISCUSSION
A. The Proposed Amendments and the Parties’ Arguments
Plaintiffs argue that the proposed amended and supplemented complaints stem from a

corporate transaction in Switzerland. Novartis AG announced the intention to spin-off
Sandoz AG on August 25, 2022; a prospectus was issued on August 18, 2023; the transaction
was completed on October 4, 2023. Plaintiffs also contend that they learned the relevant facts
surrounding the relationship between Novartis AG and Sandoz Inc. through depositions
conducted in 2023.
Defendants argue that none of the proposed amendments challenge the legality of the
2023 transaction, but that Plaintiffs instead allege veil-piercing and direct-liability theories
based on the relationship between Novartis AG and Sandoz Inc. during the period of alleged

9

Lutter v. JNESO, 86 F.4th 111, 125 n.13 (3d Cir. 2023).

10

Price v. Trans Union, LLC, 737 F. Supp. 2d 276, 279 (E.D. Pa. 2010).

Id.; see also Dimensional Commc’ns, Inc. v. OZ Optics, Ltd., 148 F. App’x 82, 85 (3d Cir. 2005)
(affirming district court’s decision denying leave to amend for failure to comply with Rule 16’s “good
cause” standard); E. Mins. & Chems. Co. v. Mahan, 225 F.3d 330, 340 (3d Cir. 2000) (similar).

11

4

price fixing from 2009 to 2016. Defendants further argue that the proposed claims are based
on documents that were produced to Plaintiffs years ago. Finally, Defendants argue that the
proposed amendments would seriously prejudice Defendants and disrupt the MDL process;
including delays inherent to the need to effect international service under the Hague
Convention and the likelihood of motions to dismiss.
B. Cases Subject to a Rule 16 Scheduling Order
Cases filed before November 20, 2018, are subject to Pretrial Order No. 61 (“PTO
61”), which set a deadline of December 21, 2018, for “[a]ny amendment to any currently
outstanding complaint” except in certain circumstances not applicable here or “as permitted
by the Federal Rules of Civil Procedure or Court Order.” 12 Pretrial Order No. 153 (“PTO
153”) established a deadline of December 15, 2020 for amendments and motions for leave to
amend in cases filed or amended between September 1, 2019 and July 10, 2020. 13 The Court
intended PTOs 61 and 153 to set firm deadlines for motions to amend as well as other
pretrial deadlines for the included cases. Therefore, PTOs 61 and 153 are Rule 16 scheduling
orders and Plaintiffs in the affected cases must meet the “good cause” standard before the
Court “considers whether the party also meets Rule 15(a)’s more liberal standard” for
amendment. 14
For those cases subject to PTOs 61 and 153, the Court concludes that good cause has
not been shown. “‘Good cause’ under Rule 16(b) focuses on the diligence of the party

MDL Doc. No. 775. PTO 61 included additional language allowing amendments that are not applicable
here. The Court does not find that PTO 79, which was in the context of certain specific circumstances,
applies here.
12

13

MDL Doc. No. 1648.

14

Premier Comp Solutions, LLC v. UPMC, 970 F.3d 316, 319 (3d Cir. 2020).
5

seeking the modification of the scheduling order.” 15 “Thus, if the party was not diligent,
there is no ‘good cause’ for modifying the scheduling order and allowing the party to file a
motion to amend its pleading.” 16 Defendants have shown that information related to the
newly-raised claims as to the relationship between Novartis AG and Sandoz Inc. was
contained in documents produced years ago. Even if the transaction could be considered a
basis for seeking amendment, the first motions to amend and supplement were not filed until
January 2024, despite knowing about the pending transaction for much longer. Plaintiffs
could have filed the motions earlier—some sought injunctive relief (later withdrawn) in
September 2023 relating to the spin-off before it was even completed.
The parties were aware of the deadlines established by the Court’s scheduling orders.
Being subject to those deadlines placed a burden on Plaintiffs in those cases to act with
diligence in seeking to amend, particularly considering that these deadlines were established
after substantial discussion over a period of months. Given the circumstances of the MDL,
the Court concludes that Plaintiffs failed to act with the diligence required to satisfy good
cause. The motions will be denied as to the cases subject to PTOs 61 and 153. 17

15

Hildebrand v. Dentsply Int’l, Inc., 264 F.R.D. 192, 198 (E.D. Pa. 2010).

16

Price, 737 F. Supp. 2d at 279 (internal quotation marks omitted).

The Court also notes that with regard to the cases filed by the EPPs, those Plaintiffs recently reached a
settlement of all their cases with Sandoz, Inc. (and Fougera Pharmaceuticals) in an amount up to $275
million; the Court has preliminarily approved the settlement after having previously granted final
approval of a $265 million settlement with the direct-purchaser class. Thus, as to the EPPs the proposed
amendment is likely moot; to the extent it is not, the settlement undercuts the premise of the argument
that Sandoz Inc. has been stripped of assets necessary to compensate Plaintiffs.

17

6

C. Cases Subject Only to Rules 15 and 20
As discussed above, amendment under the liberal standard of Rule 15 should be
granted unless there is a finding of bad faith, undue delay, prejudice, or futility. Here, there is
no basis for concluding that Plaintiffs have acted in bad faith. The Court will not consider
whether the claims will survive potential motions to dismiss as the Third Circuit has
emphasized that Rule 15 “‘embodie[s]’ a ‘clear preference . . . for merits-based decision
making.’” 18 Where a proposed amendment includes new claims and the futility of those
claims is not clear, “the better course is to liberally allow amendments that state a colorable
claim and defer judgment as to whether they survive a motion to dismiss for failure to state a
claim until such time when that motion is raised.” 19
For the Court to deny amendment, then, Defendants must show either prejudice or
undue delay. The need for “additional discovery, cost, and preparation [for the non-moving
party] to defend against new facts or new theories” may contribute to a finding that
amendment would be prejudicial. 20 Although the Third Circuit has “expressed a preference
for allowance of the amendment, so long as the opposing party is not prejudiced,” 21 a
“finding of undue delay, on its own, suffices” as a basis to deny a motion to amend 22 where
the delay has placed “an unwarranted burden on the court.” 23

Se. Pa. Transp. Auth. v. Orrstown Fin. Servs., Inc., 12 F.4th 337, 345 (3d Cir. 2021) (quoting T Mobile
Ne. LLC v. City of Wilmington, 913 F.3d 311, 328 (3d Cir. 2019)).

18

19

Agere Sys. Guardian Corp. v. Proxim, Inc., 190 F. Supp. 2d 726, 736 (D. Del. 2002).

20

Cureton, 252 F.3d at 273.

21

DLJ Mortg. Cap., Inc. v. Sheridan, 975 F.3d 358, 369 (3d Cir. 2020).

22

Spartan Concrete Prods., LLC v. Argos USVI, Corp., 929 F.3d 107, 117 (3d Cir. 2019).

23

Cureton, 252 F.3d at 273 .
7

As to those cases that are not subject to the Court’s scheduling orders, the Court
determines that Defendants have not shown a basis for denying amendment. As discussed
above, Plaintiffs could have moved with more dispatch in seeking amendment. However, the
Court does not find that amendment will place an undue burden on the Court in the
management of the MDL as to these newer cases, which have not been subject to courtordered deadlines governing amendment.
Nor is the Court persuaded that amendment would create substantial prejudice to
Defendants. The Court recognizes that there may be delays from the filing of motions to
dismiss, and that some additional discovery will be necessary, but these are not
insurmountable obstacles. The Court expects that the parties will cooperate to complete the
additional discovery relevant to the amendments promptly. The Court will permit additional
discovery as needed to protect the interests of the newly-added Defendants, but notes that it
will not be necessary to reopen all previous discovery given that Sandoz Inc. has participated
in the discovery process to date and would have advanced the same interests as Novartis AG
and Sandoz AG. To facilitate the additional discovery process, the Court will call upon the
expertise of the Special Masters to resolve any disputes expeditiously.
Finally, the Court concludes that addition of these Defendants satisfies Rule 20(a)(2)
as Plaintiffs allege that Novartis AG, Sandoz AG, and Sandoz Inc. are jointly and severally
liable and that their actions were intertwined. In this regard, the Court also notes that
Novartis AG and Sandoz AG are already named as Defendants in the MDL, although that is
not a consideration for the Court with regard to allowing amendment. 24

24

See, e.g., American Airlines, Inc. v. Actavis Holdco U.S., Inc., No. 24-1430 (E.D. Pa. filed Apr. 4, 2024).
8

III.

CONCLUSION
For the reasons stated above, the Court will deny the motions to amend as to those

cases subject to PTOs 61 and 153, and will grant the motions as to the remaining cases. An
order will be entered.

9