HALMAN ALDUBI PROVIDENT AND PENSION FUNDS LTD. v. TEVA PHARMACEUTICAL INDUSTRIES LIMITED et al

Filing 126

MEMORANDUM AND/OR OPINION. SIGNED BY DISTRICT JUDGE KAREN S. MARSTON ON 08/30/2024. 08/30/2024 ENTERED AND COPIES E-MAILED.(nd)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
HALMAN ALDUBI PROVIDENT AND
PENSION FUNDS LTD.,

CIVIL ACTION
NO. 20-4660-KSM

Plaintiff,
v.
TEVA PHARMACEUTICALS INDUSTRIES
LIMITED, et al.,
Defendants.
MEMORANDUM
Marston, J.

August 30, 2024

Lead Plaintiff Gerald Forsythe, individually and on behalf of all others similarly situated,
alleges that Teva Pharmaceuticals Industries Limited (“Teva”) and Teva executives Erez
Vigodman, Eyal Desheh, Robert Koremans, Michael Derkacz, Kåre Schultz, Michael McClellan,
and Brendan O’Grady (collectively, the “Individual Defendants,” and together with Teva,
“Defendants”) violated Section 10(b) of the Securities Exchange Act of 1934 and Securities and
Exchange Commission Rule 10b-5 by making false and misleading statements and by failing to
disclose material information about Teva’s specialty drug, Copaxone. (Doc. No. 1.) Plaintiff
also claims that the Individual Defendants violated Section 20(a) of the Exchange Act because
they knew or recklessly disregarded that Teva was making materially false and misleading
statements and material omissions. (Id. ¶¶ 249–254.) On August 2, 2022, the Court granted
Defendants’ motion to stay the case pending the resolution of an active enforcement action
brought against Teva by the U.S. Department of Justice (the “DOJ Action”). (Doc. Nos. 86, 87.)
Presently before the Court is Plaintiff’s Motion for Reconsideration and to Lift the Stay

implemented by the Court’s August 2, 2022 order (the “Motion”). (Doc. Nos. 120, 123.)
Defendants oppose the Motion. (Doc. No. 122.) For the reasons discussed below, the Motion is
granted.
I.

Background

Because the Court has previously described the factual background extensively in several
memoranda (see, e.g., Doc. Nos. 74, 115), the Court provides only limited background here. As
relevant to this opinion, the background is as follows.
A. Teva’s Shared Solutions Program
Teva is a global pharmaceutical company that sells generic, specialty medicines, and
over-the-counter products. (Doc. No. 64-2 at ¶ 27.) One of Teva’s primary products is the
specialty drug, Copaxone (glatiramer acetate injection), an injectable drug used to treat patients
with multiple sclerosis. (Id. ¶¶ 28–29.) To increase patient access to Copaxone, Teva sponsored
“Shared Solutions,” which trained patients on how to inject the drug, offered patients injection
devices to administer the drug, and assigned patients case managers who help patients secure
insurance coverage for the drug. (Id. ¶ 41.) In 2006, in connection with the Shared Solutions
program, Teva contracted with Advanced Care Scripts, Inc. (“ACS”), a specialty pharmacy. (Id.
¶ 42.) For the patients who did not already have Medicare Part D coverage, ACS assisted with
the enrollment process. (Id.) And for the patients who already had Medicare Part D coverage
and were eligible for co-pay coverage from a patient assistance program (“PAP”), 1 ACS helped
them apply to a PAP for coverage. (Id.)
ACS referred Teva’s Copaxone patients to two PAPs for co-pay assistance: the Chronic
Disease Fund (“CDF”) and The Assistance Fund (“TAF”). (Id.) Teva regularly donated to both
A PAP is a charitable program that provides financial assistance to help patients cover Medicare Part D
co-pays. (Doc. No. 57 ¶ 35.)

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PAPs. (Id.) Under the applicable regulations, pharmaceutical companies may donate to PAPs;
however, “the funds received through donations must be applied generally to all beneficiaries,
and it is illegal for a Charitable PAP to apply the funds received to any particular drug.” (Id. ¶
35.) Teva allegedly ran afoul of those regulations because it did not intend its donations to CDF
and TAF to cover co-payments for multiple sclerosis treatments generally; rather, it intended for
its donations to CDF and TAF to only cover patients’ co-pays on Copaxone. (Id. ¶ 48.)
B. The DOJ Action
On August 18, 2020, the U.S. Attorney’s Office for the District of Massachusetts filed a
complaint (“DOJ complaint”) against Teva for alleged violations of the False Claims Act. (Id. ¶
168.) In the DOJ complaint, the Government contends that Teva’s payments to CDF and TAF
were “kickbacks” that allowed the company to increase the price of Copaxone while leaving the
“American taxpayers to shoulder the high prices that Teva set.” (Id.) Plaintiff alleges that the
DOJ complaint is the corrective disclosure which revealed Teva’s Copaxone scheme to the
market. (Id.) On July 14, 2023, following the close of discovery in the DOJ Action, the
Honorable Nathaniel M. Gorton denied Teva’s motion for summary judgment and granted the
government’s motion for partial summary judgment. See Mem. and Order (Doc. No. 195),
United States v. Teva Pharms. USA, Inc., Civil Action No. 1:20-cv-11548-NMG (D. Mass. July
14, 2023). Subsequently, on August 23, 2023, Judge Gorton allowed Teva’s motion to certify
the question of whether the government “must demonstrate a but-for causal connection between
Teva’s donations to CDF and TAF and the resulting co-pay assisted Copaxone claim that
Medicare reimbursed,” for interlocutory appeal. (Doc. No. 112-1 at 6.) Presently, this motion is
fully briefed and is pending before the United States Court of Appeals for the First Circuit.
United States v. Teva Pharms. USA, Inc., No. 23-1958 (1st Cir. 2024).

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But, on June 16, 2024, Teva filed an unopposed motion to hold the First Circuit appeal in
abeyance because the parties are “actively engaged in settlement negotiations and Teva is
optimistic that the parties can reach a resolution.” See Motion to hold case in abeyance, United
States v. Teva Pharms. USA, Inc., No. 23-1958 (1st Cir. June 16, 2024). The First Circuit
granted this motion, canceled the oral argument previously scheduled for July 22, 2024, and
ordered the parties to file a status report on July 22, 2024 and at 30-day intervals thereafter
advising the court of the outcome of the settlement discussions. See Order, United States v. Teva
Pharms. USA, Inc., No. 23-1958 (1st Cir. June 20, 2024). On July 22, 2024, the DOJ and Teva
filed their first status report to the First Circuit, notifying the court that “[t]he parties remain
actively engaged in settlement negotiations and will report further on the status of those
negotiations on August 21, 2024, or earlier if a settlement is reached before that date.” See Joint
Status Report, United States v. Teva Pharms. USA, Inc., No. 23-1958 (1st Cir. July 22, 2024).
On August 21, 2024, the DOJ and Teva filed a nearly identical status report, informing the First
Circuit that they would report on the status of negotiations in another 30 days. See Status
Report, United States v. Teva Pharms. USA, Inc., No. 23-1958 (1st Cir. August 21, 2024). As of
this date, the parties to the DOJ Action have not filed notification of settlement discussion
resolution.
C. Procedural History
On September 23, 2020, Halman Aldubi Provident and Pension Funds Ltd. (“Halman
Aldubi”) commenced this lawsuit individually and on behalf of all others similarly situated. 2
(Doc. No. 1.) On August 2, 2022, the Court granted Defendants’ motion to stay this matter,
except as to class certification, pending resolution of the DOJ Action. (Doc. No. 87.) On
On March 1, 2021, this case was reassigned from the calendar of the Honorable Jan E. DuBois to the
docket of the undersigned. (Doc. No. 37.)

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November 3, 2023, the Court granted Plaintiff’s motion for class certification, (Doc. No. 116),
and on November 22, 2023, the Court denied Plaintiff’s motion to lift the stay in this matter
pending the Third Circuit’s determination to grant or deny Defendants’ petition for leave to
appeal pursuant to Federal Rule of Civil Procedure 23(f) the Court’s decision granting class
certification (Doc. No. 117). On May 16, 2024, the Third Circuit denied Defendants’ petition for
leave to appeal. See Order (Doc. No. 20), Halman Aldubi Provident & Pension Funds Ltd v.
Teva Pharm. Indus. Ltd., et al., 23-8050 (3d Cir. May 16, 2024). On May 22, 2024, Plaintiff
filed the instant motion to lift the stay in this matter. (Doc. No. 120.) Defendants oppose the
motion. (Doc. No. 122.)
II.

Analysis
A. Legal Standard

The Court has broad discretion to stay proceedings. See Bechtel Corp. v. Local 215,
Laborer’s Int’l Union of N. Am., 544 F.2d 1207, 1215 (3d Cir. 1976). This power is “incidental
to the power inherent in every court to control the disposition of the causes on its docket with
economy of time and effort for itself, for counsel, and for litigants.” Landis v. N. Am. Co., 299
U.S. 248, 254 (1936). In considering whether to stay a case pending a related criminal or civil
enforcement action, courts in this district consider the following factors:
(1) the interest of the plaintiffs in proceeding expeditiously with this litigation or
any particular aspect of it, and the potential prejudice to plaintiffs of a delay; (2)
the burden which any particular aspect of the proceedings may impose on
defendants; (3) the convenience of the court in the management of its cases, and the
efficient use of judicial resources; (4) the interests of persons not parties to the civil
litigation; and (5) the interest of the public in the pending civil and criminal [or civil
enforcement] litigation.
Golden Quality Ice Cream Co. v. Deerfield Specialty Papers, Inc., 87 F.R.D. 53, 56 (E.D. Pa.
1980).

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B. Discussion
On August 2, 2022, the Court previously granted the stay in this matter because (1)
although Plaintiff does have an interest in proceeding expeditiously, he did not sufficiently
demonstrate how a stay would prejudice him; (2) Defendants would face a great burden because
they would be forced to undergo two parallel discovery processes in complex cases; (3) a stay
promoted judicial efficiency because it could narrow the issues to be resolved in this action and
the outcome of the DOJ action could incentivize Defendants to settle this action; (4) nonparty
interests were served by a stay because it was preferable to avoid coordination of responses to
simultaneous, complex discovery processes; and (5) the public interest would be best served to
allow the DOJ Action to proceed smoothly and without distraction from this matter. (See Doc.
No. 86.)
Plaintiff now argues that the stay should be lifted because a continuation of a stay
pending resolution of the DOJ Action will severely prejudice Plaintiff and the class, no
dispositive action in the DOJ Action will occur in the near future, there is no prospect of parallel
discovery since discovery in the DOJ Action concluded in March 2023, and the legality of
Teva’s charitable donation scheme does not control Plaintiff’s claims. (Doc. No. 120-1 at 5–7.)
Defendants respond that the DOJ case is proceeding apace and is not delayed because the parties
are in active settlement negotiations and oral argument before the First Circuit was calendared
prior to the request to hold the appeal in abeyance. (Doc. No. 122 at 6.) Additionally, if the
appeal in the DOJ case is denied, Defendants argue the Government would presumably seek a
prompt trial date in district court. (Id. at 7.) Defendants further argue that Plaintiff has not
identified any additional prejudice, whereas Defendants could face a great burden of having to
endure both a trial and discovery simultaneously, with now more than 20 people listed as

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witnesses in both this matter and the DOJ Action. (Id. at 8.) Finally, Defendants argue that the
stay still helps avoid the risk of inconsistent adjudications, and the interests of third parties and
the public still favor a stay. (Id. at 8–9.)
For the reasons discussed below, the Court grants Plaintiff’s motion and lifts the stay.
1.

Plaintiff’s Interest in Proceeding Expeditiously and Prejudice to
Plaintiff if the Stay Continues

Regarding the first factor—Plaintiff’s interest in proceeding expeditiously and prejudice
if the stay continues—we previously stated that a stay is unlikely to prejudice Plaintiff because
the stay was likely to be of a limited duration, since dispositive motion practice was set to begin
in March 2023 and a trial was scheduled for September 2023. (Doc. No. 86 at 8.) But the
September 2023 trial date in the DOJ Action came and went without any movement in that case.
See generally, United States v. Teva Pharms. USA, Inc., Civil Action No. 1:20-cv-11548-NMG
(D. Mass. July 14, 2023). Instead, the DOJ Action has been pending on appeal from Judge
Gorton’s decision on summary judgment, and that appeal is now being held in abeyance by the
First Circuit. See Order, United States v. Teva Pharms. USA, Inc., No. 23-1958 (1st Cir. June 20,
2024). Although Defendants are optimistic that settlement negotiations are proceeding apace
and the DOJ Action will quickly resolve (Doc. No. 122 at 6), the July 22, 2024 and August 21,
2024 status reports filed by those parties—both virtually identical—do not provide any
indication as to how much time will transpire before there is a resolution to the settlement
negotiations. See Joint Status Report, United States v. Teva Pharms. USA, Inc., No. 23-1958 (1st
Cir. July 22, 2024); Status Report, United States v. Teva Pharms. USA, Inc., No. 23-1958 (1st
Cir. August 21, 2024). In the meantime, this action in the Eastern District of Pennsylvania has
been stayed for over two years. As Plaintiff argues, Plaintiff will suffer prejudice if the stay
continues because the risk of witnesses’ fading memories, witness deaths, change in witness
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locations, and lost evidence grows every day. (Doc. No. 120-1 at 6.) For this reason, the Court
finds that this factor now weighs in favor of lifting the stay. See In re Univ. Health Servs., No.
17-2187, 2018 U.S. Dist. LEXIS at *1 n.1 (E.D. Pa. Dec. 10, 2018) (denying motion for stay in
shareholder derivative suit because “[t]o allow such an indefinite stay in this case would ‘unduly
prejudice or present a clear tactical disadvantage’ to Plaintiffs. There is at least a fair possibility
that Plaintiffs will be harmed by an indefinite stay because of potential loss of evidence. As time
goes on, memories fade and witnesses may become unavailable, irrevocably impeding the
discovery process”); cf. Resco Prods. V. Bosai Minerals Grp. Co., No. 06-235, 2010 U.S. Dist.
LEXIS 54949, at *16–20 (W.D. Pa. June 4, 2010) (holding that “[a]ny prejudice to plaintiff
caused by such a short delay [of six to twelve months] is outweighed by the minimization of
separation of powers concerns raised by the [related] proceedings”) (emphasis added).
2.

Burden on Defendants if the Case Proceeds

As to the second factor—burden on Defendants if the case proceeds—the Court
previously granted the stay because Teva would face a great burden of juggling two massive
discovery processes simultaneously, especially because it would likely spread thin the time of
certain key individuals at Teva. (Doc. No. 86 at 8–9.) However, discovery in the DOJ Action
has concluded, so any concern regarding simultaneous discovery has been extinguished. See
Docket, United States v. Teva Pharms. USA, Inc., Civil Action No. 1:20-cv-11548-NMG (D.
Mass. July 14, 2023). Moreover, since there is some overlap in the factual matter of this case
and the DOJ Action, it is likely that Defendants’ burden in responding to discovery will be
reduced, as many relevant documents have already been reviewed and produced in the DOJ
Action. (Doc. No. 120-1 at 6.)
Although Defendants argue that this case will proceed swiftly to trial if Teva’s appeal is

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denied by the First Circuit (Doc. No. 122 at 8), the Court finds that the risk of an impending trial
is too far attenuated; the parties are presently negotiating a settlement and even if those
settlement conversations fall through, any such trial would likely not take place for an extended
period of time, during which time the parties in this matter could endeavor to complete fact
discovery. In the first hypothetical scenario, if the parties in the DOJ Action are successful in
settling the case, there is no risk of simultaneous burden on Defendants at all. In the second, if
the parties fail to resolve this case, the First Circuit will resume its consideration of Teva’s
appeal of Judge Gorton’s summary judgment decision. It is unclear how many weeks and
months it will take for the parties to conclude negotiations, and following that, it is unclear how
many weeks and months it will take for the parties to reschedule oral argument before the First
Circuit and for the First Circuit to rule on the interlocutory appeal. 3 And, only after the First
Circuit issues its decision can Judge Gorton consider when to schedule the DOJ Action for trial. 4
As such, given the likelihood that the DOJ Action may not move forward at the District Court
level for many months, the Court finds that engaging in fact discovery at this time will not
unduly burden Defendants and this factor weighs in favor of lifting the stay. Cf. In re Blood
Reagents Antitrust Litig., 756 F. Supp. 2d 653, 636 (E.D. Pa. 2010) (“At this time, the criminal
grand jury investigation is still in its infancy. Because no criminal proceeding has been initiated,
and may never be initiated, defendants are asking for a stay of an undetermined, but possibly

Plaintiff suggests that the median time from filing Notice of Appeal to Last Opinion or Final Order in
the First Circuit is 14.5 months, whereas Defendants suggest that the median time from oral argument to
last opinion or final order in the First Circuit is 3.9 months. (Doc. No. 120-1 at 6 n.3, Doc. No. 122 at 6
n.1.) Under either timeline, the parties will have adequate time to complete fact discovery.
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Additionally, if the First Circuit rules in favor of Teva on an issue that Defendants argue could be
outcome determinative, then the DOJ Action would quickly end. (Doc. No. 122 at 7.) Although
Defendants suggest that this possibility should counsel in favor of keeping the stay in place, the Court
notes that this hypothetical scenario suggests that this Court should not wait months for the outcome of
the First Circuit opinion if it would only be a needless delay.
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prolonged, period of time. . . . [T]he potential prejudice to defendants and third-parties is, at this
pre-indictment period of time, speculative.”).
3.

Efficient Use of Judicial Resources

The third factor—efficient use of judicial resources—weighs slightly against lifting the
stay. As we stated in our opinion initially granting the stay, a settlement in the DOJ Action could
incentivize the parties to settle this matter as well. (See Doc. No. 86 at 11.) Furthermore, as we
noted previously, if Teva is found “not liable” in the DOJ Action, Plaintiff may be foreclosed
from arguing that Defendants made false statements or could be precluded from establishing
materiality. (Id.) However, and importantly, the outcome of the DOJ Action has no direct
impact on this matter, since the legality or illegality of Teva’s actions, central to the DOJ Action,
has no bearing on the validity of Plaintiff’s claims here. (See Doc. No. 74 at 20 (“[I]t is largely
immaterial whether Teva’s actions were illegal because Plaintiff does not argue that Teva was
required to disclose this scheme merely because it may have been illegal; rather, Plaintiff argues
that Teva was required to disclose this scheme because it is what made Copaxone so
successful.”).) Thus, because this Court will still be required to efficiently and timely adjudicate
this matter regardless of the outcome of the DOJ Action, an indefinite delay harms our interest in
quick resolution, and the Court finds that this factor only slightly weighs against lifting the stay.
See In re Blood Reagents Antitrust Litig., 756 F. Supp. 2d at 636 (“The judiciary’s interests are
furthered by the ‘just, speedy, and inexpensive determination of every action and proceeding,’ a
policy at odds with a stay of indeterminate length.”) (citing Fed. R. Civ. P. 1).
4.

Interests of Non-Parties

The fourth factor—interests of non-parties—also weighs in favor of lifting the stay. We
previously granted the stay because several nonparties were potential witnesses in both actions

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and could be burdened by simultaneous third-party discovery processes. (Doc. No. 86 at 12.)
Now that discovery has concluded in the DOJ Action, the nonparties will not be burdened by
simultaneous discovery, and as discussed supra, any potential trial in the DOJ Action where such
witnesses could be expected to testify is too far attenuated to warrant further stay of this matter. 5
5.

Interest of the Public

Finally, the fifth factor—the public’s interest in the pending litigation—weighs in favor
of lifting the stay. We previously held that the public interest would be served by permitting the
DOJ Action to proceed smoothly and without distraction from this matter. (Doc. No. 86 at 12.)
But, since the DOJ Action appeal is being held in abeyance, and will be pending on appeal if the
settlement negotiations fail, there is no real “distraction” to the trial proceedings at this time.
Additionally, “the public’s interest in the enforcement of [shareholder derivative] laws is
furthered by the expeditious resolution of this class-action lawsuit.” In re Blood Regents
Antitrust Litig., 756 F. Supp. 2d at 636 (citation omitted).
*

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*

Weighing these factors together, the Court finds it appropriate to lift the stay in this
matter. The Court recognizes that Defendants seek to avoid any undue burden from engaging in
discovery in this matter simultaneously with trial preparation in the DOJ Action–however, any
burden is likely to be limited because the DOJ Action is unlikely to resume in federal district
court at least for several more months. Additionally, as this matter has already been stayed for
over two years, Plaintiff is suffering ongoing prejudice as witnesses’ memories fade and the risk
of lost evidence increases. Considering these factors together, we find a stay is no longer

To the extent a non-party is unduly burdened by overlapping timing of third-party witness depositions in
this matter and trial testimony in the DOJ Action, this Court will entertain a motion for extension of
discovery deadlines.

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warranted in this action.
III.

Conclusion

For the reasons discussed, Plaintiff’s Motion is granted, and the stay implemented by this
Court’s August 2, 2022 Order (Doc. No. 87) is lifted. An appropriate Order follows.

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