Cerovene, Inc. v. Fukuzyu Pharmaceutical Co., Ltd.

Background

Cerovene, Inc. and Dr. Reddy’s Laboratories, Inc. brought an antitrust action against Fukuzyu Pharmaceutical Co., Ltd. They alleged that Fukuzyu violated Sections 1 and 2 of the Sherman Act by entering an unlawful agreement and conspiring to monopolize the U.S. market for Daraprim, a drug used to treat acute parasitic infections in individuals with HIV infections.

According to the amended complaint, Fukuzyu manufactured pyrimethamine, the key active pharmaceutical ingredient in Daraprim. Cerovene had been developing a generic version of Daraprim and partnered with Dr. Reddy’s Laboratories to market and sell it after approval. Cerovene alleged that it tried to buy pyrimethamine from Fukuzyu, which was then the only supplier of Daraprim’s active ingredient approved by the Food and Drug Administration. The negotiations occurred through Sumitomo Corporation of Americas and its Japanese subsidiary. Cerovene alleged that Fukuzyu stopped selling the ingredient after entering an exclusive supply agreement with Vyera Pharmaceuticals and doing so at Vyera’s direction, delaying the plaintiffs’ entry into the market.

Motions and jurisdictional issue

Fukuzyu moved to dismiss under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction and under Rule 12(b)(6) for failure to state a claim. Personal jurisdiction is the court’s legal authority over a defendant. Fukuzyu also moved for judicial notice of a prior motion concerning, and an order approving, a settlement agreement involving the plaintiffs, Vyera, and Vyera’s parent company.

The parties disputed facts relevant to personal jurisdiction. Among other issues, they disagreed about whether Sumitomo acted as Fukuzyu’s agent or representative, whether Fukuzyu solicited business in the United States or New York, how a Sumitomo letter should be translated, and whether Fukuzyu used a U.S.-based agent to file materials with the Food and Drug Administration.

The plaintiffs alleged facts that could support jurisdiction, including that Fukuzyu entered an exclusive contract and conspiracy with Vyera, whose headquarters and principal office were in the Southern District of New York; that Sumitomo was based there and negotiated for Fukuzyu with Cerovene; that Fukuzyu filed materials with the Food and Drug Administration through a U.S.-based agent; and that Fukuzyu shipped samples to Cerovene in the district.

Court’s ruling

The court held that limited jurisdictional discovery was appropriate because the parties’ factual disputes concerned facts relevant to personal jurisdiction and some of those facts were particularly within Fukuzyu’s knowledge. The court explained that jurisdictional discovery could be ordered even though the plaintiffs had not yet established a full initial showing of personal jurisdiction, because they had alleged facts supporting a possible basis for jurisdiction.

Because the court ordered jurisdictional discovery, it denied Fukuzyu’s pending motions to dismiss without prejudice and with leave to renew after discovery was completed. It also denied Fukuzyu’s motion for judicial notice without prejudice and with leave to renew. The court did not decide the merits of the antitrust claims.

The court required the parties, within seven days after jurisdictional discovery ended, to file a joint letter addressing whether the plaintiffs intended to amend the complaint, whether Fukuzyu intended to refile its motions, proposed next steps, and whether an evidentiary hearing on jurisdiction was necessary. The Clerk was directed to close the pending motions on the docket.