Silbersher v. Valeant Pharmaceuticals International, Inc

Background

Dr. Falk Pharma GmbH, which the opinion describes as a German corporation headquartered in Breisgau, Germany, moved to dismiss the Corrected First Amended Complaint for lack of personal jurisdiction. The complaint asserted claims under the False Claims Act and alleged jurisdiction under 31 U.S.C. § 3732. The order addresses only Falk’s personal-jurisdiction motion and notes that a more detailed statement of the case would appear in a later order on defendants’ motion to dismiss for failure to state a claim.

Legal standard

Because the court had not required an evidentiary hearing, Plaintiff-Relator Zachary Silbersher needed to make a prima facie showing of personal jurisdiction. At that stage, the court treated uncontroverted allegations in the complaint as true. The court explained that § 3732(a) permits service of process inside or outside the United States. When a statute authorizes nationwide service, due process requires a foreign defendant to have sufficient minimum contacts with the United States as a whole, rather than only with the particular state where the court sits.

Court’s analysis

The court held that Silbersher made the required preliminary showing. The complaint alleged that Falk was assigned ownership rights under United States law for the mesalamine patent at issue and asserted those rights by suing multiple generic drug manufacturers for patent infringement before the Patent Trial and Appeal Board invalidated the patent. The court characterized those lawsuits as purposeful use of the benefits and protections of U.S. law.

The court also found specific, or case-linked, jurisdiction. The alleged False Claims Act scheme was that defendants fraudulently obtained a patent and used it to exclude generic competitors, which allegedly allowed them to submit or cause the submission of false claims for Apriso prescriptions to federal and state government agencies. In the court’s view, Falk’s role in obtaining the patent and bringing infringement lawsuits was a critical part of that alleged scheme.

Falk argued that it was improperly joined under Federal Rule of Civil Procedure 20 because it did not prosecute the patent or submit claims for payment for Apriso. The court rejected that argument, explaining that Rule 20 permits defendants to be joined when claims arise from the same transaction or occurrence, or from the same series of transactions or occurrences. It found that Falk’s patent lawsuits played a critical role in allowing Valeant to maintain inflated prices for Apriso, which the court identified as a key element of the alleged false claims.

Disposition

The court denied Falk’s motion to dismiss for lack of personal jurisdiction. It concluded that joinder was proper under Rule 20 and that jurisdiction was present under § 3732 and the applicable due-process analysis.