Hy-Vee, Inc. v. Astrazeneca Pharmaceuticals LP

Background

The order addresses three related cases: CVS Pharmacy, Inc., Rite Aid Corporation, and Rite Aid Hdqtrs. Corp. in No. 19-cv-9999; Walgreen Co., The Kroger Co., Albertsons Companies, Inc., and H-E-B, L.P. in No. 19-cv-10049; and Hy-Vee Inc. in No. 20-cv-4483. The retailers sued AstraZeneca Pharmaceuticals L.P., AstraZeneca L.P., AstraZeneca UK Limited, Handa Pharmaceuticals, LLC, Par Pharmaceutical, Inc., and Accord Healthcare, Inc. The cases were member cases of a related direct-purchaser class action that the court had already transferred to the District of Delaware.

The retailers alleged that the defendants entered into agreements that delayed competition from generic versions of AstraZeneca’s branded Seroquel XR. Handa and Accord had filed applications to market generic versions of different strengths. AstraZeneca later entered into settlement agreements with Handa and Accord under which the generic launches were delayed. The retailers claimed that the delayed launches caused them and their wholesalers to pay higher prices.

The retailers were not themselves direct purchasers of Seroquel XR. They asserted direct-purchaser claims assigned by wholesalers, including McKesson Corporation, Cardinal Health, Inc., and Amerisource-Bergen Drug Corporation. The wholesalers had purchased Seroquel XR directly from defendants for resale to the retailers and assigned claims arising from those purchases.

Motions and Governing Standard

AstraZeneca, AstraZeneca UK Limited, Handa, and Par moved to dismiss for lack of personal jurisdiction or improper venue, or alternatively to transfer the cases. Accord made a separate motion seeking the same relief. The court addressed transfer before personal jurisdiction because a transfer would make the personal-jurisdiction issue in the Southern District of New York unnecessary.

Under 28 U.S.C. § 1404(a), a federal court may transfer a civil action to another district where it could have been brought when transfer serves the convenience of the parties and witnesses and the interests of justice. The court explained that the cases could have been brought in Delaware because AstraZeneca, Par, and Handa were incorporated there, while AstraZeneca UK Limited and Accord consented to jurisdiction there for these cases.

Forum-Selection Clauses

The wholesalers’ distribution agreements with AstraZeneca contained broad forum-selection clauses. Those clauses required actions arising from or related to the agreements to be brought exclusively in state or federal courts in Delaware. The agreements also contained provisions concerning the wholesalers’ inventory and purchasing levels for Seroquel XR.

The court held that the retailers, as assignees, received no greater rights than the wholesalers had. Although the wholesalers assigned their claims rather than the agreements themselves, the assigned claims remained subject to the agreements’ limitations, including the forum-selection clauses. The court also held that the clauses reached antitrust claims arising from purchases governed by those agreements.

The court recognized that the clauses might cover only some claims, including claims involving purchases after the agreements were made, and might not directly cover claims against every defendant. It nevertheless concluded that these circumstances did not justify disregarding the clauses. The court held that the claims covered by the clauses should be transferred and that the related claims not covered by them should also be transferred under the ordinary § 1404(a) analysis.

Section 1404(a) Factors

The court found that the relevant factors favored transfer. The retailers were not located in the Southern District of New York, and their connection to that district was limited. The court gave their choice of forum substantially less weight than usual.

The convenience-of-witnesses factor favored transfer because many witnesses would likely testify in both these cases and the related case already transferred to Delaware. Holding the matters in one location would reduce inconvenience and avoid duplicated testimony.

The convenience-of-parties factor also favored transfer. The court concluded that most retailers would have to travel regardless of whether the cases proceeded in New York or Delaware, and that transfer would improve efficiency for the defendants without materially increasing the retailers’ burden.

The court gave particularly heavy weight to trial efficiency and the interests of justice. It found that the retailers’ claims were nearly identical to the claims in the related case and that keeping the cases in different districts would risk duplicative discovery, duplicated trials, and inconsistent results. The fact that Accord was involved in the retailers’ cases did not change the result because Accord either was incorporated in Delaware or had submitted to Delaware’s jurisdiction for these cases.

Disposition

The court granted the defendants’ motions to transfer. It directed the Clerk of Court to close the identified motions and transfer all three cases to the United States District Court for the District of Delaware. The order did not decide the antitrust claims on their merits and did not decide the defendants’ personal-jurisdiction challenges in the Southern District of New York.