CVS Pharmacy, Inc. v. Astrazeneca Pharmaceuticals L.P.

Background

The opinion 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 concern alleged 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 of the drug. AstraZeneca later entered settlement agreements with Handa and Accord under which the generic companies agreed to delay their launches, while AstraZeneca agreed not to launch an authorized generic until a later date. The retailers alleged that these arrangements caused them and the wholesalers that supplied them to pay higher prices for longer.

The retailers asserted five claims under the federal Sherman Act. The first four claims concerned alleged agreements involving AstraZeneca, Handa, Par, and Accord; the fifth alleged that AstraZeneca monopolized or attempted to monopolize the relevant market. The retailers brought the claims as assignees of wholesalers that had purchased Seroquel XR directly from the defendants and assigned related claims to the retailers.

Motions and governing agreements

The defendants moved to dismiss for lack of personal jurisdiction or improper venue, or alternatively to transfer the cases to the District of Delaware. The court had already transferred the related lead direct-purchaser case to Delaware. The court decided to address transfer before personal jurisdiction because a transfer would make personal-jurisdiction issues concerning the Southern District of New York irrelevant.

The wholesalers’ distribution agreements with AstraZeneca contained forum-selection clauses requiring the parties to bring covered actions in state or federal courts in Delaware. The agreements also contained terms concerning the wholesalers’ purchases and inventory of Seroquel XR. The court concluded that the agreements were materially similar to an agreement it had considered in the earlier round of the related litigation.

Court’s analysis

Under 28 U.S.C. § 1404(a), a federal court may transfer a civil case for the convenience of the parties and witnesses and in the interest of justice when the case could have been brought in the proposed new district. The court found that all defendants were subject to personal jurisdiction in Delaware: AstraZeneca, Par, and Handa were incorporated there, while AstraZeneca UK and Accord consented to jurisdiction there for these cases.

The court enforced the Delaware forum-selection clauses. It rejected the retailers’ argument that they were not bound because they received assigned claims rather than the wholesalers’ contracts. The court held that an assignee receives no greater rights than the assignor and therefore takes the assigned claims subject to the same limitations. It also held that the broad clauses reached antitrust claims arising from purchases governed by the agreements.

The court further held that claims not covered by the forum-selection clauses should also be transferred. It applied the ordinary § 1404(a) factors to those claims and found that transfer was warranted. The retailers did not reside in the Southern District of New York, the connection between that district and the alleged conduct was limited, and the defendants’ witnesses and the related lead case made Delaware a more efficient forum. Keeping the cases together in Delaware would avoid duplicative discovery and trial and reduce the risk of inconsistent results.

Disposition

Judge Colleen McMahon granted the defendants’ motions to transfer. The court ordered all three cases transferred to the United States District Court for the District of Delaware and directed the clerk to close the identified open motions. The opinion resolved the transfer motions; it did not decide the defendants’ alternative personal-jurisdiction and dismissal arguments.