Opinion
Nos. 98 Civ. 861 (RWS) and 99 Civ. 3607 (RWS)
September 27, 2002
Attorney for Plaintiff, Apothecon, Inc.: SOLOMON, ZAUDERER, ELLENHORN, FRISCHER SHARP from New York, NY. By: HARRY FRISCHER, ESQ., Of Counsel.
Attorneys for Defendant, Barr Laboratories: WINSTON STRAWN from Chicago, IL. By: KURT L. SCHULTZ, ESQ., BRANT C. WEIDNER, ESQ., JAY L. LEVINE, ESQ., JOHN J. TULLY, JR., ESQ., and GREGORY C. VAMOS, ESQ., Of Counsel.
Attorneys for Defendants, Brantford Chemicals, Inc., Bernard C. Sherman, Apotex Holdings Inc., Apotex Inc. and Sherman Delaware Inc.: LORD, BISSELL BROOK from Chicago, IL. By: MICHAEL J. GAERTNER, ESQ., DAVID G. GREENE, ESQ., JOHN F. KLOECKER, ESQ., and STACEY Y. DIXON, ESQ., Of Counsel.
OPINION
Plaintiff Apothecon, Inc. ("Apothecon") has moved for the entry of final judgment under Rule 54(b) of the Federal Rules of Civil Procedure and for an order staying a trial until the appeal from that judgment is determined. For the following reasons, the motion to certify is granted, but a stay will not be entered.
Facts
The facts discussed herein are described in greater detail in Geneva Pharmaceuticals Technologies Corp. v. Barr Labs., Inc., 201 F. Supp.2d 236 (S.D.N.Y. 2002), familiarity with which is presumed.
Prior Proceedings
This is a consolidated proceeding consisting of two separate actions. By complaint dated February 6, 1998, Invamed, Inc. ("Invamed") commenced the first action asserting various claims relating to the production of generic warfarin sodium. Approximately one year later, Apothecon filed a similar suit on May 19, 1999, and asked the Court to consolidate its claims with those filed by Invamed. In its Memorandum of Law in Support of its Motion to Consolidate, Apothecon noted that "[b]oth this action and the Invamed action arise out of the same series of events, and involve substantially identical questions of fact and law." Mem. at 1. According to Apothecon, "[t]he Invamed action . . . arises from exactly the same set of operative facts in this action. . . . Moreover, both actions overlap substantially." Id. at 3. Apothecon argued:
In the instant case, it would be inefficient and wasteful to proceed with two separate actions. A single consolidated action, by contrast, would conserve the resources of the parties and the Court. No party will be prejudiced by an order of consolidation. . . . [A]ny consolidation of these two actions will promote greater judicial efficiency and will not unduly delay the resolution of this matter in any respect.Id. at 7. The defendants did not oppose this motion and the Court granted it on June 23, 1999.
On August 3, 2001, the defendants filed motions for summary judgment, addressing the claims asserted by Invamed and Apothecon in tandem and without distinguishing between them. Apothecon and Invamed filed a single memorandum in opposition to the motions that similarly addressed the claims together.
On May 10, 2002, the Court granted in part and denied in part the defendants' motions for summary judgment. The Court granted summary judgment to the defendants on the state law claims asserted by Apothecon and all of the antitrust claims asserted by both plaintiffs. The Court concluded that Apothecon could not proceed with state law claims against defendants Barr Laboratories, Inc. ("Barr") and Brantford Chemicals, Inc. ("Brantford") because there was insufficient evidence of a joint venture between Apothecon and Invamed. The Court denied summary judgment on four state law claims asserted by Invamed: breach of contract and promissory estoppel against Brantford and tortious interference with contract and tortious interference with business advantage against Barr. These claims were identical to ones asserted by Apothecon but dismissed by the Court because Apothecon lacked standing to assert them.
The defendants moved for reconsideration of that portion of the decision that upheld Invamed's claims on May 28, 2002. That motion was denied on August 21, 2002. Geneva Pharmaceuticals Technologies Corp. v. Barr Labs., Inc., 2002 WL 1933881 (S.D.N.Y. Aug. 21, 2002). The case is therefore on course to proceed to trial on Invamed's remaining state law claims against Brantford and Barr. At the time the motions were submitted, this matter was set for a pretrial conference on September 24, 2002.
That conference has been continued for one week, to October 1, 2002.
Apothecon filed the instant motion on July 2, 2002, and it was considered fully submitted on Aug. 14, 2002.
Discussion
I. Standard of Review
Fed.R.Civ.P. 54(b) provides, in pertinent part, that:
When more than one claim for relief is presented in an action, whether as a claim, counter-claim, cross-claim, or third-party claim, or when multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment.
In deciding a Rule 54(b) motion, a district court must first determine that it is dealing with a "final judgment." Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 7 (1980). "It must be a `judgment' in the sense that it is a decision upon a cognizable claim for relief, and it must be `final' in the sense that it is `an ultimate disposition of an individual claim entered in the course of a multiple claims action.'"Id.
Once having found finality, the district court must then determine whether there is any just reason for delay — a determination within the discretion of the district court. Id. at 8; see also Hogan v. Consolidated Rail Corp., 961 F.2d 1021-1025 (2d Cir. 1992); Ginnett v. Computer Task Group, 962 F.2d 1085, 1092 (2d Cir. 1992). Given the "historic federal policy against piecemeal appeals," Curtiss-Wright, 446 U.S. at 8, "[c]ertification under Rule 54(b) should be granted only where there are `interest[s] of sound judicial administration' and efficiency to be served, . . . or in the `infrequent harsh case,' . . . where there exists some danger of hardship or injustice through delay which would be alleviated by immediate appeal." Hogan, 961 F.2d at 1025 (citations and internal quotations omitted). Therefore, certification will not be granted solely at the request of counsel, but rather must be justified by reasons for a departure from the normal practice consolidating all claims and parties for review in a single appellate proceeding. Cullen v. Margiotta, 618 F.2d 226, 228 (2d Cir. 1980).
In determining whether the interests of judicial administration will be served by an entry of judgment pursuant to Rule 54(b), the court must consider the burdens an intermediate appeal would impose on the appellate court as well as the potential efficiency that early review will provide for the district court. Ginett, 962 F.2d at 1094. In general, a Rule 54 (b) certification of the dismissal of fewer than all the claims in an action should not be granted "if the same or closely related issues remain to be litigated." Harriscom Svenska AB v. Harris Corp., 947 F.2d 627, 629 (2d Cir. 1991) (citations omitted). The mere fact, however, that the same or closely related issues remain to be litigated does not "necessarily mean that Rule 54(b) certification would be improper." Curtiss-Wright, 446 U.S. at 9 n. 2. The district court may nonetheless find a sufficiently important reason for certification,e.g., that an appellate resolution would facilitate a settlement of the remaining claims. Id.
II. Motion for Final Judgment is Granted
Apothecon has moved for final judgment on its antitrust and state law claims. There is no dispute that both sets of claims are "final" for the purposes of Rule 54(b). The only question, therefore, centers on the second part of the test: whether there is no just reason for delay.
A. Antitrust Claims
The defendants argue that there is a just reason for delay because both parties' antitrust claims are closely intertwined with Invamed's remaining state law claims, and some of the same factual determinations are at issue. For instance, the issue of "availability or non-availability of bulk sodium warfarin at various times from various manufacturers" will be raised in the arguments regarding the parties' Sherman Act § 2 claims. Further, the "reasonableness of the conduct of the parties" will be at issue in the parties' Sherman Act § 1 claims. Finally, evidence of "Barr's knowledge of an agreement between Invamed and Brantford" will be weighed in determining the validity of the parties' antitrust conspiracy claims.
Invamed's remaining claims are: Counts VI (breach of contract against ACIC/Brantford), VII (promissory estoppel against ACIC/Brantford), VIII (tortious interference with contract against Barr) and IX (tortious interference with business relations against Barr).
The Second Circuit has held, however, that even where dismissed clams have arisen from the same transaction or occurrence as pending claims, a final judgment under Rule 54(b) is nonetheless appropriate "if different sorts of relief are sought, and consequently, the claim for greater relief would be pressed by the plaintiff even if the other claim were granted." Cullen v. Margiotta, 811 F.2d 698, 711 (2d Cir. 1987). The plaintiffs would be entitled to treble damages under the antitrust laws, and thus the dismissed claims involve a claim for greater relief.
The Supreme Court has affirmed a district court's use of Rule 54(b) in a similar situation based on this reasoning. In Sears, Roebuck Co. v. Mackey, 351 U.S. 427 (1956), the plaintiffs alleged a Sherman Act violation and common law claims of breach of contract, unfair competition, and patent infringement — all of which related to the alleged destruction of their business. The district court dismissed the Sherman Act claim and entered a final judgment with respect to that claim pursuant to Rule 54(b). The Supreme Court affirmed, even though the Sherman Act claim "rest[ed] in part on some of the facts that [were] involved" in the common-law claims, 351 U.S. at 437 n. 9. The Court reasoned that the antitrust claim rested on an "independent . . . basis of liability" and was not "so inherently separable from, or closely related to," the common-law claims as to invalidate the district judge's exercise of Rule 54(b) discretion. Id. at 436. See also Purdy Mobile Homes, Inc. v. Champion Home Builders Co., 71 F.R.D. 341, 343 (E.D. Wash. 1976) (entering final judgment as to federal claims, including Sherman Act claims, prior to conducting trial of remaining state law claims), aff'd, 594 F.2d 1313 (9th Cir. 1979); HW Indus., Inc. v. Formosa Plastics Corp., 860 F.2d 172, 176 (5th Cir. 1988) (entering final judgment on Sherman Act claim even though Clayton Act claim had not been dismissed because "[a]lthough market share is relevant to both of these claims, they present separate claims for relief and thus can be appealed separately"); Trugman-Nash, Inc. v. New Zealand Dairy Board, Milk Products Holdings (North America), Inc., 954 F. Supp. 733 (S.D.N.Y. 1997) (allowing Rule 54(b) appeal of dismissal of antitrust claims while common-law claims arising from the same events were pending in district court).
In addition, the appeal of both parties' antitrust claims will facilitate settlement, Curtiss-Wright, 446 U.S. at 9 n. 2, and clarify what issues, if any, remain in the case for all parties involved. Cruden v. Bank of New York, 1990 WL 251023, at *2 (S.D.N.Y. Sept. 4, 1990),aff'd in pertinent part, 957 F.2d 961 (2d Cir. 1992).
Apothecon dedicates the bulk of its argument to the benefits to be reaped from postponing the trial of Invamed's common law claims until it is determined whether antitrust issues should be tried as well. This argument is unavailing as the trial will not be postponed, but the other arguments above are sufficient to demonstrate that there is no just reason for delay.
Therefore, Apothecon's Rule 54(b) motion is granted as to the antitrust claims of both Invamed and Apothecon.
Invamed did not submit papers either in support or in opposition of Apothecon's motion. If Invamed does not support the entry of a final judgment of its antitrust claims, it should object within 10 days of the issuance of this opinion and the matter may be reconsidered at that time.
B. State Law Claims
The defendants again argue that the intertwined nature of Apothecon's state law claims and those remaining to be tried by Invamed should forestall certification.
All of Apothecon's state law claims — which Apothecon asserted as an alleged joint venturer with Invamed — were rejected without reaching the merits because it was determined that Apothecon had failed to allege facts sufficient to show that it was a joint venturer with Invamed and therefore lacked standing to assert the claims. However, the Second Circuit would not be limited in its review to the question of whether Apothecon had presented sufficient evidence that it was a joint venturer. Thus, because Apothecon's state claims are similar to the ones that Invamed is set to try, if certification is granted, the appellate court might have to address similar questions of state law in two separate appeals.
In its complaint, Apothecon asserted the same state law claims as Invamed had alleged in its complaint, in addition to four additional claims: (1) violation of the Donnelly Act, New York's antitrust law, against Barr and ACIC/Brantford (Count VI); (2) fraud against Barr and ACIC/Brantford (Count VIII); (3) breach of fiduciary obligation against ACIC/Brantford (Count XIV); and (4) unfair competition against Barr (Count XV).
The appellate court will review this Court's dismissal of Apothecon's state law claims de novo, Shumway v. United Parcel Service, Inc., 118 F.3d 60, 63 (2d Cir. 1997). Therefore, even if it determines that there was sufficient evidence presented to suggest that Apothecon and Invamed were joint venturers, its inquiry cannot end there. "[A]n appellate court may affirm the judgment of the district court in the record [even if] different from those relied on by the court below." Id. Therefore, the Court would have to address the merits of the state law claims, four of which are identical to the ones that will be tried by Invamed.
However, the Supreme Court has held that the determination that claims are intertwined does not absolutely forestall Rule 54(b) certification.Curtiss-Wright, 446 U.S. at 9 n. 2. Because it was determined above that the antitrust claims would in any case be appealable, the appellate court will already be faced with the expansive factual record in this case. The record is the same for the state law and antitrust claims. Further, if it is determined that Apothecon is in fact a party because of the antitrust claims, the resolution of whether it has standing to bring state law claims and whether those claims are viable will be instrumental in facilitating settlement.
Therefore, Apothecon's motion is granted as to its state law claims.
III. The Trial Will Not Be Stayed
Apothecon points to a number of cases where the courts determined to stay a pending trial as a result of entering a final judgment pursuant to Rule 54(b). E.g., Southeastern Fertility Center v. Aetna Casualty Surety Co., 205 F.3d 1334, 200 WL 223339 (4th Cir. 2000) (noting that trial was stayed pending Rule 54(b) appeal); Stearns v. Consolidated Mgmt, Inc., 747 F.2d 1105, 1109 (7th Cir. 1984) (noting that trial was stayed pending Rule 54(b) appeal). These cases do not, however, stand for the proposition that a court must — or even should — stay a trial pending a Rule 54(b) appeal.
Apothecon argues that unless the trial is stayed, there is a possibility of two difficult, complex trials as opposed to one extremely difficult, complex trial. Yet every time a case is tried there is always the possibility that it will have to be retried. This is an insufficient reason for delaying a trial in a case that is now four and a half years old, where discovery has been completed and summary judgment motions decided. Particularly in light of the defendants' opposition and Invamed's silence on the matter, the remaining parties, who are poised on the eve of trial, are entitled to proceed.
Therefore, Apothecon's request to postpone the trial on Invamed's remaining claims is denied.
Conclusion
Apothecon's motion for entry of final judgment pursuant to Rule 54(b) is granted as to its state law claims and both parties' antitrust claims. Further, the trial of the remaining claims in this case will not be postponed during the pendency of the appeal.
The Clerk of the Court is directed to enter final judgment as to Apothecon's state law claims and as to both parties' antitrust claims in this action.
It is so ordered.