In re Lantus Direct Purchaser Antitrust Litig.

Full title: In re LANTUS DIRECT PURCHASER ANTITRUST LITIGATION

Court: United States District Court, D. Massachusetts

Date published: Sep 14, 2022

Civil Action 16-12652-LTS (D. Mass. Sep. 14, 2022)

Opinion

Civil Action 16-12652-LTS

09-14-2022

In re LANTUS DIRECT PURCHASER ANTITRUST LITIGATION

Judith Gail Dein, United States Magistrate Judge.

REDACTED PUBLIC VERSION

REPORT AND RECOMMENDATION ON MOTIONS FOR SUMMARY JUDGMENT REGARDING PUERTO RICAN SALES OF LANTUS

Judith Gail Dein, United States Magistrate Judge.

I. INTRODUCTION

The plaintiffs, FWK Holdings, LLC (“FWK”), Meijer, Inc. and Meijer Distribution, Inc. (collectively, “Meijer”), are direct purchasers of the insulin glargine products, Lantus® and Lantus SoloStar® (collectively, “Lantus”). They have brought this putative class action against Sanofi-Aventis U.S. LLC (“Sanofi U.S.”), the manufacturer and initial seller of both products, and Sanofi-Aventis Puerto Rico (“Sanofi P.R.”), an entity that purchased Lantus from Sanofi U.S. and sold it to customers in Puerto Rico, claiming that the defendants engaged in an anticompetitive scheme to monopolize the market for insulin glargine and charge supracompetitive prices for Lantus in the United States, its territories and the District of Columbia. The plaintiffs allege that Sanofi U.S. carried out this scheme by improperly listing patents in the U.S. Food and Drug Administration's (“FDA's”) book of Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”) and then taking advantage of its consequent right to file patent infringement actions against aspiring competitors in an effort to block competition before competing products reached the market. They further allege that Sanofi P.R. participated in the scheme by selling Lantus to Puerto Rican customers at supracompetitive prices set by Sanofi U.S. By their claims, the plaintiffs are seeking to hold each of the defendants liable for monopolization and attempted monopolization pursuant to Section 2 of the Sherman Act, 15 U.S.C. § 2. They are also seeking damages for overcharges that were paid by the plaintiffs and members of a proposed class consisting of “[a]ll persons or entities in the United States and its territories, or subsets thereof, that purchased Lantus ... directly from Sanofi U.S. or from Sanofi P.R., at any time between February 13, 2015 and December 31, 2016 or until the anticompetitive effects of Sanofi's conduct cease[.]”

The matter is before the court on the “Direct Purchaser Plaintiffs' Motion for Partial Summary Judgment as to Standing to Pursue Puerto Rico Overcharges from Sanofi-Aventis U.S. LLC” (Docket No. 308). By their motion, FWK and Meijer are seeking a ruling that they have standing to pursue damages from Sanofi U.S., for overcharges paid to Sanofi P.R. by its Puerto Rican customers, under the so-called “owned or controlled” exception to Illinois Brick Co. v. Illinois, 431 U.S. 720, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977). In that case, the Supreme Court established the general rule that only parties who purchase a product directly from an alleged antitrust violator may recover damages in antitrust suits. The “owned or controlled” exception permits an indirect purchaser to sue the alleged antitrust violator when the alleged violator “owns or controls” the direct purchaser from whom the plaintiff purchased a product. In re Automotive Parts Antitrust Litig., 997 F.3d 677, 683 (6th Cir. 2021) (discussing the owned or controlled exception to Illinois Brick), and cases cited. Accordingly, the fundamental issue raised by the plaintiffs' motion for partial summary judgment is whether the undisputed facts establish that Sanofi P.R. is owned or controlled by Sanofi U.S. such that the plaintiffs may maintain their claims against Sanofi U.S. for overcharges paid by customers who purchased Lantus from Sanofi P.R.

The matter is also before the court on “Defendant Sanofi-Aventis Puerto Rico, Inc.'s Motion for Summary Judgment” (Docket No. 311), by which Sanofi P.R. is seeking summary judgment on the plaintiffs' claim that Sanofi P.R. and Sanofi U.S. comprise a single economic enterprise under antitrust law, and therefore, Sanofi U.S.'s anticompetitive actions must be imputed to Sanofi P.R. As detailed below, the plaintiffs relied on this theory as the basis for naming Sanofi P.R. as a separate defendant in this case, and it also served as the impetus for an order directing the parties to conduct limited discovery and file motions for summary judgment at this stage in the litigation. Sanofi P.R. asserts that it is entitled to judgment as a matter of law on this issue because the single economic enterprise theory is inapplicable to claims asserted under Section 2 of the Sherman Act and because the plaintiffs have failed to present sufficient facts to establish the existence of a single economic enterprise in this case.

After consideration of the parties' written submissions, their oral arguments and the evidentiary record, this court finds that there are genuine issues of material of fact which preclude summary judgment on the question whether, during the relevant time period, Sanofi U.S. exercised sufficient control over Sanofi P.R. to satisfy the owned or controlled exception to Illinois Brick. On the other hand, this court finds that the evidence is insufficient to show that Sanofi P.R. engaged in “coordinated activity” with Sanofi U.S., as required to be deemed part of a single economic enterprise with Sanofi U.S. under the case law relied on by the plaintiffs. Accordingly, and for all the reasons described below, this court recommends to the District Judge to whom this case is assigned that the plaintiffs' motion for summary judgment be DENIED and that Sanofi P.R.'s motion for summary judgment be ALLOWED.

II. STATEMENT OF FACTS ¹

1 The facts are derived from: (1) exhibits attached to the Memorandum in Support of Direct Purchaser Plaintiffs' Motion for Partial Summary Judgment (Docket No. 309) and the Declaration of Bradley J. Vettraino in Support of Direct Purchaser Plaintiffs' Opposition to Sanofi-Aventis Puerto Rico, Inc.'s Motion for Summary Judgment (Docket No. 331) (“Pl. Ex. ”); (2) the Direct Purchaser Plaintiffs' Statement of Material Facts in Support of Their Motion for Partial Summary Judgment (Docket No. 310) (“PF”); (3) exhibits attached to the Declaration of Theresa C. Martin in Support of Defendant Sanofi-Aventis Puerto Rico, Inc.'s Motion for Summary Judgment (Docket No. 312-1) and the Declaration of Theresa C. Martin in Support of Defendant Sanofi-Aventis Puerto Rico, Inc.'s Reply Memorandum of Law in Support of its Motion for Summary Judgment (Docket No. 336-1) (“Def. Ex. ”); (4) the Local Rule 56.1 Statement of Material Undisputed Facts Supporting Defendant Sanofi-Aventis Puerto Rico, Inc.'s Motion for Summary Judgment (Docket No. 313) (“DF”); (5) the Declaration of John D. Conway in Support of Defendant Sanofi-Aventis Puerto Rico, Inc.'s Motion for Summary Judgment (Docket No. 314) (“Conway Decl.”); (6) the Declaration of Antonio Pereira in Support of Defendant Sanofi-Aventis Puerto Rico, Inc.'s Motion for Summary Judgment (Docket No. 315) (“Pereira Decl.”); (7) the Declaration of Betzaida Rodriguez in Support of Defendant Sanofi-Aventis Puerto Rico, Inc.'s Motion for Summary Judgment (Docket No. 316) (“Rodriguez Decl.”); (8) the Declaration of Leo F. Silvestri in Support of Defendant Sanofi-Aventis Puerto Rico, Inc.'s Motion for Summary Judgment (Docket No. 317) (“Silvestri Decl.”); (9) exhibits attached to the Declaration of Theresa C. Martin in Support of Defendants' Memorandum of Law in Opposition to Direct Purchaser Plaintiffs' Motion for Partial Summary Judgment (Docket No. 326-1) (“Def. Supp. Ex. ”); (10) the Direct Purchaser Plaintiffs' Response to Defendant Sanofi-Aventis Puerto Rico, Inc.'s Local Rule 56.1 Statement of Material Undisputed Facts (Docket No. 327) (“PR”); (11) the Defendants' Response to Direct Purchaser Plaintiffs' Statement of Material Facts in Support of Their Motion for Partial Summary Judgment (Docket No. 328) (“DR”); (12) the Declaration of Betzaida Rodriguez in Support of Defendants' Opposition to Plaintiffs' Motion for Partial Summary Judgment (Docket No. 329) (“Supp. Rodriguez Decl.”); (13) Defendant Sanofi Puerto Rico's Reply Statement of Material Undisputed Facts in Support of its Motion for Summary Judgment (Docket No. 337) (“DRF”); (14) Direct Purchaser Plaintiffs' Reply to Defendants' Response to Direct Purchaser Plaintiffs' Statement of Material Facts in Support of Their Motion for Partial Summary Judgment as to Standing to Pursue Puerto Rico Overcharges from Sanofi Aventis U.S. LLC (Docket No. 339) (“PRF”); and (15) the Declaration of Kristen A. Johnson in Response to Section III of Defendants' Opposition to Purchasers' Motion for Summary Judgment (Docket No. 340) (“Johnson Decl.”).

Scope of the Record

In connection with the pending motions for summary judgment, each of the parties has filed, pursuant to Local Rule 56.1, a statement of undisputed facts, a response to the opposing party's statement of undisputed facts and a reply statement of undisputed facts.² Rules such as Local Rule 56.1 “are designed to function as a means of ‘focusing a district court's attention on what is - and what is not - genuinely controverted.” Caban Hernandez v. Philip Morris USA, Inc., 486 F.3d 1, 7 (1st Cir. 2007). However, in this case the parties' approach to the facts has complicated the record. The plaintiffs have disputed, at least to some extent, nearly every fact asserted in the defendant's statement of material facts, or objected to the asserted facts as inaccurate, incomplete, immaterial, misleading or otherwise improper. They have also objected to the admissibility of certain underlying documents and declined to respond to certain facts, pursuant to Rule 56(d) of the Federal Rules of Civil Procedure, on the grounds that discovery remains ongoing and may provide additional information.³ Furthermore, both parties' replies in support of their motions for summary judgment contain legal arguments and other assertions of counsel. This has made it challenging to discern what facts are and are not genuinely in dispute.

2 Local Rule 56.1 provides in relevant part that “[m]otions for summary judgment shall include a concise statement of the material facts of record as to which the moving party contends there is no genuine issue to be tried, with page references to affidavits, depositions and other documentation ... A party opposing the motion shall include a concise statement of the material facts of record as to which it is contended that there exists a genuine issue to be tried, with page references to affidavits, depositions and other documentation ... Unless the court orders otherwise, the moving party may file a reply within 14 days after the response is served.”

3 The plaintiffs responded to paragraphs 8-11 of Sanofi P.R.'s Local Rule 56.1 Statement of Material Undisputed Facts by citing to the Declaration of Kristen A. Johnson Pursuant to Federal Rule of Civil Procedure 56(d). (PR ¶¶ 8-11). Under Rule 56(d), “[i]f a nonmovant shows by affidavit or declaration that, for specified reasons, it cannot present facts essential to justify its opposition” to a motion for summary judgment, “the court may: (1) defer considering the motion or deny it; (2) allow time to obtain affidavits or declarations or to take discovery; or (3) issue any appropriate order.” Fed.R.Civ.P. 56(d).

The parties' approach to the facts runs afoul of Local Rule 56.1. Under that Rule, a party opposing the moving party's factual assertions must “set out his own statement with citations to the record showing that ‘there exists a genuine issue to be tried.'” Grundy v. HSBC Bank USA, N.A., as Trustee for Registered Noteholders of Renaissance Home Equity Loan Trust 2006-3, No. 17-11449-PBS, 2020 WL 1326269, at *2 (D. Mass. Feb. 10, 2020) (quoting L.R. 56.1). If the opposing party fails to comply with this requirement, the moving party's facts are deemed to be admitted. Id. (“Unless the non-moving party's statement controverts the moving party's statement, the moving party's facts are ‘admitted by [the] opposing part[y].'” (quoting L.R. 56.1)). Additionally, “[s]tatements regarding the law and legal argument are not properly part of an LR. 56.1 statement[.]” Id. and cases cited. Therefore, arguments of counsel are improper and entitled to no weight. See id. (ruling that arguments of counsel contained in response to moving party's Local Rule 56.1 statement would be “ignored and not afforded any weight.”).

To the extent the Local Rule 56.1 filings contain factual assertions that are not supported by citations to the evidence, this court has not credited those assertions. Nor has this court credited as facts statements that merely reflect the arguments of counsel. This includes the plaintiffs' passing objections to underlying evidence, unaccompanied by a motion to strike or other developed argument. It also includes the plaintiffs' citations to the Declaration of Kristen A. Johnson Pursuant to Fed.R.Civ.P. 56(d).⁴ The following Statement of Facts represents this court's careful scrutiny of the parties' factual statements, responses and replies thereto, as well as the underlying evidence. It also reflects this court's effort to provide a fair description of the relevant material facts that are, and are not, genuinely in dispute while focusing on the facts necessary to describe the critical issues presented on summary judgment and understand this court's rulings on the parties' motions.

4 In the Declaration of Kristen A. Johnson Pursuant to Fed.R.Civ.P. 56(d), Ms. Johnson, an attorney for the plaintiffs, explains that the plaintiffs “are not in a position to assert facts to dispute, or to not dispute, the conclusory statements of fact” asserted in paragraphs 8-11 of Sanofi P.R.'s Local Rule 56.1 Statement of Material Undisputed Facts and in the underlying Declaration of the defendants' witness, John D. Conway, because discovery is ongoing and “may well bear on these issues.” (Docket No. 330 ¶¶ 8-9, 11). This is insufficient to warrant relief under Rule 56(d). As an initial matter, Ms. Johnson's Declaration consists of legal arguments by the plaintiffs' counsel. As described above, such arguments are not properly part of a Local Rule 56.1 statement and the plaintiffs have failed to file a motion for relief under Fed.R.Civ.P. 56(d). Moreover, this court explicitly ordered the parties to complete all fact discovery relating to the single economic enterprise issue by December 8, 2021, prior to filing any motions for summary judgment by December 22, 2021. (Docket No. 282 at 2). Accordingly, the plaintiffs' opportunity to obtain discovery prior to the filing of the instant motions has expired. Finally, where, as here, the party opposing summary judgment claims the reason it cannot adduce facts necessary to oppose a motion for summary judgment is incomplete discovery, the party must “(i) ‘show good cause for the failure to have discovered the facts sooner'; (ii) ‘set forth a plausible basis for believing that specific facts ... probably exist'; and (iii) ‘indicate how the emergent facts ... will influence the outcome of the pending summary judgment motion.'” In re PHC, Inc. Shareholder Litig., 762 F.3d 138, 143 (1st Cir. 2014) (quoting Resolution Trust Corp. v. N. Bridge Assocs., Inc., 22 F.3d 1198, 1203 (1st Cir. 1994)). Here, the plaintiffs have not presented any reasons, much less compelling reasons, for their failure to discover the relevant facts sooner. Nor have they indicated how the ongoing discovery might change the outcome of Sanofi P.R.'s motion for summary judgment. Consequently, they have not shown that they are entitled to relief under Rule 56(d).

General Facts Regarding Sanofi's Sales of Lantus

Sanofi U.S. holds the approved New Drug Application (“NDA”) 21-081 for the insulin glargine products Lantus® and Lantus SoloSTAR®. (DF ¶¶ 2, 5; PR ¶¶ 2, 5). It also holds the license to the Lantus patents that are listed in the Orange Book for NDA 21-081 and are the subject of the plaintiffs' claims in this case. (Conway Decl. ¶¶ 6-7). Sanofi U.S.' status as the license holder of the Lantus patents enables it to sell Lantus in the United States. (DF ¶ 6; PR ¶ 6). It is undisputed that Sanofi U.S. sells Lantus products to customers in the continental United States but not in Puerto Rico. (DF ¶ 13; PR ¶ 13).

Sanofi P.R. does not hold NDA 21-081 and does not own, license or control any of the Lantus patents. (DF ¶¶ 15-16; PR ¶¶ 15-16). Nor does it sell Lantus products to customers in the continental United States. (DF ¶ 14; PR ¶ 14). However, it is undisputed that Sanofi P.R. sells Lantus products to customers in Puerto Rico. (Id.). It is also undisputed that during the time period from February 1, 2014 through December 31, 2020, Sanofi P.R. purchased about 98% of its supply of Lantus products from Sanofi U.S. and about 2% of its supply of those products from another Sanofi entity known as Sanofi U.S. Services, Inc. (PF ¶ 56; DF ¶ 56). Accordingly, throughout most if not all of the time period relevant to this action, Sanofi P.R. purchased nearly all of its Lantus supply from Sanofi U.S. and resold it to buyers in Puerto Rico.

The plaintiffs' Sherman Act claims, and the parties' respective motions for summary judgment, raise questions regarding the relationship between Sanofi U.S. and Sanofi P.R. Thus, “[t]he gravamen of the plaintiff[s'] complaint” in this action “is that Sanofi engaged in an anticompetitive scheme to monopolize the market for insulin glargine and charge supracompetitive prices for Lantus and Lantus SoloSTAR by improperly listing patents in the FDA's Orange Book and filing wrongful infringement actions against would-be competitors[,]” including Eli Lilly & Company (“Lilly”), Merck Sharp & Dohme Corp. (“Merck”) and Mylan N.V. (“Mylan”).⁵ In re Lantus Direct Purchaser Antitrust Litig., 512 F.Supp.3d 106, 121 (D. Mass. 2020) (footnote omitted). At issue on summary judgment is whether Sanofi U.S. owns or controls Sanofi P.R. such that the plaintiffs may seek to hold Sanofi U.S. liable for any sales of Lantus that Sanofi P.R. made to its customers at supracompetitive prices. Also at issue is whether the plaintiffs may seek to hold Sanofi P.R. directly liable for the alleged anticompetitive scheme on the grounds that Sanofi P.R. and Sanofi U.S. are part of a single economic enterprise, a question that depends on whether there is evidence showing that Sanofi P.R. engaged in “coordinated activity” with Sanofi U.S. by “independently participat[ing] in the [single] enterprise's [anticompetitive] scheme[.]” Lenox MacLaren Surgical Corp. v. Medtronic, Inc., 847 F.3d 1221, 1237 (10th Cir. 2017) (“Lenox”). The following facts relate directly to these issues.

5 Additional details of the anticompetitive scheme alleged by the plaintiffs can be found in Lantus Direct Purchaser Antitrust Litig., 512 F.Supp.3d 106 (D. Mass. 2020) and In re Lantus Direct Purchaser Antitrust Litig., No. 16-12652-JGD, 2021 WL 8016913 (D. Mass. June 11, 2021).

The Defendants' Corporate Relationship

Sanofi U.S. and Sanofi P.R. are corporate relatives that are indirectly owned by Aventis, Inc. (DF ¶ 12; PR ¶ 12; DRF ¶ 12). Sanofi S.A., a societe anonime incorporated under the laws of France, is the ultimate parent of all three entities. (Id.; PF ¶ 1; DR ¶ 1). Sanofi P.R. is a commercial operation that markets and distributes pharmaceutical products but does not manufacture those products. (PF ¶¶ 3-4; DR ¶¶ 3-4). As described above, Sanofi P.R. purchases nearly all of the Lantus products it sells from Sanofi U.S.

The Defendants' “Cash Pooling” Arrangements

Sanofi S.A. operates a “cash pooling” arrangement under which any surplus cash held by its subsidiaries is managed centrally. (PF ¶ 5; DR ¶ 5). Sanofi P.R. participates in such an arrangement directly with Sanofi S.A. (PF ¶ 6; DR ¶ 6). Pursuant to this arrangement, Sanofi P.R. contributes its surplus cash to, and receives disbursements from, Sanofi S.A.'s cash pool. (Id.). To make the contributions, the cash balance of Sanofi P.R.'s bank account is automatically transferred to an intercompany current account established between Sanofi P.R. and Sanofi S.A. to bring Sanofi P.R.'s account balance to zero on a daily basis. (Pl. Ex. 7 at 61-62).

Sanofi U.S. has a similar cash pooling arrangement with its immediate parent, Sanofi U.S. Services. (PF ¶ 7; DR ¶ 7). The defendants describe this relationship as a “sub-pool arrangement” because it does not involve Sanofi S.A. (Pl. Ex. 7 at 62). Under Sanofi U.S.'s arrangement, the cash balance of Sanofi U.S.'s bank account is automatically transferred to an intercompany current account established between Sanofi U.S. and Sanofi U.S. Services to bring Sanofi U.S.'s account balance to zero on a daily basis. (PF ¶ 7; DR ¶ 7). Sanofi U.S. Services also participates in a cash pooling arrangement with Sanofi S.A. (Pl. Ex. 7 at 36). It is undisputed that if Sanofi U.S. incurred a liability that its cash pooling arrangement with Sanofi U.S. Services could not satisfy, the money to satisfy the liability would be drawn from the cash pool between Sanofi U.S. Services and Sanofi S.A. (PF ¶ 8; DR ¶ 8). Therefore, both Sanofi P.R. and Sanofi U.S. have the ability to access funds from Sanofi S.A.'s cash pool if needed. Significantly, however, the record establishes that since January 1, 2014, Sanofi P.R. has distributed no proceeds from its sales of Lantus products to Sanofi U.S. (Silvestri Decl. ¶ 6). Nor has Sanofi P.R. reported its financial results to, or consolidated its annual financial results with, Sanofi U.S. (Id.).

Composition of Sanofi P.R.'s Board of Directors

The plaintiffs claim that from the time Sanofi U.S. began wrongfully listing its Lantus patents in the FDA's Orange Book through the class period, Sanofi U.S. controlled Sanofi P.R.'s Board of Directors (“BOD” or “Board”). (Pl. Mem. at 6).⁶ In particular, they contend that most, and at times all, of Sanofi P.R.'s directors also served as officers and/or directors of Sanofi U.S. (See id.; PF ¶¶ 9-30). The defendants dispute this assertion. While the defendants agree that some of Sanofi P.R.'s Board members also served as officers and/or directors of Sanofi U.S. at times during the period from January 2012 through the filing of the parties' motions for summary judgment, they contend that

6 “Pl. Mem.” refers to the Memorandum in Support of Direct Purchaser Plaintiffs' Motion for Partial Summary Judgment as to Standing to Pursue Puerto Rico Overcharges From Sanofi-Aventis U.S. LLC (Docket No. 309-24).

for 45 of the approximately 61 months (74%) between February 13 2015, the start of the proposed class period, and March 18, 2020, when the 30-month stay of approval of Mylan's follow-on insulin glargine expired,⁷ Sanofi PR's Board either: (a) consisted entirely or predominantly of Sanofi PR employees and/or officers who had no concurrent role as an officer or director of Sanofi US, or (b) consisted of only two directors, one of whom was always a Sanofi PR employee, such that neither director alone could make “major decisions” for Sanofi PR.

(DR ¶ 31). While this factual summary is supported by the record, it fails to account for the ebb and flow of concurrently held positions over the relevant period, making it a question for the jury as to whether Sanofi U.S. controlled Sanofi P.R.'s Board. The evidence regarding the composition of Sanofi P.R.'s Board is as follows.

7 As this court has previously explained in detail, the “30-month stay of approval” occurs when the manufacturer of a drug listed in the FDA's Orange Book files a timely patent infringement suit against a potential competitor who wishes to obtain FDA approval of follow-on or generic versions of the existing drug, before the competitor has an opportunity to enter the market. Lantus, 512 F.Supp.3d at 114-15. The filing of the infringement action automatically prevents the FDA from approving the aspiring competitor's application for up to 30 months. Id. at 115.

From January 2012 to February 15, 2013, Sanofi P.R.'s BOD consisted of three members, including Anne Whitaker, Michael McClellan and Miguel Ribas. (PF ¶ 9; DR ¶ 9). At that time, Ms. Whitaker and Mr. McClellan were employed by Sanofi U.S.'s direct parent, Sanofi U.S. Services, while Mr. Ribas was employed by Sanofi P.R. where he also served as an officer of the company with titles that included Vice President, VP and General Manager. (PF ¶ 12; DR ¶¶ 9, 12). Additionally, the record shows that during the period from February 1, 2012 to August 29, 2014, Ms. Whitaker concurrently served as an officer of Sanofi U.S. with the title of “President, North America Pharmaceuticals” and a director of Sanofi U.S. (PF ¶ 10; DR ¶ 10). She also held the position of “CEO and President” of Sanofi P.R. from June 1, 2012 to August 29, 2014. (Id.). During the period from February 1, 2012 to June 8, 2015, Mr. McClellan concurrently served as an officer of Sanofi U.S., with various titles including “Vice President, VP and CFO North America,” and a director of Sanofi U.S. (PF ¶ 11; DR ¶ 11). Mr. McClellan simultaneously acted as an officer of Sanofi P.R. with titles that included “Vice President, VP and CFO North America.” (Id.).

From February 15, 2013 to August 4, 2013, Sanofi P.R.'s Board consisted only of Ms. Whitaker and Mr. McClellan. (PF ¶ 13; DR ¶ 13). On August 5, 2013, Sanofi P.R.'s newly-hired General Manager, David Freeman, joined Sanofi P.R.'s BOD as well. (PF ¶ 14; DR ¶ 14). Sanofi P.R.'s Board continued to consist of these three individuals through August 29, 2014. (DR ¶ 14). Throughout that period, Ms. Whitaker and Mr. McClellan remained employed by Sanofi U.S. Services, while Mr. Freeman was employed by Sanofi P.R. (DR ¶ 14; PRF ¶ 14). As described above, Ms. Whitaker and Mr. McClellan also served as officers of Sanofi U.S. and Sanofi P.R., and as directors of Sanofi U.S.

The undisputed facts demonstrate that a similar composition remained in place up through the start of the class period on February 13, 2015. Thus, Mr. Freeman remained on the Board of Sanofi P.R. through the start of the class period. (PF ¶ 15; DR ¶ 15). He also remained employed by Sanofi P.R. where he continued to serve as an officer of the company. (Id.). Mr. McClellan likewise continued to serve as a member of the Board through the start of the class period. (PF ¶ 16; DR ¶¶ 14, 16). During that time, Mr. McClellan remained employed by Sanofi U.S. Services. (DR ¶ 16). As detailed previously, he also continued to serve as an officer of Sanofi U.S., a director of Sanofi U.S. and an officer of Sanofi P.R.

During a brief period between August 29, 2014 and October 1, 2014, Mr. McClellan and Mr. Freeman were the only individuals on Sanofi P.R.'s BOD. (DR ¶ 14; Pl. Ex. 8 at Resp. No. 2 at 8). However, on October 1, 2014, Jeremy Moulding joined the Board, which continued to consist of Mr. McClellan, Mr. Freeman and Mr. Moulding through the start of the class period. (PF ¶ 16; DR ¶ 16). During that time, Mr. Moulding was employed by Sanofi U.S. Services. (DR ¶ 17). He also served as the President of Sanofi U.S. and a director of Sanofi U.S. (PF ¶ 17; DR ¶ 17).

The record supports the defendants' assertion that for 45 of the approximately 61 months, or 74% of the time, between the start of the class period on February 13, 2015 and March 18, 2020,⁸ Sanofi P.R.'s BOD either “consisted entirely or predominantly of Sanofi PR employees and/or officers who had no concurrent role as an officer or director of Sanofi US, or ... consisted of only two directors, one of whom was always a Sanofi PR employee[.]” (DR ¶ 31; PRF ¶ 31). It also demonstrates that a majority of Sanofi P.R.'s BOD has been comprised of individuals simultaneously serving as an officer and/or director of Sanofi U.S. during fewer than half of the 84 months from February 13, 2015 to mid-January 2022. (DR ¶ 31). Additionally, none of the members of Sanofi P.R.'s BOD were employed by Sanofi U.S. during his or her time on the Board. (Id.). Instead, those individuals have been employed by Sanofi U.S. Services, Sanofi P.R. or Genzyme Corporation. (Id.). On the other hand, it is undisputed that Thierry Vernier has been a member of Sanofi P.R.'s Board since September 1, 2019, and has served as the company's sole Board member since March 31, 2020. (PF ¶¶ 29-30; DR ¶¶ 29-30). It is also undisputed that Mr. Vernier has been the Vice President and CFO, as well as a director, of Sanofi U.S. since September 1, 2019. (PF ¶ 29; DR ¶ 29). Throughout this time, Mr. Vernier has been an employee of Genzyme Corporation. (DR ¶ 29).

8 March 18, 2020 was the date when Mylan's follow-on insulin glargine product became eligible for FDA approval. (DR ¶ 31).

According to Sanofi P.R.'s former General Manager, David Freeman, the company's Board was responsible for approving all major decisions of the company. (PF ¶ 31; DR ¶ 31). However, Mr. Freeman could not recall any meetings of the BOD, voting on any resolutions or speaking with any other Board members regarding any Board resolutions during the six years he served as a member of the Board. (Id.). The evidence indicates that at least on some occasions, Sanofi P.R.'s Board members adopted resolutions by signing pre-drafted “Statement[s] of Action Taken by Unanimous Written Consent.” (PF ¶ 32; DR ¶ 32; Pl. Ex. 4 at 106-09; Pl. Ex. 10). On or about February 12, 2015, Mr. Freeman appears to have received one such Statement from Stacy Apgar. (Pl. Ex. 10). Ms. Apgar has been an officer of Sanofi U.S. since February 2012, and an officer of Sanofi P.R. since June 2012. (PF ¶ 32; DR ¶ 32).

Support Services Provided to Sanofi P.R.

Since at least 2013, Sanofi U.S.'s direct parent, Sanofi U.S. Services, has provided support services, including in-house legal services, human resources, compliance, procurement and financial services, to Sanofi P.R. (PF ¶ 34; DR ¶ 34). Sanofi U.S. Services also provides certain of those services to Sanofi U.S., including in-house legal services, tax services and financial services. (Pl. Ex. 7 at 15, 26, 60-61, 87). Since at least 2013, Sanofi U.S. has served as the plan sponsor and plan administrator for several health and welfare plans offered to Sanofi P.R. employees. (PF ¶ 36; DR ¶ 36). Additionally, in 2019, Sanofi P.R.'s administrative operations moved to the same address as Sanofi U.S.'s headquarters in Bridgewater, New Jersey. (PF ¶ 37; DR ¶ 37). However, Sanofi P.R. has continued to maintain its principal place of business in Guaynabo, Puerto Rico, and it has remained a separate legal entity that conducts business, employs and pays personnel, and files annual tax returns. (DR ¶ 37; Supp. Rodriguez Decl. ¶ 3). Supervision [XXXXX] Jof Sanofi P.R.'s General Manager

David Freeman was hired as Sanofi P.R.'s General Manager beginning on August 5, 2013. (PF ¶ 40; DR ¶ 40). He served in that capacity until about July 2019, when the General Manager was and [XXXXX] (PF ¶ 47; DR ¶ 47). During the period from August 29, 2014 [XXXXX], the General Manager position was the highest position within Sanofi P.R. (DR ¶ 38; PRF ¶ 38). It was also a role that carried the title of President or Vice President depending on the time period. (Id.). It is undisputed that Mr. Freeman was in charge of managing Sanofi P.R.'s operations throughout his tenure as the company's General Manager. (PF ¶ 39; DR ¶ 39).

From the time of his arrival at Sanofi P.R. through sometime in January 2014, Mr. Freeman reported directly to Dennis Urbaniak. (PF ¶ 41; DR ¶ 41). During that time, Mr. Urbaniak was the Head of U.S. Diabetes PCU and an employee of Sanofi U.S. Services. (Id.). Mr. Urbaniak also served as an officer of Sanofi U.S. in a number of different capacities, including as Vice President, VP, and Head of U.S. Diabetes. (Id.). According to Mr. Freeman, Sanofi P.R. made a lot of decisions locally based on local market conditions. (Pl. Ex. 4 at 40). Nevertheless, he considered Mr. Urbaniak his boss and worked to ensure he remained “in alignment” with Mr. Urbaniak with respect to his general approach to strategy and execution. (Id. at 25, 40).

Mr. Freeman reported directly to Scott Oehrlein from approximately April 2014 through December 2016. (PF ¶ 42; DR ¶ 42). Mr. Oehrlein served as “VP, Head of U.S. Diabetes/CV Sales.” (Id.). He was employed by Sanofi U.S. Services from April 2014 to January 2015, and by Sanofi U.S. from January 2015 to June 2017. (Id.). In December 2016, Mr. Freeman began reporting to Christopher Kaplan, and continued to do so through June 2017. (PF ¶ 43; DR ¶ 43). Throughout that time, Mr. Kaplan was employed by Sanofi U.S. Services and served as the North America Diabetes and Cardiovascular Head. (Id.). He also served as the President and Chief Executive Officer, as well as a director, of Sanofi U.S. (Id.).

For approximately six months, from July 2017 to December 2017, Mr. Freeman reported directly to the Sanofi Global Diabetes/CV Unit. (PF ¶ 44; DR ¶ 44). He then reported to Michelle Carnahan, who succeeded Mr. Kaplan as the North America Diabetes and Cardiovascular Head from January 2018 to May 2018. (PF ¶¶ 44-45; DR ¶¶ 44-45). During that time, Ms. Carnahan was an employee of Sanofi U.S. Services and held no officer or director positions with Sanofi U.S. (DR ¶ 45; Pl. Ex. 9 at Resp. No. 2 at 10, 12).

Mr. Freeman's next supervisor was Joseph Balzer, the VP, Head of U.S. Diabetes/CV Sales and an employee of Sanofi U.S. (PF ¶ 46; DR ¶ 46). Mr. Freeman reported to Mr. Balzer for approximately two months, from May 2018 to July 2018. (Id.). He then reported to James Borneman, the “VP, Head of Diabetes Sales,” from July 2018 until [XXXXX] in July 2019. (PF ¶ 47; DR ¶ 47). Mr. Borneman was an employee of Sanofi U.S. Services until December 16, 2018, when he became an employee of Sanofi U.S. (DR ¶ 47; PRF ¶ 47; Pl. Ex. 9 at Resp. No. 2 at 11-12). He also served as the Vice President of Sanofi U.S. at the time Mr. Freeman reported to him. (PF ¶ 47; DR ¶ 47).

On March 21, 2019, an email was sent on behalf of Mr. Borneman and Ms. Carnahan to “US Country Council.” (Pl. Ex. 20 at Bates # SAPR00197938-39). The email provided in relevant part that work was “ongoing to scale down the affiliate in Puerto Rico.” (Id.). As further detailed in the email:

[t]he current structure [of Sanofi P.R.] consists of 39 headcount with additional supporting functions of 5 headcount ... The intent is to eliminate the majority of the infrastructure while maintaining a field team. These field teams will be rolled into the U.S. Primary Care team organizations (Diabetes Sales, CV Sales, Market Access). Trade and BOS activities will be absorbed by the corresponding U.S. organizations. A small marketing presence (reporting into the Diabetes Marketing team) will remain to manage strategic and tactical demands specific to the island. Further analysis on the appropriate corporate form to conduct business in Puerto Rico will take place in the coming weeks along with a determination of the level of support needed from the Supply Chain and Finance organizations.

(Id.). The email further provided that Sanofi P.R.'s general manager “will be informed of this decision today, 03/21/19” and that “[t]he targeted implementation date is 07/01/19.” (Id.). It is undisputed that in March 2019, Mr. Borneman informed Mr. Freeman that the business in Puerto Rico was being restructured and that Mr. Freeman's position was being eliminated.⁹ (PF ¶ 48; DR ¶ 48; Pl. Ex. 4 at 35). However, it is unclear whether Mr. Borneman had responsibility for the restructuring.

9 The plaintiffs contend that “Sanofi P.R. is now functionally a stripped-back division of Sanofi U.S.” (PF ¶ 62). However, the defendants dispute this assertion and have presented evidence showing that Sanofi P.R. remains an operating legal entity that conducts business, employs and pays personnel, and files annual tax returns. (DR ¶ 62; Supp. Rodriguez Decl. ¶ 3). They have also presented evidence showing that Sanofi P.R. does not report its annual financial results to Sanofi U.S. or consolidate its annual financial results with those of Sanofi U.S. (Silvestri Decl. ¶ 6). In addition, it is undisputed that Sanofi P.R. remains a Puerto Rico corporation with a principal place of business in Guaynabo, Puerto Rico. (DR ¶ 62). Therefore, and for the reasons explained below, the nature of the relationship between Sanofi U.S. and Sanofi P.R. should be determined by a factfinder at trial.

Representations Regarding the Defendants' Relationship

The parties dispute whether Sanofi P.R. has held itself out in its contractual arrangements as being owned by Sanofi U.S., and whether Sanofi P.R.'s officers regarded the company as being under the control of Sanofi U.S. The evidence establishes that in 2015, Sanofi P.R. entered into an agreement with Arteaga & Arteaga Advertising Inc. (“A&A”) for advertising and professional services. (Pl. Ex. 14). The first paragraph of the agreement provided as follows:

THIS MASTER PROFESSIONAL SERVICES (the “Agreement”) is dated as of July 1st, 2015 by and between sanofi-aventis Puerto Rico Inc., a Puerto Rico corporation authorized to conduct business in the Commonwealth of Puerto Rico and owned by sanofi-aventis U.S. LLC, a Delaware corporation, with a principal place of business at 55 Corporate Drive, Bridgewater, New Jersey 08807 (“Customer” or “SA”), and Arteaga & Arteaga Advertising Inc, with a principal place of business at Urb. Caribe, Calle Alda #1571, San Juan, Puerto Rico 00926 (“Vendor” or “A&A”), (each a “Party” and collectively the “Parties”).

(Id. at 1 (emphasis added)). In August 2019, Sanofi P.R. and A&A executed a Change Order to the agreement, which provided in relevant part that “[t]his Change Order No. 1 (“Change Order”) ... is by and between sanofi-aventis Puerto Rico Inc., a Puerto Rico Corporation authorized to conduct business in the Commonwealth of Puerto Rico and owned by sanofi-aventis U.S. LLC (“Customer”) and Arteaga & Arteaga Advertising Inc. (“Vendor”).” (Pl. Ex. 15 (emphasis added)). Mr. Borneman executed the Change Order on behalf of Sanofi P.R. (Id.). As described above, Mr. Borneman was an officer and employee of Sanofi U.S. (PF ¶ 47; DR ¶ 47; PRF ¶ 47). However, at the time Mr. Borneman signed the Change Order on August 19, 2019, Sanofi P.R. no longer had a General Manager and the original signatories to the agreement with A&A were no longer employed at the company. (See PF ¶ 47; DR ¶ 47; Supp. Rodriguez Decl. ¶ 9).

The plaintiffs rely on this evidence to assert that “Sanofi P.R. has held itself out as being owned by Sanofi U.S. in contracting arrangements.” (PF ¶ 49). They further argue that even if the statements regarding Sanofi P.R.'s ownership were inaccurate, the fact that neither Sanofi P.R.'s employees nor a Sanofi U.S. officer questioned those statements constitutes evidence that they “viewed Sanofi P.R. as under the control of Sanofi U.S.” (PRF ¶¶ 49, 52). However, the defendants deny the accuracy of the statements regarding ownership and dispute the plaintiffs' assertions regarding the significance of the evidence. According to Sanofi P.R. and Sanofi U.S., “[t]he agreement erroneously stated that Sanofi PR was owned by Sanofi US” and is inconsistent with Sanofi P.R.'s financial statements, public filings and other evidence in the record. (DR ¶ 49 (emphasis in original)). Evidence cited by the defendants shows that Sanofi P.R. is a wholly-owned subsidiary of Aventisub LLC and an indirect subsidiary of Sanofi S.A. (See Def. Supp. Ex. 4 at ECF No. 4 of 15; Def. Ex. 5 at ECF No. 4 of 17; Pl. Supp. Ex. 6 at RFA No. 1). It further undermines the plaintiffs' assertion that Sanofi P.R. held itself out as being owned by Sanofi U.S. in its contractual agreements or that employees and/or officers of the defendant companies “viewed Sanofi P.R. as under the control of Sanofi U.S.” (See Supp. Rodriguez Decl. ¶¶ 3, 8-9). Accordingly, the relevant facts are disputed and the issue whether Sanofi P.R. has held itself out as being owned by Sanofi U.S. in its contractual agreements cannot be determined at this stage in the litigation.

The parties also dispute whether Sanofi U.S. viewed Sanofi P.R. as an entity that was controlled by and effectively a part of Sanofi U.S. rather than a separate, independent company. The plaintiffs point to slides from a 2019 presentation that was created for a “Diabetes National Leadership Meeting” to support their assertion that “there are significant Sanofi U.S. documents that presented Sanofi P.R. as a subordinate company and not as a separate company within Sanofi.” (See PF ¶¶ 53-54; DR ¶ 53; PRF ¶¶ 53-54). The defendants deny the plaintiffs' interpretation of the slides. (See DR ¶¶ 53-54).

This court finds that the meaning of the slides and any inferences to be drawn therefrom should be determined by the finder of fact at trial. The first slide at issue is entitled “US Diabetes Sales Team Regional Map.” (Pl. Ex. 16 at Bates No. SAMA03804607). It appears to contain a “Territory Map” depicting a new Diabetes Sales structure. (See id. at Bates No. SAMA03804605-06). The slide includes a map of the United States that groups states into regions, including the west, midwest, south central, southeast and northeast regions. (Id. at Bates No. SAMA03804607). Puerto Rico is also included on the map but is not associated with any regions of the continental United States. (Id.). The plaintiffs assert that “Puerto Rico is included as a ‘region' on [the] map depicting ‘Sanofi US[‘s] diabetes sales coverage along with other areas in the United States that are indisputably serviced by Sanofi U.S.” (PF ¶ 53). The defendants disagree and contend that the map “does not depict, define, or label Puerto Rico as a ‘region.'” (DR ¶ 53). They also note that Puerto Rico is not “included as a region in the Diabetes Regional Business Leaders box or the Diabetes Commercial Excellence Managers box that appears on the very next slide in the presentation.” (Id.). Because there is no evidence to indicate which party's interpretation of the slide is accurate, if either, it is not appropriate to resolve this dispute on summary judgment. Nor would it be appropriate at this stage to draw any conclusions from this evidence about the nature of the relationship between Sanofi U.S. and Sanofi P.R.

The same conclusion is warranted with respect to the second slide at issue. The plaintiffs assert that the slide depicts “an organizational chart of the ‘US Diabetes Sales Team,' headed by James Borneman and specifically ‘[i]ncludes Puerto Rico.'” (PF ¶ 54). However, there is no specific reference in the slide to a “US Diabetes Sales Team” and it is unclear from the evidence how Sanofi P.R. is regarded in relation to the continental United States. (See Pl. Ex. 16 at Bates No. SAMA03804609). As the defendants point out, the chart contains a box listing “Diabetes Regional Business Leaders,” which includes leaders from each region of the continental United States but not Puerto Rico. (Id.). Instead, Puerto Rico is referenced in a footnote as included among 51 “Diabetes Area Business Leaders” and “DPC1.” (Id.). These ambiguities present issues of fact that must be resolved at trial.

Participation in the Alleged Anticompetitive Scheme

As described above, the plaintiffs claim that the defendants engaged in an unlawful scheme, which enabled them to charge supracompetitive prices for Lantus, by improperly listing patents in the FDA's Orange Book and filing wrongful infringement actions designed to block competition from potential competitors. The record establishes that Sanofi U.S. makes the decision whether to list Lantus patents in the FDA's Orange Book, and whether to submit the patents to the FDA for listing. (Conway Decl. ¶¶ 8-9). It also demonstrates that Sanofi U.S. participates in decisions regarding whether to sue potential competitors for infringement of the listed patents. (Id. ¶ 10). In particular, it is undisputed that Sanofi U.S. was involved in the decision to sue Lilly, Merck and Mylan for infringement in January 2014, September 2016, and October 2017, respectively. (Id. ¶ 11). The plaintiffs allege that each of those lawsuits was part of the effort to stifle competition and monopolize the market for insulin glargine. (See Third Amended Complaint (“TAC”) (Docket No. 244) ¶¶ 326-58, 406-25, 431-36). Sanofi P.R., on the other hand, does not participate in decisions to engage in infringement litigation and there is no evidence that it had a role in the decision to initiate, or in the prosecution of, the infringement actions against Lilly, Merck and Mylan. (Conway Decl. ¶¶ 10-11; see also DF ¶¶ 18-19; PR ¶¶ 18-19; DRF ¶¶ 18-19). Additionally, Sanofi P.R. does not participate in decisions to list patents in the Orange Book or submit patents to the FDA for listing. (Conway Decl. ¶¶ 8-9; see also Declaration of Kirsten A. Johnson Pursuant to Fed.R.Civ.P. 56(d) (Docket No. 330) ¶ 7). Therefore, Sanofi P.R. was not involved in either the allegedly improper listing of Lantus patents in the Orange Book or in the filing of allegedly wrongful infringement actions against Sanofi's potential competitors that form the basis for the plaintiffs' claims in this case.

With respect to the pricing of Lantus products sold to the defendants' customers, the parties agree as follows:

Since at least the launch of Lantus SoloStar in 2007 and continuing to the present day, [Sanofi U.S.] has set the wholesale price (also known as the wholesale acquisition cost or “WAC”) for all Lantus and Lantus SoloStar products (collectively, “Lantus”) sold in the United States and its territories, including Puerto Rico. From at least 2007 until September 2014, the WAC for Lantus sold by Sanofi U.S. and [Sanofi P.R.] was identical. Beginning in September 2014, Puerto Rico's Division of Consumer Affairs began regulating the WAC for Lantus sold by Sanofi PR in Puerto Rico, and from that date forward has had the ability to approve, in whole or in part, or deny any of Sanofi US's proposed changes to the WAC for Lantus sold by Sanofi PR in Puerto Rico.

(PF ¶ 57; DR ¶ 57). Therefore, throughout the time period relevant to this case,¹⁰ Sanofi U.S. has set a WAC for Lantus products sold in Puerto Rico, but the Puerto Rico Division of Consumer Affairs (“DACO”) has had the final authority to determine the sale price for those products.

10 As described above in the Introduction to this Report and Recommendation, the plaintiffs have defined the class period as February 13, 2015 through December 31, 2016 “or until the anticompetitive effects of Sanofi's conduct cease[.]” (TAC ¶ 487).

According to the former General Manager of Sanofi P.R., David Freeman, Sanofi P.R. had to have the same initial WAC as Sanofi U.S. (Pl. Ex. 4 at 100-01). This was due to the fact that Sanofi P.R. “needed to have alignment” with the United States “in terms of the Medicaid/Medicare WAC prices.” (Id.). Nevertheless, the record shows that before Sanofi P.R. could implement a change to the WAC for any Lantus product sold in Puerto Rico, it had to submit the proposed change to DACO for review. (Suppl. Rodriguez Decl. ¶ 6). Sanofi P.R. has consistently complied with this requirement. (Id. ¶ 7). Since the time DACO first began regulating the proposed price changes for Lantus, its final price determination has been approximately 3% less than Sanofi P.R.'s proposed WAC. (Id.; see also chart set forth in PR ¶ 21). However, there has never been a guarantee that DACO would maintain this level of consistency. (Suppl. Rodriguez Decl. ¶ 7).

It is undisputed that in January 2020, [XXXXX] (Id.). On that occasion, Sanofi P.R. [XXXXX] for Lantus in the mainland United States. (Id.). [XXXXX] the price to purchase Lantus in Puerto Rico remained 3% lower than in the United States. (See id.).

With respect to specific contracts, Sanofi P.R. was in charge of negotiating its own agreements with Pharmacy Benefit Managers (“PBMs”), as well as with wholesalers, pharmacies, hospitals and other institutions. (Pl. Ex. 4 at 43-44). It also had the discretion to offer a 2% prompt payment discount and extended payment terms to wholesalers as a means of promoting purchases. (Supp. Rodriguez Decl. ¶ 10). However, Sanofi P.R. [XXXXX] for approval. (DR ¶ 59; Pl. Ex. 4 at 44; Def. Supp. Ex. 1 (errata sheet)).¹¹

11 The facts relating to Sanofi P.R.'s contract negotiations are based in part on Mr. Freeman's deposition testimony. (See PF ¶ 59; DF ¶ 59; PRF ¶ 59). The plaintiffs argue that this court should disregard the corrections Mr. Freeman made to his testimony in an errata sheet dated December 28, 2021. (PRF ¶ 59; see also Def. Supp. Ex. 1). However, the plaintiffs have not moved to strike the errata sheet or otherwise attempted to explain with any clarity the basis for their argument. (PRF ¶ 59). To the extent they contend that the errata sheet altered the substance of Mr. Freeman's testimony, they have not shown why this was improper under the circumstances. See Fed.R.Civ.P. 30(e) (“On request by the deponent or a party before the deposition is completed, the deponent must be allowed 30 days after being notified by the officer that the [deposition] transcript or recording is available in which: (A) to review the transcript or recording; and (B) if there are changes in form or substance, to sign a statement listing the changes and the reasons for making them.” (emphasis added)).

During the period from 2014 to 2020, Sanofi P.R.'s total sales of Lantus® products in Puerto Rico were equivalent to about 1.6% of Sanofi U.S.'s total sales of Lantus® products in the continental United States, after accounting for returns, chargebacks, DPA Fees and discounts. (DF ¶ 23; PR ¶ 23; see also Pereira Decl. ¶¶ 6-7). During that same period, Sanofi P.R.'s total sales of Lantus SoloStar® in Puerto Rico were equivalent to about 0.3% of Sanofi U.S.' total sales of Lantus SoloStar® in the continental United States, after accounting for returns, chargebacks, DPA Fees and discounts. (DF ¶ 24; PR ¶ 24; see also Pereira Decl. ¶¶ 6-7).

It is undisputed that at least since January 1, 2013, Sanofi P.R. has not filed litigation against Sanofi U.S. based on the anticompetitive conduct alleged by the plaintiffs in this case or any other conduct. (PF ¶ 60; DR ¶ 60; PRF ¶ 60). Nor did Sanofi P.R. contemplate filing litigation against Sanofi U.S. during the time period from January 1, 2013 to December 3, 2021. (Pl. Ex. 7 at 19-21). Moreover, there is no indication that Sanofi P.R. has contemplated filing a lawsuit against Sanofi U.S. since that time with respect to the conduct alleged by the plaintiffs in this action. (See Pl. Ex. 7 at 54-56).

Additional facts relevant to this court's analysis are set forth below where appropriate.

III. ANALYSIS - DIRECT PURCHASER PLANTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT

This court turns first to the plaintiffs' motion for partial summary judgment by which FWK and Meijer are seeking a ruling that they have standing, pursuant to the so-called “owned or controlled” exception to Illinois Brick, to seek overcharges from Sanofi U.S. on behalf of Puerto Rican customers who purchased Lantus from Sanofi P.R. at allegedly supracompetitive prices. The plaintiffs contend that they are entitled to summary judgment on this issue because “the indisputable facts now show that Sanofi U.S. controls Sanofi P.R.” (Pl. Mem. at 1 (footnotes omitted)). The defendants counter that the motion should be denied because there is no support for applying Illinois Brick's ownership or control exception to corporate affiliates outside of a parent-subsidiary relationship; the record establishes that, at a minimum, there are disputed issues of material fact regarding the question of control; and state-action immunity arising from DACO's regulation of Lantus prices in Puerto Rico “provides an independently sufficient reason for the Court to hold that Plaintiffs cannot recover for alleged overcharges on Lantus purchases in Puerto Rico.” (Def. Opp. Mem. at 7-19).¹² Alternatively, the defendants argue that the plaintiffs' motion for summary judgment should be stricken because it defies this court's order allowing the parties to file motions for summary judgment only with respect to the issue whether Sanofi P.R. and Sanofi U.S. are part of a single economic enterprise for purposes of antitrust law. (Id. at 19-20). For the reasons that follow, this court recommends that the plaintiffs' motion be denied on the grounds that the material facts regarding Sanofi U.S.'s alleged control of Sanofi P.R. are in dispute.

12 “Def. Opp. Mem.” refers to the Defendants' Memorandum of Law in Opposition to Direct Purchaser Plaintiffs' Motion for Partial Summary Judgment (Docket No. 326).

A. Summary Judgment Standard of Review

“The role of summary judgment is ‘to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.'” PC Interiors, Ltd. v. J. Tucci Constr. Co., 794 F.Supp.2d 274, 275 (D. Mass. 2011) (quoting Mesnick v. Gen. Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991)) (additional citations omitted). Pursuant to Federal Rule of Civil Procedure 56(a), summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A dispute is ‘genuine' if the evidence ‘is such that a reasonable jury could resolve the point in the favor of the non-moving party[.]'” Taite v. Bridgewater State Univ., Bd. of Trs., 999 F.3d 86, 93 (1st Cir. 2021) (quoting Ellis v. Fid. Mgmt. Tr. Co., 883 F.3d 1, 7 (1st Cir. 2018)). “[A] fact is ‘material' if it ‘has the potential of affecting the outcome of the case[.]” Id. (quoting Pérez-Cordero v. Wal-Mart P.R., Inc., 656 F.3d 19, 25 (1st Cir. 2011)).

When a properly supported motion for summary judgment is presented, the non-moving party can avoid summary judgment only by providing properly supported evidence of a genuine dispute about material facts. See Theriault v. Genesis HealthCare LLC, 890 F.3d 342, 348 (1st Cir. 2018). Accordingly, “the nonmoving party must ... ‘set forth specific facts showing that there is a genuine issue for trial[.]'” Carrozza v. CVS Pharmacy, Inc., 992 F.3d 44, 56-57 (1st Cir. 2021) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). In evaluating a motion for summary judgment, the Court must review the record “in a light most favorable to the non-moving party[.]” Lima v. City of E. Providence, 17 F.4th 202, 206 (1st Cir. 2021). Rule 56 “mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Popular Auto, Inc. v. Reyes-Colon (In re Reyes-Colon), 922 F.3d 13, 20 (1st Cir. 2019) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).

B. Defendants' Request to Strike Plaintiffs' Motion

In light of the dispositive nature of the issue, it is appropriate to begin by addressing the defendants' request to strike the plaintiffs' motion for partial summary judgment on the grounds that the plaintiffs violated this court's order allowing the parties to file motions for summary judgment only with respect to the issue whether Sanofi P.R. and Sanofi U.S. are part of a single economic enterprise. This court agrees that the plaintiffs represented that they intended to seek to hold Sanofi P.R. liable under a “single economic enterprise” theory, and that the court allowed discovery and a motion for summary judgment to be filed on that basis. The plaintiffs never indicated that they intended to seek to hold Sanofi U.S. liable for Sanofi P.R.'s alleged overcharges under the “owned or controlled” exception to Illinois Brick. This court further agrees that the plaintiffs' ever-changing theories have greatly complicated this litigation over the years. If asked to do so, the court would not allow additional discovery on this newly presented theory, as such a request would be untimely. See note 4, supra. Nevertheless, the court will address the merits of the plaintiffs' motion for summary judgment. The plaintiffs have consistently alleged that they are entitled to recover for sales in Puerto Rico, although their legal theories have shifted. Since there is no prejudice to the defendants in responding to a new legal theory premised on the same discovery this court has already allowed, it is appropriate to allow the plaintiffs to proceed.

The similar case of Winn-Dixie Stores, Inc. v. E. Mushroom Mktg. Coop., No. 15-6480, 2021 WL 1907501 (E.D. Pa. May 12, 2021), is instructive. There the court allowed the plaintiffs to argue the ownership or control exception to Illinois Brick at the summary judgment stage, despite their having failed to plead it in their complaint. As the court held:

The Federal Rules do not require a plaintiff to set out a legal theory at the pleadings stage and “do not countenance dismissal of a complaint for imperfect statement of the legal theory supporting the claim asserted.” Johnson v. City of Shelby, Miss., 574 U.S. 10, 11 (2014). When a party has a valid claim, it should be able to recover provided that the change in theory will not prejudice the other party in maintaining a defense upon the merits. 5 Wright & Miller, Federal Practice & Procedure § 1219 (3d ed.); see also Perma Life Mufflers, Inc. v. Int'l Parts Corp., 392 U.S. 134, 142 (1968), overruled on other grounds by Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752 (1984) (remanding case for trial despite objections that antitrust plaintiffs' “particular theories of conspiracy” were not pleaded with specificity because “[t]he gist of petitioners' cause of action [was] clear from the outset, and respondents will in no way be prejudiced if petitioners are permitted to rely on these alternative theories of conspiracy.”).

Id. at *13. Similarly, in the instant case the plaintiffs have consistently asserted that they are seeking to recover for sales made “in the United States and its territories.” (Docket No. 1 ¶ 285). Therefore, the court will address the merits of the plaintiffs' motion for partial summary judgment.

Relevant Background ¹³

13 The court is providing this background for the edification of any reviewing court, and it is only a brief summary of an extensively argued motion.

The named defendants in this lawsuit originally included Sanofi U.S. and Sanofi GmbH. (See Docket No. 1). However, Sanofi GmbH was dismissed voluntarily in March 2017 and the case proceeded solely against Sanofi U.S. (See Docket No. 7). In early 2021, FWK moved for leave to file a Third Amended Complaint (“TAC”) by which it sought, in relevant part, to add Sanofi P.R. as a defendant and to “revise the class definition to reflect that the class includes any member that purchased Lantus from Sanofi or any other entity that is part of the same economic enterprise, including Sanofi P.R.” (Docket Nos. 176 & 177 at 1). As reflected in their motion papers, the plaintiffs' request to add Sanofi P.R. as a defendant and expand the class definition was premised upon the theory that Sanofi U.S. and Sanofi P.R. are part of a single economic enterprise under antitrust law, and that Sanofi U.S.'s alleged anticompetitive conduct should be imputed to Sanofi P.R. because it is part of the single enterprise.¹⁴ (See generally Docket Nos. 177 & 194-1). The defendants opposed the motion and disputed the plaintiffs' theory of liability against Sanofi P.R. (Docket No. 188).

14 While the plaintiffs mentioned Illinois Brick in their memorandum in support of their motion to file a TAC, they did not suggest that the “owned or controlled” exception is applicable to this case. (See Docket No. 177 at 9). Instead, they cited it as an example of a situation in which a monopolist is not allowed to escape liability by selling a product through a subsidiary. (Id.).

This Court's Prior Orders

On June 11, 2021, this court issued a “Memorandum of Decision and Order on Plaintiff's Motion for Leave to File a Third Amended Class Action Complaint” in which it allowed the plaintiffs' motion for leave to file a TAC adding allegations against Sanofi P.R. and expanding the class definition to include persons or entities who purchased Lantus “directly from Sanofi U.S. or Sanofi P.R. at any time between February 13, 2015 and December 31, 2016 or until the anticompetitive effects of Sanofi's conduct cease[.]” In re Lantus Direct Purchaser Antitrust Litig., No. 16-12652-JGD, 2021 WL 8016913, at *7 (D. Mass. June 11, 2021) (emphasis omitted). While this court found that the facts alleged in the plaintiffs' proposed TAC in support of their single economic enterprise theory were conclusory, it determined that the question whether the plaintiffs may pursue a claim against Sanofi P.R. under that theory should be resolved following further development of the factual record. Id. at *5. Accordingly, on July 14, 2021, this court entered a Scheduling Order setting forth, inter alia, deadlines for the completion of discovery and the filing of summary judgment motions addressing the existence of a single economic enterprise. (Docket No. 258). The defendants' motion for summary judgment addresses that issue, but the plaintiffs' motion for partial summary judgment raises an entirely new issue that was not presented previously and was not contemplated by this court when it issued its prior orders.

From the outset of the litigation, the plaintiffs have been seeking overcharges on behalf of “[a]ll persons or entities in the United States and its territories” that purchased Lantus from Sanofi U.S. (Docket No. 1 ¶ 285 (emphasis added)). It is appropriate to allow the plaintiffs to proceed on any available legal theory that does not expand the scope of discovery or prejudice the defendant. Consequently, this court recommends that the defendants' request to strike plaintiffs' motion be denied.

C. The “Owned or Controlled” Exception to Illinois Brick

The Direct Purchaser Rule

The so-called “owned or controlled” exception to Illinois Brick addresses statutory standing to pursue damages for alleged antitrust violations. The right to damages in a Sherman Act case arises under § 4 of the Clayton Act, which provides that “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue ... and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney's fee.” In re ATM Fee Antitrust Litig., 686 F.3d 741, 748 (9th Cir. 2012) (punctuation in original) (quoting 15 U.S.C. § 15(a)). The Supreme Court has construed this statute “narrowly, thereby constraining the class of parties that have statutory standing to recover damages through antitrust suits.” Id. (quoting Del. Valley Surgical Supply Inc. v. Johnson & Johnson, 523 F.3d 1116, 1119 (9th Cir. 2008)). In Illinois Brick, the Supreme Court “established a bright-line rule that authorizes suits [for damages in antitrust cases] by direct purchasers but bars [such] suits by indirect purchasers.” Apple Inc. v. Pepper, 139 S.Ct. 1514, 1520, 203 L.Ed.2d 802 (2019) (emphasis in original). Since then, the Court has “consistently stated that ‘the immediate buyers from the alleged antitrust violators' may maintain a suit against the antitrust violators,” but has “ruled that indirect purchasers who are two or more steps removed from the violator in a distribution chain may not sue.” Id. (emphasis in original) (quoting Kansas v. UtiliCorp United Inc., 497 U.S. 199, 207, 110 S.Ct. 2807, 111 L.Ed.2d 169 (1990)). Accordingly, under Illinois Brick and its progeny, indirect purchasers such as customers who purchased Lantus from Sanofi P.R. in this case, are ordinarily “ineligible to recover damages for ... passed-on overcharges” that may have been set by Sanofi U.S. and passed on by Sanofi P.R. to its customers. See Howard Hess Dental Labs Inc. v. Dentsply Int'l, Inc., 424 F.3d 363, 369 (3d Cir. 2005).

The Supreme Court provided the following three underlying policy reasons for its holding in Illinois Brick:

(1) a risk of duplicative liability for defendants and potentially inconsistent adjudications could arise if courts permitted both direct and indirect purchasers to sue defendants for the same overcharge; (2) the evidentiary complexities and uncertainties involved in ascertaining the portion of the overcharge that the

direct purchasers had passed on to the various levels of indirect purchasers would place too great a burden on the courts; and (3) permitting direct and indirect purchasers to sue only for the amount of the overcharge they themselves absorbed and did not pass on would cause inefficient enforcement of the antitrust laws by diluting the ultimate recovery and thus decreasing the direct purchasers' incentive to sue.

Id. at 369-70 (citing Illinois Brick, 431 U.S. at 730-35 & nn. 11-12, 737 & n. 18, 740-43 & nn. 23, 27, 745, 97 S.Ct. 2061). Notably, the Supreme Court has emphasized that while “[t]he rationales underlying ... Illinois Brick will not apply with equal force in all cases[,]” there is “ample justification ... not to ‘carve out exceptions to the [direct purchaser] rule for particular types of markets.'” UtiliCorp, 497 U.S. at 216, 110 S.Ct. at 2817 (alteration in original) (quoting Illinois Brick, 431 U.S. at 744, 97 S.Ct. at 2074). Thus, according to the Supreme Court, “even assuming that any economic assumptions underlying the Illinois Brick rule might be disproved in a specific case, we think it an unwarranted and counterproductive exercise to litigate a series of exceptions.” Id. at 217, 110 S.Ct. at 2817.

The Owned or Controlled Exception

“While the Supreme Court has expressed reluctance in carving out exceptions to the Illinois Brick rule, limited exceptions do exist.” ATM, 686 F.3d at 749. The fundamental issue presented by the plaintiffs' motion for partial summary judgment is whether the so-called “owned or controlled” exception to Illinois Brick applies in this case. Under that exception to the direct purchaser rule, an indirect purchaser may be permitted “to sue an initial seller when the initial seller ‘own[s] or control[s]' the direct purchaser.” Howard Hess Dental Labs, 424 F.3d at 371 (alterations in original) (quoting Illinois Brick, 431 U.S. at 736 n.16, 97 S.Ct. 2061). Here, the plaintiffs contend that they should have the ability to seek damages from Sanofi U.S., on behalf of Puerto Rican customers who purchased Lantus from Sanofi P.R., because Sanofi U.S. controls Sanofi P.R.

“Courts that have extended the control exception beyond a parent-subsidiary relationship ... require ‘relationships involving such functional economic or other unity between the direct purchaser and either the defendant or the indirect purchaser that there effectively has been only one sale.'” Howard Hess Dental Labs, 424 F.3d at 372 (quoting Jewish Hosp. Ass'n of Louisville, Ky., Inc. v. Stewart Mech. Enters., Inc., 628 F.2d 971, 975 (6th Cir. 1980)). Accordingly, the plaintiffs in this case must show that Sanofi U.S. controlled Sanofi P.R. “to such a degree that collectively they function as a unitary entity on the distribution chain.” In re New Motor Vehicles Canadian Export Antitrust Litig., 307 F.Supp.2d 136, 143 (D. Me. 2004). “Modes of control that might qualify for the control exception include ‘interlocking directorates, minority stock ownership, loan agreements that subject the wholesalers to the manufacturers' operating control, [or] trust agreements.'” Howard Hess Dental Labs, 424 F.3d at 372 (alteration in original) (quoting In re Brand Name Prescription Drugs Antitrust Litig., 123 F.3d 599, 605 (7th Cir. 1997)).

Application to the Present Case

The defendants argue, as a threshold matter, that the control exception should not apply here because the plaintiffs have identified no specific cases where the exception “has been applied to find that a corporate cousin (like Sanofi US) owned or controlled its affiliate (like Sanofi PR).” (Def. Opp. Mem. at 7). As described above, however, the relevant case law shows that a parent-subsidiary relationship is not necessary as long as the relationship between the entities in question involves “such functional economic or other unity ... that there effectively has been only one sale.” Howard Hess Dental Labs, 424 F.3d at 372 (quotations and citation omitted). In fact, courts have applied the control exception even where the entities in question have no corporate relationship. See e.g., In re Mercedes-Benz Anti-Trust Litig., 157 F.Supp.2d 355, 366 (D.N.J. 2001) (“Although the courts most often contemplate the application of [the] ‘owned or controlled' exception in the context of wholly owned subsidiaries or interlocking corporate directorates, this Court sees no reason why the rationale would not apply where the control exists through the contractual relationship of agency.” (internal citation omitted)); Cutler v. Lewiston Daily Sun, 611 F.Supp. 746, 750 (D. Me. 1985) (analyzing Illinois Brick exception to determine whether newspaper carriers who purchased newspapers from publisher and resold them were controlled by publisher). There is no reason why the test applied in those cases should not apply equally to the instant case.

Disputes Regarding Control Over Sanofi P.R.'s Board of Directors

This court concludes that there are material questions of fact with respect to whether there was sufficient functional unity between Sanofi U.S. and Sanofi P.R. to warrant application of the control exception to the direct purchaser rule. As described above, an antitrust plaintiff may be able to establish that an antitrust violator controls a direct purchaser through evidence of interlocking boards of directors. See Howard Hess Dental Labs, 424 F.3d at 372 (listing interlocking directorates as one of various modes of control that “might qualify for the control exception”). In this case, there is no dispute that during the time period from January 2012 through the present, Sanofi P.R.'s BOD has included individuals who also served as officers and/or directors of Sanofi U.S. However, this court cannot conclude, at this stage in the litigation, that the makeup of Sanofi P.R.'s Board resulted in the control of Sanofi P.R. by Sanofi U.S. As an initial matter, the plaintiffs have yet to define the class period with the specificity needed to determine the precise makeup of the Board during the relevant time period. (See TAC ¶ 487 (defining class period as “any time between February 13, 2015 and December 31, 2016 or until the anticompetitive effects of Sanofi's conduct cease (emphasis added)). Additionally, the undisputed facts show that none of the individuals who served on Sanofi P.R.'s BOD at any time relevant to this case were employed by Sanofi U.S. at the time of their service. (DR ¶ 31). Furthermore, the evidence demonstrates that during 74% of the time between the start of the class period and March 18, 2020, when Mylan's follow-on insulin glargine product became eligible for FDA approval, Sanofi P.R.'s BOD either “consisted entirely or predominantly of Sanofi PR employees and/or officers who had no concurrent role as an officer or director of Sanofi US, or ... consisted of only two directors, one of whom was always a Sanofi PR employee[.]” (DR ¶ 31; PRF ¶ 31). It also demonstrates that a majority of the BOD was comprised of individuals who had a concurrent role as an officer or director of Sanofi U.S. during fewer than half of the 84 months from February 13, 2015 to mid-January 2022. (DR ¶ 31). Therefore, the record presents a genuine issue of fact as to whether the presence on Sanofi P.R.'s Board of individuals affiliated with Sanofi U.S. resulted in Sanofi U.S.'s control over the Puerto Rican entity.

Significantly, under general principles of corporate law, officers and/or directors having affiliations with more than one corporate entity are presumed to “change hats” to represent each entity separately. See, e.g., United States v. Bestfoods, 524 U.S. 51, 69, 118 S.Ct. 1876, 1888, 141 L.Ed.2d 43 (1998) (describing “well established principle [of corporate law] that directors and officers holding positions with a parent and its subsidiary can and do ‘change hats' to represent the two corporations separately” (quoting Lusk v. Foxmeyer Health Corp., 129 F.3d 773, 779 (5th Cir. 1997)); Fried v. LVI Servs., Inc., No. 10 Civ. 9308 (JSR), 2011 WL 2119748, at *5 (S.D.N.Y. May 23, 2011) (finding that plaintiff “has plead no facts to rebut the presumption that directors with affiliations to more than one corporation ‘change hats' in order to fulfill their obligations to each entity.”). The plaintiffs have presented no facts to rebut this presumption with respect to members of Sanofi P.R.'s Board. For this reason as well, the question whether the Board members' corporate affiliations support the plaintiffs' assertions regarding control remains unclear and should be resolved by a factfinder at trial.

Relying on In re Vitamins Antitrust Litig., Misc. No. 99-197 (TFH), MDL No. 1285, 2001 U.S. Dist. LEXIS 25073 (D.D.C. Oct. 30, 2001), the plaintiffs argue that “demonstrating control does not require complete, or even majority, overlap” and that only one overlapping Board member may suffice to establish control. (Pl. Mem. at 10). However, in Vitamins the court considered the Board makeup as one of many factors establishing control by a parent corporation of a subsidiary. There is nothing in Vitamins that alters this court's conclusion that the record is insufficient at this juncture to establish whether Sanofi U.S. controls Sanofi P.R. for anti-trust purposes.

In Vitamins, the issue before the court was whether, under the Clayton Act, there was personal jurisdiction over a parent corporation in eleven states where the corporation's subsidiaries conducted business. See Vitamins, 2001 U.S. Dist. LEXIS 25073, at **23-24. The “critical question” presented was whether the parent corporation “dominates or controls its subsidiaries such that attribution of the subsidiaries' business activities in the relevant fora provide a sufficient basis for jurisdiction under Section 12 of the Clayton Act without violating due process.” Id. at 26-27 (footnote omitted). The court determined that the parent corporation had sufficient control over its subsidiaries to support personal jurisdiction over the parent in that case. See id. at 27-33.

In reaching its conclusion regarding control, the Vitamins court considered a number of different factors, including but not limited to, “whether the parent [had] the capacity ‘to influence decisions of the subsidiary or affiliate that might have antitrust consequences,' e.g., ‘controlling stock ownership and interlocking directorates[.]'” Id. at 25-33. The court found that although one of the subsidiaries shared only one Board of Directors member with the parent company, the parent had “tremendous influence upon [that subsidiary] due to the presence of its employees on [the subsidiary's] Board of Directors.” Id. at 29. Thus, the court determined that the subsidiary's Board was “dominated by high-level employees of [the parent].” Id. at 28. It also noted that there were “only two” members of the subsidiary's Board of Directors who were not employees of the parent corporation, and that they had “overlapping duties” with other affiliates of the parent. Id.

The court's decision in Vitamins does not alter this court's conclusion that questions of fact remain as to whether the membership of Sanofi P.R.'s Board of Directors supports the application of the control exception in the instant litigation. Unlike the relationship between the entities in Vitamins, there is no parent-subsidiary relationship between Sanofi U.S. and Sanofi P.R. and there is no evidence that Sanofi U.S. has any ownership stake in the Puerto Rican entity. Moreover, none of the members of Sanofi P.R.'s Board were employees of Sanofi U.S. at the time of their service on the BOD. In addition, there is no dispute that the membership of Sanofi P.R.'s Board shifted throughout the period from January 2012 through mid-January 2022, and there were significant times during that period when a majority of the Board members had no concurrent role as an officer or director of Sanofi U.S. Therefore, both the corporate relationship between the entities in question in this case, as well as the facts regarding the membership of Sanofi P.R.'s Board, are distinguishable from the circumstances presented in Vitamins.

The plaintiffs' assertion that decisions of Sanofi P.R.'s Board “were directed from Sanofi U.S.'s Bridgewater, New Jersey headquarters” is similarly unpersuasive. (Pl. Mem. at 12). In support of this argument, the plaintiffs rely on Mr. Freeman's testimony that he could not recall attending any meetings of the BOD, voting on any resolutions or speaking about resolutions with other Board members during the six years he served on the BOD. (Id.). They also contend that “officers of Sanofi U.S. sent pre-drafted ‘Statement[s] of Action Taken by Unanimous Written Consent' to members of the Sanofi P.R. Board[,]” which were adopted by the Board as a matter of course. (Id.). However, none of this evidence supports the plaintiffs' contention that Sanofi U.S. controlled decisions of Sanofi P.R.'s Board. The fact that Mr. Freeman could not recall any Board meetings or votes on resolutions does not, without more, support an inference that Sanofi U.S. exercised control over Sanofi P.R. Nor does the available evidence pertaining to the use of “Statements of Action Taken by Unanimous Written Consent.” The record contains no information on how often those Statements were used, who drafted them and how they were handled by Sanofi P.R.'s Board members. (See Pl. Ex. 4 at 106-10). While the plaintiffs have submitted one such Statement, which Mr. Freeman received from Stacy Apgar, it is undisputed that Ms. Apgar was an officer of both Sanofi U.S. and Sanofi P.R. at the time she distributed the Statement. (Pl. Ex. 10; PF ¶ 32; DR ¶ 32). Accordingly, the nature and extent of Sanofi U.S.'s influence over Sanofi P.R.'s Board, if any, remains unclear and must be resolved at a later stage in the litigation.

Disputes Regarding Price Setting

The plaintiffs argue that Sanofi U.S. “controlled Sanofi P.R. in the manner most relevant” to this case- by setting the WAC for all Lantus products sold in the United States and its territories, including Puerto Rico--- and that this price setting by Sanofi U.S. alone is sufficient to establish control for purposes of the Illinois Brick exception. (Pl. Mem. at 13-14). The defendants counter that price-setting is irrelevant to the Illinois Brick analysis. (Def. Opp. Mem. at 9). They further contend that even if it is relevant, the facts of the case undermine the plaintiffs' assertion that Sanofi U.S.'s conduct in setting the WAC for sales of Lantus in Puerto Rico establishes the U.S. entity's control over Sanofi P.R. (Id. at 9-10). For the reasons that follow, this court finds that price setting is relevant to the question of control for purposes of the Illinois Brick exception. This court also finds that it is unnecessary to determine whether price setting alone is sufficient to establish control because even if it were, the fact that Sanofi U.S. set the initial WAC for Lantus products sold in Puerto Rico does not warrant summary judgment in favor of the plaintiffs under the circumstances of this case.

The relevant case law supports the plaintiffs' assertion that pricing is relevant to the question whether Sanofi U.S. controls Sanofi P.R. for purposes of the Illinois Brick exception. The control exception is available where “the plaintiff shows that the defendant has such control over the [direct purchaser] that the defendant can be said to have ‘set prices along the chain of distribution.'” In re Vitamin C Antitrust Litig., 279 F.R.D. 90, 101 (E.D.N.Y. 2012) (quoting Kloth v. Microsoft Corp., 444 F.3d 312, 321 (4th Cir. 2006)). See also In re Mushroom Direct Purchaser Antitrust Litig., No. 06-0620, 2016 WL 8459462, at *4 (E.D. Pa. Dec. 13, 2016) (same). Evidence as to whether the seller set the prices charged to an intermediary's customers is a logical component of this analysis. See Vitamin C, 279 F.R.D. at 102 (finding that control exception to direct purchaser rule was not applicable where initial seller of vitamin C exercised no control over prices that its subsidiary charged its own customers).

Nevertheless, the defendants argue that the Supreme Court's reasoning in Apple Inc. “confirms that who set the price of Lantus products is irrelevant” to the issue of control. (Def. Opp. Mem. at 9). This court finds that the defendants' reliance on Apple is misplaced. In that case, defendant Apple argued that “Illinois Brick allows consumers to sue only the party who sets the retail price, whether or not that party sells the good or service directly to the complaining party.” Apple Inc., 139 S.Ct. at 1521-22. In other words, Apple was urging the Court to abandon the “bright-line rule” that allows direct purchasers to sue antitrust violators from whom they purchased a good or service in favor of a rule allowing purchasers to sue “based on an economic theory about who set the price.” Id. at 1522. In rejecting Apple's argument, the Supreme Court stated that “Apple's effort to transform Illinois Brick from a direct-purchaser rule to a ‘who sets the price' rule would draw an arbitrary and unprincipled line among retailers based on retailers' financial arrangements with their manufacturers or suppliers.” Id. Significantly, however, the Court was not addressing the control exception or any other exception to Illinois Brick and was not suggesting that price setting was irrelevant to the control analysis. See id. Nor did the Apple Court have any occasion to address the control exception elsewhere in its decision. Accordingly, nothing in Apple renders price setting irrelevant to the control analysis.

With respect to the plaintiffs' assertion that price setting alone is enough to establish control, this court finds that it is not necessary to finally decide this issue. Even if price setting alone were sufficient to prove control, the fact that Sanofi U.S. set the initial WAC for all Lantus products sold by Sanofi P.R. is inadequate to demonstrate control in the instant litigation. As an initial matter, the defendants have presented evidence showing that Sanofi P.R. was required by Medicaid and Medicare to use the same WAC for Lantus as Sanofi U.S. and that Sanofi P.R. “needed to have alignment” with the United States in that regard. (Pl. Ex. 4 at 100-01). Therefore, a reasonable factfinder could conclude that Sanofi U.S. set the WAC for Lantus sold in Puerto Rico in order to comply with government requirements rather than to exercise control over Sanofi P.R.'s sales practices. Additionally, it is undisputed that throughout the relevant time period, DACO regulated the WAC for Lantus products sold in Puerto Rico and had final authority over the prices charged to Puerto Rican consumers. (See PF ¶ 57; DF ¶ 57; Supp. Rodriguez Decl. ¶¶ 6-7). Thus, a factfinder could reasonably conclude that DACO, not Sanofi U.S., controlled the prices charged by Sanofi P.R.

The plaintiffs argue that “Medicare regulations do not dictate the price at which Sanofi U.S. set the Lantus WAC, nor does DACO impose some minimum price that Sanofi must charge.” (Pl. Reply Mem. at 4 (emphasis in original; footnotes omitted)).¹⁵ They further argue that “Sanofi U.S. exercised its own judgment in setting the WAC,” while “DACO conducted just a cursory review of the pricing increases by Sanofi U.S.” and imposed a “pro forma reduction” of 3%. (Id. at 5). These arguments are insufficient to warrant summary judgment in favor of the plaintiffs. As described above, the record presents a genuine issue of fact as to whether Sanofi P.R.'s pricing was due at least in part to Medicaid and Medicare requirements. Furthermore, there is no admissible evidence presented to support the plaintiffs' characterization of DACO's review as “cursory.” In any event, there is no dispute that DACO had the discretion to determine the final price of Lantus sold by Sanofi P.R. (See Supp. Rodriguez Decl. ¶ 7 (stating that there is no guarantee that DACO will continue to impose a 3% price reduction)). The defendants' assertion that DACO's price reductions were “pro forma” merely presents an issue of fact that must be resolved by a factfinder at trial.

15 “Pl. Reply Mem.” refers to the Reply in Support of Direct Purchaser Plaintiffs' Motion for Partial Summary Judgment as to Standing to Pursue Puerto Rico Overcharges From Sanofi-Aventis U.S., LLC (Docket No. 338).

Additional Evidence Regarding Control

The plaintiffs argue that the record contains additional evidence which establishes the requisite control. In particular, the plaintiffs point to “cash pooling arrangements [that] intermingle Sanofi U.S.'s and Sanofi P.R.'s profits and liabilities on Lantus and Lantus SoloStar;” the fact that “the companies share legal counsel, human resources, and financial services;” evidence that “the companies share corporate offices;” and Sanofi U.S.'s sponsorship of health and welfare plans for Sanofi P.R. employees.¹⁶ (Pl. Reply Mem. at 5-6). This court finds that critical facts relating to this evidence are disputed and confirm that the issue whether Sanofi U.S. controlled Sanofi P.R. “to such a degree that collectively they function as a unitary entity on the distribution chain” must be determined at trial. See New Motor Vehicles, 307 F.Supp.2d at 143.

16 The defendants argue that some of the factors on which the plaintiffs rely to establish control are irrelevant to this case because they are based on nonIllinois Brick cases in which courts have applied different tests such as the test for determining whether a court may exercise personal jurisdiction under the Clayton Act over a parent corporation based on the parent's control of its subsidiary in the forum state, and the test for determining whether a company is the alter ego of another. (Def. Opp. Mem. at 10-11). However, the defendants have not cited any cases that limit a court's consideration to a specific list of factors, and at least one court in this circuit has indicated a willingness to consider any factors that may prove relevant in a specific case. See Cutler, 611 F.Supp. at 750 (finding that “principles set forth in the above-cited cases[,]” including a case in which the court concluded that a subsidiary was the “alter ego of the parent” company, were relevant to the question whether newspaper carriers were under the control of a publisher for purposes of the owned or controlled exception to Illinois Brick, and noting that “[o]ther factors may prove relevant as the record is developed.”). In any event, this issue does not need to be finally decided at this stage because even if this court assumes that all the factors listed by the plaintiffs are relevant to the issue of control, the plaintiffs have not shown that they are entitled to summary judgment.

With respect to cash pooling, the defendants have presented evidence showing that Sanofi U.S. and Sanofi P.R. participated in different cash pooling arrangements under which the companies contributed surplus cash to, and received disbursements from, different Sanofi entities. (PF ¶¶ 6-7; DR ¶¶ 6-7). It is also undisputed that since January 1, 2014, Sanofi P.R. has distributed no proceeds from its sales of Lantus products to Sanofi U.S., has not reported its financial results to Sanofi U.S. and has not consolidated its annual financial results with those of Sanofi U.S. (Silvestri Decl. ¶ 6). Moreover, the defendants have submitted documents that Sanofi S.A. filed with the U.S. Securities and Exchange Commission in 2018 and 2019. (Def. Supp. Exs. 6-7). Those documents indicate that Sanofi S.A. reports Sanofi P.R.'s profits separately from profits generated from sales of Lantus in the United States. (See Def. Supp. Ex. 6 at ECF No. 5 of 5 nn. 1-3; Def. Supp. Ex. 7 at ECF Nos. 4-5 of 5 & nn. a-c). This evidence creates a genuine issue of fact as to whether Sanofi U.S. controlled Sanofi P.R.

With respect to the sharing of support services such as legal services, human resources, and financial services, the record establishes that Sanofi U.S. Services has provided those services to both Sanofi P.R. and Sanofi U.S. (PF ¶ 34; DR ¶ 34; Pl. Ex. 7 at 15, 26, 60-61, 87). Because there is no evidence that Sanofi U.S. provided any such services to Sanofi P.R., a jury could reasonably conclude that this factor provides no support for the application of Illinois Brick's control exception. Similarly, while it is undisputed that Sanofi U.S. sponsors certain health and welfare plans that are offered to Sanofi P.R. employees, and that Sanofi P.R.'s administrative offices moved to Sanofi U.S.'s New Jersey headquarters in 2019, well after the onset of the class period, there is also evidence that Sanofi P.R. continues to maintain its principal place of business in Puerto Rico, and that it remains an operating legal entity that conducts business, employs and pays personnel, and files annual tax returns. (See PF ¶¶ 36-37; DR ¶¶ 36-37; Supp. Rodriguez Decl. ¶ 3).

The remaining evidence on which the plaintiffs rely is similarly insufficient to establish control as a matter of law. As described above, the facts relating to the plaintiffs' claim that Sanofi P.R. held itself out as being owned by Sanofi U.S. in contracting relationships are heavily disputed, as are the facts relating to whether, as the plaintiffs claim, Sanofi U.S. viewed Sanofi P.R. as an entity controlled by and effectively a part of Sanofi U.S. To the extent the plaintiffs contend that Sanofi U.S. supervised Mr. Freeman while he was the General Manager of Sanofi P.R., and was responsible [XXXXX] the evidence on this issue is far from clear. As detailed in this court's Statement of Facts, Mr. Freeman reported to a number of different individuals during his tenure as General Manager. Although some of those individuals held positions with Sanofi U.S., nearly all of them were employed by Sanofi U.S. Services. Furthermore, while it is undisputed that Mr. Borneman was an employee and an officer of Sanofi U.S. at the time he notified Mr. Freeman [XXXXX] is unclear what role, if any, Mr. Borneman may have had in the decision to restructure Sanofi P.R. [XXXXX] Thus, the resolution of these issues should be left to a jury.

Risk of Duplicative Lawsuits

Finally, in support of their motion for summary judgment, the plaintiffs emphasize that there will be no risk of duplicative recovery or a need to engage in a complex apportionment of damages if they are allowed to seek damages on behalf of Puerto Rican purchasers because it is undisputed that Sanofi P.R. has never contemplated filing suit against Sanofi U.S. with respect to the conduct alleged in this case. (Pl. Mem. at 16). Courts have found that the likelihood that a direct purchaser will file a lawsuit against an alleged antitrust violator is relevant to the question whether the direct purchaser is under the control of the alleged antitrust violator. See, e.g., Cutler, 611 F.Supp. at 750 (listing likelihood that direct purchasers would sue the alleged antitrust violator as one of various factors that are relevant to the determination whether the direct purchasers were under the control of the alleged violator). Nevertheless, as the plaintiffs concede, the unlikelihood of such a lawsuit is not alone sufficient to support a finding regarding application of the control exception. (See Pl. Mem. at 16 (the court should allow an indirect purchaser “to vindicate the aims of the Sherman Act” where, in addition to there being no “risk of duplicative recovery or the need to engage in complex apportionment of damages[,]” “there is substantial uncontested evidence that an alleged antitrust violator controls its direct purchaser[.]”). Because the facts pertaining to Sanofi U.S.'s control over Sanofi P.R. are in dispute, the unlikelihood of a lawsuit against Sanofi U.S. by Sanofi P.R. does not support summary judgment in the plaintiffs' favor.

D. State-Action Immunity

The defendants contend that “[s]tate-action immunity provides an independently sufficient reason for the Court to hold that Plaintiffs cannot recover for alleged overcharges on Lantus purchases in Puerto Rico” and to deny the plaintiffs' motion for partial summary judgment. (Def. Opp. Mem. at 16). Specifically, the defendants argue that state-action immunity bars the plaintiffs' claims for all overcharges resulting from Sanofi P.R.'s sales of Lantus to its customers because DACO, a state regulator, had the ultimate authority to approve, and did approve, the prices for those products. (See id. at 16-19). This court disagrees and finds that state action immunity does not apply in this case.

State action immunity is a “court-made doctrine” that “is grounded in principles of federalism, and immunizes state regulatory programs from federal antitrust attack.” Am. Tel. & Tel. Co. v. IMR Capital Corp., 888 F.Supp. 221, 235 (D. Mass. 1995). It “extends both to the regulatory activities of the states themselves and to the practices of private parties acting pursuant to state policy.” Id. (internal citation omitted). “The United States Supreme Court has cautioned, however, that ‘state-action immunity is disfavored....'” Ports Auth. of P.R. v. Compania Panamena de Aviacion (COPA), S.A., 77 F.Supp.2d 227, 233 (D.P.R. 1999) (quoting Federal Trade Comm'n v. Ticor Title Ins. Co., 504 U.S. 621, 636, 112 S.Ct. 2169, 2178, 119 L.Ed.2d 410 (1992)). Additionally, because state action immunity “is in the nature of an affirmative defense[,] the party claiming immunity has the burden of proof.”¹⁷ Id. at 232. This court finds that the defendants have not met their burden of proof on this issue.

17 The plaintiffs note but do not appear to rely on an argument that the defendants waived the defense of state-action immunity by failing to raise the issue as an affirmative defense in their answer to the complaint. (Pl. Reply Mem. at 6). “First Circuit decisions consistently hold that failure to plead an affirmative defense generally results in waiver of the defense and its exclusion from the case. Keefe v. Locals 805, Int'l Longshoremen's Ass'n, AFL-CIO, Local 800, No. 04-11340-DPW, 2007 WL 2461045, *6 (D. Mass. Aug. 23, 2007), and cases cited. In light of the plaintiffs' apparent decision not to rely on waiver, this court finds it unnecessary to address that issue.

The Supreme Court has “established a rigorous two-pronged test to determine whether anticompetitive conduct engaged in by private parties should be deemed state action and thus shielded from the antitrust laws.” Patrick v. Burget, 486 U.S. 94, 100, 108 S.Ct. 1658, 1662, 100 L.Ed.2d 83 (1988). “First, ‘the challenged restraint must be one clearly articulated and affirmatively expressed as state policy. Second, the anticompetitive conduct ‘must be actively supervised by the State itself.'” Id. at 100, 108 S.Ct. at 1663 (quoting Cal. Retail Liquor Dealers Assn. v. Midcal Aluminum, Inc., 445 U.S. 97, 105, 100 S.Ct. 937, 943, 63 L.Ed.2d 233 (1980)) (additional quotations and citations omitted). “Only if an anticompetitive act of a private party meets both of these requirements is it fairly attributable to the State” and immune from antitrust liability. Id.

The plaintiffs assert that the defendants have failed to satisfy the first prong of the test because they have not shown that DACO regulates the anticompetitive conduct at issue in this case. (Pl. Reply Mem. at 6-7). This court agrees. “The starting point in the analysis of state action immunity is to identify the ‘challenged restraint' of trade.” In re New Mexico Natural Gas Antitrust Litig., MDL Dkt. No. 403, 1982 WL 1827, at *16 (D.N.M. Jan. 26, 1982) (quoting Cal. Retail Liquor Dealers Assn., 445 U.S. at 105, 100 S.Ct. 937). As the plaintiffs claim, and as the Sanofi P.R. argues in support of its own motion for summary judgment, “the ‘challenged exclusionary conduct' ‘at the heart of Plaintiffs' Claims,' is ‘Sanofi US's act of listing patents in the Orange Book and assertion of them in [patent infringement] litigation.'” (Pl. Reply Mem. at 7 (quoting Def. Mem. at 3, 5)).¹⁸ The plaintiffs are not defining the anticompetitive conduct as the setting of prices for Lantus. (See id. at 7 n.51 (explaining that “[t]his is not a price-fixing case” and that cases challenging “the fixing of or charging of the rate itself” are not applicable). Thus, as the plaintiffs argue, the overcharges paid to Sanofi P.R. by its Puerto Rican customers are “an element of anticompetitive harm, not ... a restraint of trade. The state action doctrine examines control of the restraint, not the fruits of the restraint.” (Id. at 7 n.48).

18 “Def. Mem.” refers to the Memorandum of Law in Support of Defendant Sanofi-Aventis Puerto Rico Inc.'s Motion for Summary Judgment (Docket No. 312).

The defendants argue that the first prong of the test for state-action immunity is satisfied because “the Puerto Rico Legislature has expressly enacted a policy to displace competition with state regulation of pharmaceutical prices by authorizing DACO to ‘fix, control, freeze and review the prices ... on the goods, products and those services ... which are offered or sold in Puerto Rico[.]'” (Def. Opp. Mem. at 17 (quoting P.R. Laws Ann. tit. 3, § 341e(a)). They also point to an Order that DACO issued, pursuant to its statutory authority, confirming its legal authority to regulate prices “at all levels of distribution” in the pharmaceutical industry. (Id. at 17-18 (quoting DACO Order No. 2014-14)). However, policies addressing pharmaceutical pricing are unrelated to the exclusionary conduct at issue in this proceeding, and the defendants do not claim that DACO or any other Puerto Rican entity attempted to regulate the listing of patents in the Orange Book or the initiation of patent infringement litigation. Where, as here, there is no evidence that the state regulates the defendant's anticompetitive activities “through non-market mechanisms[,]” immunity does not apply and “all of its ... activities continue to be subject to antitrust scrutiny.” Am. Tel. & Tel., 888 F.Supp. at 239.

While the defendants have not shown that state-action immunity precludes the plaintiffs' ability to seek Puerto Rican overcharges, they have established that the record contains a myriad of disputed facts on the question whether the plaintiffs have standing to pursue those overcharges pursuant to the control exception to Illinois Brick. Therefore, and for all the reasons set forth above, this court recommends that the plaintiffs' motion for partial summary judgment be denied.

IV. ANALYSIS - SANOFI P.R.'S MOTION FOR SUMMARY JUDGMENT

This court turns next to Sanofi P.R.'s motion for summary judgment on the issue whether Sanofi U.S.'s alleged anticompetitive conduct may be imputed to Sanofi P.R. because Sanofi U.S. and Sanofi P.R. comprise a single economic enterprise under antitrust law. Sanofi P.R. argues that it is entitled to summary judgment on this issue because the single economic enterprise theory should not apply to claims brought under Section 2 of the Sherman Act and because even if it does apply, there is insufficient factual support in the record to support such a theory in this case. While the motion raises legal questions that have not been addressed by the First Circuit, this court finds that those questions do not need to be resolved at this stage. Applying the single economic enterprise analysis described in the cases on which the plaintiffs have relied, the record is insufficient to withstand summary judgment in favor of Sanofi P.R. Therefore, and for the reasons that follow, this court recommends that the defendant's motion be allowed.

A. Plaintiffs' Claims for Monopolization and Attempted Monopolization

As described above, the plaintiffs are seeking to hold Sanofi P.R. liable for monopolization and attempted monopolization pursuant to Section 2 of the Sherman Act, 15 U.S.C. § 2, under the theory that it is a single economic unit with Sanofi U.S. There is no allegation that Sanofi P.R. is independently directly liable under § 2. Nor would the facts support any such claim.

To successfully prove a monopolization offense, a plaintiff must show “(1) possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident.” Diaz Aviation Corp. v. Airport Aviation Servs., Inc., 716 F.3d 256, 265 (1st Cir. 2013) (quoting United States v. Grinnell Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966)). To prevail on a claim for attempted monopolization, a plaintiff must prove “(1) that the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly power.” Id. (quoting Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, 456, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993)). “In the First Circuit, courts refer to ‘improper methods of acquiring or maintaining monopoly power as ‘exclusionary conduct.'” In re Asacol Antitrust Litig., 233 F.Supp.3d 247, 266 (D. Mass. 2017) (quoting Town of Concord v. Boston Edison Co., 915 F.2d 17, 21 (1st Cir. 1990)). The exclusionary conduct challenged in this case consists of “improperly listing patents in the FDA's Orange Book and filing meritless patent infringement actions against potential competitors.” In re Lantus, 512 F.Supp.3d at 113. (See also Pl. Reply Mem. at 7 (arguing that “the challenged exclusionary conduct at the heart of Plaintiffs' Claims is Sanofi US's act of listing patents in the Orange Book and assertion of them in Hatch-Waxman litigation.” (internal quotations omitted)).

It is undisputed that Sanofi P.R. did not participate in the alleged exclusionary conduct. The record demonstrates that Sanofi P.R. was not involved in any decisions to list patents in the Orange Book or submit patents to the FDA for listing. (Conway Decl. ¶¶ 8-9). It further demonstrates that Sanofi P.R. did not participate in the decision to initiate, or in the prosecution of, Sanofi U.S.'s infringement actions against its potential competitors. (Id. ¶¶ 10-11; DR ¶¶ 18-19). Therefore, no reasonable factfinder could conclude that Sanofi P.R. directly “engaged in conduct unlawful under the Sherman Act.” Invamed, Inc. v. Barr Labs., Inc., 22 F.Supp.2d 210, 218 (S.D.N.Y. 1998).

The fact that Sanofi P.R. and Sanofi U.S. are part of the same corporate family is, without more, insufficient to alter this conclusion. “[C]ourts have repeatedly emphasized that a corporation cannot ‘be held liable under § 2 for the anticompetitive conduct of one or more related entities, merely by virtue of its place in the same corporate family.'” In re Lantus, 2021 WL 8016913, at *4 (quoting Lenox, 847 F.3d at 1237), and cases cited. Therefore, Sanofi U.S.'s actions cannot be imputed to Sanofi P.R. for purposes of a direct antitrust claim. See Invamed, 22 F.Supp.2d at 219 (finding that plaintiff could not rely on the alleged monopolistic practices of the defendants' affiliate to hold defendants liable under § 2 of the Sherman Act where plaintiff failed to allege that defendants themselves engaged in exclusionary conduct). Sanofi P.R.'s motion for summary judgment raises the issue whether it can be held liable as a matter of law or fact under a single economic enterprise theory. As detailed below, this court avoids the unsettled principle of law, and concludes that the facts are insufficient to establish liability under a single economic enterprise theory.

B. Application of the Single Economic Enterprise Theory

The plaintiffs' decision to name Sanofi P.R. as a defendant in this case was “premised upon the theory that Sanofi U.S. and Sanofi P.R. are part of a single economic enterprise under antitrust law, and that Sanofi U.S.'s alleged anticompetitive conduct must be imputed to Sanofi P.R.” Lantus, 2021 WL 8016913, at *1. (See also Pl. Opp. Mem. at 1).¹⁹ Sanofi P.R. argues that it is entitled to judgment as a matter of law on this claim because it would be inappropriate as a legal matter to extend the single economic enterprise theory to monopolization and attempted monopolization claims arising under § 2 of the Sherman Act. (Def. Mem. at 10-12). It also argues that even if this court determines that the theory should apply in this case, the evidence is insufficient to support any such claim against it. (Id. at 12-16). The plaintiffs counter that this court has already ruled, in connection with its order on their motion for leave to file a TAC, that the single economic enterprise theory is applicable here and that Sanofi P.R. may be held liable if the facts are sufficient to satisfy the relevant criteria. (Pl. Opp. Mem. at 6-9). They further contend that Sanofi P.R.'s motion for summary judgment should be denied because they have presented evidence from which a reasonable jury could conclude that the defendants are part of a single economic enterprise. (Id. at 10-15). The plaintiffs' arguments are not persuasive, and this court recommends that the motion for summary judgment on this issue be allowed.

19 “Pl. Opp. Mem.” refers to the Direct Purchaser Plaintiffs' Opposition to Sanofi-Aventis Puerto Rico, Inc.'s Motion for Summary Judgment (Docket No. 325).

Prior Rulings of this Court

Before going any further, this court must address the plaintiffs' contention that the prior rulings of this court establish, as the law of the case, that the single economic enterprise theory applies to monopolization and attempted monopolization claims asserted under § 2 of the Sherman Act. (See Pl. Opp. Mem. at 6-7). “Under the law of the case doctrine, ‘when a court decides upon a rule of law, that decision should continue to govern the same issues in subsequent stages in the same case.'” Negron-Almeda v. Santiago, 579 F.3d 45, 50 (1st Cir.2009) (quoting United States v. Wallace, 573 F.3d 82, 87-88 (1st Cir.2009)). However, the “doctrine plays no role” where the court has not previously ruled on an issue. City of Bangor v. Citizens Commc'ns Co., 532 F.3d 70, 100 (1st Cir.2008). In the instant case, in connection with the court's ruling on plaintiffs' motion for leave to file the TAC asserting a claim under the single economic enterprise theory, Sanofi did not dispute, for purposes of the motion only, “that the single economic enterprise theory could potentially apply in the context of this case.” Lantus, 2021 WL 8016913, at *3. Rather, its opposition was based on the (unsuccessful argument) that the factual pleadings were insufficient to state such a claim. Id. Sanofi P.R. has made no such concession in connection with its present summary judgment motion. This court also determined, in its order on the motion for leave to file a TAC, that the relevant case law provided little if any guidance for pleading a claim based on the single economic enterprise theory or for determining “what level of involvement must be shown to hold an affiliated corporation liable as part of an enterprise's anticompetitive scheme[.]” Id. at *5. Consequently, this court ruled that “[g]iven the unsettled nature of the case law” the question whether the single economic enterprise theory should apply in this case “should be resolved based on a more complete factual record, by way of summary judgment if appropriate.” Id. Thus, this court left open the question, raised again here, whether the single economic enterprise theory is applicable to a § 2 monopolization or attempted monopolization claim. The law of the case doctrine does not apply. Therefore, further analysis is necessary.

The Single Economic Enterprise Theory

The single economic enterprise theory arises out of the Supreme Court's decision in Copperweld Corp. v. Indep. Tube Corp., 467 U.S. 752, 104 S.Ct. 2731, 81 L.Ed.2d 628 (1984).

In that case, the Supreme Court addressed the question whether a parent corporation and its wholly owned subsidiary are capable of conspiring with each other in violation of § 1 of the Sherman Act. Copperweld Corp., 467 U.S. at 755, 104 S.Ct. at 2733-34. The Court determined that “the coordinated activity of a parent and its wholly owned subsidiary must be viewed as that of a single enterprise for purposes of § 1 of the Sherman Act” because they “have a complete unity of interest.” Id. at 771, 104 S.Ct. at 2741. In particular, the Court emphasized that in the case of a parent and a wholly owned subsidiary,

[t]heir objectives are common, not disparate; their general corporate actions are guided or determined not by two separate corporate consciousnesses, but one. They are not unlike a multiple team of horses drawing a vehicle under the control of a single driver. With or without a formal “agreement,” the subsidiary acts for the benefit of the parent, its sole shareholder. If a parent and a wholly owned subsidiary do “agree” to a course of action, there is no sudden joining of economic resources that had previously served different interests, and there is no justification for § 1 scrutiny.

Id. at 771, 104 S.Ct. at 2741-42. Because it determined that a parent company and its wholly owned subsidiary comprise a single economic enterprise, the Supreme Court held that they “are incapable of conspiring with each other for purposes of § 1 of the Sherman Act.” Id. at 777, 104 S.Ct. at 2745.

A majority of Circuit Courts of Appeal, including the First Circuit, “have held that Copperweld's ‘rationale and underlying policy apply with equal force to sister corporations that are wholly owned subsidiaries of the same parent,' and that such subsidiaries, along with their parent, constitute a single economic enterprise for antitrust purposes.” Lenox, 847 F.3d at 1233 (footnote omitted) (quoting Gonzalez-Maldonado v. MMM Healthcare, Inc., 693 F.3d 244, 249-50 (1st Cir. 2012)). Accordingly, “Copperweld supports treating the coordinated acts of sister subsidiaries wholly owned by the same parent as those of a single enterprise” for purposes of § 1 of the Sherman Act. Id. at 1234. Moreover, numerous courts, including another session of this court, have “held that affiliated entities which must be treated as a single enterprise for purposes of § 1 also must be treated as a single enterprise for purposes of § 2[,]”at least insofar as a conspiracy theory is at issue under § 2. Id. at 1235, and cases cited. See also Growers 1-7 v. Ocean Spray Cranberries, Inc., No. 12-12016-RWZ, 2014 WL 1764533, at *7 (D. Mass. May 2, 2014) (holding that parent company and its wholly owned subsidiary comprised a single economic entity, in case involving claims for conspiracy to monopolize under § 2 of the Sherman Act, where they had “overlapping ownership, personnel. and economic interests”). As the Tenth Circuit reasoned in Lenox, “[i]t would be anomalous to hold that wholly related corporations constitute a single entity, and so cannot form a conspiracy, for purposes of § 1, but that the same corporations constitute separate entities, and so can form a conspiracy, for purposes of § 2.” Lenox, 847 F.3d at 1235. See also Growers 1-7, 2014 WL 1764533, at *7 (asking “[i]f a parent and subsidiary do not provide the plurality of actors necessary for § 1 liability, why do they do so for § 2 liability?” and ruling that “they do not.”). These cases leave open the question, presented here, whether the single economic enterprise theory can apply to non-conspiracy claims brought under § 2. The First Circuit has not addressed this issue. As detailed below, while argued by the parties, this court need not resolve it either.

A number of federal district courts have held that the single economic enterprise theory is not applicable to hold related entities liable for monopolization under § 2. See, e.g., In re Processed Egg Products Antitrust Litig., 821 F.Supp.2d 709, 748-49 (E.D. Pa. 2011), and cases cited (single enterprise theory only applicable to conspiracy claims and fact that companies are “part of a vertically integrated enterprise” does not mean that they “are so linked that they effectively function as single entity with respect to alleged antitrust conduct.”); In re Florida Cement & Concrete Antitrust Litig., 746 F.Supp.2d 1291, 1324 (S.D. Fla. 2010), and cases cited (single economic enterprise theory not applicable to hold parent liable for conspiracy engaged in by subsidiary); In re Suboxone (Buprenorphine Hydrochloride and Naloxone) Antitrust Litig., MDL No. 2445, 13-MD-2445, Civ. A. No. 16-5073, 2017 WL 4642285, at *6 (E.D. Pa. Oct. 17, 2017) (single economic enterprise theory not applicable to hold sister companies liable for anticompetitive conduct under § 2); Invamed, 22 F.Supp.2d at 219 n. 2 (Copperweld “did not hold that members of a corporate group ... should be treated as a single enterprise under section 2”). In Lenox, however, the Tenth Circuit was the first (and only)²⁰ circuit court to hold that the rationale of Copperweld could be applied to claims for monopolization or attempted monopolization under § 2 if “the affiliated corporations' collective conduct - i.e., the conduct of the enterprise they jointly compose” is “shown to satisfy the elements of a monopolization or attempted monopolization claim.” Lenox, 847 F.3d at 1236. Assuming, arguendo, that Lenox would be followed in this circuit, Sanofi P.R. would still be entitled to summary judgment.

20 It appears that no other circuit court has directly addressed the question whether Copperweld's reasoning should apply to claims for monopolization or attempted monopolization under § 2 of the Sherman Act. See Chandler v. Phoenix Servs., No. 7:19-cv-00014-O, 2020 WL 1848047, at *13 (N.D. Tex. Apr. 13, 2020), appeal filed, No. 21-10626 (5th Cir. June 18, 2021). While the First Circuit has indicated in passing that “a company or any other single economic unit can violate section 2 of the Sherman Act,” it has not had an opportunity to rule on that issue or consider the circumstances under which the single economic enterprise theory might apply in such a case. Gonzalez-Maldonado, 693 F.3d at 250 (explaining that appellants abandoned their section 2 antitrust claim by failing to brief it on appeal).

The Lenox court cautioned that nothing in its analysis of Copperweld “should be read to suggest that a corporation can be held liable under § 2 for the anticompetitive conduct of one or more related entities, merely by virtue of its place in the same corporate family.” Id. at 1237. As the Tenth Circuit emphasized, “Copperweld ‘held only that “the coordinated activity” of [related entities] must be viewed as that of a single enterprise.'” Id. (alteration in original) (quoting Mitchael v. Intracorp, Inc., 179 F.3d 847, 857 (10th Cir. 1999) (quoting Copperweld, 467 U.S. at 777, 104 S.Ct. 2731) (emphasis added)). Accordingly, the Lenox court determined that while the plaintiff “was entitled to pursue its § 2 claims against Defendants as a single enterprise, and to prove those claims based on the actions of the enterprise as a whole,” it “was still required to come forward with evidence that each defendant independently participated in the enterprise's scheme, to justify holding the defendant liable as part of the enterprise.” Id. However, it did not reach the issue as to what evidence would be sufficient to make this showing.²¹

21 After observing that “[t]he question of what must be shown in order to hold a particular affiliated corporation liable as part of an inter-corporate scheme appears to be uncharted territory at the federal circuit level[,]” the Lenox court determined that it was unnecessary to express an opinion on the appropriate test or the evidence needed to satisfy any such test because the plaintiff's antitrust claims failed on other grounds. Lenox, 847 F.3d at 1239. Thus, the Tenth Circuit left the resolution of those issues “for another day.” Id.

Relying on Arandell Corp. v. Centerpoint Energy Servs., 900 F.3d 623 (9th Cir. 2018), a § 1 case, the plaintiffs contend that Sanofi P.R. participated in the anticompetitive scheme asserted in this case by selling Lantus products at supracompetitive prices to customers in Puerto Rico. (Pl. Opp. Mem. at 11-12). Sanofi P.R. argues not only that Arandell is an outlier, but also that even if it were followed here, Sanofi P.R. could not be found to have participated in any anticompetitive scheme. (Def. Mem. at 15-16). This court agrees, and for the reasons that follow, this court finds that Sanofi P.R.'s sales activity is insufficient to hold it liable as part of a single economic enterprise under the circumstances presented in this case.

The Ninth Circuit's Decision in Arandell

Arandell involved an industry-wide conspiracy to manipulate the price of natural gas in Wisconsin and other states around the country. Arandell, 900 F.3d at 626-27. On appeal of a summary judgment ruling in favor of CenterPoint Energy Services (“CES”), a wholly owned subsidiary of one of the co-conspirators, Reliant Energy, Inc. (“Reliant”), the Ninth Circuit was asked to determine whether there was sufficient evidence from which a jury could find that CES was liable for conspiring to sell natural gas at prices previously rigged by its parent and affiliated entities, even though CES claimed to have sold gas without knowledge of its parent's price-fixing scheme. See id. at 625, 627-29. Although the plaintiffs' antitrust claims against CES arose under Wisconsin law, the Wisconsin courts' interpretation of the relevant statute was controlled by federal court decisions addressing § 1 of the Sherman Act. Id. at 629. Accordingly, the Ninth Circuit applied federal antitrust law to the parties' dispute. See id.

The Arandell plaintiffs relied on Copperweld to support their antitrust claims against CES. See id. As the Ninth Circuit explained, the plaintiffs' theory was that CES, along with Reliant and another affiliate, “was part of a ‘single entity'” which colluded with other, unaffiliated conspirators to manipulate gas prices and profit from their wrongdoing. Id. at 630. Thus, the Ninth Circuit considered whether Copperweld supported the plaintiffs' single economic enterprise theory against CES. The Arandell court agreed with the Lenox court's view of Copperweld and its application. Id. at 631. Specifically, the Ninth Circuit found that under Copperweld, “[a] wholly owned subsidiary that engages in coordinated activity in furtherance of the anticompetitive scheme of its parent and/or commonly owned affiliates is deemed to engage in such coordinated activity with the purposes of the single ‘economic unit' of which it is a part.” Id. at 632. It also recognized, consistent with the Tenth Circuit's decision in Lenox, that Copperweld “does not supply a theory of unbounded vicarious liability for the acts of legally distinct entities. Rather, Copperweld states that commonly-owned-but legally-distinct entities are considered a ‘single entity' for antitrust purposes where they engage in ‘coordinated activity.'” Id. at 633 (emphasis in original; footnote omitted). Therefore, the Ninth Circuit concluded that in order to hold a related company liable under a single enterprise theory, the plaintiff “must put forth evidence that [the company] engaged in anticompetitive conduct.” Id. (footnote omitted).

Because the case was governed by Section 1 of the Sherman Act, the Arandell court went on to consider whether the record contained evidence that “CES acted to further the alleged price-fixing conspiracy” by engaging “in anticompetitive conduct.” Id. (footnote omitted). As the Ninth Circuit explained:

To be liable on a Section 1 claim, a defendant must have conspired (or agreed or combined, etc.) to restrain trade. “It is not necessary to find an express agreement, either oral or written, in order to find a conspiracy, but it is sufficient that a concert of action be contemplated and that defendants conform to the arrangement.” Esco Corp. v. United States, 340 F.2d 1000, 1008 (9th Cir. 1965). “[A]ny conformance to an agreed or contemplated pattern of conduct will warrant an inference of conspiracy.” Id. Therefore, CES's alleged contributions to the conspiracy (selling gas to Wisconsin consumers at the inflated prices and disbursing the profits to Reliant), would be adequate circumstantial evidence of conspiracy, if proved, to permit a finding of liability.

Id. at 634.

The court went on to find that the plaintiffs had submitted sufficient evidence to show that “CES in fact participated in coordinated activity in furtherance of the alleged inter- enterprise price-fixing conspiracy.” Id. (footnote omitted). As the Arandell court noted, the plaintiffs submitted evidence showing that “during the Class Period, CES sold gas at rigged prices and then distributed the proceeds up to its parent's coffers.” Id. They also submitted evidence showing “that the profits from CES's natural gas sales ‘rolled up' to Reliant and its shareholders, and that Reliant would report those distributions as revenues in its consolidated financial reports.” Id. The Ninth Circuit found that this evidence was “crucial” to the challenged price-fixing conspiracy. Id. at 635. Specifically, as the court emphasized:

[c]rediting Plaintiffs' evidence, CES' role was essential to securing the benefit of the other Reliant defendants' price-fixing (at least in Wisconsin), and CES's acts were the immediate cause of Plaintiffs' injuries. In selling gas at rigged prices and distributing the inflated profits to its parent, CES helped to carry out the inter-enterprise conspiracy with the other gas companies (just as Reliant allegedly carried out the conspiracy by reporting sham sales to the trade publications). CES's role was not only helpful to the conspirators, it was crucial: Until CES sold the gas to consumers, the rigged and inflated prices were not passed on to buyers outside of the Reliant economic unit and there was no gain to the Reliant enterprise.

Id. at 634-35 (internal citation omitted). Therefore, the Ninth Circuit concluded that “CES's critical contributions to the conspiracy, if proved, would permit a rational factfinder to find that CES joined the conspiracy” and engaged in coordinated activity with its affiliates. Id. at 635.

Application of Arandell to the Present Case

This court finds that Arandell provides little support for the plaintiffs' claims against Sanofi P.R. in this case. As described above, the anticompetitive conduct alleged in this case “is Sanofi US's act of listing patents in the Orange Book and assertion of them in [patent infringement] litigation.” (Pl. Reply Mem. at 7 (internal quotations omitted)). However, it is undisputed that Sanofi P.R. had no involvement in the listing or decision to list patents in the Orange Book. (Conway Decl. ¶¶ 8-9; Declaration of Kirsten A. Johnson Pursuant to Fed.R.Civ.P. 56(d) ¶ 7). Nor is there any dispute that Sanofi P.R. had no involvement in the decision to initiate, or in the prosecution of, the patent infringement litigation challenged in this case. (Conway Decl. ¶¶ 10-11; PR ¶¶ 18-19). Furthermore, there is no evidence that Sanofi P.R. “controlled, or dictated, or encouraged” Sanofi U.S.'s conduct with respect to the Orange Book listings or its patent infringement litigation against Lilly, Merck and Mylan such that it could be deemed to have engaged in coordinated activity in furtherance of the alleged scheme to monopolize the market for insulin glargine. See Chandler, 2020 WL 1848047, at **14-15 (ruling that parent company could not be held liable under a single economic enterprise theory for attempted monopolization by its subsidiary where there was no evidence that parent engaged in “coordinated activity” by controlling, dictating or encouraging the subsidiary's anticompetitive conduct); Climax Molybdenum Co. v. Molychem, L.L.C., 414 F.Supp.2d 1007, 1013 (D. Co. 2005) (ruling that counterclaim plaintiff could not hold a parent company liable for monopolization as part of a single enterprise with its subsidiary, based on its subsidiary's enforcement of patents allegedly procured by fraud, where counterclaim plaintiff alleged no facts showing that the parent company “ha[d] any right to enforce the patents or that it controlled, or dictated, or encouraged their enforcement” by the subsidiary). Accordingly, the plaintiffs have not presented evidence that Sanofi P.R. independently engaged in the anticompetitive conduct alleged in this case. See Arandell, 900 F.3d at 633 (explaining that “[a]s with any antitrust defendant, Plaintiffs must put forth evidence that [the defendant] engaged in anticompetitive conduct” in order to hold the defendant liable under a single economic enterprise theory).

While the plaintiffs “do not contend that Sanofi P.R. actively participated in the decision-making with regard to listing Lantus in the Orange Book or suing Lilly, Merck, and Mylan over those patents,” they argue that “a reasonable jury could conclude that Sanofi P.R. was aware of Sanofi U.S.'s anticompetitive conduct and its effects on the price of Lantus, but nevertheless acquiesced and went ahead with its supracompetitively-priced sales.” (Pl. Opp. Mem. at 12-13). This argument fails to support the plaintiffs' monopolization claims against Sanofi P.R. To the extent Sanofi P.R. may have had knowledge of Sanofi U.S.'s improper conduct, any such evidence alone would not be sufficient to support a conclusion that Sanofi P.R. engaged in coordinated activity by taking part in the anticompetitive conduct at issue. In any event, the evidence on which Sanofi P.R. relies fails to support a reasonable inference that Sanofi P.R. had any such knowledge.

In support of their contention that Sanofi P.R. knew about and acquiesced in Sanofi U.S.'s effort to monopolize the insulin glargine market, the plaintiffs first posit that the legal department Sanofi P.R. shared with Sanofi U.S. “most certainly” participated in the decision-making with regard to the Orange Book listings and the subsequent infringement litigation against Lilly, Merck and Mylan. (Id.). Although it is undisputed that Sanofi U.S. Services provided in-house legal services to both Sanofi P.R. and Sanofi U.S., the plaintiffs have presented no details about the nature and extent of those services. (See PF ¶ 34; DR ¶ 34). In particular, they have not presented evidence identifying specific in-house attorneys who participated in, or may have participated in, the selection of patents for listing in the Orange Book or the decision to initiate infringement litigation. Nor have they presented evidence indicating that Sanofi P.R. worked with those attorneys or even required the services of patent counsel. Additionally, the plaintiffs have presented no specific facts to show that Sanofi P.R. was even aware of the listings or the decision to initiate the infringement litigation, much less the alleged fact that the conduct was part of an effort to monopolize the market for insulin glargine. Accordingly, no reasonable factfinder could conclude, based on the fact that both Sanofi entities received legal services from Sanofi U.S. Services, that Sanofi P.R. had knowledge of the challenged conduct and acquiesced in that conduct through its sales of Lantus in Puerto Rico.

The plaintiffs further point to evidence showing that Sanofi P.R. relied on assumptions from Sanofi U.S. about when Sanofi U.S. expected to face competition in the market for insulin glargine products, in order to make its own predictions about Lantus sales in Puerto Rico, but that Sanofi P.R. “did not question or change these assumptions, even as the dates for anticipated competitors to enter [the market] were moved later by Sanofi U.S.” (Pl. Opp. Mem. at 13 (citing PR ¶¶ 18-19)). However, the plaintiffs have not presented any evidence to suggest that there was anything suspicious about the changes to Sanofi U.S.'s assumptions or that Sanofi P.R. should have viewed those changes as an indication that Sanofi U.S. had engaged in anticompetitive conduct. Therefore, this evidence too is insufficient to support a reasonable conclusion that Sanofi P.R. had knowledge of Sanofi U.S.'s alleged anticompetitive conduct.

Relying on Arandell, the plaintiffs nevertheless argue that Sanofi P.R.'s sales of Lantus at supracompetitive prices, without more, is enough to establish that Sanofi P.R. engaged in “coordinated activity” within the meaning of Copperweld because “the lynchpin of any anticompetitive scheme that harms consumers is the sale of the product at artificially high prices” and Sanofi P.R.'s sales of Lantus were critical to that scheme. (Pl. Opp. Mem. at 11). Thus, as the plaintiffs assert:

In Arandell ... the sale of gas at supracompetitive prices by an unwitting subsidiary was, the Ninth Circuit reasoned, a “crucial” “role” in the scheme: “[u]ntil CES sold the gas to consumers, the rigged and inflated prices were not passed on to buyers outside of the Reliant economic unit and there was no gain to the Reliant enterprise.” Here, Sanofi P.R. filled that crucial role.

(Id. (footnote omitted)). This court disagrees. Even assuming the Ninth Circuit's analysis of CES' role in the alleged price fixing conspiracy in Arandell is applicable in the present context, the critical facts of this case are distinguishable from those in Arandell and undermine any conclusion that Sanofi P.R.'s sales of Lantus were crucial to Sanofi U.S.'s alleged monopolization or attempted monopolization of the market for insulin glargine.

In contrast to the situation in Arandell, it is undisputed in this case that Sanofi P.R. neither sold Lantus products at the prices set by Sanofi U.S. nor transferred the profits from its Lantus sales to Sanofi U.S. during the relevant time period. The record demonstrates that throughout the class period, DACO regulated the price of all Lantus products sold in Puerto Rico and had the final authority to determine the price of all Lantus sold to Puerto Rican consumers. (See PF ¶ 57; DR ¶ 57; Supp. Rodriguez Decl. ¶ 6). It also establishes that DACO repeatedly adjusted the price down from the price proposed by Sanofi P.R.²² (Supp. Rodriguez Decl. ¶ 7). Accordingly, no reasonable jury could conclude that Sanofi P.R.'s acts, as opposed to DACO's decision to set prices at a certain level, “were the immediate cause of Plaintiffs' injuries.” Arandell, 900 F.3d at 634-35. With respect to the profits from Sanofi P.R.'s sales of Lantus, the undisputed facts establish that Sanofi P.R. has distributed no proceeds from its sales to Sanofi U.S. since the beginning of 2014, and does not consolidate its financial results with those of Sanofi U.S. (Silvestri Decl. ¶ 6). They also establish that Sanofi P.R. and Sanofi U.S. participate in cash pooling arrangements with different entities so that any surplus cash contained in their bank accounts is transferred to separate cash pool accounts. (PF ¶¶ 6-7; DR ¶¶ 6-7). Although Sanofi U.S. is able to obtain needed funds from Sanofi S.A.'s cash pool with Sanofi U.S. Services if Sanofi U.S. incurs a liability that its own cash pooling arrangement is unable to satisfy, there is no indication that Sanofi U.S. has regularly relied on funds from Sanofi S.A.'s cash pool. (See PF ¶ 8; DR ¶ 8). Therefore, the evidence presented here undermines the conclusion that Sanofi U.S. received a direct benefit from Sanofi P.R.'s sales of Lantus or that Sanofi P.R.'s sales were “crucial” to the alleged anticompetitive scheme. See Arandell, 900 F.3d at 635 (finding that CES's role was “crucial” to the price fixing conspiracy where there would have been “no gain to the ... enterprise” in the absence of CES's sales of gas to consumers).

22 The plaintiffs argue that “[t]here is no evidence that [the] pro forma 3% reduction to the Sanofi U.S. price increases by DACO operated to lower the price of Lantus in Puerto Rico below supracompetitive levels.” (Pl. Opp. Mem. at 14 (footnote omitted)). However, there is no specific evidence supporting the plaintiffs' characterization of DACO's 3% price reductions as merely “pro forma.” More importantly, the plaintiffs' argument does not alter the fact that DACO, rather than the defendants, had final responsibility for setting the price of Lantus products sold in Puerto Rico. (See Supp. Rodriguez Decl. ¶¶ 6-7). Nor does it alter the fact that Sanofi P.R.'s role in the alleged anticompetitive scheme is distinguishable from the crucial role played by CES in Arandell.

Even if the evidence showed that Sanofi P.R.'s sales resulted in a benefit to Sanofi U.S., this case is further distinguishable from Arandell because Sanofi P.R.'s cooperation was not necessary for Sanofi U.S. to maintain the alleged antitrust scheme. See id. (explaining that CES's sales “supplied part of the continuous cooperation necessary to keep the conspiracy alive” and enabled the affiliated companies to profit from the conspiracy); In re Packaged Seafood Prods. Antitrust Litig., No. 15-MD-2670 DMS (MDD), 2022 WL 836951, at *10 (S.D. Cal. Mar. 21, 2022) (finding that allegations of parent company's “knowledge and ... coordinated activity” with its subsidiary “in furtherance of the [alleged price fixing] conspiracy [were] sufficient under Arandell to raise a reasonable inference of [the parent company's] own participation in the conspiracy” where the parent company's “role in knowingly encouraging ... collusion was crucial to the continued viability of the conspiracy.”). As described above, during the period from 2014 to 2020, Sanofi P.R.'s total sales of Lantus® in Puerto Rico were equivalent to about 1.6% of Sanofi U.S.'s total sales of Lantus® in the continental United States, and Sanofi P.R.'s total sales of Lantus SoloStar® in Puerto Rico were equivalent to about 0.3% of Sanofi U.S.'s total sales of that product in the continental United States.²³ (DF ¶¶ 23-24; PR 23-24). Unlike the subsidiary in Arandell, Sanofi P.R.'s sales of Lantus products in Puerto Rico could hardly be considered “critical” to the viability of the alleged monopolization scheme. See Arandell, 900 F.3d at 635 (finding that plaintiffs raised a triable issue as to CES's liability where “CES's critical contributions to the conspiracy, if proved, would permit a rational factfinder to find that CES joined the conspiracy” and engaged in “coordinated activity with the alleged illegal purpose of its affiliates[.]”). Accordingly, this court finds that the record is insufficient to support the conclusion that Sanofi P.R. engaged in “coordinated activity” with Sanofi U.S., as required to support the plaintiffs' claim that Sanofi P.R. may be held liable as part of a single economic enterprise.²⁴ For this reason as well, this court recommends that Sanofi P.R.'s motion for summary judgment be allowed.

23 The plaintiffs argue that evidence regarding the percentages of total sales attributable to Sanofi P.R. is immaterial because the overcharges paid by Puerto Rican purchasers could not have occurred without Sanofi P.R.'s participation. (Pl. Opp. Mem. at 15). As described above, the significance of this evidence is that it demonstrates that Sanofi P.R.'s sales were not “critical” or “crucial” to Sanofi U.S.'s ability to maintain the alleged anticompetitive scheme. Under Arandell, Sanofi P.R.'s minor contribution to the antitrust scheme undermines the plaintiffs' claims that it engaged in coordinated activity with Sanofi U.S. See Arandell, 900 F.3d at 634-35 (finding that evidence sufficed to create a triable issue of liability against CES where plaintiffs presented evidence that “CES's role was essential to securing the benefit of the [affiliated companies'] price-fixing” and “crucial” to the ability to carry out the price-fixing conspiracy).

24 In light of this court's conclusion that the plaintiffs have presented insufficient evidence to show that Sanofi P.R. directly engaged in conduct that violates § 2 of the Sherman Act or that it could be held liable under § 2 as part of a single economic enterprise with Sanofi U.S., it is not necessary at this stage to address Sanofi P.R.'s argument that it is entitled to summary judgment on the plaintiffs' claim for attempted monopolization because “no reasonable juror could conclude that it possessed the specific intent to monopolize.” (Def. Mem. at 17).

V. CONCLUSION ²⁵

25 The parties are hereby advised that under the provisions of Fed.R.Civ.P. 72, any party who objects to these proposed findings and recommendations must file a written objection thereto with the Clerk of this Court within 14 days after being served with this Report and Recommendation. The written objections must specifically identify the portion of the proposed findings, recommendations or report to which the objection is made and the basis for such objections. The parties are further advised that the United States Court of Appeals for this Circuit has repeatedly indicated that failure to comply with this Rule shall preclude further appellate review. See Keating v. Sec'y of Health & Human Servs., 848 F.2d 271, 275 (1st Cir. 1988); United States v. Valencia-Copete, 792 F.2d 4, 6 (1st Cir. 1986); Park Motor Mart, Inc. v. Ford Motor Co., 616 F.2d 603, 604-05 (1st Cir. 1980); United States v. Vega, 678 F.2d 376, 378-79 (1st Cir. 1982); Scott v. Schweiker, 702 F.2d 13, 14 (1st Cir. 1983); see also Thomas v. Arn, 474 U.S. 140, 153-54, 106 S.Ct. 466, 474, 88 L.Ed.2d 435 (1985). Accord Phinney v. Wentworth Douglas Hosp., 199 F.3d 1, 3-4 (1st Cir. 1999); Henley Drilling Co. v. McGee, 36 F.3d 143, 150-51 (1st Cir. 1994); Santiago v. Canon U.S.A., Inc., 138 F.3d 1, 4 (1st Cir. 1998).

For all the reasons detailed herein, this court recommends to the District Judge to whom this case is assigned that the “Direct Purchaser Plaintiffs' Motion for Partial Summary Judgment as to Standing to Pursue Puerto Rico Overcharges from Sanofi-Aventis U.S. LLC” (Docket No. 308) be DENIED and that “Defendant Sanofi-Aventis Puerto Rico, Inc.'s Motion for Summary Judgment” (Docket No. 311) be ALLOWED.