PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______
Nos. 14-4202, 14-4203, 14-4204, 14-4205, 14-4206, 14-4602
& 14-4632
______
IN RE: LIPITOR ANTITRUST LITIGATION
Rite Aid Corporation; Rite Aid Hdqtrs. Corporation; JC (PJC)
USA, LLC; Maxi Drug, Inc. d/b/a Brooks Pharmacy; Eckerd
Corporation,
Appellants in No. 14-4202
Walgreen Company; The Kroger Co.; Safeway, Inc.;
Supervalu, Inc.; HEB Grocery Company L.P.,
Appellants in No. 14-4203
Giant Eagle, Inc.,
Appellant in No. 14-4204
Meijer, Inc.; Meijer Distribution, Inc.,
Appellants in No. 14-4205
Rochester Drug Co-Operative, Inc.; Stephen L. LaFrance
Pharmacy, Inc. d/b/a SAJ Distributors; Burlington Drug
Company, Inc.; Value Drug Company; Professional Drug
Company, Inc.; American Sales Company LLC,
Appellants in No. 14-4206
A.F.L.-A.G.C. Building Trades Welfare Plan; Mayor and City
Council of Baltimore, Maryland; New Mexico United Food
and Commercial Workers Union’s and Employers’ Health
and Welfare Trust Fund; Louisiana Health Service Indemnity
Company, d/b/a Blue Cross/Blue Shield of Louisiana; Bakers
Local 433 Health Fund; Twin Cities Bakery Workers Health
and Welfare Fund; Fraternal Order of Police, Fort Lauderdale
Lodge 31, Insurance Trust Fund; International Brotherhood of
Electrical Workers Local 98; New York Hotel Trades
Counsel & Hotel Association of New York City, Inc., Health
Benefits Fund; Edward Czarnecki; Emilie Heinle; Frank
Palter; Andrew Livezey; Edward Ellenson; Jean Ellyne
Dougan; Nancy Billington, on behalf of themselves and all
others similarly situated,
Appellants in No. 14-4602
RP Healthcare, Inc.; Chimes Pharmacy, Inc.; James
Clayworth, R.Ph., d/b/a Clayworth Pharmacy; Marin
Apothecaries, Inc., d/b/a Ross Valley Pharmacy; Golden Gate
Pharmacy Services, Inc., d/b/a Golden Gate Pharmacy;
Pediatric Care Pharmacy, Inc.; Meyers Pharmacy, Inc.; Tony
Mavrantonis R. Ph., d/b/a Jack’s Drugs; Tilley Apothecaries
Inc., d/b/a Zweber’s Apothecary,
Appellants in No. 14-4632
2
______
Nos. 15-1184, 15-1185, 15-1186, 15-1187, 15-1274, 15-1323
& 15-1342
______
IN RE: EFFEXOR XR ANTITRUST LITIGATION
Walgreen, Co.; The Kroger, Co.; Safeway, Inc.; Supervalu,
Inc.; HEB Grocery Company LP; American Sales Company,
Inc.,
Appellants in No. 15-1184
Rite Aid Corporation; Rite Aid Hdqtrs., Corporation; JCG
(PJC) USA, LLC; Maxi Drug, Inc. d/b/a Brooks Pharmacy;
Eckerd Corporation; CVS Caremark Corporation,
Appellants in No. 15-1185
Giant Eagle, Inc.,
Appellant in No. 15-1186
Meijer, Inc.; Meijer Distribution, Inc.,
Appellants in No. 15-1187
Professional Drug Company, Inc.; Rochester Drug Co-
Operative, Inc.; Stephen L. LaFrance Holdings, Inc.; Stephen
L. LaFrance Pharmacy, Inc. d/b/a SAJ Distributors;
Uniondale Chemist, Inc.,
Appellants in No. 15-1274
Painters District Council No. 30 Health & Welfare Fund;
Medical Mutual of Ohio,
Appellants in No. 15-1323
3
A.F.L.-A.G.C. Building Trades Welfare Plan; Daryl Deino;
IBEW-NECA Local 505 Health & Welfare Plan; Louisiana
Health Service Indemnity Company d/b/a Blue Cross/Blue
Shield of Louisiana; Man-U Service Contract Trust Fund;
MC-UA Local 119 Health & Welfare Plan; New Mexico
United Food and Commercial Workers Union’s and
Employers’ Health and Welfare Trust Fund; Plumbers and
Pipefitters Local 572 Health and Welfare Fund; Sergeants
Benevolent Association Health and Welfare Fund; Patricia
Sutter (together “End-Payor Class Plaintiffs”) on behalf of
themselves and all others similarly situated,
Appellants in No. 15-1342
______
On Appeal from the United States District Court
for the District of New Jersey
(MDL 2332) / (D.N.J. No. 3-12-cv-02389) / (D.N.J. No. 3-
12-cv-02478) / (D.N.J. No. 3-12-cv-02519) / (D.N.J. No. 3-
12-cv-04115) / (D.N.J. No. 3-12-cv-04537) / (D.N.J. No. 3-
12-cv-05129) / (D.N.J. No. 3-12-cv-06774) / (D.N.J. No. 3-
12-cv-07561)
(D.N.J. No. 3-11-cv-05479) / (D.N.J. No. 3-11-cv-05590) /
(D.N.J. No. 3-11-cv-05661) / (D.N.J. No. 3-11-cv-06985) /
(D.N.J. No. 3-11-cv-07504) / (D.N.J. No. 3-12-cv-03116) /
(D.N.J. No. 3-12-cv-03523)
District Judge: Honorable Peter G. Sheridan
______
4
Argued: September 27, 2016
Before: AMBRO, SMITH* and FISHER, Circuit Judges.
(Filed: April 13, 2017)
Monica L. Rebuck
Hangley Aronchick Segal Pudlin & Schiller
4400 Deer Path Road, Suite 200
Harrisburg, PA 17110
Maureen S. Lawrence
Barry L. Refsin [ARGUED]
Hangley Aronchick Segal Pudlin & Schiller
One Logan Square
18th & Cherry Streets, 27th Floor
Philadelphia, PA 19103
Counsel for Appellants Rite Aid Corp., Rite Aid Hdqtrs
Corp., Maxi Drug Inc., Eckerd Corp. and JCG (PJC)
USA LLC
Anna T. Neill
Scott E. Perwin [ARGUED]
Lauren C. Ravkind
Kenny Nachwalter, P.A.
1441 Brickell Avenue
*
Honorable D. Brooks Smith, United States Circuit
Judge for the Third Circuit, assumed Chief Judge status on
October 1, 2016.
Honorable D. Michael Fisher, United States Circuit
Judge for the Third Circuit, assumed senior status on
February 1, 2017.
5
Four Seasons Tower, Suite 1100
Miami, FL 33131
Counsel for Appellants Walgreen Co., Kroger Co.,
Safeway Inc., Supervalu, Inc., HEB Grocery Co. LP
and American Sales Co. LLC
David P. Germaine
Joseph M. Vanek
Vanek, Vickers & Masini, P.C.
55 West Monroe Street, Suite 3500
Chicago, IL 60603
Bradley J. Demuth
Linda P. Nussbaum
Nussbaum Law Group P.C.
570 Lexington Avenue, 19th Floor
New York, NY 10022
Counsel for Appellants Meijer, Inc. and Meijer
Distribution
Moira Cain-Mannix
Bernard D. Marcus
Marcus & Shapira LLP
One Oxford Centre
35th Floor
Pittsburgh, PA 15219
Counsel for Appellant Giant Eagle, Inc.
Gregory T. Arnold
Kristen A. Johnson
Kristie A. LaSalle
Thomas M. Sobol
Hagens Berman Sobol & Shapiro LLP
6
55 Cambridge Parkway, Suite 301
Cambridge, MA 02142
Caitlin Coslett
Eric L. Cramer
Jennifer MacNaughton, Esq.
Daniel Simons, Esq.
David F. Sorensen, Esq. [ARGUED]
Berger & Montague, P.C.
1622 Locust Street
Philadelphia, PA 19103
Elena K. Chan
Bruce E. Gerstein
Kimberly Hennings
Garwin Gerstein & Fisher LLP
88 Pine Street, 10th Floor
New York, NY 10005
Peter Kohn
Richard D. Schwartz
Faruqi & Faruqi LLP
101 Greenwood Avenue, Suite 600
Jenkintown, PA 19046
Miles Greaves
Barry S. Taus
Taus Cebulash & Landau, LLP
80 Maiden Lane, Suite 1204
New York, NY 10038
7
Erin C. Burns
Dianne M. Nast
NastLaw LLC
1101 Market Street, Suite 2801
Philadelphia, PA 19107
Don Barrett
Barrett Law Group
404 Court Square
P.O. Box 927
Lexington, MS 39095
Counsel for Appellants Direct-Purchaser Class
Plaintiffs Rochester Drug Co-Operative, Inc., et al.
James E. Cecchi [ARGUED]
Lindsey H. Taylor
Carella, Byrne, Cecchi, Olstein, Brody, & Agnello, P.C.
5 Becker Farm Road
Roseland, NJ 07068
Peter S. Pearlman
Cohn Lifland Pearlman Herrmann & Knopf LLP
Park 80 West - Plaza One
250 Pehle Avenue, Suite 401
Saddle Brook, NJ 07663
Liaison Counsel for Appellants Direct-Purchaser
Class Plaintiffs Rochester Drug Co-Operative, Inc., et
al.
Justin N. Boley
Bethany R. Turke
Kenneth A. Wexler
Wexler Wallace LLP
8
55 W. Monroe Street, Suite 3300
Chicago, IL 60603
James W. Anderson
Vincent J. Esades
Renae Steiner
David Woodward
Heins Mills & Olson, P.L.C.
310 Clifton Avenue
Minneapolis, MN 55403
J. Douglas Richards
Sharon K. Robertson
Cohen Milstein Sellers & Toll, PLLC
88 Pine Street, 14th floor
New York, NY 10005
Michael M. Buchman
Alex Straus, Esq.
Motley Rice LLC
600 Third Avenue, Suite 2101
New York, NY 10016
Jeffrey L. Kodroff
John A. Macoretta
Spector Roseman Kodroff & Willis
181 Market Street
Suite 2500
Philadelphia, PA 19103
Counsel for Appellants End-Payor Class Plaintiffs
AFL-AGC Building Trades Welfare Plan, et al.
9
Lisa J. Rodriguez
Schnader Harrison Segal & Lewis LLP
Woodland Falls Corporate Park
220 Lake Drive East, Suite 200
Cherry Hill, NJ 08002-1165
Liaison Counsel for Appellants End-Payor Class
Plaintiffs AFL-AGC Building Trades Welfare Plan, et
al.
Joseph M. Alioto [ARGUED]
Jamie L. Miller
Theresa Driscoll Moore
Alioto Law Firm
One Sansome Street, 35th Floor
San Francisco, CA 94104
Timothy A.C. May
Gil D. Messina
Messina Law Firm, P.C.
961 Holmdel Road
Holmdel, NJ 07733
James M. Dombroski
Law Office of James M. Dombroski
P.O. Box 751027
Petaluma, CA 94975
Counsel for Appellants RP Healthcare, Inc., et al.
Lori A. Fanning
Marvin A. Miller
Matthew E. Van Tine
Miller Law LLC
115 South LaSalle Street, Suite 2910
10
Chicago, IL 60603
Kevin P. Roddy
Wilentz, Goldman & Spitzer, P.A.
90 Woodbridge Center Drive, Suite 900
Woodbridge, NJ 07095
Mark S. Sandmann
Hill Carter Franco Cole & Black, P.C.
99102 Brinley Avenue, Suite 201
Louisville, KY 40243
Counsel for Appellants Painters District Council No.
30 Health & Welfare Fund and Medical Mutual of
Ohio
Steve D. Shadowen
Hilliard & Shadowen LLP
919 Congress Avenue, Suite 1325
Austin, TX 78701
Michael A. Carrier
Rutgers Law School
217 North Fifth Street
Camden, NJ 08102
Counsel for 48 Law, Economics, and Business
Professors and the American Antitrust Institute as
Amici Curiae in support of Appellants
Jonathan E. Nuechterlein, Former General Counsel
David C. Shonka, Acting General Counsel
Joel Marcus, Director of Litigation
11
Michele Arington, Assistant General Counsel
Deborah L. Feinstein, Director
Markus H. Meier, Acting Deputy Director
Bradley S. Albert, Deputy Assistant Director
Elizabeth R. Hilder
Heather Johnson
Jamie R. Towey
Federal Trade Commission
600 Pennsylvania Avenue, N.W.
Washington, DC 20580
Counsel for Federal Trade Commission as Amicus
Curiae in support of Appellants
Dimitrios T. Drivas
Raj S. Gandesha
Bryan D. Gant
Sheryn E. George
Robert A. Milne [ARGUED]
Brendan G. Woodard
Amy E. Boddorff
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Liza M. Walsh
Connell Foley LLP
One Newark Center
1085 Raymond Boulevard, 19th Floor
Newark, NJ 07102
Counsel for Appellees Pfizer, Inc., Pfizer Ireland
Pharmaceuticals, Warner-Lambert Company, Warner-
Lambert Company LLC, Wyeth, Inc., Wyeth
Pharmaceuticals, Inc., Wyeth-Whitehall
12
Pharmaceuticals LLC and Wyeth Pharmaceuticals
Company
Jonathan D. Janow
John C. O’Quinn
Gregory L. Skidmore
Edwin J. U
Karen N. Walker
Kirkland & Ellis LLP
655 15th Street, N.W., Suite 1200
Washington, DC 20005
Jay P. Lefkowitz, [ARGUED]
Joseph Serino, Jr.
Steven J. Menashi
Kirkland & Ellis LLP
601 Lexington Avenue
New York, NY 10022
Counsel for Appellees Ranbaxy, Inc., Ranbaxy
Pharmaceuticals, Inc., Ranbaxy Laboratories Ltd.,
Teva Pharmaceutical Industries Ltd. and Teva
Pharmaceuticals USA, Inc.
Katherine A. Helm
Noah M. Leibowitz [ARGUED]
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
David C. Kistler
Blank Rome LLP
301 Carnegie Center
Princeton, NJ 08540
13
Counsel for Appellees Daiichi Sankyo Co. Ltd and
Daiichi Sankyo, Inc.
Victor E. Schwartz
Philip S. Goldberg
Cary Silverman
Shook, Hardy & Bacon L.L.P.
1155 F Street NW, Suite 200
Washington, DC 20004
Counsel for American Tort Reform Association and
Pharmaceutical Research and Manufacturers of
America as Amici Curiae in support of Appellees
Jonathan D. Hacker
Edward Hassi
O’Melveny & Myers LLP
1625 Eye Street NW
Washington, DC 20006
Counsel for Antitrust Economists as Amici Curiae in
support of Appellees
Ashley Bass
Stephen Bartenstein
Andrew D. Lazerow
Covington & Burling LLP
850 10th Street, N.W.
One City Center
Washington, D.C. 20001
Counsel for Pharmaceutical Research and
Manufacturers of America as Amicus Curiae in
support of Appellees
14
Roy Chamcharas
Peter J. Curtin
William A. Rakoczy
Rakoczy Molino Mazzochi & Siwik LLP
6 West Hubbard Street, Suite 500
Chicago, IL 60654
Brian T. Burgess
Goodwin Procter LLP
901 New York Avenue, NW
Suite 900 East
Washington, DC 20001
Christopher T. Holding
Goodwin Procter LLP
100 Northern Avenue
Boston, MA 02210
Counsel for Generic Pharmaceutical Association as
Amicus Curiae in support of Appellees
______
OPINION OF THE COURT
______
FISHER, Circuit Judge.
A pharmaceutical company holding the patent on a drug
sues the manufacturer of a generic version of that drug for
patent infringement. The patent-holder and the generic
manufacturer later settle, with the former paying the latter not
to produce a generic until the patents at issue expire. In FTC
v. Actavis, Inc., 133 S. Ct. 2233 (2013), the Supreme Court
15
recognized that such a settlement—commonly known as a
“reverse payment”—where large and unjustified, can
sometimes unreasonably diminish competition in violation of
the antitrust laws. To answer the antitrust question, Actavis
explained, “it is not normally necessary to litigate patent
validity” because “the size of the unexplained reverse payment
can provide a workable surrogate for a patent’s weakness.” Id.
at 2236-37.
These two sets of consolidated appeals involve
allegations that the companies holding the patents for Lipitor
and Effexor XR delayed entry into the market of generic
versions of those drugs. The companies did so, plaintiffs say,
by engaging in an overarching monopolistic scheme that
involved fraudulently procuring and enforcing the underlying
patents and then entering into a reverse-payment settlement
agreement with a generic manufacturer. With a single
exception, every complaint asserts one of these
monopolization claims against the patent-holders. The cases
were assigned to the same district judge, who ultimately
dismissed the bulk of plaintiffs’ claims.
In this opinion, we address two questions of federal
jurisdiction. First, do plaintiffs’ allegations of fraudulent
procurement and enforcement of the patents require us to
transfer these appeals to the Court of Appeals for the Federal
Circuit? That court has exclusive jurisdiction over appeals
from civil actions “arising under” patent law. 28 U.S.C. §
1295(a)(1). But not all cases presenting questions of patent law
necessarily arise under patent law. See Christianson v. Colt
Indus. Operating Corp., 486 U.S. 800 (1986). Where, as here,
patent law neither creates plaintiffs’ cause of action nor is a
necessary element to any of plaintiffs’ well-pleaded claims,
jurisdiction lies in this Court, not the Federal Circuit.
16
The second jurisdictional question we confront is
confined to one of the Lipitor appeals, RP Healthcare, Inc. v.
Pfizer, Inc., No. 14-4632. That case, brought by a group of
California pharmacists, involves claims solely under
California law and was filed in California state court.
Following removal the District Court declined to remand the
case to state court, citing potential patent defenses. That was
error, as federal jurisdiction depends on the content of the
plaintiff’s complaint, not a defendant’s possible defenses.
Before final judgment, however, the remaining non-diverse
defendants were voluntarily dismissed, thus raising the
possibility that, notwithstanding the District Court’s failure to
remand the case, it possessed diversity jurisdiction before the
time it entered judgment. See Caterpillar Inc. v. Lewis, 519
U.S. 61 (1996). But because the state of the record before us
is unclear with regard to the citizenship of the parties, we
cannot reach the merits of this appeal until that question is
resolved. We will accordingly remand the RP Healthcare
appeal to the District Court so it can conduct jurisdictional
discovery and address the matter in the first instance.
I
It is necessary to begin by discussing the regulatory
framework that forms the foundation for the issues presented
by these appeals.
A
“Apparently most if not all reverse payment settlement
agreements arise in the context of pharmaceutical drug
regulation, and specifically in the context of suits brought
under statutory provisions allowing a generic drug
manufacturer (seeking speedy marketing approval) to
challenge the validity of a patent owned by an already-
approved brand-name drug owner.” Actavis, 133 S. Ct. at
17
2227. With the Drug Price Competition and Patent Term
Restoration Act, 98 Stat. 1585, as amended, known as the
Hatch-Waxman Act, Congress “attempted to balance the goal
of ‘mak[ing] available more low cost generic drugs’ with the
value of patent monopolies in incentivizing beneficial
pharmaceutical advancement.” King Drug Co. v. SmithKline
Beecham Corp., 791 F.3d 388, 394 (3d Cir. 2015) (alteration
in original) (quoting H.R. Rep. No. 98-857, pt. 1, at 14-15
(1984)), cert. denied, 137 S. Ct. 446 (2016). “The Act seeks to
accomplish this purpose, in part, by encouraging
‘manufacturers of generic drugs . . . to challenge weak or
invalid patents on brand name drugs so consumers can enjoy
lower drug prices.’” Id. (alteration in original) (quoting S. Rep.
No. 107-167, at 4 (2002)). In Actavis, the Supreme Court
identified four relevant features of Hatch-Waxman’s
regulatory framework. 133 S. Ct. at 2227-29; see also King
Drug, 791 F.3d at 394-96.
First, a drug manufacturer seeking to market a new,
“pioneer” prescription drug must obtain approval from the
Food and Drug Administration (FDA). See 21 U.S.C. §
355(b)(1). This approval process involves testing that is “long,
costly, and comprehensive.” Actavis, 133 S. Ct. at 2228.
Second, following FDA approval of a brand-name drug,
a generic manufacturer can file an Abbreviated New Drug
Application (ANDA) indicating that the generic “has the same
active ingredients as, and is biologically equivalent to, the
brand-name drug.” Caraco Pharm. Labs., Ltd. v. Novo
Nordisk A/S, 566 U.S. 399, 405 (2012) (citing 21 U.S.C. §
355(j)(2)(A)(iv)). The ANDA process furthers drug
competition “by allowing the generic to piggy-back on the
pioneer’s approval efforts.” Actavis, 133 S. Ct. at 2228.
Third, the Hatch-Waxman Act “sets forth special
18
procedures for identifying, and resolving, related patent
disputes.” Id. The new drug applicant is required to list any
patents issued relating to the drug’s composition or methods of
use. See 21 U.S.C. § 355(b)(1). If the FDA approves the new
drug, it publishes this patent information, without verification,
in its Orange Book (officially known as Approved Drug
Products with Therapeutic Equivalence Applications). King
Drug, 791 F.3d at 395 & n.5 (citing Caraco, 566 U.S. at 405-
06). In its ANDA, the generic manufacturer must “assure the
FDA that its proposed generic drug will not infringe the
brand’s patents.” Caraco, 566 U.S. at 406. One method of
assurance is known as “paragraph IV certification,” whereby
the generic may assert that the relevant listed patents are
“invalid or will not be infringed by the manufacture, use, or
sale of the [generic] drug.” 21 U.S.C. § 355(j)(2)(A)(vii)(IV).
The filing of a paragraph IV certification “means provoking
litigation,” Caraco, 566 U.S. at 407, as the patent statute treats
it as an act of automatic infringement, see 35 U.S.C. §
271(e)(2)(A). If the brand-name patentee brings an
infringement suit within 45 days, the FDA is required to
withhold approving the generic for a 30-month period. If the
courts decide the matter during that period, the FDA will
follow that determination; if not, the FDA may move forward
on its own. See 21 U.S.C. § 355(j)(5)(B)(iii).
Fourth, “Hatch-Waxman provides a special incentive
for a generic to be the first to file an [ANDA] taking the
paragraph IV route.” Actavis, 133 S. Ct. at 2228-29. From the
time it begins marketing its generic, the first-filer enjoys a 180-
day exclusivity period during which no other generic can
compete with the brand-name drug. See 21 U.S.C. §
355(j)(5)(B)(iv). This exclusivity period “can prove valuable,
possibly ‘worth several hundred million dollars.’” Actavis,
133 S. Ct. at 2229 (quoting C. Scott Hemphill, Paying for
19
Delay: Pharmaceutical Patent Settlement as a Regulatory
Design Problem, 81 N.Y.U. L. Rev. 1553, 1579 (2006)). The
right to exclusivity belongs to the first-filer alone and is
nontransferable. See 21 U.S.C. § 355(j)(5)(D). However,
Hatch-Waxman does not preclude the underlying patent-holder
from marketing a brand-generic version of its drug—known as
an “authorized generic”—during the 180-day exclusivity
period. See Mylan Pharm., Inc. v. FDA, 454 F.3d 270, 276-77
(4th Cir. 2006); Teva Pharm. Indus. Ltd. v. Crawford, 410 F.3d
51, 55 (D.C. Cir. 2005); see also King Drug, 791 F.3d at 393;
Sanofi-Aventis v. Apotex Inc., 659 F.3d 1171, 1174-75 (Fed.
Cir. 2011).
B
In Actavis, the Supreme Court addressed whether
reverse-payment settlements in the Hatch-Waxman context are
subject to antitrust scrutiny. The Court concluded that such
settlements “can sometimes violate the antitrust laws.” 133 S.
Ct. at 2227. That is so, the Court held, because “[a]n
unexplained large reverse payment itself would normally
suggest that the patentee has serious doubts about the patent’s
survival,” thus “suggest[ing] that the payment’s objective is to
maintain supracompetitive prices to be shared among the
patentee and the challenger rather than face what might have
been a competitive market.” Id. at 2237.
Actavis rejected an approach known as the “scope of the
patent” test, a near-categorical rule that “absent sham litigation
or fraud in obtaining the patent, a reverse payment settlement
is immune from antitrust attack so long as its anticompetitive
effects fall within the scope of the exclusionary potential of the
patent.” FTC v. Watson Pharm., Inc., 677 F.3d 1298, 1312
(11th Cir. 2012), rev’d sub nom. Actavis, 133 S. Ct. 2223. The
Court concluded that it would be “incongruous to determine
20
antitrust legality by measuring the settlement’s anticompetitive
effects solely against patent law policy, rather than by
measuring them against procompetitive antitrust policies as
well.” Actavis, 133 S. Ct. at 2231. Instead, the Court’s
precedents “indicated that patent and antitrust policies are both
relevant in determining the ‘scope of the patent monopoly’—
and consequently antitrust law immunity—that is conferred by
a patent.” Id. The Court viewed these cases as “seek[ing] to
accommodate patent and antitrust policies, finding challenged
terms and conditions unlawful unless patent law policy offsets
the antitrust law policy strongly favoring competition.” Id. at
2233; see id. at 2244 (Roberts, C.J., dissenting) (“The majority
seems to think that even if the patent is valid, a patent holder
violates the antitrust laws merely because the settlement took
away some chance that his patent would be declared invalid by
a court.”). Finally, the Court observed, among other things,
that “it is normally not necessary to litigate patent validity to
answer the antitrust question (unless, perhaps, to determine
whether the patent litigation is a sham).” Id. at 2236 (majority
opinion). Such antitrust questions are to be addressed under
the traditional rule-of-reason analysis. See id. at 2237-38.
II
A
In In re Lipitor Antitrust Litigation, Nos. 14-1402 et al.,
plaintiffs are a putative class of direct-purchasers of branded
Lipitor, a putative class of end-payors, and four individual-
retailers asserting direct-purchaser claims. We will refer to
these three groups of plaintiffs collectively as the “Lipitor
plaintiffs.” Defendants are Pfizer Inc., Ranbaxy Inc., and their
respective corporate affiliates; they will be referred to
collectively as the “Lipitor defendants.” There is also a fourth
group of plaintiffs—several California-based pharmacists
21
raising claims under California law—that we will refer to
independently as the “RP Healthcare plaintiffs.” In addition
to suing the Lipitor defendants, the RP Healthcare plaintiffs
also named additional parties as defendants whose relevance
we will explore in Part V, infra.
1
Warner-Lambert Co. developed atorvastatin, the active
ingredient in its blockbuster brand-name drug Lipitor. One of
the best-selling pharmaceutical products of all time, Lipitor
reduces the level of bad LDL cholesterol in the bloodstream.
Warner-Lambert, in partnership with Pfizer, launched Lipitor
in 1997. The two companies merged in 2002, and we will refer
to them collectively as “Pfizer.”
In 1987, Pfizer obtained the original patent for Lipitor.
That patent—designated U.S. Patent No. 4,681,893 (the ‘893
Patent)—claims protection for atorvastatin. Initially scheduled
to expire in May 2006, Pfizer eventually secured extensions on
the ‘893 Patent’s term through March 24, 2010. Pfizer
obtained additional, follow-on patent protection for Lipitor in
December 1993, when the Patent and Trademark Office (PTO)
issued U.S. Patent No. 5,273,995 (the ‘995 Patent). That patent
claims atorvastatin calcium, the specific salt form of the active
atorvastatin molecule in Lipitor. The Lipitor plaintiffs assert
that Pfizer committed fraud with regard to the procurement and
enforcement of the ‘995 Patent. In particular, the Lipitor
plaintiffs allege that Pfizer submitted false and misleading data
to the PTO to support its claim that the cholesterol-synthesis
inhibiting activity of atorvastatin calcium was surprising and
unexpected. The ‘995 Patent expired on June 28, 2011.
Following Lipitor’s 1997 launch, Pfizer obtained five
additional patents, all of which, according to the Lipitor
22
plaintiffs, could not block further generic versions of the drug
from coming to market. Pfizer listed all Lipitor patents in the
FDA’s Orange Book, with the exception of the process patents,
which cannot be listed. The Lipitor plaintiffs allege fraud only
with regard to the procurement and enforcement of the ‘995
Patent.
After obtaining ANDA first-filer status for generic
Lipitor in August 2002, Ranbaxy notified Pfizer of its
paragraph IV certifications, which contended that none of the
valid patent claims that covered Lipitor would be infringed by
the sale, marketing, or use of its generic. Pfizer sued Ranbaxy
in the District Court for the District of Delaware within the 45-
day period prescribed by Hatch-Waxman, alleging that
Ranbaxy’s generic would infringe the ‘893 and ‘995 Patents.
Pursuant to Hatch-Waxman, the filing of Pfizer’s lawsuit
stayed FDA approval of Ranbaxy’s ANDA for 30 months.
After a bench trial, the district court ruled that Pfizer’s
patents were valid and enforceable and would be infringed by
Ranbaxy’s generic. Pfizer Inc. v. Ranbaxy Labs. Ltd., 405 F.
Supp. 2d 495, 525-26 (D. Del. 2005). On appeal, the Federal
Circuit largely agreed, affirming the district court’s ruling that
the ‘893 Patent would be infringed. Pfizer Inc. v. Ranbaxy
Labs. Ltd., 457 F.3d 1284, 1286 (Fed. Cir. 2006). The Federal
Circuit reversed in part, however, holding that claim 6 of the
‘995 Patent was invalid due to what amounted to a scrivener’s
error in the drafting of the claim. Id. at 1291-92. On remand,
the district court enjoined FDA approval of Ranbaxy’s ANDA
until March 24, 2010, the date of the ‘893 Patent’s expiration.
Also in response to the Federal Circuit’s ruling, Pfizer applied
for a reissuance of the ‘995 Patent to cure the drafting error.
Ranbaxy filed an objection to the reissuance with the PTO.
In July 2005, as the 30-month statutory window halting
23
Ranbaxy’s generic market entry was closing, Pfizer filed a
citizen petition with the FDA stating that the amorphous
noncrystalline form of atorvastatin used in generic Lipitor
(including Ranbaxy’s, as identified in its ANDA) may be
“inferior in quality” to branded Lipitor’s crystalline form.
Lipitor J.A. 1851. The Lipitor plaintiffs claim that this citizen
petition was a sham. In May 2006, the FDA informed Pfizer
that it had not yet reached a decision, citing the need for further
review and analysis. The FDA denied the petition in a 12-page
decision issued on November 30, 2011.
Around the same time as their Lipitor patent dispute,
Pfizer and Ranbaxy were also locked in patent-infringement
litigation regarding a separate drug called Accupril. After
Ranbaxy received ANDA approval and began marketing a
generic Accupril product in conjunction with Teva
Pharmaceuticals, Pfizer sued Ranbaxy and Teva in the District
of New Jersey. On March 25, 2005, the district court issued a
preliminary injunction halting Ranbaxy’s sales of generic
Accupril, subject to Pfizer posting a $200 million bond to cover
Ranbaxy’s damages in the event the injunction was
improvidently granted. The Federal Circuit affirmed without
prejudice to an ultimate resolution of the merits. Pfizer Inc. v.
Teva Pharm. USA, Inc., 429 F.3d 1364, 1383 (Fed. Cir. 2005).
On June 13, 2007, in light of the disputed patent’s expiration,
the district court vacated the preliminary injunction. The only
issues that remained contested were Pfizer’s limited claims for
past damages and Ranbaxy’s counterclaim as secured by the
preliminary injunction bond.
In March 2008, Pfizer again sued Ranbaxy in the
District of Delaware, this time claiming that Ranbaxy’s generic
Lipitor would infringe Pfizer’s two Lipitor-related process
patents. Not long after, on June 18, 2008, Pfizer and Ranbaxy
24
publically announced that they had reached a near-global
litigation settlement—which the Lipitor plaintiffs allege
constituted an unlawful reverse payment—regarding scores of
patent litigations around the world, including the Lipitor and
Accupril disputes. In particular, the settlement ended the
Accupril litigation with prejudice, all domestic patent
infringement litigation between Pfizer and Ranbaxy pertaining
to Lipitor, and all foreign litigation between the two companies
over Lipitor. As a result of the settlement, Ranbaxy received a
licensed entry date of November 30, 2011 for generic Lipitor,
Pfizer and Ranbaxy negotiated similar market entry dates for
generic Lipitor in several foreign jurisdictions, Ranbaxy paid
$1 million to Pfizer in connection with the Accupril litigation,
and Pfizer’s $200 million injunction bond from the Accupril
litigation was cancelled. Ranbaxy also withdrew its objection
to the ‘995 Patent’s reissuance. The PTO reissued the ‘995
Patent in March 2009.
As part of the agreement, Ranbaxy delayed entry of its
generic to March 2010, when the ‘983 Patent was set to expire.
Due to its ANDA first-filer status, Ranbaxy was entitled to 180
days of market exclusivity. The Pfizer-Ranbaxy agreement
consequently had the effect of maintaining a bottleneck over
the entry of generic Lipitor from later ANDA filers. Any other
would-be generic manufacturer that wanted the 180-day period
to begin earlier than November 2011 would need a court to
hold that all of Pfizer’s Orange Book-listed patents were
invalid or not infringed. Pfizer helped to forestall this
possibility, the Lipitor plaintiffs say, through a combination of
several lawsuits against subsequent ANDA filers. The FDA
approved Ranbaxy’s Lipitor ANDA on November 30, 2011,
the day Ranbaxy’s license to the unexpired Lipitor patents
commenced.
25
2
Beginning in November 2011, the Lipitor direct-
purchasers and end-payors, as well as the RP Healthcare
plaintiffs, filed separate antitrust actions in various federal
jurisdictions. The cases were referred to the Judicial Panel on
Multidistrict Litigation (JPML) for coordination. In January
2012, the RP Healthcare plaintiffs withdrew their federal suit
and refiled in California state court raising claims solely under
California law. That suit was removed to federal court two
months later.
The JPML transferred each case to the District of New
Jersey, and assigned the matters to Judge Peter G. Sheridan.
See In re Lipitor Antitrust Litig., 856 F. Supp. 2d 1355
(J.P.M.L. 2012); In re Lipitor Antitrust Litig., 2012 WL
4069565 (J.P.M.L. Aug. 3, 2012). Thereafter, the direct-
purchaser and end-payor plaintiffs filed amended class action
complaints; the individual-retailer plaintiffs likewise filed
complaints joining the consolidated proceedings. The
complaints are substantively identical, raising the same two
claims: First, a monopolization claim under section 2 of the
Sherman Act (15 U.S.C. § 2) or a state analogue against Pfizer,
asserting that the company engaged in an overarching
anticompetitive scheme that involved fraudulently procuring
the ‘995 Patent from the PTO (Walker Process fraud),
enforcing the ‘995 Patent and certain process patents through
sham litigation, filing a sham citizen petition with the FDA,
and entering into a reverse-payment settlement with Ranbaxy.
Second, the Lipitor plaintiffs raise a claim under section 1 of
the Sherman Act (15 U.S.C. § 1) or a state analogue against
both Pfizer and Ranbaxy, challenging the reverse-payment
settlement as an unlawful restraint of trade. We will refer to
these claims, respectively, as the “section 2 monopolization
26
claim” and the “section 1 restraint of trade claim.”
The RP Healthcare plaintiffs’ amended complaint
raises an altogether different claim under California’s antitrust
statute, the Cartwright Act, Cal. Bus. & Prof. Code § 16700 et
seq. They allege that Pfizer, Ranbaxy, a Japanese company
called Daiichi Sankyo (and an affiliate), and two large
pharmacies entered into a per se unlawful market allocation
agreement regarding Lipitor. This agreement, according to the
RP Healthcare plaintiffs, extended the life of Pfizer’s Lipitor-
related patents and fixed prices for Lipitor and its generic
equivalents at supracompetitive levels.
The Lipitor defendants filed motions to dismiss all
complaints under Federal Rule of Civil Procedure 12(b)(6).
On October 19, 2012, the District Court denied the RP
Healthcare plaintiffs’ motion to remand to California state
court, reasoning that “there may be many patent issues raised
as defenses in this case which would engender federal
jurisdiction.” Lipitor J.A. 2. And on May 16, 2013, the District
Court stayed proceedings pending the Supreme Court’s
decision in Actavis. In light of Actavis, the District Court
reopened the case and permitted the parties to file supplemental
briefs on the pending motions to dismiss.
On September 5, 2013, the District Court dismissed the
Lipitor plaintiffs’ complaints to the extent they were based on
anything other than the reverse-payment settlement. In re
Lipitor Antitrust Litig., 2013 WL 4780496 (D.N.J. Sept. 5,
2013). In particular, the District Court rejected the Walker
Process, sham litigation, and sham FDA citizen petition
aspects of the Lipitor plaintiffs’ monopolization claims. Id. at
*15-23. The court also granted leave to file amended
complaints focused solely on the Pfizer-Ranbaxy reverse
payment. Id. at *25-27.
27
The Lipitor plaintiffs filed amended complaints in
October 2013. The direct-purchasers and end-payors attached
their prior complaints as exhibits to their new complaints to
preserve for appeal the allegations that had been dismissed.
For their part, the independent-retailers stated in the first
paragraph of their new complaints that they were also
preserving the previously dismissed claims.
In November 2013, the Lipitor defendants once again
moved to dismiss. On September 12, 2014, the District Court
dismissed with prejudice the Lipitor direct-purchasers’
remaining argument that the Pfizer-Ranbaxy settlement was
unlawful under Actavis. In re Lipitor Antitrust Litig., 46 F.
Supp. 3d 523 (D.N.J. 2014). The complaints of the end-payor,
individual-retailer, and RP Healthcare plaintiffs were
subsequently dismissed with prejudice in light of the District
Court’s opinion.
The direct-purchasers filed a motion to amend the
judgment and for leave to file an amended complaint, arguing
that the District Court applied a novel pleading standard. That
motion was denied on March 17, 2015. Lipitor J.A. 151-52.
These timely appeals followed.
B
In In re Effexor XR Antitrust Litigation, Nos. 15-1184
et al., plaintiffs are a putative class of direct-purchasers of
branded Effexor XR, a putative class of end-payors, two
individual third-party payors, and four individual-retailers
asserting direct-purchaser claims. We will refer to these
parties collectively as the “Effexor plaintiffs.” Defendants are
Wyeth, Inc., Teva Pharmaceutical Industries Ltd., and their
respective corporate affiliates. We will likewise refer to these
parties collectively as the “Effexor defendants.”
28
1
In 1985, the PTO issued a patent for the compound
venlafaxine hydrochloride. That patent was assigned to
American Home Products, Wyeth’s predecessor. Eight years
later, in 1993, the FDA granted Wyeth approval to begin
marketing Effexor, a drug used to treat major depression.
Effexor’s active ingredient is venlafaxine hydrochloride; the
patent for that compound expired on June 13, 2008. In 1997,
Wyeth introduced Effexor XR, an extended release, once-daily
version. Wyeth obtained three patents for Effexor XR, all of
which expired on March 20, 2017. The Effexor plaintiffs
contend that Wyeth obtained the Effexor XR patents through
fraud on the PTO, improperly listed those patents in the FDA’s
Orange Book, and enforced those patents through serial sham
litigation.
On December 10, 2002, Teva filed a paragraph IV
certification challenging the validity of Wyeth’s Effexor XR
patents. As the first company to file an ANDA with a
paragraph IV certification for generic Effexor XR, Teva was
entitled to Hatch-Waxman’s 180-day period of marketing
exclusivity. Wyeth brought suit against Teva for patent
infringement in the District of New Jersey.
In October 2005, shortly after the district court held a
Markman hearing on claim construction, Wyeth and Teva
reached a settlement. Under the settlement, which the Effexor
plaintiffs allege constitutes an unlawful reverse payment,
Wyeth and Teva reached an agreed-upon entry date of July 1,
2010 for generic Effexor XR, nearly seven years before the
expiration of Wyeth’s patents related to that drug. Wyeth
further agreed that it would not market an authorized-generic
Effexor XR during Teva’s 180-day exclusivity period. In
return, Teva would pay Wyeth royalties for the license,
29
beginning at 15% during the 180-day period. If Wyeth chose
not to introduce an authorized-generic after 180 days and no
other generic entered the market, Teva was required to pay
Wyeth 50% royalties for the next 180 days and 65% thereafter
for up to 80 months. Moreover, in accordance with the
settlement, Wyeth granted Teva a license to begin selling
generic immediate release Effexor (Effexor IR) for two years
prior to the June 2008 expiration of the original venlafaxine
hydrochloride patent and agreed that it would not compete with
Teva’s marketing of generic Effexor IR during that two-year
period. Teva, for its part, would pay Wyeth 28% royalties
during the first year and 20% during the second year.
Wyeth and Teva filed the settlement agreement with the
district court presiding over the patent infringement litigation.
In accordance with a 2002 consent decree, the Federal Trade
Commission (FTC) had the right to weigh in on Wyeth’s
settlements and to raise objections in advance. It offered no
objection. The settlement was also submitted to the FTC and
the U.S. Department of Justice pursuant to section 1112 of the
Medicare Prescription Drug, Improvement, and Modernization
Act of 2003, Pub. L. No. 108-173, 117 Stat. 2066, 2461-63
(2003) (codified at 21 U.S.C. § 355 note). The district court
thereafter entered orders vacating its prior Markman rulings,
dismissing the case, and adopting the terms of the settlement
as a consent decree and permanent injunction. Effexor J.A.
1298.
Following the Wyeth-Teva settlement, between April
2006 and August 2011, Wyeth brought patent infringement
suits against sixteen other companies that sought to market a
generic Effexor XR. All suits settled under terms stipulating
that Wyeth’s patents were valid and infringed.
2
30
Beginning in May 2011, several direct-purchasers of
Effexor XR filed class action complaints in the Southern
District of Mississippi challenging the lawfulness of the
Wyeth-Teva settlement agreement. The cases were
consolidated and, on September 21, 2011, the court transferred
the action to the District of New Jersey.
After transfer, the direct-purchasers filed an amended
consolidated class action complaint, a group of end-payors
joined the case with a consolidated class action complaint of
their own, four individual-retailers filed complaints, and two
individual third-party payors together filed their own
complaint. The complaints are substantially similar: Each
alleges a monopolization claim against Wyeth under section 2
of the Sherman Act or analogous state statutes, asserting that
Wyeth fraudulently induced the PTO to issue the three patents
covering Effexor XR (Walker Process fraud), wrongfully
listed those patents in the Orange Book, enforced those patents
through serial sham litigation, and entered into a reverse-
payment settlement with Teva. The complaints also raise a
claim under section 1 of the Sherman Act or a state analogue
against both Wyeth and Teva, challenging the reverse-payment
settlement as an unlawful restraint of trade. As with the Lipitor
appeals, we will refer to these claims, respectively, as the
“section 2 monopolization claim” and the “section 1 restraint
of trade claim.” (Though otherwise similar to the other
complaints, the individual third-party payors’ complaint names
only Wyeth and its affiliates as defendants. They also raise
additional claims not relevant to these appeals.)
The Effexor defendants filed motions to dismiss under
Rule 12(b)(6), but the District Court stayed proceedings
pending the Supreme Court’s decision in Actavis. After
Actavis was issued, the District Court vacated the stay,
31
reopened the case, and called for supplemental briefing on the
pending motions to dismiss. On October 23, 2013, the direct-
purchasers (but no other party) filed an amended complaint.
On October 6, 2014, the District Court granted in part
and denied in part the Effexor defendants’ motions to dismiss.
In re Effexor XR Antitrust Litig., 2014 WL 4988410 (D.N.J.
Oct. 6, 2014). It rejected the Effexor plaintiffs’ challenges to
the Wyeth-Teva reverse-payment settlement and dismissed
with prejudice the section 1 restraint of trade claims. Id. at *19-
24. However, the District Court declined to dismiss the Effexor
plaintiffs’ Walker Process allegations against Wyeth. Id. at
*24-26. At the Effexor plaintiffs’ request, the court granted
final judgment on the restraint of trade claims under Federal
Rule of Civil Procedure 54(b).
These timely appeals followed. On February 27, 2015,
the Effexor defendants moved this Court to transfer the Effexor
appeals to the Federal Circuit on the ground that the Effexor
plaintiffs’ complaints assert claims that arise under patent law.
We denied the motion without prejudice to the Effexor
defendants raising the jurisdictional argument in their merits
briefs.
III
The District Court possessed subject-matter
jurisdiction, at a minimum, under the following statutes: With
respect to the Lipitor and Effexor direct-purchasers and
independent-retailers, the District Court had jurisdiction under
28 U.S.C. §§ 1331 and 1337(a). With respect to the Lipitor
and Effexor end-payors, the District Court had jurisdiction
under 28 U.S.C. § 1332(d). And with respect to the Effexor
independent third-party payors, the District Court had
jurisdiction under 28 U.S.C. § 1332(a)(1) and (3).
32
The Lipitor and Effexor defendants contend that the
District Court also had jurisdiction over each of these cases
under 28 U.S.C. § 1338(a), thus necessitating transfer of these
appeals to the Federal Circuit. The RP Healthcare plaintiffs,
for their part, argue that the District Court did not possess
subject-matter jurisdiction at all; they say their case properly
belongs in California state court.
Though our jurisdiction to reach the merits of these
appeals is disputed, “it is familiar law that a federal court
always has jurisdiction to determine its own jurisdiction.”
United States v. Ruiz, 536 U.S. 622, 628 (2002); see also
Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 542
(1986); Brown v. Keene, 33 U.S. (8 Pet.) 112, 116 (1834). We
therefore, for purposes of this opinion, have jurisdiction under
28 U.S.C. § 1291. Our review of the jurisdictional questions
at issue is plenary. In re NFL Players Concussion Injury Litig.,
775 F.3d 570, 576 (3d Cir. 2014).
IV
Like all other federal courts, we are a court of limited
jurisdiction, possessing “only that power authorized by
Constitution and statute.” Kokkonen v. Guardian Life Ins. Co.
of Am., 511 U.S. 375, 377 (1994). As an Article III court
established by Congress, our appellate jurisdiction is “purely
statutory.” Heike v. United States, 217 U.S. 423, 428 (1910).
The United States Courts of Appeals have general
appellate jurisdiction over “appeals from all final decisions of
the district courts of the United States.” 28 U.S.C. § 1291. But
carved out of § 1291’s jurisdictional grant is the Court of
Appeals for the Federal Circuit. Congress vested that court
with “exclusive jurisdiction of an appeal from a final decision
of a district court of the United States . . . in any civil action
arising under . . . any Act of Congress relating to patents.” Id.
33
§ 1295(a)(1) (emphasis added). The federal district courts, in
turn, “have original jurisdiction of any civil action arising
under any Act of Congress relating to patents.” Id. § 1338(a).
“Thus, the Federal Circuit’s jurisdiction is fixed with reference
to that of the district court, and turns on whether the action
arises under federal patent law.” Holmes Grp., Inc. v. Vornado
Air Circulation Sys., Inc., 535 U.S. 826, 829 (2002). So if the
District Court here had jurisdiction over at least one claim in a
particular case under § 1338(a), the Federal Circuit has
exclusive jurisdiction of that appeal. See Apotex, Inc. v.
Thompson, 347 F.3d 1335, 1342 (Fed. Cir. 2003); see also 19
James Wm. Moore & George C. Pratt, Moore’s Federal
Practice § 208.10[2], p. 208-16 (3d ed. 2017) (“The minimum
jurisdictional requirement is the existence of at least one claim
under the patent . . . statutes, and in a mixed case, the Federal
Circuit has jurisdiction to decide all of the issues involved in
the appeal.” (footnote omitted)). In that circumstance, we
would lack jurisdiction and be required to transfer these
appeals to the Federal Circuit. See 28 U.S.C. § 1631; In re
Arunchalam, 812 F.3d 290, 293-94 (3d Cir. 2016) (per
curiam).
The discussion that follows applies to both sets of
appeals. Consequently, unless otherwise indicated, we will
refer to the Lipitor and Effexor plaintiffs collectively as the
“plaintiffs” and the Lipitor and Effexor defendants collectively
as the “defendants.”
A
The Supreme Court’s pathmarking decision addressing
the Federal Circuit’s patent-law jurisdiction is Christianson v.
Colt Industries Operating Corp., 486 U.S. 800 (1986). At the
time, the Federal Circuit’s jurisdictional statute vested that
court with “exclusive jurisdiction of an appeal from a final
34
decision of a district court of the United States . . . if the
decision of a district court was based, in whole or in part, on
[28 U.S.C.] § 1338.” 28 U.S.C. § 1295(a)(1). Then, as now, §
1338(a) granted the district courts “original jurisdiction of any
civil action arising under any Act of Congress relating to
patents.” Section 1338(a) uses the same operative language as
28 U.S.C. § 1331, the statute that gives the district courts
“original jurisdiction of all civil actions arising under the
Constitution, laws, or treaties of the United States.” (Emphasis
added.).
Christianson held that “[l]inguistic consistency”
requires that courts apply the same jurisdictional test to
determine whether a case arises under § 1331 as it would under
§ 1338(a). 486 U.S. at 808. Under § 1338(a), then, jurisdiction
extends “only to those cases in which a well-pleaded complaint
establishes either that federal patent law creates the cause of
action or that the plaintiff’s right to relief necessarily depends
on resolution of a substantial question of federal patent law, in
that patent law is a necessary element of one of the well-
pleaded claims.” Id. at 809. As in the § 1331 context, the
determination whether a claim “arises under” patent law must
be made in accordance with the time-honored well-pleaded-
complaint rule. And as “appropriately adapted to § 1338(a),”
that rule provides that the answer to whether a claim “arises
under” patent law “must be determined from what necessarily
appears in the plaintiff’s statement of his own claim in the bill
or declaration, unaided by anything alleged in anticipation or
avoidance of defenses which it is thought the defendant may
interpose.” Id. (quoting Franchise Tax Bd. of Cal. v. Constr.
Laborers Vacation Trust, 463 U.S. 1, 10 (1983)).
For those cases in which federal patent law does not
create the cause of action, it is not “necessarily sufficient that
35
a well-pleaded claim alleges a single theory under which
resolution of a patent-law question is essential.” Id. at 810.
Rather, if “‘on the face of a well-pleaded complaint there are .
. . reasons completely unrelated to the provisions and purposes
of [the patent laws] why the [plaintiff] may or may not be
entitled to the relief it seeks,’ then the claim does not ‘arise
under’ those laws.” Id. (alterations in original) (quoting
Franchise Tax Bd., 463 U.S. at 26). “Thus,” Christianson
explained, “a claim supported by alternative theories in the
complaint may not form the basis for § 1338(a) jurisdiction
unless patent law is essential to each of those theories.” Id.
The complaint in Christianson contained an antitrust
count that the Court understood as raising a monopolization
claim under section 2 of the Sherman Act and a group-boycott
claim under section 1. See id. Even though the claims included
allegations of patent invalidity, the Court held that the Federal
Circuit lacked jurisdiction because the “patent-law issue, while
arguably necessary to at least one theory under each claim,
[was] not necessary to the overall success of either claim.” Id.
As to the complaint’s section 2 monopolization claim,
the Court first identified the “thrust” of the allegations, namely,
that Colt, the defendant, “embarked on a course of conduct to
illegally extend its monopoly position with respect to the
described patents and to prevent” plaintiffs from competing.
Id. But because the well-pleaded-complaint rule “focuses on
claims, not theories,” the Court emphasized that “just because
an element that is essential to a particular theory might be
governed by federal patent law does not mean that the entire
monopolization claim ‘arises under’ patent law.” Id. at 811.
One such theory involved allegations that certain Colt trade
secrets were not protected under state law because their
underlying patents were invalid. But after parsing the
36
complaint, the Court observed that this monopolization theory
was “only one of several, and the only one for which the patent-
law issue is even arguably essential.” Id. Because there were
“‘reasons completely unrelated to the provisions and purposes’
of federal patent law why [the plaintiffs] ‘may or may not be
entitled to the relief they [sought]’ under their monopolization
claim, the claim [did] not ‘arise under’ patent law.” Id. at 812
(quoting Franchise Tax Bd., 463 U.S. at 26).
The same result obtained with regard to the plaintiffs’
section 1 group-boycott claim. That claim involved allegations
that Colt engaged in a group-boycott to protect its trade secrets.
And like the section 2 monopolization claim, one theory of
recovery involved assertions that Colt’s patents protecting its
trade secrets were invalid. “Whether or not the patent-law
issue was an ‘essential’ element of that group-boycott theory,”
the Court noted, plaintiffs “could have supported their group-
boycott claim with any of several theories having nothing to do
with the validity of Colt’s patents.” Id. at 813. Instead, “the
appearance on the complaint’s face of an alternative, non-
patent theory compel[led] the conclusion that the group-
boycott claim [did] not ‘arise under’ patent law.” Id.
Four working principles underlie the Court’s decision in
Christianson. First, whether a claim “arises under” federal
patent law is made by reference to the well-pleaded complaint.
See Holmes Grp., 535 U.S. at 829-30. Second, for
jurisdictional purposes, regardless of how a complaint labels
its claims or counts, courts are to look to the complaint and its
allegations as a whole to identify the plaintiff’s claims and any
theories undergirding those claims. Third, in the antitrust
context, courts must attend to the thrust of the plaintiff’s
allegations and then determine the theories that explain why
certain alleged conduct was anticompetitive. And finally, after
37
distinguishing between claims and theories, courts then must
ascertain whether each theory supporting a claim necessarily
requires the resolution of a substantial question of patent law.
If one theory does not, the Federal Circuit lacks appellate
jurisdiction. See ClearPlay, Inc. v. Abecassis, 602 F.3d 1364,
1369 (Fed. Cir. 2010) (“Christianson embraces a distinctly
non-holistic approach to ‘arising under’ jurisdiction. It is not
enough that patent law issues are in the air. Instead, resolution
of a patent law issue must be necessary to every theory of relief
under at least one claim in the plaintiff’s complaint.” (emphasis
added)).
B
Applying these principles, we conclude that the actions
brought by the Lipitor and Effexor plaintiffs do not “arise
under” patent law. We note at the outset a clear and undisputed
aspect of our jurisdictional inquiry. Federal and state antitrust
law, not federal patent law, creates plaintiffs’ claims. This
case, like Christianson itself, turns on the second head of
“arising under” jurisdiction. And so we must decide whether
plaintiffs’ well-pleaded complaints state at least one claim
upon which their “right to relief necessarily depends on
resolution of a substantial question of federal patent law, in that
patent law is a necessary element of one of the well-pleaded
claims.” Christianson, 486 U.S. at 809.
Defendants do not argue that plaintiffs’ section 1
restraint of trade claims arise under patent law. Those claims
relate only to the Pfizer-Ranbaxy and Wyeth-Teva reverse-
payment settlements. Defendants instead home in on
plaintiffs’ section 2 monopolization claims. Recall that the
thrust of those claims is that Pfizer and Wyeth each engaged in
an overall scheme to monopolize the markets for their
respective branded Lipitor and Effexor XR drugs. Those
38
schemes, plaintiffs allege, were furthered in part by the
companies’ fraudulent procurement and enforcement of certain
patents relating to the drugs. But the schemes were also
furthered by the reverse-payment settlements (and, in the
Lipitor appeals, the filing of a sham FDA citizen petition).
The fraudulent procurement of a patent—known as
Walker Process fraud, see Walker Process Equip., Inc. v. Food
Mach. & Chem. Corp., 382 U.S. 172 (1965) (recognizing that
a patentee’s knowing and willful misrepresentation of facts to
the PTO can strip the patentee of immunity under the antitrust
laws)—requires a plaintiff to show, among other things, that
the patentee committed fraud before the PTO, that the fraud
caused the patent to issue, and that the patentee enforced the
fraudulently procured patent, Unitherm Food Sys., Inc. v.
Swift-Eckrich, Inc., 375 F.3d 1341, 1355 (Fed. Cir. 2004),
rev’d on other grounds, 546 U.S. 394 (2006). Walker Process
fraud has for some time been considered by courts to present a
substantial question of patent law. See In re DDAVP Antitrust
Litig., 585 F.3d 677, 685 (2d Cir. 2009); In re Ciprofloxacin
Antitrust Litig., 544 F.3d 1323, 1330 n.8 (Fed. Cir. 2008)
(“[T]he determination of fraud before the PTO necessarily
involves a substantial question of patent law.”); Nobelpharma
AB v. Implant Innovations, Inc., 141 F.3d 1059, 1068 (Fed. Cir.
1998) (en banc in relevant part) (“[W]hether conduct in
procuring or enforcing a patent is sufficient to strip a patentee
of its immunity from the antitrust laws is to be decided as a
question of Federal Circuit law.”). And to the extent plaintiffs’
sham litigation and false Orange Book listing theories depend
on a successful showing of Walker Process fraud, they too
could present substantial questions of patent law. See DDAVP,
585 F.3d at 685; Nobelpharma, 141 F.3d at 1071-72. We
recognize as well that the substantiality of these theories may
be open to debate following Gunn v. Minton, 133 S. Ct. 1059
39
(2013). That case held, in the context of a state legal
malpractice claim, that hypothetical, backward-looking, case-
within-a-case questions of patent law that do not change the
real-world result of prior federal patent litigation do not present
a substantial patent-law issue. Id. at 1067-68. We need not
definitively address the substantiality of plaintiffs’ Walker
Process, sham litigation, and false Orange Book listing
theories in light of Gunn. For even assuming that these theories
do present substantial questions of patent law, plaintiffs’ right
to relief on their section 2 monopolization claims does not
depend upon them.
Here, plaintiffs could obtain relief on their section 2
monopolization claims by prevailing on an alternative, non-
patent-law theory, namely, that Pfizer and Wyeth monopolized
the market in their respective branded drugs by engaging in a
reverse-payment settlement. And in Lipitor the plaintiffs could
also prevail on the additional non-patent law theory that Pfizer
filed a sham citizen petition with the FDA. See DDAVP, 585
F.3d at 686 (“[W]hether [a FDA] petition was a sham is an
issue independent of patent law.”); see also Apotex Inc. v.
Acorda Therapeutics, Inc., 823 F.3d 51, 59 (2d Cir. 2016).
Actavis teaches that reverse-payment antitrust claims do
not present a question of patent law. See 133 S. Ct. at 2236-37
(“[T]he size of the unexplained reverse payment can provide a
workable surrogate for a patent’s weakness, all without forcing
a court to conduct a detailed exploration of the validity of the
patent itself.”). The Court did acknowledge, however, that
questions of patent validity may still arise from time to time.
See id. at 2236 (“[I]t is normally not necessary to litigate patent
validity to answer the antitrust question (unless, perhaps, to
determine whether the patent litigation is a sham).”). But even
where patent-law questions are presented, it does not follow
40
that patent law is necessary for relief on every theory of
liability supporting an antitrust claim. In the present appeals,
“[s]ince there are reasons completely unrelated to the
provisions and purposes of federal patent law why [plaintiffs]
may or may not be entitled to the relief they seek under their
monopolization claim, the claim does not ‘arise under’ federal
patent law.” Christianson, 486 U.S. at 812 (brackets, citation,
and some internal quotation marks omitted). These
considerations lead us to conclude that the presence of non-
patent-law theories of liability supporting the Lipitor and
Effexor plaintiffs’ monopolization claims vests jurisdiction
over their appeals in this Court, not the Federal Circuit.
C
Defendants do not quarrel with any of the principles that
guide our analysis. They instead assert that plaintiffs’ reverse-
payment settlement allegations constitute monopolization
claims separate and apart from the Walker Process fraud, sham
litigation, and false Orange Book listing theories. The
allegations of fraudulent procurement and enforcement of the
Lipitor and Effexor patents, in defendants’ view, involve
distinct anticompetitive conduct that occurred years before the
reverse-payment settlements (and, in Lipitor, the sham FDA
citizen petition).
We reject this divide-and-conquer approach to “arising
under” jurisdiction. Defendants in effect ask that we rewrite
plaintiffs’ complaints, which plead patent-law related theories
as aspects of an overall monopolistic scheme. A
monopolization claim under section 2 of the Sherman Act has
two elements: (1) the possession of monopoly power in the
relevant market and (2) the willful acquisition or maintenance
of that power. LePage’s Inc. v. 3M, 324 F.2d 141, 146 (3d Cir.
2003) (en banc) (citing United States v. Grinnell Corp., 384
41
U.S. 563, 570-71 (1966)). But to be condemned as
exclusionary, a monopolist’s anticompetitive conduct must
have an anticompetitive effect. “The relevant inquiry,” we
have held, “is the anticompetitive effect of [a defendant’s]
exclusionary practices considered together.” Id. at 162. Thus,
“courts must look to the monopolist’s conduct taken as a whole
rather than considering each aspect in isolation.” Id. (citing
Cont’l Ore Co. v. Union Carbide & Carbon Corp., 370 U.S.
690, 699 (1962)); see id. (“[I]t would not be proper to focus on
specific individual acts of an accused monopolist while
refusing to consider their overall combined effect . . . . We are
dealing with what has been called the ‘synergistic effect’ of the
mixture of the elements.” (alterations in original) (internal
quotation marks omitted)).
Defendants contend that the patent-law theories of
monopolization liability in plaintiffs’ complaints are distinct
“claims.” But that runs headlong into traditional antitrust
principles. Plaintiffs’ monopolization claims encompass the
totality of the allegedly anticompetitive conduct—from
defendants’ fraudulent procurement and enforcement of their
patents on through to the reverse-payment settlements. We
will not permit the defendants to commandeer these
complaints, of which plaintiffs are master.
Nor do we accept the argument that certain statements
made by the Effexor plaintiffs in the District Court somehow
estop them from arguing that the patent-law allegations
constitute theories of relief. Principles of estoppel cannot
confer jurisdiction where it otherwise does not exist. See Ins.
Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee,
456 U.S. 694, 702 (1982); Semper v. Gomez, 747 F.3d 229, 247
(3d Cir. 2014). And in any event, our jurisdictional inquiry is
confined solely to the plaintiffs’ well-pleaded complaints, not
42
subsequent events. See Christianson, 486 U.S. at 814 (“Since
the district court’s jurisdiction is determined by reference to
the well-pleaded complaint, not the well-tried case, the referent
for the Federal Circuit’s jurisdiction must be the same.”).
D
Our jurisdictional holding is consistent, we think, with
two of the Second Circuit’s pre-Actavis reverse-payment cases.
In one case, the court transferred an appeal to the Federal
Circuit and retained jurisdiction over others. The Second
Circuit explained: “The indirect purchaser plaintiffs amended
their complaint to add state-law, Walker Process antitrust
claims . . . . Because the Walker Process claims are preempted
by patent law, we transferred the indirect purchaser plaintiffs’
appeal to the Federal Circuit, while retaining jurisdiction over
the direct purchaser plaintiffs’ appeals.” Arkansas Carpenters
Health & Welfare v. Bayer AG, 604 F.3d 98, 103 n.10 (2d Cir.
2010); see In re Ciprofloxacin Hydrochloride Antitrust Litig.,
2007 U.S. App. LEXIS 30732, at *1 (2d Cir. Nov. 7, 2007)
(order transferring indirect purchaser plaintiffs’ appeal to the
Federal Circuit). The Second Circuit and the Federal Circuit
therefore each independently assessed the lawfulness of the
same reverse-payment settlement. See Arkansas Carpenters,
604 F.3d at 103 & n.10; Ciprofloxacin, 544 F.3d at 1333. But
unlike the Lipitor and Effexor appeals before us, the appeal
transferred from the Second Circuit to the Federal Circuit
involved stand-alone Walker Process claims. See In re
Ciprofloxacin Hydrochloride Antitrust Litig., 363 F. Supp. 2d
514, 544 (E.D.N.Y. 2005) (“[I]ndirect plaintiffs’ Count V
[raising state-law Walker Process claims] not only arises out
of patent law, but rests entirely on patent law” (emphasis
added)), aff’d, 544 F.3d 1232 (Fed. Cir. 2008), and aff’d sub
nom. Arkansas Carpenters, 604 F.3d 98.
43
And in DDAVP, 585 F.3d 677, the Second Circuit
retained jurisdiction over a reverse-payment case. The
DDAVP plaintiffs alleged four theories of liability in a
Sherman Act monopolization claim against a branded drug
manufacturer based upon theories nearly identical to those the
Lipitor and Effexor plaintiffs bring against Pfizer and Wyeth:
Walker Process fraud, sham Orange Book listing, sham
litigation against generic competitors, and a sham FDA citizen
petition. Id. at 685. The Second Circuit acknowledged that,
while the plaintiffs’ first three theories turned on substantial
questions of patent law, the fourth theory—the filing of a sham
FDA citizen petition—did not. Id. at 685-86. Because the
citizen-petition theory did not raise any question of patent law,
the court exercised jurisdiction over the entirety of the
plaintiffs’ monopolization claim. Id. at 686.
A final, prudential consideration tips in favor of our
Court exercising jurisdiction over these appeals. Under the
Federal Circuit’s choice-of-law rules, it would apply Third
Circuit antitrust jurisprudence—including our recent decision
in King Drug, 791 F.3d 388—when reviewing whether
plaintiffs’ complaints state plausible claims for relief under
Actavis. See Nobelpharma, 141 F.3d at 1059 (Federal Circuit
“appl[ies] the law of the appropriate regional circuit to issues
involving other elements of antitrust law such as relevant
market, market power, damages, etc., as those issues are not
unique to patent law”). Now that the Supreme Court has
confirmed that it is usually unnecessary to litigate these patent-
law issues to determine antitrust liability, the development of
post-Actavis jurisprudence is, in the ordinary case, left to the
regional Courts of Appeals.
Christianson establishes that not all cases involving
patent law fall within the Federal Circuit’s jurisdiction.
44
Congress has left a role for our Court to play in adjudicating
patent-law issues over which we possess jurisdiction. Our
holding requires us to fulfill that role in these appeals.
V
The appeal of the RP Healthcare plaintiffs requires a
separate jurisdictional inquiry. That case was filed by a group
of California pharmacists in the Superior Court of California,
Sonoma County, but Pfizer removed it to federal district court,
citing federal-question jurisdiction under 28 U.S.C. § 1331 and
patent-law jurisdiction under § 1338(a). RP Healthcare J.A.
26-27; see 28 U.S.C. § 1441(a). In denying the RP Healthcare
plaintiffs’ remand motion, the District Court reasoned that
“there may be patent issues raised as defenses in this case
which would engender jurisdiction.” Lipitor J.A. 2. We
disagree. “Under the well-pleaded complaint rule . . . whether
a claim ‘arises under’ patent law ‘must be determined from
what necessarily appears in the plaintiff’s statement of his own
claim in the bill or declaration, unaided by anything alleged in
anticipation or avoidance of defenses which it is thought the
defendant may interpose.’” Christianson, 486 U.S. at 809
(quoting Franchise Tax Bd., 463 U.S. at 8); see Louisville &
Nashville R.R. Co. v. Mottley, 211 U.S. 149 (1914); N.J.
Carpenters v. Tishman Constr. Corp. of N.J., 760 F.3d 297,
302 (3d Cir. 2014) (“The existence or expectation of a federal
defense is insufficient to confer federal jurisdiction.”).
Pfizer and Ranbaxy nevertheless argue that the RP
Healthcare case belongs in federal court because it “arises
under” patent law pursuant to § 1338(a). They also say the
District Court possessed diversity jurisdiction before final
judgment entered as a result of the RP Healthcare plaintiffs’
voluntary dismissal of the only two non-diverse defendants.
We reject the first argument but find the record insufficient to
45
decide the second.
A
The RP Healthcare plaintiffs do not challenge the
Pfizer-Ranbaxy settlement as an unlawful reverse payment.
Rather, they allege that the settlement constitutes a per se
unlawful market allocation agreement in violation of
California’s Cartwright Act. Two years after Actavis, the
California Supreme Court held that reverse-payment
settlements can be challenged under that Act and are to be
analyzed under a structured rule-of-reason. In re Cipro Cases
I & II, 348 P.3d 845 (Cal. 2015). But the California court has
yet to recognize the kind of per se market allocation claim
proposed by the RP Healthcare plaintiffs.
To the extent their claim exists under California law (a
question we do not decide), as pled by the RP Healthcare
plaintiffs that claim would not “arise under” federal patent law.
Pfizer and Ranbaxy latch onto a single sentence in the RP
Healthcare plaintiffs’ state court complaint making an express
allegation of Walker Process fraud. See RP Healthcare Pls.’
Compl. ¶ 114, RP Healthcare J.A. 57 (“The Agreement
between Defendants extending the length of the Lipitor patents
constitutes fraudulent procurement and enforcement of a patent
. . . .” (citing Walker Process, 382 U.S. 172)). But like the
complaints of the Lipitor and Effexor plaintiffs discussed
above, we conclude that there are alternative non-patent-law
theories through which the RP Healthcare plaintiffs could
prevail on their state-law antitrust claim. See Christianson,
486 U.S. at 809-10. The RP Healthcare plaintiffs’ complaint
includes theories of liability other than Walker Process fraud.
See id. ¶ 105, RP Healthcare J.A. 56 (“The Agreements
between the Defendants, which artificially extended the length
of the Lipitor-related patents, allocated markets between them,
46
artificially postponed price reductions, and restrained trade in
the provision of Lipitor and its generic alternatives, are a
violation of the Cartwright Act . . . .” (emphasis added)). Thus,
the RP Healthcare plaintiffs could obtain relief on the market
allocation claim all without addressing the validity of Pfizer’s
Lipitor patents. The oblique mention of Walker Process fraud
in their complaint does not land this case in the “special and
small category” of state-law claims “in which arising under
jurisdiction still lies.” Gunn, 133 S. Ct. at 1064 (internal
quotation marks omitted).
B
While the District Court did not possess jurisdiction
over the RP Healthcare case under § 1338(a), the possibility
exists that the court had diversity jurisdiction by the time it
entered final judgment. Article III of the Constitution provides
that “[t]he judicial Power [of the United States] shall extend . .
. to Controversies . . . between Citizens of different States; . . .
and between a State, or the Citizens thereof, and foreign States,
Citizens or Subjects.” Beginning with the Judiciary Act of
1789, ch. 20, § 11, 1 Stat. 78, Congress has authorized the
federal courts to exercise jurisdiction based on the parties’
diversity of citizenship. In its current form, the diversity
statute vests in the federal district courts original jurisdiction
of “all civil actions where the matter in controversy exceeds
the sum or value of $75,000, . . . and is between . . . citizens of
different States and in which citizens or subjects of a foreign
state are additional parties.” 28 U.S.C. § 1132(a)(3). Since
Strawbridge v. Curtis, 7 U.S. (3 Cranch) 267 (1806), the
Supreme Court has interpreted the diversity statute to require
“complete diversity” of citizenship: “[i]n a case with multiple
plaintiffs and multiple defendants, the presence in the action of
a single plaintiff from the same State as a single defendant
47
deprives the district court of original diversity jurisdiction over
the entire action,” Exxon Mobil Corp. v. Allahpattah Servs.,
Inc., 545 U.S. 546, 553 (2005).
Though “[i]t had long been the case that ‘the jurisdiction
of the court depends upon the state of things at the time of the
action brought,’” Grupo Dataflux v. Atlas Global Grp., L.P.,
541 U.S. 567, 570 (2004) (quoting Mollan v. Torrance, 22 U.S.
(9 Wheat.) 537, 539 (1824)), this time-of-filing rule is subject
to a few discrete exceptions. One such “method of curing a
jurisdictional defect [that has] long been an exception to the
time-of-filing rule” is when a jurisdictional defect is “cured by
the dismissal of the party that had destroyed diversity.” Id. at
572. As the Supreme Court recognized in Caterpillar Inc. v.
Lewis, “a district court’s error in failing to remand a case
improperly removed is not fatal to the ensuing adjudication if
federal jurisdictional requirements are met at the time
judgment is entered.” 529 U.S. 61, 64 (1996).
Pfizer and Ranbaxy urge us to apply that exception here.
After all, the RP Healthcare plaintiffs voluntarily dismissed
the only two non-diverse defendants prior to entry of final
judgment. Before this Court, however, the parties expressed
uncertainty regarding the state of the record as it pertains to the
citizenship of two parties—defendants Pfizer Ireland
Pharmaceuticals and Warner-Lambert Co., LLC, both
unincorporated entities and wholly owned subsidiaries of
Pfizer. See Lipitor Tr. of Oral Arg. 23-24, 44-47; RP
Healthcare Pls.’ Reply Br. 17-18. Like all unincorporated
entities, partnerships and limited liability companies (LLCs)
bear the citizenship of each of their members. See Americold
Realty Trust v. ConAgra Foods, Inc., 136 S. Ct. 1012, 1016-17
(2016); Carden v. Arcoma Assocs., 494 U.S. 185, 195-96
(1990); Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412,
48
420 (3d Cir. 2010).
As the parties asserting diversity jurisdiction, Pfizer and
Ranbaxy bear the burden of proving diversity of citizenship by
a preponderance of the evidence. See Freidrich v. Davis, 767
F.3d 374, 377 (3d Cir. 2014). Since this case was removed to
federal court, diversity must have existed both at the time the
RP Healthcare plaintiffs’ state court complaint was filed and
at the time of removal. See Pullman Co. v. Jenkins, 305 U.S.
534, 537 (1939); Johnson v. SmithKline Beecham Corp., 724
F.3d 337, 346 (3d Cir. 2013). But no changes in citizenship
after the time of filing (and, as relevant here, the time of
removal) can create or destroy diversity. See Grupo Dataflux,
541 U.S. at 574-75; Conolly v. Taylor, 27 U.S. (2 Pet.) 556,
565 (1829).
In calling for diversity jurisdiction Pfizer and Ranbaxy
made no effort before this Court or the District Court to
demonstrate that complete diversity was in fact present before
final judgment. That is especially puzzling, since an
unincorporated association “is in the best position to ascertain
its own membership,” Lincoln Benefit Life Co. v. AEI Life,
LLC, 800 F.3d 99, 108 (3d Cir. 2015), and the entities in
question are Pfizer subsidiaries. While we have previously
observed that, “where the unincorporated association is the
proponent of diversity jurisdiction, there is no reason to excuse
it of its obligation to plead the citizenship of each of its
members,” id. at 108 n.36, that statement was made in the
context of an unincorporated association asserting diversity as
a plaintiff. It does not address the situation in this case, where
the removing parties are asserting diversity as a result of the
plaintiffs’ own voluntary post-removal actions. We therefore
consider it premature to direct that the RP Healthcare case be
sent back to California state court. Rather, we will remand the
49
matter to the District Court to give the parties the opportunity
to clarify the record with regard to diversity of citizenship. The
District Court should also ensure that the amount in
controversy alleged in the RP Healthcare plaintiffs’ state-court
complaint exceeds $75,000. See 28 U.S.C. § 1332(a); Angus
v. Shiley, 989 F.2d 142, 145-46 (3d Cir. 1993).
Our remand applies as well to the Daiichi Sankyo
defendants. Before the District Court, they moved to dismiss
the RP Healthcare plaintiffs’ complaint on three grounds: lack
of Article III standing, lack of personal jurisdiction, and failure
to state a claim upon which relief can be granted. The District
Court dismissed the Daiichi Sankyo defendants under Rule
12(b)(6) for failure to state a plausible claim. Lipitor J.A. 65,
3543-44. But “a federal court generally may not rule on the
merits of a case without first determining that it has jurisdiction
over the category of claim in suit (subject-matter jurisdiction)
and the parties (personal jurisdiction).” Sinochem Int’l Co. v.
Malaysia Int’l Shipping Corp., 549 U.S. 422, 430-31 (2007);
see Steel Co. v. Citizens for Better Environment, 523 U.S. 83,
93-102 (1998). The District Court should have resolved the
standing and personal jurisdictional arguments before
dismissing Daiichi Sankyo on the merits. In the event that the
District Court concludes on remand that the parties were
completely diverse at the time of judgment, it should address
those arguments to determine whether it had the power to reach
the merits of the RP Healthcare plaintiffs’ claim against
Daiichi Sankyo.
It is a common practice among the Courts of Appeals to
retain jurisdiction over an appeal while making a limited
remand for additional findings or explanations. Basic
illustrations include a “controlled remand to determine whether
there is federal subject-matter jurisdiction,” as well as
50
“remands to determine justiciability or personal jurisdiction.”
16 Charles Alan Wright, Arthur R. Miller, & Edward H.
Cooper, Federal Practice & Procedure § 3937.1, pp. 847-48
(3d ed. 2012) (footnote omitted); see, e.g., Friery v. Los
Angeles Unified Sch. Dist., 448 F.3d 1146, 1150 (9th Cir.
2006) (limited remand for Article III standing determination);
Fort Knox Music Inc. v. Baptiste, 203 F.3d 193, 197 (2d Cir.
2000) (limited remand for personal jurisdiction determination);
Jason’s Foods, Inc. v. Peter Eckrich & Sons, Inc., 768 F.2d
189, 190-91 (7th Cir. 1985) (limited remand for diversity-of-
citizenship determination). We will follow that practice and
retain jurisdiction over the RP Healthcare plaintiffs’ appeal. It
is expected that the District Court and the parties will move
expeditiously on remand to resolve the diversity-of-citizenship
issue and, if necessary, jurisdiction over the Daiichi Sankyo
defendants.
VI
For the reasons stated, we conclude that, with a single
exception, we have jurisdiction to reach the merits of these
appeals. In one of the Lipitor appeals, RP Healthcare, Inc. v.
Pfizer, Inc., No. 14-4632, because it is unclear whether the
District Court had jurisdiction at the time judgment was
entered, we will order a limited remand for the parties to clarify
the record in this regard. Any further proceedings in these
appeals will be heard by this panel.
51