81,7(' 67$7(6 ',675,&7 &2857 )25 7+( ',675,&7 2) &2/80%,$ BBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBBB $/%(57 0$5&(//86 %5,6&2( et al. 3ODLQWLIIV Y &LYLO $FWLRQ 1R $%- 81,7(' 67$7(6 2) $0(5&,$ et al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¶V SUHYLRXV 0HPRUDQGXP 2SLQLRQ see Briscoe v. United States 1R :/ DW ± ''& -XO\ VR RQO\ WKH UHOHYDQW FLUFXPVWDQFHV ZLOO EH UHSHDWHG KHUH 2Q -XO\ WKH &RXUW GLVPLVVHG &RXQWV , ,, ,,, DQG ,9 DJDLQVW WKH )%, WKH 'HSDUWPHQW RI -XVWLFH DQG WKH 'LUHFWRU RI WKH )%, LQ KLV RIILFLDO FDSDFLW\ &RXQWV , ,,, DQG ,9 DJDLQVW GHIHQGDQW /RZU\ LQ KLV RIILFLDO FDSDFLW\ DQG &RXQWV , ,,, DQG ,9 DJDLQVW WKH 8QLWHG 6WDWHV See Briscoe :/ DW ± 2UGHU -XO\ >'NW @ 7KH &RXUW FRQFOXGHG WKDW LW ZDV QRW \HW FOHDU ZKHWKHU LW KDG VXEMHFW PDWWHU MXULVGLFWLRQ RYHU &RXQW ,, WKH QHJOLJHQW VXSHUYLVLRQ FRXQW VR LW GHQLHG WKH JRYHUQPHQW¶V PRWLRQ WR GLVPLVV WKDW FRXQW IRU IDLOXUH WR VWDWH D FODLP ZLWKRXW SUHMXGLFH DQG LW DXWKRUL]HG SODLQWLIIV WR HPEDUN RQ OLPLWHG MXULVGLFWLRQDO GLVFRYHU\ Briscoe :/ DW ± 7KH &RXUW DOVR GHIHUUHG UXOLQJ RQ GHIHQGDQW /RZU\¶V PRWLRQ WR GLVPLVV WKH VWDWH ODZ FODLPV DJDLQVW KLP XQGHU )HGHUDO 5XOH RI &LYLO 3URFHGXUH E XQWLO DIWHU LW KDG GHWHUPLQHG ZKHWKHU DQ\ IHGHUDO FODLPV ZRXOG EH OHIW VWDQGLQJ Id. &RXQW ,, DOOHJHV WKDW WKH IHGHUDO GHIHQGDQWV NQHZ RU VKRXOG KDYH NQRZQ DERXW /RZU\¶V GUXJ DGGLFWLRQ DQG KLV WDPSHULQJ ZLWK HYLGHQFH DQG WKDW WKHLU IDLOXUH WR VXSHUYLVH DQG PRQLWRU KLP EUHDFKHG D GXW\ RZHG WR WKH SODLQWLIIV DQG FDXVHG WKHP WR VXIIHU WKH KDUP WKDW IORZHG IURP WKHLU FRQYLFWLRQ DQG LQFDUFHUDWLRQ $P &RPSO >'NW @ ± ,Q LWV PRWLRQ WR GLVPLVV WKH JRYHUQPHQW DUJXHG WKDW WKH 8QLWHG 6WDWHV ZDV LPPXQH IURP VXLW DQG WKH &RXUW WKHUHIRUH ODFNHG VXEMHFW PDWWHU MXULVGLFWLRQ RYHU WKH QHJOLJHQW VXSHUYLVLRQ FODLP LQ OLJKW RI WKH GLVFUHWLRQDU\ IXQFWLRQ H[FHSWLRQ WR WKH )HGHUDO 7RUW &ODLPV $FW 8QLWHG 6WDWHV $JHQF\ 'HIV¶ 0RW WR 'LVPLVV >'NW @ ³8QLWHG 6WDWHV 0RW´ 0HP LQ 6XSS RI 8QLWHG 6WDWHV 0RW >'NW @ ³8QLWHG 6WDWHV 0HP´ DW ± $V WKH &RXUW H[SODLQHG DW WKH WLPH ³>W@KH GLVFUHWLRQDU\ IXQFWLRQ H[FHSWLRQ EDUV FODLPV µEDVHG XSRQ WKH H[HUFLVH RU SHUIRUPDQFH RU WKH IDLOXUH WR H[HUFLVH RU SHUIRUP D GLVFUHWLRQDU\ IXQFWLRQ RU GXW\ RQ WKH SDUW RI D IHGHUDO DJHQF\ RU DQ HPSOR\HH RI WKH *RYHUQPHQW ZKHWKHU RU QRW WKH GLVFUHWLRQ LQYROYHG EH DEXVHG¶´ Briscoe :/ DW TXRWLQJ Jerome Stevens Pharms., Inc. v. FDA )G '& &LU 7KH &RXUW LV UHTXLUHG WR HQJDJH LQ D WZRSDUW LQTXLU\ ZKHQ WKH JRYHUQPHQW LQYRNHV WKH H[FHSWLRQ )LUVW WKH &RXUW PXVW DVVHVV ZKHWKHU WKH FKDOOHQJHG FRQGXFW LQYROYHV ³DQ HOHPHQW RI MXGJPHQW RU FKRLFH´ United States v. Gaubert 86 TXRWLQJ Berkovitz ex rel Berkovitz v. United States 86 $Q DFWLRQ LV QRW VXEMHFW WR MXGJPHQW RU FKRLFH LI D ³IHGHUDO VWDWXWH UHJXODWLRQ RU SROLF\ VSHFLILFDOO\ SUHVFULEHV D FRXUVH RI DFWLRQ IRU DQ HPSOR\HH WR IROORZ´ Gaubert 86 DW TXRWLQJ Berkovitz 86 DW ,QWHUQDO JXLGHOLQHV FDQ DOVR FRQVWLWXWH WKLV VRUW RI PDQGDWRU\ GLUHFWLYH Ignatiev v. United States )G '& &LU 7KH VHFRQG SURQJ RI WKH GLVFUHWLRQDU\ IXQFWLRQ H[FHSWLRQ DVNV ZKHWKHU WKH FKDOOHQJHG DFWV DUH ³RI WKH NLQG WKDW WKH GLVFUHWLRQDU\ IXQFWLRQ H[FHSWLRQ ZDV GHVLJQHG WR VKLHOG´ ± WKDW LV ³DFWLRQV DQG GHFLVLRQV EDVHG RQ FRQVLGHUDWLRQV RI SXEOLF SROLF\´ Berkovitz 86 DW ± 3ODLQWLIIV GLG QRW GLVSXWH WKDW WKH )%,¶V VXSHUYLVLRQ RI LWV HPSOR\HHV VDWLVILHG WKLV SURQJ RI WKH WHVW See 3OV¶ 2SS WR 8QLWHG 6WDWHV 0RW >'NW @ see also Burkhart v. Wash. Metro. Area Transit Auth. )G '& &LU FRQFOXGLQJ WKDW WKH VXSHUYLVLRQ RI HPSOR\HHV VDWLVILHV WKH VHFRQG SURQJ RI WKH GLVFUHWLRQDU\ IXQFWLRQ LQTXLU\ %XW SODLQWLIIV DUJXHG WKDW WKH FRQGXFW WKH\ FKDOOHQJHG ZDV QRW GLVFUHWLRQDU\ IRU WZR UHDVRQV WKH )%, DQG LWV DJHQWV H[FHHGHG WKH VFRSH RI WKHLU FRQVWLWXWLRQDO DXWKRULW\ DQG WKH )%, DQG LWV DJHQWV YLRODWHG D IHGHUDO VWDWXWH UHJXODWLRQ RU SROLF\ VSHFLILFDOO\ SUHVFULELQJ WKH PDQDJHPHQW DQG VXSHUYLVLRQ RI )%, DJHQWV 3OV¶ 2SS WR 8QLWHG 6WDWHV 0RW DW 7KH &RXUW IRXQG WKDW SODLQWLIIV KDG IDLOHG WR DOOHJH DQ\ XQFRQVWLWXWLRQDO H[HUFLVH RI VXSHUYLVRU\ GLVFUHWLRQ Briscoe :/ DW ± %XW LQ UHOLDQFH RQ WKH '& &LUFXLW¶V JXLGDQFH LQ Ignatiev LW IRXQG WKDW GLVFRYHU\ ZDV QHHGHG WR DVFHUWDLQ ZKHWKHU D PDQGDWRU\ GLUHFWLYH FRXOG KDYH EHHQ YLRODWHG +HUH SODLQWLIIV¶ DOOHJDWLRQV ZLWK UHVSHFW WR WKH IDLOXUH WR VXSHUYLVH /RZU\ DUH VXPPDU\ DQG VFDUFH EXW SODLQWLIIV GR FODLP WKDW ³GHIHQGDQWV QHJOLJHQW>O\@ IDLO>HG@ WR DGHTXDWHO\ VXSHUYLVH /RZU\ ´ GHIHQGDQWV IDLOHG WR ³GHWHFW DQG SUHYHQW´ /RZU\¶V PLVFRQGXFW DQG WKDW ³HDFK LQGLYLGXDO GHIHQGDQW KDG D GXW\ WR SURSHUO\ VXSHUYLVH DQG PRQLWRU LWV DJHQWV LQFOXGLQJ /RZU\´ 3ODLQWLIIV GR QRW UHIHU WR DQ\ LQWHUQDO )%, SROLFLHV WKDW PD\ KDYH GLFWDWHG GHIHQGDQWV¶ VXSHUYLVLRQ RI /RZU\ DQG WKH 8QLWHG 6WDWHV FRQWHQGV WKDW VXFK DQ RPLVVLRQ LV IDWDO %XW SODLQWLIIV¶ IDLOXUH WR DOOHJH WKH H[LVWHQFH RI DQ LQWHUQDO SROLF\ LV QRW GLVSRVLWLYH DW WKLV HDUO\ VWDJH $V LQ Ignatiev ZKDW LV PLVVLQJ IURP WKH FRPSODLQW LV QRW D VWDWHPHQW RI WKH UHOHYDQW IDFWV ± WKDW WKH )%, IDLOHG WR VXSHUYLVH /RZU\ ZKLOH KH ZDV LOOHJDOO\ PLVKDQGOLQJ HYLGHQFH ± EXW D UHIHUHQFH WR DSSOLFDEOH LQWHUQDO JXLGHOLQHV WKDW ZRXOG KDYH UHQGHUHG VRPH RI GHIHQGDQWV¶ VXSHUYLVRU\ DFWLRQV QRQGLVFUHWLRQDU\ $QG WKH '& &LUFXLW KDV JUDQWHG MXULVGLFWLRQDO GLVFRYHU\ LQ H[DFWO\ WKLV VLWXDWLRQ 7KHUHIRUH WKH &RXUW ZLOO GHQ\ WKH 8QLWHG 6WDWHV¶ PRWLRQ WR GLVPLVV &RXQW ,, ZLWKRXW SUHMXGLFH DQG JUDQW SODLQWLIIV¶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riscoe :/ DW LQWHUQDO FLWDWLRQV RPLWWHG see also 2UGHU -XO\ >'NW @ SHUPLWWLQJ SODLQWLIIV WR SURSRXQG WKH GLVFRYHU\ DQG VWDWLQJ ³>L@I SODLQWLIIV FRQWHQG WKDW WKH PDWHULDO SURYLGHG VKRZV WKH H[LVWHQFH RI D PDQGDWRU\ SROLF\ SODLQWLIIV PD\ VXEPLW D SURSRVHG SODQ IRU OLPLWHG GLVFRYHU\ RQ WKH TXHVWLRQ RI ZKHWKHU WKH SROLF\ ZDV DGKHUHG WR LQ WKLV FDVH´ 1RZ WKDW WKLV SUHOLPLQDU\ GLVFRYHU\ LV FRPSOHWH SODLQWLIIV KDYH DGYLVHG WKH &RXUW WKDW WKH )%, LQ IDFW SURGXFHG VHYHUDO PDQGDWRU\ GHSDUWPHQWDO UHJXODWLRQV DQG WKH\ KDYH SURSRVHG WR XQGHUWDNH DGGLWLRQDO GLVFRYHU\ RQ WKH TXHVWLRQ RI ZKHWKHU WKRVH SROLFLHV ZHUH YLRODWHG E\ WKH RIILFLDOV UHVSRQVLEOH IRU /RZU\¶V VXSHUYLVLRQ See 3O¶V 3URSRVHG 'LVF 3ODQ >'NW @ ,Q UHVSRQVH WKH 8QLWHG 6WDWHV DFNQRZOHGJHV WKDW WKHUH ZHUH SROLFLHV LQ SODFH WKDW SUHVFULEHG PDQGDWRU\ GXWLHV EXW LW DUJXHV WKDW VLQFH WKH H[LVWHQFH RI WKRVH SROLFLHV UHVROYHV WKH MXULVGLFWLRQDO TXHVWLRQ LW ZRXOG QRW EH DSSURSULDWH WR HPEDUN RQ GLVFRYHU\ RQ ZKDW LV HVVHQWLDOO\ D PHULWV LQTXLU\ ± ZHUH WKH SROLFLHV YLRODWHG" ± EHIRUH WKH &RXUW KDV UXOHG RQ WKH PRWLRQ WR GLVPLVV &RXQW ,, IRU IDLOXUH WR VWDWH D FODLP See 8QLWHG 6WDWHV¶ 5HVS WR 3O¶V 3URSRVHG 'LVF 3ODQ >'NW @ 7KH &RXUW DJUHHV ,W ILQGV WKDW WKH GLVFUHWLRQDU\ IXQFWLRQ H[FHSWLRQ WR WKH )7&$ GRHV QRW DSSO\ WR &RXQW ,, DQG WKDW WKHUHIRUH LW KDV VXEMHFW PDWWHU MXULVGLFWLRQ WR FRQVLGHU WKH QHJOLJHQW VXSHUYLVLRQ FODLP DJDLQVW WKH 8QLWHG 6WDWHV RQ WKH PHULWV %XW VLQFH LW DOVR ILQGV WKDW SODLQWLIIV KDYH IDLOHG WR DOOHJH VXIILFLHQW IDFWV WR HVWDEOLVK WKDW DQ\ QHJOLJHQFH RQ WKH SDUW RI /RZU\¶V VXSHUYLVRUV FDXVHG SODLQWLIIV¶ DOOHJHG LQMXULHV &RXQW ,, PXVW EH GLVPLVVHG DJDLQVW WKH 8QLWHG 6WDWHV DORQJ ZLWK WKH RWKHU QHJOLJHQFH FRXQWV DJDLQVW /RZU\ LQ KLV LQGLYLGXDO FDSDFLW\ DQG QR IXUWKHU GLVFRYHU\ LV ZDUUDQWHG $V WKH &RXUW KDV SUHYLRXVO\ UXOHG ³GHIHQGDQWV FDQQRW EH KHOG OLDEOH IRU WKH HIIHFWV RI DQ DWWHQXDWHG FKDLQ RI HYHQWV´ Briscoe :/ DW 3ODLQWLIIV DOOHJH WKDW WKH\ ZHUH LQGLFWHG E\ D JUDQG MXU\ DQG XOWLPDWHO\ SOHG JXLOW\ WR KHURLQ GLVWULEXWLRQ DQG SRVVHVVLRQ FKDUJHV $V SDUW RI WKHLU JXLOW\ SOHDV SODLQWLIIV DGPLWWHG WR WKHLU SDUWLFLSDWLRQ LQ D GUXJ WUDIILFNLQJ FRQVSLUDF\ DQG HQWHUHG WKRVH SOHDV ³EHFDXVH >WKH\ ZHUH@ LQ IDFW JXLOW\´ 3ODLQWLIIV DOOHJH WKDW WKH VXEVWDQFH VHL]HG LQ WKH FRXUVH RI WKH LQYHVWLJDWLRQ ZDV LQ IDFW ³KHURLQ´ DQG WKH\ QHYHU DVVHUW WKHLU LQQRFHQFH $VLGH IURP SODLQWLIIV¶ ³WKUHDGEDUH UHFLWDOV>@´ WKDW GHIHQGDQWV¶ FRQGXFW ³SUR[LPDWHO\ FDXVHG´ WKHLU LQMXULHV RU WKDW SODLQWLIIV¶ LQMXULHV ZHUH WKH ³SUR[LPDWH UHVXOW´ RI GHIHQGDQWV¶ FRQGXFW SODLQWLIIV IDLO WR DOOHJH D VLQJOH IDFW WKDW JLYHV ULVH WR WKH LQIHUHQFH WKDW GHIHQGDQWV¶ ³IDLOXUH WR HIIHFWLYHO\ PDQDJH HYLGHQFH DQG WKH FKDLQ RI FXVWRG\´ ZDV D VXEVWDQWLDO IDFWRU LQ FDXVLQJ WKH KDUP WKH\ VXIIHUHG 7KH FRPSODLQW GRHV QRW WLH /RZU\¶V PLVDSSURSULDWLRQ RI VHL]HG FRQWUDEDQG RU KLV GLOXWLRQ RU GHVWUXFWLRQ RI HYLGHQFH WR SODLQWLIIV¶ FRQYLFWLRQV RU VHQWHQFLQJV LQ DQ\ ZD\ WKHUH LV QR DOOHJDWLRQ WKDW GUXJV WKDW KDG EHHQ WDPSHUHG ZLWK ZHUH HQWHUHG LQWR HYLGHQFH LQ DQ\ SURFHHGLQJ (DFK SODLQWLII¶V DOOHJHG LQMXULHV VWHPV IURP KLV LQFDUFHUDWLRQ EXW LW ZDV RQO\ DIWHU HDFK SODLQWLII ZDV LQGLFWHG DQG HQWHUHG D JXLOW\ SOHD WKDW KH ZDV VHQWHQFHG WR VHUYH D WHUP RI \HDUV LQ SULVRQ >7@KHUH LV QR DOOHJDWLRQ LQ WKH FRPSODLQW WKDW /RZU\¶V XQODZIXO DFWLYLW\ RU WKH DJHQF\¶V DOOHJHG IDLOXUH WR GHWHFW RU SUHYHQW LW OHG WR WKHLU LQFDUFHUDWLRQ Id. LQWHUQDO FLWDWLRQV RPLWWHG ,Q VXP 6SHFLDO $JHQW /RZU\¶V PLVFRQGXFW OHG WR SODLQWLIIV¶ HDUO\ UHOHDVH EXW LW ZDV QRW ZKDW FDXVHG WKHLU LQFDUFHUDWLRQ 7KH GLVPLVVDO RI WKH ODVW IHGHUDO FODLP OHDYHV RQO\ WKH VWDWH ODZ FODLPV IRU QHJOLJHQFH IDOVH LPSULVRQPHQW DQG QHJOLJHQW LQIOLFWLRQ RI HPRWLRQDO GLVWUHVV DJDLQVW 6SHFLDO $JHQW /RZU\ 8QGHU DOO RI WKH FLUFXPVWDQFHV WKH &RXUW ZLOO GHFOLQH WR H[HUFLVH VXEMHFW PDWWHU MXULVGLFWLRQ RYHU WKH PHULWV RI WKRVH FODLPV ZKLFK VXIIHU IURP PDQ\ RI WKH VDPH IODZV DV WKH IHGHUDO FODLPV See 86& F ³7KH GLVWULFW FRXUWV PD\ GHFOLQH WR H[HUFLVH VXSSOHPHQWDO MXULVGLFWLRQ RYHU D FODLP XQGHU > D @ LI WKH GLVWULFW FRXUW KDV GLVPLVVHG DOO FODLPV RYHU ZKLFK LW KDV RULJLQDO MXULVGLFWLRQ´ Shekoyan v. Sibley Int’l )G '& &LU ³$ GLVWULFW FRXUW PD\ FKRRVH WR UHWDLQ MXULVGLFWLRQ RYHU RU GLVPLVV SHQGHQW VWDWH ODZ FODLPV DIWHU IHGHUDO FODLPV DUH GLVPLVVHG´ FLWLQJ 86& F )RU DOO RI WKHVH UHDVRQV &RXQW ,, DJDLQVW WKH 8QLWHG 6WDWHV DQG &RXQWV , ,,, DQG ,9 DJDLQVW /RZU\ LQ KLV LQGLYLGXDO FDSDFLW\ ZLOO EH GLVPLVVHG 1R FRXQWV UHPDLQ SHQGLQJ EHIRUH WKH &RXUW $ VHSDUDWH RUGHU ZLOO LVVXH $0< %(50$1 -$&.621 8QLWHG 6WDWHV 'LVWULFW -XGJH '$7( 1RYHPEHU