Appeals Court Asked to Overturn Flonase Case Ruling
The Washington Legal Foundation and the National Association of Manufacturers are asking the 3rd Circuit Court of Appeals to overturn a Pennsylvania federal court ruling allowing the state of Louisiana to proceed with “copycat” Flonase litigation after the court approved a class-wide settlement that included Louisiana. In an amicus brief, the two organizations express concern that the district court’s decision “inappropriately undermines the efficacy of class-wide settlements and, if affirmed on appeal, will substantially reduce defendants’ willingness to enter into such settlements. To a large degree, class-action defendants are motivated to settle by an understanding that a settlement, although often expensive, will buy them litigation peace and ensure that they will never again face claims based on the same factual allegations. The district court’s order seriously undermines that motivation.”
The case involved allegations that GlaxoSmithKline improperly sought to delay the marketing of a generic form of its Flonase. The plaintiffs alleged that the company’s actions violated a variety of antitrust and state consumer protection laws.
On 6/19/13 the district court certified a settlement class and issued a final order and judgment approving a settlement that was reached in 2012, the brief says. The settlement offered all absent class members an opportunity to opt out and Louisiana did not do so, it says.
However, on 12/29/14, Louisiana, represented by private counsel hired on a contingency fee basis, filed a complaint in Louisiana state court that is “identical in all material respects to the complaints filed in this case,” the brief reports. It says that the substantive paragraphs of the Louisiana complaint were copied word-for-word from the 7/14/08 complaint filed in the federal case. On 4/2/15, Glaxo filed a motion in the district court asking it to enforce the class settlement against the Louisiana attorney general.
However, the court issued a 12/21/15 memorandum denying the motion and saying that Louisiana is entitled to 11th Amendment sovereign immunity that precludes it from being made a party to federal court proceedings without its “unequivocal consent.” It also held that Louisiana should not be deemed to have provided such consent based on its failure to opt out of the settlement.
The two associations argue that the Supreme Court has always construed the 11th Amendment to protect states only when they are sued in federal court as defendants. “GSK has not sought to bring Louisiana into federal court as a defendant,” they say. “Rather, it has sought to make the U.S. District Court … the principal forum for those wishing to assert claims against GSK for its alleged efforts to impede the marketing of a generic form of Flonase. Louisiana’s attorney general could have avoided the need to appear in federal court by simply choosing to opt out of these proceedings or, having failed to opt out, by not asserting separate damage claims against GSK based on the same course of conduct. Louisiana’s novel assertion that 11th Amendment immunity extends beyond claims filed against a state has been uniformly rejected by the courts.”