By Andrew Williams --
Is the ability to obtain personal jurisdiction against an ANDA filer for a Hatch-Waxman-type litigation going to become exceedingly more difficult? In the past, jurisdiction against such a defendant was often predicated on general jurisdiction, analyzing whether the party's contacts with the forum "are so continuous and systematic as to render it essentially at home in the forum State." Daimler AG v. Bauman, 134 S. Ct. 746, 761 (2014). The Supreme Court in the Daimler case made the finding of general jurisdiction for a foreign entity more difficult. Consistent with that holding, Judge Sleet in the AstraZeneca AB v. Mylan Pharmaceuticals, Inc. case found that an ANDA filer's contacts with Delaware were insufficient to confer general jurisdiction -- contacts that might have been sufficient previously. Nevertheless, Judge Sleet did find that the act of sending the paragraph IV notification to AstraZeneca in Delaware provided sufficient minimum contact for the Delaware court to exercise specific jurisdiction. Because this result is allegedly inconsistent with an outcome from a North Carolina District Court, Mylan sought certification for interlocutory appeal, which Judge Sleet granted on December 17, 2014 (Certification Order). In so deciding, the judge noted the huge volume of Hatch-Waxman cases pending in Delaware, and that therefore "immediate appeal may indeed advance the termination of this and other ligitation." Certification Order at FN 1. Needless to say, if the Federal Circuit disagrees with Judge Sleet's determination, this could have an immediate and sufficient impact on Hatch-Waxman cases in the state of Delaware, and potentially elsewhere.
The present case stems from Mylan's filing of two ANDAs to seek approval to market generic versions of AstraZeneca's ONGLYZA® and KOMBIGLYZETM drug products. The first of these is for saxagliptin hydrochloride tablets, and the latter is for saxagliptin hydrochloride and metformin hydrochloride extended release-release tablets. AstraZeneca filed suit in Delaware, alleging that the District Court had jurisdiction because Mylan "purposefully availed itself of the rights and benefits of Delaware law by engaging in systematic and continuous contacts with Delaware." Nevertheless, AstraZeneca failed to allege in its complaint that Mylan engaged in any specific activities in Delaware related to the present action, other than a generic statement that "this action arises from actions of Mylan directed toward Delaware." Instead, as in many similar cases, AstraZeneca pointed to the "regular[] and continuous[]" business transactions within the state, which included the selling of pharmaceutical products. Because Mylan derived substantial revenue from the sale of such products, it was alleged, Mylan had "availed itself of the privilege of conducting business within the State of Delaware." Moreover, Mylan had been previously sued in Delaware without objecting to personal jurisdiction and even asserting counterclaims (thereby availing itself of the court). This case was filed at about the same time as cases against several other ANDA filers, all of which were consolidated under the heading AstraZeneca AB v. Aurobindo Pharma., Ltd.
As a refresher of first-year Civil Procedure jurisprudence, the U.S. Constitution's due process clause requires that a defendant not located within a state must "have certain minimum contacts with it such that maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. State of Wash., Office of Unemployment Compensation & Placement, 326 U.S. 310, 316 (1945). There are two ways to satisfy this requirement -- the presence of specific or general jurisdiction. As suggested above, general jurisdiction can exist even if the cause of action arises outside of the forum state, provided that the party's contacts with the state are "so continuous and systematic as to render it essentially at home in the forum State." Last term, the Supreme Court in the Daimler case pointed out that being "at home" really only existed for a narrow set of circumstances, such as at the place of incorporation or the principal place of business. This effectively reduced the instances in which general jurisdiction exists. However, a court can still have specific jurisdiction over a case if "the litigation results from alleged injuries that 'arise out of or relate to'" activities that are purposefully directed to residents of the forum. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73 (1985). Therefore, for example, in the Hatch-Waxman contact, any previous contacts that an ANDA-filer may have had with a particular state are irrelevant to the determination of specific jurisdiction. Instead, only contacts related to specifics of the case can be considered.
In the present case, Mylan is a West Virginia corporation. It prepared its two ANDAs in West Virginia and filed them in Maryland (where the FDA is located). Mylan is registered to do business in Delaware, and has appointed a registered agent to accept service of process in Delaware, both of which were required by the state. Otherwise, Mylan allegedly has no property or employees in Delaware. Because of these limited contacts with the state, Mylan challenged personal jurisdiction via a Motion to Dismiss. Departing from previous opinions, Judge Sleet determined that the common ways of finding general jurisdiction in the past were no longer viable in view of Daimler. For example, the Court noted that obtaining substantial revenue from drug sales in the state was no longer sufficient. If Delaware was able to assert general jurisdiction over Mylan, Judge Sleet explained, than that would permit the "exercise of general jurisdiction in every [s]tate," which was precluded by the Daimler case. Moreover, the Court rejected AstraZeneca's argument that Mylan consented to general jurisdiction by registering to do business in the state, because Daimler still requires minimum contacts in such circumstances (which still did not exist). Therefore, the Court found general jurisdiction did not exist.
Nevertheless, Mylan's motion to dismiss was denied because of specific jurisdiction. The only "specific" acts that the Court could point to were the filing of the ANDA and the sending of the notification letter into the state, but these were sufficient. Of course, the ANDA was not filed in Delaware, but Judge Sleet noted that the consequences of this "real act" of filing was (or will be) suffered in Delaware. This is partially because the Federal Circuit had already held that jurisdiction is not conferred in Maryland simply because the FDA is located there. The sending of the notice letter was probably more significant because, according to Judge Sleet, the cause of action arose from the receipt of this correspondence, which trigged the 45-day window to file suit. Moreover, the traditional notions of fair play and substantial justice weighed in favor of exercising specific jurisdiction because Mylan is no stranger to litigation in the state of Delaware. To hold otherwise would force AstraZeneca to bring the lawsuit in Mylan's state of West Virginia (which the Court found contrary to the "balance" established by Congress in the statute). Finally, the Court did consider that there were at least ten generic defendants, and resolution of each of these cases in a single district promoted judicial economy.
All eyes will be in the Federal Circuit to see how it addresses this issue of personal jurisdiction. Judge Sleet noted that he was not aware of any other judicial decisions regarding personal jurisdiction in Hatch-Waxman cases that considered the impact of the Daimler case. Because it could impact not only the present case, but may other litigations, the Court found certification appropriate. We will continue to monitor and report on the progress of the interlocutory appeal.
Andrew,
Very interesting subject. If Daimler stands for the proposition that having a statutory agent in a state is insufficient for general jurisdiction, the Royal Nine is out of touch with the reality what state statutory agents are for, i.e., to accept service of process.
Posted by: EG | December 31, 2014 at 08:32 AM