The opinion of the court was delivered by: SWEET
Defendants Bernard C. Sherman ("Sherman"), Apotex Holdings Inc. ("Holdings"), Apotex Inc. ("Apotex"), and Sherman Delaware, Inc. ("Sherman Delaware") (collectively, the "Affiliates") have moved for partial dismissal of the complaint pursuant to Rules 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. Specifically, the Affiliates have moved to dismiss the following claims against them: (1) monopolization, attempt to monopolize, and conspiracy to monopolize, in violation of section 2 of the Sherman Act, 15 U.S.C. § 2 (First, Second, and Third Causes of Action, respectively), (2) conspiracy in restraint of trade, in violation of section 1 of the Sherman Act, 15 U.S.C. § 1 (Fourth Cause of Action), (3) tortious interference with contract (Eighth Cause of Action), and (4) tortious interference with business relationships (Ninth Cause of Action).
For the reasons set forth below, the Affiliates' motion will be granted with leave to replead.
Plaintiff Invamed, Inc. ("Invamed") is a New Jersey corporation with its principal place of business in Dayton, New Jersey. Invamed is engaged in the business of developing, manufacturing, and marketing generic pharmaceuticals.
Defendant Barr Laboratories, Inc. ("Barr") is a New York corporation with its principal place of business in Pomona, New York. Like Invamed, Barr is engaged in the business of developing, manufacturing, and marketing generic pharmaceuticals.
Defendant Brantford Chemicals Inc. ("Brantford") is a Canadian corporation with its principal place of business in Ontario, Canada. Brantford was formerly known as ACIC (Canada) Inc. It is engaged in the business of manufacturing and marketing chemical compounds used in the manufacture of pharmaceuticals. Brantford conducts substantial business in the United States.
Sherman is an individual residing in Ontario, Canada. He conducts substantial business in the United States.
Holdings is a Canadian corporation with its principal place of business in Ontario, Canada.
Apotex is a Canadian corporation with its principal place of business in Ontario, Canada.
Sherman Delaware is a Delaware corporation with its principal place of business in the State of Delaware.
Invamed's complaint contains eleven counts alleging violations of the federal antitrust laws, tortious interference with contract and with business relationships, contract, and tort claims. Including the claims mentioned above on which the Affiliates have moved, Invamed in its fifth cause of action alleges unlawful acquisition of Brantford by the Affiliates and Barr in violation of section 7 of the Clayton Act, 15 U.S.C. § 18, as well as sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. The remaining claims, the sixth, seventh, tenth, and eleventh, are directed at Brantford only and are based on contract and tort principles for its refusal and failure to supply clathrate to Invamed.
The complaint was filed on February 6, 1998. The instant motion was filed on April 9, 1998. Oral arguments were heard on June 24, 1998, at which time the motion was deemed fully submitted.
In considering a motion to dismiss, the facts alleged in the complaint are presumed to be true and all factual inferences must be drawn in the plaintiff's favor and against the defendants. See Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974); Mills v. Polar Molecular Corp., 12 F.3d 1170, 1174 (2d Cir. 1993); Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir. 1989); Dwyer v. Regan, 777 F.2d 825, 828-29 (2d Cir. 1985). Accordingly, the factual allegations considered here and set forth below are taken from Invamed's complaint and do not constitute findings of fact by the Court. They are presumed to be true only for the purpose of deciding the present motion.
Invamed and Barr are competitors in the business of developing, manufacturing, and marketing generic pharmaceuticals. In particular, Invamed and Barr each have submitted applications to, and received permission from, the Food & Drug Administration ("FDA") to market warfarin sodium, an oral anti-coagulant medication. According to Invamed, to date no other generic pharmaceutical company has received FDA approval to sell warfarin sodium.
Warfarin sodium clathrate ("clathrate") is the principal active ingredient in warfarin sodium, and there are no substitutes for clathrate in the production of warfarin sodium. Without an FDA-approved source of clathrate, a pharmaceutical company cannot enter the market for warfarin sodium. Brantford is the only commercially available source for clathrate that has been approved for use in the United States by the FDA. Accordingly, a marketer of warfarin sodium would be dependent on Brantford for the supply of clathrate in order to produce warfarin sodium. Brantford supplies clathrate to Barr, and Invamed asserts that Brantford supplied clathrate to it prior to the events it details in the complaint.
In short, Invamed alleges Brantford has the ability to exercise monopoly power and substantial market power over the market for clathrate for use in the production of warfarin sodium. Through two chains of ownership or control, the Affiliates and Barr are able to exercise dominion and control over Brantford and therefore control entry into the warfarin sodium market(s) by controlling access to clathrate. As a result, asserts Invamed, Barr and the Affiliates enjoy and are able to perpetuate monopoly power and substantial market power over the market(s) for warfarin sodium.
Sherman Delaware directly or indirectly owns a majority of the issued stock of Barr and effectively controls Barr. Sherman Delaware is in turn controlled by Sherman, who owns the majority of Sherman Delaware stock. As the result of its acquisition in August 1996, Brantford is controlled by Apotex, which is controlled by Holdings, which in turn is controlled by Sherman. In other words, through the chains of ownership running up from Barr to Sherman and down from Sherman to Brantford, Barr and the Affiliates are able to exercise control over Brantford and to use that power to choke off competition in the warfarin sodium market(s).
According to Invamed, prior to the August 1996 acquisition of Brantford, in the course of applying to the FDA for permission to market warfarin sodium, Invamed purchased quantities of clathrate from Brantford, used clathrate supplied by Brantford to develop its warfarin sodium tablets, obtained a "Letter of Access" from Brantford for its "Master Drug File" at the FDA for submission to the FDA with Invamed's application and, with the knowledge and approval of Brantford, advised the FDA that Brantford would be the supplier of clathrate for Invamed's warfarin sodium following FDA approval. Subsequent to the acquisition of Brantford, Invamed in September 1996 received notification from Brantford of its continued willingness to supply clathrate, and thereafter Brantford repeatedly reaffirmed its willingness to supply clathrate to Invamed upon Invamed's receiving approval from the FDA to market warfarin sodium. However, following Invamed's receipt of approval in October 1997, Brantford refused to supply clathrate to Invamed and has continued to refuse to deal with Invamed. Moreover, by letter dated December 3, 1997, Brantford purported to withdraw its "Letter of Access" issued to Invamed and advised the FDA of this withdrawal.
As a result of Brantford's acts, Invamed maintains that it is and will continue to be unable to market warfarin sodium despite its receipt of FDA approval and to compete with Barr.
In the complaint, Invamed includes a "background" section comprised of 24 paragraphs of factual averments. As to the Affiliates, this section contains but one sentence mentioning them; it states that "upon information and belief, in or about August 1996, defendants Barr and Sherman, through Holdings and Apotex, acquired control of ACIC (Canada) Inc. and changed its name to Brantford." (Compl. P 36.)
I. The Affiliates Have Not Waived Their Right to Move to Dismiss Pursuant to Rule 12(b)(6)
According to Invamed, the instant motion should be denied because the Affiliates did not make their motion to dismiss prior to answering the complaint in accordance with Rule 12(b)(6). In this case, the Affiliates filed their answers and this motion simultaneously on April 9, 1998.
Although Fed. R. Civ. P. 12(b) encourages the responsive pleader to file a motion to dismiss before pleading, nothing in the rule prohibits the filing of a motion to dismiss with an answer ... . A plaintiff is not prejudiced by the filing of such motion simultaneously with an answer, as was done here, and that very filing puts the plaintiff on notice that the defendant is not waiving its right to assert the motion.
Beary v. West Publ'g Co., 763 F.2d 66, 68 (2d Cir. 1985); see 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1361 (2d ed. 1990) (explaining that "should defendant file a Rule 12(b) motion simultaneously with his answer, the court will view the motion as having ...