The opinion of the court was delivered by: Trager, District Judge.
This motion presents a difficult question of federal jurisdiction. Plaintiffs have brought multiple putative class action lawsuits in various state courts, claiming defendants violated state antitrust laws and related state statutes by agreeing to prevent competition by generic drug manufacturers in the market for the antibiotic ciprofloxacin hydrochloride. Defendants removed these cases to federal court on the grounds of federal question and diversity jurisdiction, and plaintiffs have moved to remand their cases to state court.
Before the remand motions were resolved, the actions were transferred to the Judicial Panel on Multidistrict Litigation ("JPML"), which in turn transferred the actions to this Court. Presently before the Court are plaintiffs' motions to remand in the following eight actions: Lee v. Bayer A.G., CV-00-4731 (CA); Garber v. Bayer A.G., CV-00-4529 (CA); Patane v. Bayer A.G., CV-00-9099 (CA); Samole v. Bayer Corp., CV-00-4530 (CA); Ozarow v. Bayer Corp., CV-00-8922 (FL); Platt v. Bayer Corp., CV-01-2155 (TX); Relles v. Bayer Corp., CV-00- 12453 (CA); Sandhaus v. Bayer Corp., CV-00-2527 (KS). *fn1 A number of courts have addressed similar motions, and the overwhelming majority have found federal jurisdiction lacking. *fn2 Although the issue is a particularly close one, the motions to remand to state court are granted.
Defendants Bayer A.G., a German company, *fn4 and its American subsidiary, Bayer Corporation, ("Bayer") are the manufacturers of Cipro, the brand name of the widely used antibiotic, ciprofloxacin hydrochloride ("ciprofloxacin"). Ciprofloxacin, a wide-spectrum antibiotic, is prescribed for a variety of infections, and is dispensed in tablet, liquid, and intravenous forms. Cipro has been the best-selling antibiotic in the world for the past eight years, and is the eleventh most-prescribed drug in the United States. Bayer has earned more than $1 billion from sales of Cipro in the United States alone.
Bayer claims the active ingredient in Cipro, ciprofloxacin hydrochloride, under patent number 4,670,444 (the "' 444 patent"). The '444 patent was filed with the Patent and Trademark Office ("PTO") on May 29, 1984, and issued to Bayer on June 2, 1987. In October 1987, Miles, Inc., then a subsidiary of Bayer and the licensee of the '444 patent, obtained FDA approval to market the drug. Since 1987, defendant Bayer has been the only producer of ciprofloxacin in the United States.
On October 27, 1991, defendant Barr Laboratories, Inc. ("Barr"), filed an "Abbreviated New Drug Application" ("ANDA") for a generic bioequivalent version of the "pioneer" drug Cipro. An ANDA filing is governed by the Drug Price Competition and Patent Term Restoration Act of 1984, known commonly as the Hatch Waxman Act. The Act provides a simplified and shortened method of obtaining FDA approval to bring generic bioequivalent drugs to the marketplace. The Hatch Waxman Act also provides incentives for generic competition in pharmaceuticals by granting a 180-day period of market exclusivity to the first generic entrant on the market. See 21 U.S.C. s 355 et seq. Hatch Waxman also minimizes the time it takes for a generic drug to enter the market by permitting a new drug applicant to affirm to the FDA that the drug it seeks to market contains the same active ingredient(s) as a drug already approved and listed by the FDA, and is the listed drug's bioequivalent. See 21 U.S.C. s 355(j). An ANDA filing incorporates the conclusions and data concerning safety and effectiveness yielded by research conducted by the pioneer drug manufacturer, thereby expediting the FDA approval process.
Along with information regarding the petitioned drug's active ingredient(s), effective dosage, strength, and course of administration, the ANDA filer is required to submit a certification regarding its conclusions about the applicability of existing patents to the generic drug. See 21 U.S.C. s 355(j)(2)(A)(vii). Specifically, and of special significance in this case, an ANDA filer may indicate it believes the patent held by the pioneer drug manufacturer is either invalid or would not be infringed by the generic, bioequivalent version for which it seeks approval. See id. If an ANDA filer certifies that the existing patent is invalid, it must notify the patent holder that it has filed an ANDA and state the factual and legal bases for its contention that the existing patent is invalid. See 21 U.S.C. s 355(j)(2)(B). The patent holder then has forty-five days upon receipt of the letter to initiate a patent infringement suit against the ANDA filer. See 21 U.S.C. s 355(j)(5)(B)(iii).
Hatch-Waxman provides that, during the ensuing patent litigation, FDA consideration and approval of the generic ANDA will be stayed for thirty months from the date the notice of non-infringement is sent, or until a final, non-appealable determination regarding the invalidity of the patent is entered, whichever date is earlier. See 21 U.S.C. s 355(j)(5)(B)(iii). The court hearing the patent case may, in its discretion, extend the stay if the litigation is not resolved within the thirty month period provided by the statute. See 21 U.S.C. s 355(j)(5)(B)(iii). It seems relatively clear, however, that if there is no resolution of the patent litigation and a stay is not granted, and the patent holder has not obtained preliminary injunctive relief, the ANDA filer may begin to market its product. In such an instance, the ANDA filer assumes the risk it might be found liable for infringing the pioneer manufacturer's patent. As noted, Hatch Waxman further provides that the first generic manufacturer to have filed an ANDA that has gained FDA approval enjoys a 180 day period of market exclusivity from the date the applicant first sells its product or the date on which a final, non-appealable order determining the invalidity of the patent is entered, whichever is earlier. See 21 U.S.C. s 355(j)(5)(B)(iv).
Barr contended in its 1991 ANDA application that Bayer's '444 patent was invalid and unenforceable. As provided for in Hatch-Waxman, Barr notified Bayer of its ANDA filing, and Bayer responded by initiating a patent suit against Barr. Bayer filed its suit on January 16, 1992, within the 45 day statutory period, in the Southern District of New York. Barr answered and interposed counterclaims seeking a declaration that the '444 patent was invalid and unenforceable. On November 31, 1992, Bayer and Barr entered into a stipulation agreeing to extend the 30 month period until the patent court entered a final judgment. The stay otherwise would have expired on July 16, 1994. Under the terms of the stipulation, Barr agreed that it would not manufacture, use, or sell ciprofloxacin hydrochloride in the United States until a final judgment was entered. It is unclear what consideration, if any, Barr received from Bayer in return for agreeing to the terms of the stipulation.
Plaintiffs assert that on January 6, 1995, Barr received tentative FDA approval to manufacture and market ciprofloxacin tablets. See, e.g., Garber Compl., p 49; Barr Laboratories, Inc. Annual 10K, Jan. 30, 1995; see also Bayer Will Pay Barr, Rugby Laboratories To Settle Patent Suit, Wall St. J., Jan. 20, 1997, at B5 (stating that Barr received FDA approval in January 1997). *fn5 Subsequently, in June 1996, the Southern District denied Bayer's and Barr's partial cross-motions for summary judgment in the patent litigation.
On January 8, 1997, the parties in the patent suit, as well as certain of the other defendants in this action, the Rugby Group ("Rugby") and Hoechst Marion Roussel, Inc. ("HMR"), *fn6 entered into a settlement agreement ("Agreement"). The terms of the Agreement, which form the bases for plaintiffs' allegations of an unreasonable restraint of trade, require Barr to recognize the validity and enforceability of Bayer's patent for Cipro, and not to manufacture or market ciprofloxacin until the patent expires. The Agreement further requires Bayer to pay Barr and Rugby each an initial lump-sum amount of $24.55 million, and grants Bayer the option of either paying Barr and HMR or Rugby each $25 million per year from March 1998 to December 2003, the date the '444 patent expires, or of supplying Barr and HMR or Rugby with ciprofloxacin to market and distribute under a generic label. To date, Bayer has elected to make the $25 million payments, rather than grant Barr and the other defendants a license to market and distribute a generic version of Cipro. In short, Bayer agreed to pay Barr and the other defendants over $100 million, and Barr agreed to drop its challenge to the validity of Bayer's patent and its plans to market generic ciprofloxacin.
At the same time defendants executed the Agreement, Bayer and Barr entered into a consent judgment ("Judgment"), which was "so ordered" by the district court on January 16, 1997, and which extinguished all claims raised in the patent litigation. The Judgment affirmed the validity and enforceability of the '444 patent, and acknowledged that Barr had infringed that patent. The consent judgment did not refer in any way to the specific terms of the Agreement, and spoke only to the claims between the parties to the patent lawsuit, Bayer and Barr. The consent judgment also made no mention of the involvement of either HMR or Rugby in the Agreement.
The Agreement has spawned nearly 30 lawsuits across the United States. The class-action suits consolidated here and addressed by this opinion are among those filed by indirect purchasers of Cipro. These customers, situated at the end of the chain of distribution, allege defendants, by executing the Agreement and Judgment terminating the patent claims between Bayer and Barr, unlawfully restrained trade in the market for ciprofloxacin, and effectively eliminated the possibility of generic competition. Plaintiffs allege these acts were committed in contravention of the antitrust and consumer protection laws of the states in which the various suits were filed, and caused them injury because, but for the unlawful agreement, plaintiffs would have had access to generic ciprofloxacin at a price lower than that charged for the brand name drug, Cipro.As noted above, these actions were filed in state court and removed by defendants on grounds of federal question jurisdiction under 28 U.S.C. s 1331 and diversity jurisdiction under 28 U.S.C. s 1332. *fn7 Plaintiffs now move to remand these actions to state court. For the reasons discussed below, plaintiffs' remand motions are granted.
The removal statute, 28 U.S.C. s 1441, provides, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." Because the right to remove a state court action to federal court is statutory, it must be invoked in strict conformity with statutory requirements. See American Fire & Cas. Co. v. Finn, 341 U.S. 6, 10-12, 71 S.Ct. 534, 538, 95 L.Ed. 702 (1951); Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108, 61 S.Ct. 868, 872, 85 L.Ed. 1214 (1941); Somlyo v. J. Lu-Rob Enters., Inc., 932 F.2d 1043, 1045-46 (2d Cir.1991). Moreover, "[i]n light of the congressional intent to restrict federal court jurisdiction, as well as the importance of preserving the independence of state governments, federal courts construe the removal statute narrowly, resolving any doubts against removability." Somlyo, 932 F.2d at 1045-46 (citing Shamrock Oil, 313 U.S. at 108, 61 S.Ct. at 872). Finally, a defendant opposing remand bears the burden of establishing that removal was proper. See FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231, 110 S.Ct. 596, 608, 107 L.Ed.2d 603 (1990); United Food & Commercial Workers Union v. CenterMark Props., 30 F.3d 298, 301 (2d Cir.1994). A court is required to keep these principles in mind as it evaluates a defendant's proffered bases for removal.
As discussed above, these actions were transferred to this Court by order of the JPML. In deciding any questions of federal law raised by these motions to remand, the applicable law is that of our circuit, rather than the law of the transferor courts. See, e.g., Menowitz v. Brown, 991 F.2d 36, 40 (2d Cir.1993); In re Korean Air Lines Disaster, 829 F.2d 1171, 1175-76 (D.C.Cir.1987).
Federal Question Jurisdiction
In opposition to remand, defendants first argue that removal is proper because this Court has federal question jurisdiction over plaintiffs' claims in each of the eight actions. Federal question jurisdiction apples to "all civil actions arising under" federal law. 28 U.S.C. s 1331. Not surprisingly, then, "the vast majority of cases brought under the federal-question jurisdiction of the federal courts are those in which federal law creates the cause of action." Christianson v. Colt Industries Oper. Corp., 486 U.S. 800, 821, 108 S.Ct. 2166, 2180, 100 L.Ed.2d 811 (1988) (Stevens, J., concurring) (citing Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804, 808, 106 S.Ct. 3229, 3232, 92 L.Ed.2d 650 (1986)). In the cases before this court, however, each of the causes ...