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American Federation of State v. Pfizer, Inc.

United States District Court, Second Circuit

June 3, 2013

PFIZER, INC., Defendant.


J. PAUL OETKEN, District Judge.

Plaintiffs American Federation of State, County, and Municipal Employees District Council 37 Health & Security Plan and Sergeants Benevolent Association Health and Welfare Fund allege RICO and antitrust claims against Defendant Pfizer Inc. relating to a co-pay subsidy program maintained by Pfizer. Pfizer has filed a motion for judgment on the pleadings pursuant to Federal Rules of Civil Procedure 12(c) and 9(b) (which it has styled a "motion to dismiss"), and Plaintiffs have moved to voluntarily dismiss the Complaint pursuant to Rule 41(a)(2). For the reasons that follow, Plaintiffs' motion is granted, Pfizer's motion is denied as moot, and this case is dismissed without prejudice.

I. Background

Plaintiffs initially brought this action in the U.S. District Court for the Eastern District of New York on March 7, 2012, along with a separate but similar suit against Bristol-Myers Squibb Co. ("BMS"). Plaintiffs then voluntarily dismissed those cases and re-filed them in this Court on May 27, 2012. Plaintiffs have filed seven similar suits against different pharmaceutical companies in federal courts across the country. On April 12, 2012, Plaintiffs filed a petition before the Judicial Panel on Multidistrict Litigation ("JPML") requesting transfer of all of their cases to the United States District Court for the Northern District of Illinois. After that MDL petition was filed, counsel for a different employee welfare fund, the Allied Services Division Welfare Fund ("Allied Services"), filed three similar complaints against Pfizer, Merck & Co., Inc., and Novartis Pharmaceuticals Corp. in the U.S. District Court for the Southern District of Illinois. Plaintiffs' counsel and counsel for Allied Services have worked together representing third-party payors against pharmaceutical companies in the past and have discussed coordination in the best interests of the class of third-party payors. The JPML later denied Plaintiffs' petition for an MDL proceeding. See Order, In Re Prescription Drug Co-Pay Subsidy Antitrust Litig. [Doc. 75], MDL No. 2370 (J.P.M.L. Aug 2, 2012). After the JPML issued that ruling, Pfizer, Merck, and Novartis each moved to dismiss the Allied Services cases pursuant to the first-filed doctrine; in response, Allied Services moved to consolidate all three cases in the Southern District of Illinois before Judge Herndon. The Merck and Novartis cases were transferred under the first-filed doctrine, see Mem. & Order at 6 [Doc. 36], Allied Servs. Div. Welfare Fund v. Merck, No. 3:12-cv-00766 (S.D. Ill. Nov. 9, 2012); Allied Servs. Div. Welfare Fund v. Novartis, No. 3:12-cv-00775 (S.D. Ill. Nov. 28, 2012), and Judge Herndon stayed the Pfizer case pending the outcome of this action, see Mem. & Order [Doc. 39], Allied Servs Div. Welfare Fund v. Pfizer., No. 3:12-cv-00764 (S.D. Ill. Oct. 4, 2012).

On October 4, 2012, Plaintiffs filed the First Amended Class Action Complaint, in which they named Amgen, Inc. and Pfizer as defendants. On October 9, 2012, Plaintiffs voluntarily dismissed all claims against Amgen pursuant to Rule 41(a)(1)(A)(i). On October 16, 2012, Pfizer filed its Answer and moved for judgment on the pleadings pursuant to Rule 12(c). Plaintiffs filed their opposition to the Rule 12(c) motion on November 30, 2012 and then filed a motion to voluntarily dismiss their claims on December 13, 2012. Pfizer filed its reply brief in support of its Rule 12(c) motion on December 19, 2012, and then opposed Plaintiffs' Rule 41(a)(2) motion. The Court held oral argument on these motions on May 10, 2013.

II. Motion To Voluntarily Dismiss Pursuant to Rule 41(a)(2)

A. Legal Standard

Because Pfizer filed an answer and did not agree to a stipulation of dismissal, the "action may be dismissed at the plaintiff's request only by court order, on terms that the court considers proper." Fed.R.Civ.P. 41(a)(2). "Although voluntary dismissal without prejudice is not a matter of right, the presumption in this circuit is that a court should grant dismissal pursuant to Rule 41(a)(2) absent a showing that defendants will suffer substantial prejudice as a result." Gap, Inc. v. Stone Int'l Trading, Inc., 169 F.R.D. 584, 588 (S.D.N.Y. 1997) (internal citations omitted); see also Benitez v. Hitachi Metals Am., Ltd., No. 11 Civ. 6816, 2012 WL 3249417, at *1 (S.D.N.Y. Aug. 6, 2012) ("[T]here is a general presumption that motions to dismiss claims without prejudice should be granted."). The Second Circuit has identified five factors relevant to considering whether a motion for voluntary dismissal without prejudice should be granted:

(1) [T]he plaintiff's diligence in bringing the motion, (2) any undue vexatiousness on the plaintiff's part, (3) the extent to which the suit has progressed, including the defendant's efforts and expense in preparation for trial, (4) the duplicative expense of relitigation, and (5) the adequacy of the plaintiff's explanation for the need to dismiss.

Sec. Exch. Comm. v. Compania Internacional Financiera S.A., No. 11 Civ. 4904, 2012 WL 1856491, at *2 (S.D.N.Y. May 22, 2012) (citing Zagano v. Fordham Univ., 900 F.2d 12, 14 (2d Cir. 1990)). "The Court will analyze each of these factors individually, but no one factor is dispositive. The crucial inquiry remains whether [the defendant] will suffer substantial prejudice as a result of a dismissal without prejudice." Sec. Exch. Comm. v. Chakrapani, Nos. 9 Civ. 325, 9 Civ. 1043, 2010 WL 2605819, at *2 (S.D.N.Y. June 29, 2010).

B. Application of Law to Facts

The first Zagano factor is Plaintiff's diligence in bringing the motion. This factor weighs in Plaintiffs' favor. In general, "for the plaintiff's delay to militate against a grant of dismissal, the [defendant] must show that it expended resources or otherwise detrimentally relied on a reasonable expectation that the plaintiff would pursue its remaining claims." Banco Cent. De Paraguay v. Paraguay Humanitarian Found., Inc., No. 01 Civ. 9649, 2006 WL 3456521, at *4 (S.D.N.Y. Nov. 30, 2006). Thus, courts have found in favor of plaintiffs when a voluntary dismissal motion was made "before discovery beg[an] in earnest, " Sec. Exch. Comm. v. One or More Unknown Purchasers of Sec. of Telvent GIT, SA, No. 11 Civ. 3794, 2013 WL 1683665, at *2 (S.D.N.Y. Apr. 17, 2013), and when plaintiffs sought dismissal "within a year after the action began, " In re Bank of Am. Mortgage Servicing S'holder Derivative Litig., No. 11 Civ. 2475, 2012 WL 1506271, at *2 (S.D.N.Y. Apr. 4, 2012) (citing Omega Inst., Inc. v. Universal Sales Sys., Inc., No. 8 Civ. 6473, 2010 WL 475287, at *3 (W.D.N.Y. Feb.5, 2010)). Other courts have considered "whether a plaintiff moved to dismiss within a reasonable period of time after the occurrence of the event that led to the plaintiff's decision not to pursue the action, " Ascentive, LLC v. Opinion Corp., No. 10 Civ. 4443, 2012 WL 1569573, at *4 (E.D.N.Y. May 3, 2012), and whether the plaintiff "encouraged the [defendant] to continue discovery without any intention of pursuing its claims, " Shaw Family Archives, Ltd. v. CMG Worldwide, Inc., No. 5 Civ. 3939, 2008 WL 4127549, at *5 (S.D.N.Y. Sept. 2, 2008).

Here, Plaintiffs filed their Rule 41(a)(2) motion less than a year after filing the Complaint, less than three months after filing the First Amended Complaint, and roughly two months after Judge Herndon stayed a similar case in Illinois-a decision that prompted Plaintiffs to seek voluntary dismissal of this action. In all these respects, Plaintiffs acted diligently. More importantly, there is no evidence that Pfizer acted to its detriment on any expectation created by Plaintiffs, and Plaintiffs sought voluntary dismissal before any discovery, summary judgment briefing, or trial preparation. Thus, it cannot be said that Plaintiffs led Pfizer to incur significant or wasteful expenses related to this litigation. Because Plaintiffs acted diligently, this Zagano factor weighs in favor of granting their motion for voluntary dismissal.

The second Zagano factor-undue vexatiousness-also weighs in favor of Plaintiffs. Vexatiousness is usually used to describe situations where "the case was brought to harass the defendant, " Hinfin Realty Corp. v. Pittston Co., 206 F.R.D. 350, 356 (E.D.N.Y 2002), or the plaintiff otherwise illustrates an "ill-motive, " such as "where plaintiffs have assured the court and the defendants that they intended to pursue their claims prior to seeking dismissal, " Shaw, 2008 WL 4127549, at *6; see also Compania Internacional, 2012 WL 1856491, at *5 ("Courts define undue vexatiousness' to mean that the plaintiff acted with ill-motive' in bringing or maintaining its claims.'" (citations omitted)); Banco Cent. De Paraguay, 2006 WL 3456521, at *5 ("Courts find ill-motive where, for example, the plaintiff never had any intention of providing discovery in th[e] case but nonetheless permitted the case to proceed, thereby seeking the advantage of filing its charges without having to support ...

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