United States District Court, S.D. New York
OPINION AND ORDER
M. FURMAN, UNITED STATES DISTRICT JUDGE.
Apotex Coip. ("Apotex") brings claims against
Defendants Hospira Healthcare India Private Ltd.
("Hospira India") and Hospira, Inc. (together with
Hospira India, "Hospira"), successors of an entity
that had agreed with Apotex to jointly develop and market
certain generic pharmaceutical products for sale in the
United States. In an earlier Opinion and Order, the Court
granted in part and denied in part a motion to dismiss
Apotex's claims, and granted Apotex leave to file a
second amended complaint. See Apotex Corp. v. Hospira
Healthcare India Private Ltd., No. 18-CV-4903 (JMF),
2019 WL 3066328 (S.D.N.Y. July 12, 2019). Thereafter, Apotex
filed the operative Second Amended Complaint, which includes
claims against Hospira for breach of contract; unfair
competition under the Florida Deceptive and Unfair Trade
Practices Act ("FDUTPA"), Fla. Stat. Ann.
§§ 501.201 et seq.; and monopolization and
attempted monopolization under Section 2 of the Sherman
Antitrust Act, 15 U.S.C. § 2. ECF No. 74
("SAC"). Hospira now moves, pursuant to Rule
12(b)(6) of the Federal Rules of Civil Procedure, to dismiss
Apotex's antitrust claims and its claim for punitive
damages for breach of contract. ECF Nos. 84-85. For the
reasons that follow, Hospira's motion is GRANTED as to
the antitrust claims. The Court reserves judgment on the
punitive damages claim pending further briefing on
subject-matter jurisdiction in light of the dismissal of the
relevant background is set forth in the Court's prior
Opinion and will be summarized only briefly here. In 2003,
Apotex entered into an agreement - the Development,
Manufacturing, Supply and Commercialization Agreement
("Agreement"), see ECF No. 39, at 5-8 -
with Hospira's predecessor. Orchid Chemicals and
Pharmaceuticals, Ltd. ("Orchid"). SAC ¶ 1. The
Agreement provided that Orchid would supply Apotex with
certain drugs, including cefazolin, ceftriaxone, cefoxitin,
cefepime, and piperacillin-tazobactam ("pip/taz").
Id. In addition, the Agreement prohibited Orchid
from supplying the covered drugs to Apotex's competitors
and from directly competing with Apotex in the United States.
Id. ¶¶ 47-50; see also Id. ¶
53 (describing amendment creating an exception for certain
customers). On March 23, 2010, Hospira succeeded Orchid
through a contractual novation ("Novation"),
see ECF No. 39, at 11-13, and thus became subject to
the Agreement's exclusive supply provision and other
restrictions on competition with Apotex, see SAC
1, 2018, Apotex sued Hospira India for breach of the
Agreement and Novation anda variety of related claims. See
ECF No. 1. On July 12, 2019, the Court granted in part and
denied in part a motion to dismiss these claims. ECF No. 70.
In brief, the Court ruled that Apotex's three fraud-based
claims and claims for unfair competition, breach of the
implied covenant of good faith and fair dealing, tortious
interference, and unjust enrichment failed as a matter of
law, but its claim under the FDUTPA did not. See
2019 WL 3066328, at *4-8. In addition, the Court ruled that
Apotex may seek only benefit-of-the-bargain damages,
attorney's fees, and costs for its FDUTPA claim; that
Apotex is bound by the Agreement and Novation's
limitation on damages; and that it was ambiguous whether the
limitation on damages precluded lost profit damages for
Apotex's contract claim. Id. at *8-9. Most
relevant for present purposes, the Court reserved judgment on
whether Apotex adequately pleaded a claim for punitive
damages for breach of contract and whether any such claim was
barred by the limitation on damages, see Id. at *8
n.5, and granted Apotex leave to file a second amended
complaint adding "new allegations and claims . . .
regarding monopolization and attempted monopolization,"
id. at *10. Thereafter, Apotex filed the Second
Amended Complaint, adding Hospira, Inc. as a new Defendant
and alleging claims under the Sherman Antitrust Act.
See SAC ¶¶ 169-192.
Second Amended Complaint alleges that Hospira monopolized the
U.S. market for cefepime, a type of cephalosporin antibiotic,
and attempted to monopolize the U.S. market for several other
drugs. See SAC¶¶ 169-192. Apotex alleges
that Hospira did so by breaching its obligations under the
parties' agreement to act as Apotex's exclusive
suppher for these drugs, and by selling its own version of
the drugs to Apotex's competitors and directly to
Apotex's customers. See Id. ¶¶ 176,
184. For example, Hospira allegedly cut off Apotex's
supply of cefepime and manufactured and sold its own
brand-name version of the drug, Maxipime, to Apotex's
competitors and customers. Id. at¶¶ 176,
180. Hospira allegedly used "confidential average
price" information obtained through the parties'
partnership to sell Maxipime "on par with or near
Apotex's contract price." Id. at ¶
176(d). Through this alleged scheme, Hospira's share of
the cefepime market "soared from negligible to a
majority market share," reaching 56.58% in August 2016.
Id. at ¶¶ 173, 178. In addition, Hospira
ultimately closed "the only facility at which it
manufactures Products for Apotex," known as the IKKT
facility, leaving Apotex entirely ''unable to
compete." Id. at¶¶ 8, 203. Hospira
allegedly used the same scheme in an attempt to monopolize
the U.S. market for other drugs - namely, ceftriaxone,
cefazolin, cefoxitin, andpip/taz. See Id. at
¶¶ 1, 189-91. Hospira allegedly gained 43.75% of
the market for ceftriaxone "as of January 2017,"
and 30.76% of the market for cefazolin "as of January
2016." Id. ¶ 191. (It is unclear what, if
any, market share Hospira gained for the other drugs.) On the
basis of these allegations, Apotex now seeks, inter
alia, treble damages, plus costs and attorney's
fees, for the alleged antitrust violations and punitive
damages for the alleged breach of contract. See SAC
at Prayer for Relief ¶ 1(a), (c).
evaluating a motion to dismiss pursuant to Rule 12(b)(6), a
court must accept all facts set forth in the complaint as
true and draw all reasonable inferences in the plaintiffs
favor. See, e.g., Kashef v. BNP Paribas S.A., 925
F.3d 53, 58 (2d Cir. 2019). A claim will survive a Rule
12(b)(6) motion, however, only if the plaintiff alleges facts
sufficient "to state a claim to relief that is plausible
on its face." Bell Atlantic Corp. v. Twombly,
550 U.S. 544, 570 (2007). A claim is facially plausible
''when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged."
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing
Twombly, 550 U.S. at 556). A plaintiff must show
"more than a sheer possibility that a defendant has
acted unlawfully," id., and cannot rely on mere
"labels and conclusions" to support a claim,
Twombly, 550 U.S. at 555. If the plaintiffs
pleadings "have not nudged [his or her] claims across
the line from conceivable to plausible, [the] complaint must
be dismissed." Twombly, 550 U.S. at 570.
Court begins with the motion to dismiss Apotex's
antitrust claims, its sole federal claims. Section 2 of the
Sherman Antitrust Act prohibits "monopolizing], or
attempt[ing] to monopolize . . . any part of the trade or
commerce among the several States." 15 U.S.C. § 2.
A claim of monopolization "requires, in addition to the
possession of monopoly power in the relevant market, the
willful acquisition or maintenance of that power as
distinguished from growth or development as a consequence of
a supenor product, business acumen, or historic
accident." In re Adderall XR Antitrust Litig.,
754F.3d 128, 133 (2dCir. 2014) (internal quotation marks
omitted) (quoting Verizon Commc'ns Inc. v. Law
Offices of Curtis V. Trinko, LLP, 540 U.S. 398, 407
(2004)). "To state an attempted monopolization claim, a
plaintiff must establish '(1) that the defendant has
engaged in predatory or anticompetitive conduct with (2) a
specific intent to monopolize and (3) a dangerous probability
of achieving monopoly power.'" PepsiCo., Inc. v.
Coca-Cola Co., 315 F.3d 101, 105 (2d Cir. 2002) (per
curiam) (quoting Spectrum Sports, Inc. v. McQuillan,
506 U.S. 447, 456 (1993)). The two claims "are
substantially identical, with the exception that attempted
monopolization requires a showing of specific intent to
monopolize." New York v. Actavis, PLC, No.
14-CV-7473 (RWS), 2014 WL 7015198, at *35 (S.D.N.Y. Dec. 11,
2014), aff'd sub nom. New York ex rel. Schneiderman
v. Actavis PLC, 787 F.3d 638 (2d Cir. 2015).
argues that Apotex's claims fail for at least two
reasons: first, because Apotex fails to make a showing of
"anticompetitive conduct," ECF No. 85
("Defs.' Mem."), at 10-14; and second, because
Apotex fails to plausibly allege that Hospira actually
monopolized or dangerously threatened to do so, id.
19-22. The Court agrees on both fronts.
under the Sherman Act must allege anticompetitive conduct, as
federal antitrust laws were "enacted for the protection
of competition not competitors." Brunswick Corp. v.
Pueblo Bowi-O-Mat, Inc., 429 U.S. 477, 488 (1977)
(internal quotation marks omitted). "[Anticompetitive
conduct is conduct without a legitimate business purpose that
makes sense only because it eliminates competition."
In re Adder all, 754 F.3d at 133 (internal quotation
marks omitted). A "prototypical valid business
purpose" is expanding into a new market to compete on
the basis of increased efficiency. See Port Dock &
Stone Corp. v. Oldcastle Northeast, Inc., 507 F.3d 117,
124-25 (2d Cir. 2007) (holding that a manufacturer's
breach of a distributorship agreement was not anticompetitive
because the manufacturer "expected to perform the second
level service more efficiently than the old trading
partners"). Conduct undertaken for such a purpose
cannot, as a matter of law, be the basis for an antitrust
case, Apotex's own allegations reveal that Hospira's
conduct was undertaken for legitimate, pro-competitive
purposes. The primary conduct alleged in the Second Amended
Complaint is Hospira's decision to breach the exclusive
supplier agreement with Apotex in order to compete directly
with Apotex and to supply Apotex's competitors. See,
e.g., SAC ¶¶ 84 ("Hospira has sold or
otherwise supplied to third parties in the Territory certain
drugs that directly compete with Apotex's sale of the
Products."), 88 (describing "Hospira's
deliberate decision to divert supply of Products to its own
use in competition with Apotex"); see also Id.
¶ 2 (alleging that "Hospira did compete with Apotex
in the United States pharmaceuticals market" prior to
the parties' agreement). That decision is consistent with
competitive business behavior: "Like any seller of a
product," Hospira "would prefer multiple competing
buyers unless an exclusive distributorship arrangement
provides other benefits." E&L Consulting, Ltd.
v. Doman Indus. Ltd.,472 F.3d 23, 30 (2d Cir. 2006).
Engaging in competition was especially rational given
Hospira's competitive advantage over Apotex. Apotex
alleges that "many" firms produce "virtually
identical drugs," which means that firms must compete on
factors like "consistency of supply." Id.
¶¶ 39-40. Hospira, as a manufacturer, has direct
access to a consistent supply of products, unlike a reseller
like Apotex. Hospira's decision to capitalize on this
advantage is not the type of ...