United States District Court, D. Maryland
July 2, 2015
LUPIN PHARMACEUTICALS, INC., et al., Plaintiffs,
CRAIG RICHARDS, Defendant.
Richard D. Bennett United States District Judge
In this case, Plaintiffs Lupin Pharmaceuticals, Inc. (“Lupin Pharmaceuticals”) and Lupin, Ltd. (“Lupin India”) (collectively, “the Lupin Plaintiffs”) seek to enjoin Defendant Craig Richards, the Attorney General of Alaska, (“the Attorney General”) from issuing a civil investigative demand (“CID”) to the Lupin Plaintiffs and from applying Alaskan antitrust law to the Lupin Plaintiffs. The Attorney General has moved to dismiss this action, arguing that this Court should abstain from exercising its jurisdiction under the abstention doctrine established in Younger v. Harris, 401 U.S. 37 (1971). The parties’ submissions have been reviewed, and this Court held a hearing on June 26, 2015 on the Motion. See Local Rule 105.6 (D. Md. 2014). For the reasons that follow, Defendants Craig Richards’ Motion to Dismiss (ECF No. 23) is GRANTED, and this case is DISMISSED.
This Court accepts as true the facts alleged in plaintiff’s complaint. See Aziz v. Alcolac, Inc., 658 F.3d 388, 390 (4th Cir. 2011). This dispute arose out of issues pertaining to two drugs, Loestrin FE 24 and Effexor XR. These drugs are manufactured and sold by Warner-Chilcott and Wyeth, respectively, and those companies hold patents on the drugs. See Compl., ¶ 16. The Lupin Plaintiffs allege that neither Lupin Pharmaceuticals, Inc. nor Lupin, Ltd. (“Lupin India”) had rights to sell the drugs or approval to sell generic versions. Id. The Lupin Plaintiffs had filed applications with the Food & Drug Administration (“FDA”) in 2006 and 2009 to sell generic versions of the respective drugs, but the brand manufacturers sued the Lupin Plaintiffs for declaratory judgments stating that the sale of such generics would violate their patents. Id. at ¶ 17. The Lupin Plaintiffs settled the patent claims in 2009 and 2010 respectively. Id. at ¶¶ 17-18.
On February 3, 2015, pursuant to Alaska Stats. §§45.50.592 and 45.50.495, Attorney General Richards issued separate civil investigative demands (CIDs) to Lupin Pharmaceuticals, Inc., and Lupin, Ltd., demanding production of three categories of documents related to the two drugs. Id. at ¶ 21. The CIDs state that “[t]he Attorney General seeks to determine whether the pharmaceutical manufacturers subject to [the CID] violated Alaska state law by entering into a settlement agreement that terminated ongoing patent litigation regarding the brand name drug listed herein, and thereby delaying generic entry into the marketplace, ” in potential violation of Alaska antitrust and consumer protection statutes. See Mem. Supp. Mot. Dismiss 1-2, ECF No. 23-1. The CIDs originally required production of responsive documents within sixty days. Id. at 2. The Lupin Plaintiffs allege that the scope of the CIDs included filings with the Federal Trade Commission (“FTC”) and Department of Justice (“DOJ”), documents produced in the patent litigations, documents discussing the validity of the patents, and agreements between Lupin and the branded manufacturers. Pls.’ Compl. ¶ 21.
Alaska law provides that the subject of a CID may within 20 days of service file a petition in Alaska Superior Court stating good cause why the CID should be modified or set aside. Alaska Stat. §45.50.592(f). The Lupin Plaintiffs declined to file any petition requesting modification of the CID. It is undisputed, however, that the Lupin Plaintiffs requested to extend the time for compliance with the CIDs; the Attorney General granted those requests. Thus, the deadline to produce documents responsive to the CIDs was May 4, 2015. Pls.’ Compl. ¶23.
Instead of complying with or objecting to the CIDs, the Lupin Plaintiffs filed the present action on the May 4 deadline, and filed the Motion for Preliminary Injunction (ECF No. 4) on the following day. The Complaint requests that this Court immediately issue a permanent injunction restraining Defendant from issuing civil investigative demands (CIDs) to Plaintiffs in connection with the Attorney General’s investigation of Plaintiffs’ compliance with Alaskan Antitrust laws, and from applying those state laws to Plaintiffs. Plaintiffs also request a declaratory judgment that Defendant’s issuance of CIDs to Plaintiffs in connection with the Attorney General’s investigation of Plaintiffs’ compliance with Alaskan antitrust laws regarding the drugs was unconstitutional. The Plaintiffs also seek attorneys’ fees and damages.
On May 22, 2015, the Attorney General filed a motion for extension of time to respond, noting that the assistant attorney general assigned to the case (Clyde Sniffen, Jr.) was on vacation when this case was filed and that an extension was needed to allow time for Sniffen to “return from vacation on May 27, 2015 to review the pleadings in this case, confer with Attorney General Richards, and prepare a response to the motion for preliminary injunction.” The motion was opposed by the Plaintiffs but was granted by this Court.
On June 1, 2015, the Attorney General filed a petition in Alaska Superior Court for an order to show cause why the Lupin Plaintiffs should not be held in contempt for failure to respond to the CIDs pursuant to Alaska Stat. § 45.50.592(g). On June 1, 2015, the Attorney General also filed the subject Motion to Dismiss (ECF No. 23) and a Motion to Stay the Motion for Preliminary Injunction (ECF No. 24) in this Court.
This Court held a teleconference on June 3, 2015. As a result of that call, the Motion to Stay the Motion for Preliminary Injunction was granted, and this Court established a briefing schedule for the motion to dismiss. This Court held a hearing on the Motion to Dismiss on June 26, 2015.
STANDARD OF REVIEW
A motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction challenges a court’s authority to hear the matter brought by a complaint. See Davis v. Thompson, 367 F.Supp.2d 792, 799 (D. Md. 2005). This challenge under Rule 12(b)(1) may proceed either as a facial challenge, asserting that the allegations in the complaint are insufficient to establish subject matter jurisdiction, or a factual challenge, asserting “that the jurisdictional allegations of the complaint [are] not true.” Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009) (citation omitted). With respect to a facial challenge, a court will grant a motion to dismiss for lack of subject matter jurisdiction “where a claim fails to allege facts upon which the court may base jurisdiction.” Davis, 367 F.Supp.2d at 799.
Where the challenge is factual, “the district court is entitled to decide disputed issues of fact with respect to subject matter jurisdiction.” Kerns, 585 F.3d at 192. “[T]he court may look beyond the pleadings and ‘the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists.’” Khoury v. Meserve, 268 F.Supp.2d 600, 606 (D. Md. 2003) (citation omitted). The court “may regard the pleadings as mere evidence on the issue and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Velasco v. Gov’t of Indon., 370 F.3d 392, 398 (4th Cir. 2004); see also Sharafeldin v. Md. Dep’t of Pub. Safety & Corr. Servs., 94 F.Supp.2d 680, 684-85 (D. Md. 2000). A plaintiff carries the burden of establishing subject matter jurisdiction. Lovern v. Edwards, 190 F.3d 648, 654 (4th Cir. 1999).
The main issue before this Court is whether this Court should abstain from exercising its jurisdiction over this case under the doctrine of Younger v. Harris, 401 U.S. 37 (1971). Of course, federal courts have a “virtually unflagging” obligation to hear and decide those cases for which they have jurisdiction. Sprint Communications, Inc. v. Jacobs, 134 S.Ct. 584, 591 (2013) (citing Colorado River Water Conservation Dist. V. United States, 424 U.S. 800 (1976)). Certain “exceptional circumstances, ” however, “justify a federal court’s refusal to decide a case in deference to the States.” Id. (quoting New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350 (1989)). The first case involving such an “exceptional circumstance” was Younger, where the United States Supreme Court held that considerations of federalism and comity required federal courts to abstain from exercising their equity jurisdiction to enjoin ongoing state criminal prosecutions. Subsequently, the Supreme Court found that such considerations also justified abstention where there were “state civil proceedings that [were] akin to criminal prosecutions” or state proceedings “that implicate[d] a State’s interest in enforcing the orders and judgments of its courts.” Sprint Communications, Inc. v. Jacobs, 134 S.Ct. 584, 588 (2013). The Supreme Court’s most recent opinion addressing Younger abstention-Sprint Communications, Inc. v. Jacobs-does not purport to diverge from the Court’s previous Younger jurisprudence; however, the Court noted that its decision was intended “to guide other federal courts” and to “clarify and affirm that Younger extends to the three exceptional circumstances identified in [New Orleans Pub. Serv., Inc. v. Council of City of New Orleans, 491 U.S. 350 (1989)], but no further.” Sprint, 134 S.Ct. at 593-94 (internal quotation marks omitted).
The Attorney General asserts that the Alaska Proceeding warrants Younger abstention because it is both a civil enforcement proceeding akin to a criminal prosecution (i.e., the second Younger category) and a state proceeding that implicates the State’s interest in enforcing the orders and judgments of its courts (i.e., the third Younger category). The Lupin Plaintiffs characterize the Alaska Proceeding as a discovery dispute that does not qualify under either the second or third Younger categories. Because this Court finds that this case clearly qualifies for the third category of Younger abstention, this Court need not reach the issue of whether this case also satisfies Younger’s second category.
A) The Alaska Proceeding Implicates the State’s Interest in Enforcing the Orders and Judgments of its Courts
In Juidice v. Vail, 430 U.S. 327 (1977), the Supreme Court found that abstention under Younger was appropriate in a federal class action suit brought by individuals who had been found in contempt by state court judges for disobeying subpoenas. The Court recognized that the same principles of federalism and comity that were emphasized in Younger also applied to cases involving a State’s contempt process because “federal-court interference with the State’s contempt process is an offense to the State’s interest . . . likely to be every bit as great as it would be were [it] a criminal proceeding.” Juidice, 430 U.S. at 335-36 (internal quotation marks omitted).
The Lupin Plaintiffs attempt to distinguish this case from Juidice on the basis of the type of subpoena at issue. In Juidice, the Supreme Court was faced with contempt proceedings arising out of an individual’s failure to respond to a subpoena in a civil action between private parties. In this case, the civil investigative demands-essentially subpoenas-are administrative in nature. Specifically, AS § 45.50.592 authorizes the Attorney General to issue CIDs when the Attorney General believes a party may have documentary evidence believed to be relevant to an authorized antitrust investigation. Petitions pertaining to such demands “may be filed in the superior court for the judicial district in which the person on whom the demand is served resides.” AS § 45.50.592(f).
The Lupin Plaintiffs acknowledge that courts have found that Younger abstention is appropriate in the face of similar civil investigative demands,  but argue that those cases were “eviscerate[d]” by the Supreme Court’s opinion in Sprint. Pls.’ Resp. at 8. The Lupin Plaintiffs argue that this case is instead analogous to Google v. Hood, ___ F.Supp. 3d ___, 2015 WL 1546160 (S.D.Miss. Mar. 27, 2015), and that Younger abstention does not apply. In the Google case, the district court found that a subpoena issued under the Mississippi Consumer Protection Act by a state’s attorney general did not fit into any of the three Younger types of cases. In reaching that conclusion, however, the district court noted that there was no pending attempt to enforce the subpoena. Id. at *6 (“At this time, there is no ongoing state criminal prosecution relating to this matter, nor are there civil proceedings involving certain orders uniquely in furtherance of the state courts’ ability to perform their judicial functions.”). Thus, the Google case is immediately distinguishable because the attorney general in that case never sought to enforce the subpoena through an action in the state court. In this case, the Attorney General has already filed a proceeding in Alaska Superior Court, thereby triggering judicial oversight of the CIDs. In this respect, therefore, the Lupin Plaintiffs’ argument reveals itself as a mere distinction without a difference. The subpoenas at issue in Juidice were not issued by a court itself; instead, they were issued by a private party’s attorney acting “as an officer of the court.” 430 U.S. at 329 n2. Similarly, the CIDs in this case are issued by the Attorney General, but like in Juidice, can only be enforced after involving a state court. Accordingly, this Court finds that Juidice requires this Court to abstain under the third category of the Younger Doctrine.
B) The Alaska Proceeding as a Parallel Action
The Lupin Plaintiffs next argue that “this Court should not abstain in favor of the show cause petition because it is not a truly parallel state proceeding that raises the constitutional questions that Plaintiffs have presented in their federal complaint.” Pl.’s Resp. 12-13, ECF No. 32. The Lupin Plaintiffs argue that the proceeding will be restricted to whether the Lupin Plaintiffs willfully disobeyed the CIDs and that “it appears unlikely that the Alaska superior court will decide the defense that the AG lacked constitutional authority to issue the CIDs to Plaintiffs.” Id. at 13. The Lupin Plaintiffs assert that the Alaska statute only expressly allows improper service of the CID to be raised and prohibits defenses going to a CID’s validity; thus, the Lupin Plaintiffs argue that their challenge to the Attorney General’s jurisdictional authority to even issue the CIDs to the Lupin Plaintiffs is an issue that will not be reached.
The Lupin Plaintiffs’ speculation about the purported inadequacy of the Alaska proceeding fails to prevent the application of Younger abstention in this case. The Supreme Court has explained that “the burden . . . rests on the federal plaintiff to show that state procedural law bar[s] presentation of its claims.” Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 14 (1987) (internal quotation marks omitted). “[W]hen a litigant has not attempted to present his federal claims in related state-court proceedings, a federal court should assume that state procedures will afford an adequate remedy, in the absence of unambiguous authority to the contrary.” Id. at 15. The Lupin Plaintiffs have not cited to any case authority from Alaska that suggests constitutional or jurisdictional challenges cannot be raised in response to the show cause petition. Indeed, such limitations is unlikely because the Alaska Superior Court is the court of general jurisdiction in the State. Accordingly, while the statute is somewhat ambiguous as to the full gambit of defenses that may be raised during a show cause petition arising out of a CID, the Lupin Plaintiffs have failed to present unambiguous authority that would justify a conclusion by this Court that an Alaskan state judge would “interpret ambiguities in state procedural law to bar presentation of federal claims.” Id.
C) The Timing of the State and Federal Actions
The Lupin Plaintiffs next argue that abstention is inappropriate because, in its view, there have been proceedings on the merits in this case, and the Attorney General did not file the Alaska Proceeding until after the Lupin Plaintiffs filed their Motion for Preliminary Injunction in this Court. Citing to Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 238 (1984), the Lupin Plaintiffs argue that their motion for preliminary injunction “put the merits of the Plaintiffs’ case in play.” Pl.’s Resp. at 15. However, in Midkiff, the district court had granted an injunction-i.e., there was a ruling on the issues raised by the parties. In this case, however, the Court has not made any substantive rulings to date; therefore, there is no basis for this Court to refuse to abstain based upon proceedings on the merits in federal court.
D) Exceptions to the Younger Doctrine
The Lupin Plaintiffs also argue that several of the exceptions to the Younger Doctrine apply to this case. Indeed, the Supreme Court has recognized a few exceptions to Younger abstention. These exceptions include state proceedings initiated in bad faith or for purposes of harassment. Additionally, an exception exists where a statute is “flagrantly and patently violative of express constitutional prohibitions in every clause, sentence and paragraph, and in whatever manner and against whomever an effort might be made to apply it.” Younger, 401 U.S. at 53-54.
1) The Lupin Plaintiffs’ Alleged Irreparable Loss of Constitutional Claims
The Lupin Plaintiffs assert that, through this action, they seek to “vindicate their constitutional right to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit.” Pls.’ Resp. at 16 (internal marks omitted). In Younger, the Court alluded to the possibility of an exception for irreparable injury that is “both great and immediate.” See 401 U.S. at 46. The Court clarified, however, that such a threat of injury to federally protected rights “must be one that cannot be eliminated by [the] defense against a single criminal prosecution, ” and that “the cost, anxiety, and inconvenience” of responding to a proceeding were insufficiently severe to prevent abstention. Id.
In this case, the concerns raised by the Lupin Plaintiffs-although undoubtedly relating to jurisdictional issues-boil down to harms arising from responding to the Alaska Proceeding itself. As discussed above, the Lupin Plaintiffs have failed to demonstrate that they have no way of vindicating their rights through the Alaska Proceeding and, thus, they have failed to show that the threatened harm constitutes an irreparable injury for purposes of Younger.
2) The Alleged Retaliatory Nature of the Alaskan Proceeding
The Lupin Plaintiffs argue that the Attorney General’s show-cause petition is retaliatory because such a petition is warranted under Alaska law only when a recipient “willfully disobeys” a CID, but not when a recipient merely “challenges” a CID. See Mot. in Opposition, ECF No. 32. The question then becomes whether filing the present motion for injunctive relief constitutes a response to the CID under § 44.62.590(a)(2).
Plaintiffs argue that § 45.50.592(f), the provision outlining how a recipient may challenge a CID without being in contempt, could be interpreted to permit the present motion as a “response” for the purposes of § 44.62.590(a)(2). The statute reads in relevant part “a petition to extend the return date for, or to modify or set aside a demand issued under (a) of this section, stating good cause, may be filed in the superior court for the judicial district where the parties reside.” Alaska Stat. Ann. § 45.50.592(f) (emphasis added). The Lupin Plaintiffs contend that because the statute does not expressly foreclose the possibility of filing a challenge to a CID in a federal district court of a different state, the present action must be construed as a valid “response, ” and not a refusal that would justify the Attorney General’s show-cause petition. This argument is unpersuasive, as the context of the statute indicates contemplation of a “superior court, ” the common denomination of an intermediate court in Alaska, not a federal court established under Article III of the U.S. Constitution. At best, such interpretive creativity hardly reveals the show-cause petition to be “bad faith” or “retaliatory” as alleged by the Lupin Plaintiffs.
3) The Alleged Waiver of the Abstention Issue
Plaintiffs next contend that by virtue of the Attorney General’s motion for an extension to respond to Plaintiffs’ motion for preliminary injunction, the Attorney General waived any claim for Younger abstention. In support, Plaintiffs cite to Ohio Civil Rights Comm’n v. Dayton Christian Schools, Inc., 477 U.S. 619 (1986). In Ohio Civil Rights Comm’n, the Supreme Court held that the United States District Court for the Southern District of Ohio properly abstained under Younger from enjoining the Ohio Civil Rights Commission from exercising jurisdiction over a sex discrimination complaint brought by a discharged teacher. Id. In dicta, the Supreme Court explained that a State may “voluntarily submit to federal jurisdiction even though it might have had a tenable claim for abstention, ” but noted that these were cases where “the State expressly urged this Court or the District Court to proceed to an adjudication of the constitutional merits.” Id. at 626. Requesting adjudication is hardly analogous to filing a motion for an extension to respond to a Complaint. Quite simply, the Attorney General did not forfeit any argument under Younger by merely requesting an extension of time to respond.
For the reasons stated above, Defendant Craig Richards’ Motion to Dismiss (ECF No. 23) is GRANTED, and this case is DISMISSED.
A separate Order follows.