Appeals court rules Louisiana isn’t bound by Flonase antitrust settlement

By David Hutton | Jan 3, 2018

BATON ROUGE — The U.S. Third Circuit Court of Appeals recently ruled that an antitrust settlement that GlaxoSmithKline (GSK) reached over its efforts to put a hold on generic alternatives to Flonase nasal spray won’t put the brakes on a similar claim in Louisiana.

The panel ruled that it could not force the State of Louisiana to adhere to the antitrust settlement between GSK and individuals who purchased Flonase.

At the time Louisiana filed its complaint in late 2014, state officials maintained its case was merited and should be allowed to continue.

“Louisiana’s suit against GSK is based on the same anti-competitive actions that formed the basis of the private class action, but the State of Louisiana was not a party to that private action," a communications official said at the time. "As our responsive pleadings will show, the state still has a number of viable claims against GSK that have not been resolved by any prior suit."

Former Attorney General James “Buddy” Caldwell, who was in office at the time of the filing, drew criticism when he brought lawsuits against large corporations by using outside law firms, some of which had financial ties to his office through campaign contributions. Caldwell sued several corporations on behalf of the state capturing hundreds of millions in damage awards of which outside firms received a percentage.

In the appeal before the Third Circuit court, GSK sought to have Louisiana enjoined to the antitrust lawsuit for 11th Amendment purposes. GSK tried to show that Louisiana waived its sovereign immunity in order to avoid the 11th Amendment’s restrictions.

GSK also argued that Louisiana didn’t opt out of the settlement class, and would as a result be bound by the settlement and final judgment.

On Dec. 21, 2015, the District Court for the Eastern District of Pennsylvania denied GSK’s motion and dismissed the case.

Citing Pennhurst State School and Hospital v. Halderman, the district court maintained that the 11th Amendment covered the enforcement action because a state retains the autonomy to choose not just whether it may be sued but where it may be sued.

The Third Circuit also rejected GSK’s argument, maintaining that Louisiana did not waive its sovereign immunity in the primary suit simply by receiving a Class Action Fairness Act notice and failing to act.

The court also found none of GSK’s arguments against this persuasive.

Ultimately, the Third Circuit ruled the 11th Amendment applied to the settlement agreement and the instant enforcement action.

"GSK may not avoid the Eleventh Amendment’s prohibition,” the panel wrote in its Dec. 22 opinion. “Additionally, the District Court did not abuse its discretion in denying GSK’s rule 60(b) motion.”

 As a result, the panel affirmed the district court’s order.

The Court of Appeals panel hearing the case included judges Michael A. Chagares, Joseph A. Greenaway Jr. and Thomas I. Vanaskie.

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