The Third Circuit Court of Appeals affirmed a Pennsylvania district court decision holding the Eleventh Amendment to the United States Constitution prevented a private party from enjoining the state of Louisiana from bringing claims identical to those previously thought released in a class action settlement.
As our prior post detailed, in 2013 pharmaceutical giant GlaxoSmithKline (GSK) settled a class action brought against it by indirect purchasers of the allergy medicine Flonase stemming from allegations the company improperly attempted to delay the introduction of a generic version of the drug. The settlement required class members to release all their claims. The state of Louisiana, as an indirect purchaser, qualified as a potential class member and received a notice of settlement pursuant to the Class Action Fairness Act (CAFA). The state did not opt out of the settlement.
Later, Louisiana's Attorney General filed a copycat lawsuit in state court raising claims against GSK that were virtually identical to the settled claims. GSK then promptly instituted ancillary proceedings and moved to enforce the settlement agreement and enjoin Louisiana from pursuing the lawsuit. The district court denied the motion. The court held the Eleventh Amendment sovereign immunity provisions covered the enforcement action and insufficient evidence existed to show Louisiana had waived these protections and consented to the court's jurisdiction.
The Third Circuit agreed with the district court. First, the court held that the Eleventh Amendment protections extend to any suit in law or equity. As such, it covered the enforcement action because the motion to enjoin Louisiana from suing sought an equitable remedy against the state. Next, the court held that Louisiana did not waive its sovereign immunity simply by receiving the CAFA notice and by failing to respond. A state only waives its sovereign immunity upon making a "clear declaration" that it intends to submit itself to the jurisdiction of the court. Louisiana's failure to respond was thus insufficient to find a waiver.
The court's ruling should guide defendants who wish to settle class actions in which states are absent members.
In Re: Flonase Antitrust Litigation, Nos. 16-1124 & 16-3019 (3rd. Cir. Dec. 22, 2017)
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