Removal attempt fails despite CAFA, preemption arguments

Asahi Kasei Pharma Corp. v. Actelion Ltd., 2009 WL 801555 (N.D. Cal.)

Asahi, a Japanese pharmaco, entered into a license agreement with defendant CoTherix to develop and market Fasudil, an allegedly promising new drug discovered by Asahi for treating pulmonary arterial hypertension (PAH) and stable angina. Asahi alleged that defendant Actelion interfered with the license agreement (or assumed then breached it) in order to protect its monopoly in treatment for PAH. That is, shortly after the license agreement, Actelion acquired CoTherix at a massive premium, which allegedly allowed Actelion to extend its sales of Tracleer, its PAH treatment, and delay Fasudil. Actelion notified Asahi, on behalf of CoTherix, that it intended to halt Fasudil “for—inter alia—business and commercial reasons, including other pipeline considerations.” These included a possible combination therapy using Tracleer and another PAH treatment from CoTherix, Ventavis. Asahi alleged that it couldn’t find another development partner, putting Fasudil on hold and delaying development in Japan because Asahi can’t use US clinical trial data in Japanese regulatory submissions.

Asahi sued defendants in California state court, alleging various breaches of contract, interference with prospective economic advantage, and violation of state unfair competition law. Its state false advertising claims allege that defendants

advertised Tracleer and Ventavis as a combined therapy for PAH using false or misleading statements of fact regarding the drugs, and promoted off-label combination therapy of the two drugs to medical professionals.

Actelion removed the case under CAFA and under preemption theories. The court scoffed at the attempt to use CAFA: Asahi didn’t bring a class action; using a consumer protection statute to redress one’s own harm is not the same thing as filing a class action, even though Asahi also alleged that consumers had been harmed.

Actelion also argued that Asahi’s claims were inextricably intertwined with violations of the FDCA. Asahi rejoined that the complaint’s references to the FDCA showed defendants’ liability, but are not necessary elements of its false advertising claims. The court agreed: Merrell Dow Pharmaceuticals, Inc. v. Thompson, 478 U.S. 804 (1986), held that a consumer claim against a drug company, based in part on the theory that a violation of the FDCA constituted negligence, did not present a federal question, and thus removal was improper. Asahi alleged that defendants falsely advertised Tracleer and Ventavis as a “perfect fit” and “a logical combination,” even though studies of the combination therapy were still underway and the FDA hadn’t approved combined use. The truth or falsity of these statements can be determined without interpreting the FDCA, though violations of the FDCA would be evidence of liability.

Defendants also argued complete preemption by the FDCA. There’s no precedent for this; complete preemption is rare and has only been applied by the Supreme Court to

the Labor-Management Relations Act, ERISA, and the National Bank Act. Lower courts have rejected the theory that the FDCA should be added to this list, and the court here did the same, especially since the FDCA does not provide a private right of action.

The court remanded to state court and deemed Asahi’s request for attorneys’ fees a “close call.” (Comment: even on the CAFA attempt? That doesn’t seem like an argument many litigators could make with a straight face, and frankly the ones who could scare me. But defense counsel apparently argued the court out of it.)