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State v. Astra Zeneca AB

Court of Appeals of Louisiana, First Circuit

April 11, 2018

STATE OF LOUISIANA, BY AND THROUGH ITS ATTORNEY GENERALJAMES CALDWELL
v.
ASTRA ZENECA AB, ASTRAZENECA LP, ASTRAZENECA PHARMACEUTICALS LP, AND AKTIBOLAGET HASSLE

          On Appeal from the Nineteenth Judicial District Court In and for the Parish of East Baton Rouge State of Louisiana No. 637960 Honorable Timothy E. Kelley, Judge Presiding

          Jeff Landry Attorney General Keetsie T. Gunnels Nicholas J. Diez Stacie Deblieux Elizabeth Baker Murrill Baton Rouge, Louisiana And Alejandro Perkins Baton Rouge, Louisiana And Robert L. Salim Barrett Beasley Natchitoches, Louisiana John Alden Meade Adam G. Young New Orleans, Louisiana And James P. Ryan Opelousas, Louisiana And Jerald P. Block Thibodaux, Louisiana Counsel for Plaintiff/Appellant State of Louisiana by and through its Attorney General, James Caldwell.

          Bradley C. Myers Linda G. Rodrigue Jennifer Jones Thomas Amanda M. Collura Baton Rouge, Louisiana And Michael P. Kelly Daniel M. Silver Benjamin A. Smyth Wilmington, Delaware Counsel for Defendants/Appellees AstraZeneca AB, AstraZeneca LP, AstraZeneca Pharmaceuticals LP, and Aktiebolaget Hassle.

          BEFORE: WHIPPLE, C.J., GUIDRY, PETTIGREW, McDONALD, McCLENDON, WELCH, HIGGINBOTHAM, CRAIN, THERIOT, HOLDRIDGE, CHUTZ, AND PENZATO, JJ.

          McCLENDON, J.

         The State of Louisiana appeals a judgment that sustained peremptory exceptions raising the objections of no cause of action and no right of action in favor of a drug manufacturer, dismissing the State's claims against the manufacturer with prejudice. For the reasons that follow, we reverse.

         FACTS AND PROCEDURAL HISTORY

         The State of Louisiana, by and through its Attorney General, filed the instant suit against AstraZeneca AB, AstraZeneca LP, AstraZeneca Pharmaceuticals LP, and Aktiebolaget Hassle (collectively "AstraZeneca") on March 18, 2015. The State alleges that AstraZeneca intentionally delayed approval of a generic equivalent to their brand pharmaceutical product Toprol-XL® in an effort to limit competition from generic pharmaceutical manufacturers and in violation of state law.[1] As a result of a generic being delayed, the State alleges that it, through the Louisiana Medicaid program, paid more in reimbursement for Toprol-XL than it otherwise would have paid for the generic equivalent. The State also claims that it lost substantial amounts in reimbursements paid outside of the Medicaid program. In its lawsuit, the State asserts that its claims arise from antitrust violations under the Louisiana Monopolies Act ("Monopolies Act"), LSA-R.S. 51:121, et seq., and from violations of the Louisiana Unfair Trade Practices Act ("LUTPA"), LSA-R.S. 51:1401, et seq. Alternatively, the State asserts that it has a claim for unjust enrichment. It seeks restitution, treble damages, attorney fees, and costs.

         In response, AstraZeneca filed multiple exceptions, including the ones at issue herein - the peremptory exceptions raising the objections of no right of action and no cause of action. Following argument on AstraZeneca's exceptions, the trial court found that all claims were vested with the Department of Health and Hospitals (now Louisiana Department of Health or "LDH") rather than the State. No evidence was introduced at the hearing. Because the trial court found that all claims were vested with LDH, it sustained the exceptions of no right of action and no cause of action and dismissed the State's claims with prejudice.

         The State has appealed, assigning the following as error:

1. The trial court erred in sustaining Defendants' Exceptions of No Right of Action and No Cause of Action in this suit, based upon its finding that the State of Louisiana is not the proper party in interest to bring the suit and/or that the Louisiana Department of Health has the sole right to assert these claims.
2. The Trial Court erred in sustaining Defendants' Exceptions of No Right of Action and No Cause of Action in this suit, based upon its finding that the State of Louisiana's role as an indirect purchaser of Toprol-XL bars the State from pursuing antitrust claims and LUTPA claims.
3. The Trial Court erred in sustaining Defendants' Exceptions of No Right of Action and No Cause of Action in this suit by dismissing the State's claims that are not derived from Medicaid expenditures.
4. The Trial Court erred in sustaining Defendants' Exceptions of No Right of Action and No Cause of Action in this suit by dismissing the State's unjust enrichment claim.

         DISCUSSION

         At issue in this case are the exceptions of no right of action and no cause of action. Although these two exceptions are often confused, the peremptory exceptions of no right of action and no cause of action are separate and distinct. LSA-C.C.P. art. 927(A)(5) and (6); Badeaux v. Southwest Computer Bureau, Inc., 05-0612 (La. 3/17/06), 929 So.2d 1211, 1216. The Louisiana Supreme Court has recognized that one of the primary differences between the exception of no right of action and no cause of action lies in the fact that the focus in an exception of no right of action is on whether the particular plaintiff has a right to bring the suit, while the focus in an exception of no cause of action is on whether the law provides a remedy against the particular defendant. Badeaux, 929 So.2d at 1216-17.

         An exception of no cause of action questions whether the law extends a remedy against the defendant to anyone under the factual allegations of the petition and is triable on the face of the petition. Badeaux, 929 So.2d at 1217. To determine the issues raised by the exception of no cause of action, each well-pleaded fact in the petition must be accepted as true. Id. In reviewing a district court's ruling sustaining an exception of no cause of action, appellate courts conduct a de novo review because the exception raises a question of law, and the district court's decision is based only on the sufficiency of the petition. Id. An exception of no cause of action should be granted only when it appears beyond doubt that the plaintiff can prove no set of facts in support of any claim that would entitle him to relief. Id. Every reasonable interpretation must be accorded the language used in the petition in favor of maintaining its sufficiency and affording the plaintiff the opportunity of presenting evidence at trial. Id. If the petition states a cause of action on any ground or portion of the demand, the exception should generally be overruled. Id.

         Further, the Louisiana Supreme Court has held that the exception of no cause of action should not be maintained in part, so as to prevent a multiplicity of appeals thereby forcing an appellate court to consider the merits of the action in a piecemeal fashion. Everything on Wheels Subaru, Inc. v. Subaru South, Inc., 616 So.2d 1234, 1236 (La. 1993). If there are two or more items of damages or theories of recovery that arise out of the operative facts of a single transaction or occurrence, a partial judgment on an exception of no cause of action should not be rendered to dismiss an item of damages or theory of recovery. Id. at 1239.

         As to the exception of no right of action, the function of the exception is a determination of whether plaintiff belongs to the class of persons to whom the law grants the cause of action asserted in the petition. LSA-C.C.P. art. 927(A)(6); Badeaux, 929 So.2d at 1217. In examining an exception of no right of action, a court should focus on whether the particular plaintiff has a right to bring the suit, but assume that the petition states a valid cause of action for some person. Turner v. Busby, 03-3444 (La. 9/9/04), 883 So.2d 412, 415. Evidence supporting or controverting an exception of no right of action is admissible; however, in the absence of evidence to the contrary, the averments of fact in the pleadings will be taken as true. See Eagle Pipe and Supply, Inc. v. Amerada Hess Corporation, 10-2267, 10-2272, 10-2275, 10-2279, 10-2289 (La. 10/25/11), 79 So.3d 246, 252-53 & 255. Determination of whether a plaintiff has a right of action is a question of law. 1900 Highway 190, L.L.C. v. City of Slidell, 15-1755 (La.App. 1 Cir. 6/3/16), 196 So.3d 693, 698 (citing Horrell v. Horrell, 99-1093 (La.App. 1 Cir. 10/6/00), 808 So.2d 363, 368, writ denied, 01-2546 (La. 12/7/01), 803 So.2d 971).

          Additionally, courts have treated a partial exception of no right of action no differently than a partial exception of no cause of action. This court has previously held that the Code of Civil Procedure does not provide for a partial peremptory exception raising the objection of no right of action, and, thus, if a plaintiff has a right of action as to any one of the theories or demands for relief set out in his petition, the objection of no right of action should be overruled. Talbot v. C&C Millworks, Inc., 97-1489 (La.App. 1 Cir. 6/29/98), 715 So.2d 153, 156 fating Clement v. McNabb, 580 So.2d 981, 983 (La.App. 1 Cir. 1991) and Cenac Towing Co. v. Cenac, 413 So.2d 1351, 1352 (La.App. 1 Cir. 1982)). Where the plaintiff pleads multiple theories of recovery based on a single occurrence or set of operative facts, the partial grant of an exception of no right of action, which attacks only one theory of recovery and which does not dismiss a party, would be invalid as an impermissible partial judgment. Talbot, 715 So.2d at 156 (citing Shinew v. Luciano Refrigerated Transport, Inc., 96-2454 (La.App. 1 Cir. 11/19/97), 706 So.2d 140, 142 and Poy v. Twin Oaks Nursing Home, Inc., 95-889 (La.App. 5th Cir. 2/14/96), 671 So.2d 15, 18-19.

         In light of these axioms, we first consider whether the Attorney General has a right of action to bring the proceeding at issue. In connection with its exception raising the objection of no right of action, AstraZeneca maintains that LDH, as opposed to the State, is the only party that has a right of action. AstraZeneca avers that the Louisiana Supreme Court has recognized: (1) state agencies with the power to "sue and be sued" as "the sole parties capable of bringing suit to enforce their rights" and (2) that lawsuits concerning the duties of such agencies should be instituted by the agency and not by the state. See State ex rel. Dep't of Highways v. City of Pineville, 403 So.2d 49, 52 (La. 1981). AstraZeneca notes that LDH is "a body corporate with the power to sue and be sued, " and contends that LDH is statutorily vested with responsibility for Medicaid. LSA-R.S. 36:251A and 36:254D(1)(a)(i). Further, AstraZeneca asserts that LDH is the owner of the funds used to reimburse pharmacies for the purchase of Toprol-XL. See LSA-R.S. 46:153.3. Nevertheless, AstraZeneca maintains that even if the funds could be classified as belonging to the State, any action against it would belong to LDH under the rationale of City of Pineville.

         On the other hand, while the State recognizes that LDH is a body corporate with the power to sue and be sued, the State maintains that it is not asserting any right that was ever solely possessed by LDH. The State avers that under the rationale of Pineville, the political subdivision becomes the sole party capable of asserting a claim only when the claim asserted derives from property owned (or a contract entered into) exclusively by that political subdivision or agency. The State argues that while LDH administers the Medicaid program, all Medicaid funds belong to the State. The State claims that all of the funds paid through the Medicaid program come from the State's general fund and from federal funds granted the State on which the State remains obligated-funds which were never a part of LDH's budget and never the distinct property of LDH. The State additionally alleges that there were non-Medicaid funds that were also paid out by the State. As such, the State maintains that it has a right to bring this action in its own name stemming from its ownership of those funds.

         Recently, this court addressed a similar issue in State v. Abbott Laboratories, Inc.,15-1854, 15-1626 (La.App. 1 Cir. 10/21/16), 208 So.3d 384, writs denied, 17-0125, 17-0149 (La. 3/13/17), 216 So.3d 802, 808, wherein the State sued pharmaceutical manufacturers alleging that the manufacturers "engaged in an unlawful and deceptive scheme to receive Medicaid payments for drugs that were not eligible for Medicaid payments." The State raised claims under LUTPA and the Louisiana Medical Assistance Programs Integrity Law (MAPIL), LSA-R.S. 46:437.1, et seq., along with claims for fraud, negligent misrepresentation, redhibition, and unjust enrichment. Id. at 386-87. In response, the manufacturers filed an exception of no right of action, asserting that the right of action belonged to the Louisiana Department of Health and Hospitals (now LDH). The trial court sustained the manufacturers' exception of no right of action and dismissed the suit. The State then appealed. Id. at 387.

         On appeal, this court noted that LDH was a political subdivision that had the right to sue and be sued, and that the LDH was statutorily authorized to file suit on behalf of Medicaid. LSA-R.S. 36:254D(2)(H). Abbott, 208 So.3d at 388. Nonetheless, this court recognized the extensive powers granted the Attorney General on behalf of the State to "institute and prosecute any and all suits he may deem necessary for the protection of the interests and rights of the state." See LSA-R.S. 13:5036. We also recognized the specific powers granted the Attorney General in the area of consumer protection under LUTPA. See LSA-R.S. 51:1404.[2] Abbott, 208 So.3d at 388-89. With regard to the LUTPA claim, this court cited the following provisions of the act: Louisiana Revised Statutes 51:1405 provides, in part:

A. Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are ...

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