Richards Layton & Finger
 

Chief Judge Stark Denies Defendants' Motion for Reargument on its Order and Contingently Imposes Costs on Defendants

July 11, 2017

In UCB, Inc. v. Watson Laboratories, Inc., C.A. No. 14-1083-LPS-SRF (D. Del. May 19, 2017), Chief Judge Stark denied the defendants’ motion for reargument of the Court’s December 5, 2016 order, in which the Court denied the plaintiffs’ request for a stay, but held that the defendants were liable for the costs of litigation from that point forward if either of two contingencies occurred. According to the order, the defendants would be liable for costs if either: “(a) their ANDA is rejected due to the ‘major deficiencies’ cited by the FDA or (b) they change the ANDA formulation contrary to repeated representations to the Court that no such alteration is required.” Ultimately, the Court denied the defendants’ motion for reargument because the defendants did not establish that any of the grounds for granting reargument were applicable.

The Court gave several reasons for denying the defendants’ request for reargument. First, the Court noted that the defendants failed to comply with their obligations to meet and confer with the plaintiffs before filing their motion. Second, the Court rejected the defendants’ argument that shifting litigation costs was outside the adversarial issues presented in the plaintiffs’ request for a stay. The Court explained that the prejudice of continuing litigation based on an ANDA formulation that could ultimately change (and thus result in unnecessary litigation expenses) was relevant in determining whether to grant the stay. The litigation costs were allocated to balance the concerns of continuing the litigation in light of the increased uncertainty of the ANDA formulation.

Next, citing its inherent power to manage its docket and to take action to “facilitate the just, speedy, and inexpensive disposition of all matters” before it, the Court rejected the defendants’ argument that there was no legal basis for the Court’s contingent imposition of costs. If either of the two contingencies were to transpire, the Court explained, the litigation would likely be disrupted, and duplicative costs would be imposed on the plaintiffs. Lastly, the Court explained that its prior order would not “lead to a manifest injustice” because “costs will be awarded only if Actavis’s representations to the Court are not borne out.” The Court concluded that this situation was unusual for Hatch-Waxman cases because “‘Actavis knows that it will have to change its product,’ yet has so far refused to do so.” Therefore, the prior order will not, as the defendants suggested, have a chilling effect on access to the judicial system or defeat the objectives of the Hatch-Waxman Act.

Key Points: The Court is willing to utilize its inherent power to manage its docket by contingently imposing costs to discourage activity that would likely lead to duplicative litigation.