Reverse Settlements Are Not Per Se Cartwright Act Antitrust Violations

Nathan A. Adams IV is a Partner in our Tallahasse office.

In In re: Lipitor Antitrust Litigation RP Healthcare, Inc., No. 14-4632, 2018 WL 266751 (3d Cir. Jan. 3, 2018), the court determined that the district court had diversity jurisdiction over the plaintiff's Cartwright Act (California's antitrust statute) claim, but affirmed dismissal of the claim because a reverse settlement is not a per se violation of the act. The district court initially declined to send the case back to state court from whence it was removed based on an erroneous finding of federal jurisdiction in potential patent defenses of the defendants. At the time, there were non-diverse defendants, but RP Healthcare voluntarily dismissed them so that by the time of final judgment there was a proper basis for federal jurisdiction. Turning to the merits, RP Healthcare alleged that Pfizer sued Ranbaxy for infringement of a Lipitor patent and that the parties entered into a reverse settlement agreement,