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No. 17-230 IN THE _________ ALICE IVERS Petitioner, v. WESTERLY PHARMACEUTICALS, INC. Respondent. _________ On Writ of Certiorari to the United States Court of Appeals for the Twelfth Circuit _________ BRIEF FOR RESPONDENT _________ TEAM #2629

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Page 1: Southern Illinois University School of Law · 1. Do the Hatch-Waxman Amendments preempt failure to update label lawsuits against generic drug manufacturers, where the Amendments express

No. 17-230

IN THE

_________

ALICE IVERS

Petitioner,

v.

WESTERLY PHARMACEUTICALS, INC.

Respondent.

_________

On Writ of Certiorari to

the United States Court of Appeals

for the Twelfth Circuit

_________

BRIEF FOR RESPONDENT

_________

TEAM #2629

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QUESTIONS PRESENTED

1. Do the Hatch-Waxman Amendments preempt failure to update label lawsuits

against generic drug manufacturers, where the Amendments express

Congress’s decision to balance marginal cost over marginal safety of generic

drugs, empower the FDA to establish and enforce a national standard for

generic manufacturers’ duty of care, and where the manufacturer has

updated its label?

2. Does Federal Rule of Civil Procedure 41(d) authorize district courts to award

attorney’s fees as part of costs, where a plaintiff voluntarily dismisses a case

in one forum and refiles substantially the same complaint in another forum

for improper reasons?

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TABLE OF CONTENTS

QUESTIONS PRESENTED ........................................................................................... i

TABLE OF CONTENTS ................................................................................................ ii

TABLE OF AUTHORITIES ......................................................................................... iv

OPINIONS BELOW ...................................................................................................... 0

CONSTITUTIONAL PROVISIONS INVOLVED......................................................... 0

STATUTES, REGULATIONS, AND COURT RULES INVOLVED ............................ 0

STATEMENT OF THE CASE ....................................................................................... 1

SUMMARY OF THE ARGUMENT .............................................................................. 5

ARGUMENT .................................................................................................................. 7

I. IVERS’ STATE TORT LAW CLAIMS ARE PREEMPTED BECAUSE SUCH

CAUSES OF ACTION INTERFERE WITH CONGRESS’S REQUIREMENTS

AND OBJECTIVES IN THE HATCH-WAXMAN AMENDMENTS. ...................... 7

A. There Is No Presumption Against Preemption in Regulating Generic Drug

Labeling. ................................................................................................................. 8

B. Ivers’ Defective Label Claim Must Fail Because It Would Have Been

Impossible for Westerly to Design Initially a Label That Differed from That

Approved for the Brand-Name Drug Without Violating Federal Law. .............. 10

C. Ivers’ Failure To Update Claim Must Fail Because Congress Preempted

State Tort Law Causes of Action Against Generic Drug Manufacturers That

Comply With FDA Regulations. ........................................................................... 12

1. State Tort Liability For Generic Drug Labeling Would Interfere With

Congressional Balancing Of The Benefits And Risks Of Generic Drugs In The

Marketplace Under The Hatch-Waxman Amendments To The FDCA. ......... 13

a. Congress Enacted a Nationally Uniform Regulatory Scheme for

Generic Drugs, and Liability Sounds in Federal Law, Not in State Law. .. 14

i. State Tort Liability Would Destroy National Uniformity in Generic

Drug Regulation. ........................................................................................ 15

ii. State Tort Liability Would Allow State Juries Instead of Congress

and the FDA to Balance the Benefits and Risks of Generic Drugs. ........ 18

b. Generic Drugs Are Regulated Differently Than Brand-name Drugs to

Accomplish Different Congressional Objectives. .......................................... 22

2. Generic Drug Manufacturer Liability in Tort Would Frustrate the

Primary Objective of the Hatch-Waxman Amendments. ................................ 25

a. The Hatch-Waxman Amendments Have Successfully Lowered Drug

Prices and Made Life-Saving Drugs More Accessible to the Public. ........... 27

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b. State Tort Liability Would Increase the Costs to Generic Drug

Manufacturers, Dramatically Increasing Prices of Prescription Drugs. ..... 29

II. ATTORNEY’S FEES WESTERLY INCURRED DEFENDING AGAINST

IVERS’ SUIT IN EAST TEXAS ARE TAXABLE TO IVERS UNDER RULE 41(D)

BECAUSE THAT RULE ALLOWS FEE SHIFTING. ............................................ 32

A. The Plain Meaning of the Word Costs Is Broad Enough to Include

Attorney’s Fees. .................................................................................................... 34

B. Rule 41’s Multiple Provisions Work in Concert to Empower Judges to

Punish Plaintiffs Who Abuse the Judicial Process. ............................................ 36

C. Rule 41(d) Allows for an Award of Attorneys’ Fees Under Two Exceptions

to “the American Rule.” ........................................................................................ 39

1. Courts Can Use Their Inherent Power to Deter Vexatious Conduct by

Awarding Attorney’s Fees as Part of Costs. ..................................................... 39

2. Courts Can Look to the Underlying Statute’s Definition of Costs to

Resolve Whether They May Award Attorney’s Fees. ...................................... 44

CONCLUSION ............................................................................................................. 49

APPENDIX A ...............................................................................................................1A

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TABLE OF AUTHORITIES

Cases

Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240 (1975) ................... 40, 41

Andrews v. America’s Living Ctrs., LLC, 827 F.3d 306 (4th Cir. 2016) .. 41, 43, 44, 46

Barclays Capital Inc. v. Theflyonthewall.com, Inc., 650 F.3d 876 (2d Cir. 2011) ..... 17

Behrle v. Olshansky, 139 F.R.D. 370 (W.D. Ark. 1991) .............................................. 43

Cadle Co. v. Beury, 242 F.R.D. 695 (S.D. Ga. 2007) ................................................... 37

Cent. Basin Mun. Water Dist. v. Water Replenishment Dist. of S. Cal., No. CV11-

7531 CAS (RZx), 2012 WL 1378650 (C.D. Cal. Apr. 19, 2012) ............................... 47

Delaware & Hudson Ry. Co., Inc. v. Knoedler Mfrs., Inc., 781 F.3d 656 (3d Cir. 2015)

............................................................................................................................. 18, 22

Esposito v. Piatrowski, 223 F.3d 497 (7th Cir. 2000) ........................................... 43, 46

Esquivel v. Arau, 913 F. Supp. 1382 (C.D. Cal. 1996) ................................................ 42

Farina v. Nokia, Inc., 625 F.3d 97 (3d Cir. 2010) ................................................. 20, 21

Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132 (1963) ........................ 11

Food & Drug Admin. v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000) . 38

Fulgenzi v. PLIVA, Inc., 711 F.3d 578 (6th Cir. 2013) ............................................... 22

Geier v. American Honda Motor Co., 529 U.S. 861 (2000) ......................................... 17

Green v. Bock Laundry Mach. Co., 490 U.S. 504 (1989) ............................................ 35

Griffin v. Oceanic Contractors, Inc., 458 U.S. 564 (1982) .......................................... 35

Hines v. Davidowitz, 312 U.S. 52 (1941) ............................................................... 13, 27

Jochum v. Schmidt, 570 F.2d 1229 (5th Cir. 1978) .................................................... 39

Jones v. Sec. & Exch. Comm’n, 298 U.S. 1 (1936) ...................................................... 38

Key Tronic Corp. v. United States, 511 U.S. 809 (1994) ................................. 34, 37, 40

Kimble v. Marvel Entertainment, LLC, 131 S.Ct. 2401 (2015) .................................. 27

Kurns v. A.W. Chesterton Inc., 620 F.3d 392 (3d Cir. 2010), aff'd sub nom., Kurns v.

R.R. Friction Prods. Corp., 132 S.Ct. 1261 (2012) .................................................. 18

Marek v. Chesny, 473 U.S. 1, 9 (1985) ................................................................ passim

McCann v. Bentley Stores Corp., 34 F. Supp. 234 (E.D. Mo. 1940) ........................... 39

Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) ................................................................ 9

Morris v. PLIVA, Inc., 713 F.3d 774 (5th Cir. 2013) .................................................. 22

Mut. Pharm. Co. v. Bartlett, 133 S.Ct. 2466 (2013) .................................................... 12

Oteng v. Golden Star Res., Ltd., 615 F. Supp. 2d 1228 (D. Colo. 2009) ..................... 41

Platinum Logistics, Inc. v. Platinum Cargo Logistics, Inc., No.: 3:15-CV-617-CAB-

KSC, 2015 WL 11921401 (S.D. Cal. Sep. 15, 2015) ................................................ 47

PLIVA, Inc. v. Mensing , 564 U.S. 604 (2011) ............................................................ 11

Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868 (6th Cir. 2000) .................................. 37

Sanderson v. Spectrum Labs, Inc., 248 F.3d 1159, 2000 WL 1909678 (7th Cir. 2000)

............................................................................................................................. 47, 48

Simeone v. First Bank Nat’l Ass’n, 971 F.2d 103 (8th Cir. 1992) .............................. 34

United States v. Locke, 529 U.S. 89 (2000) ................................................................. 10

United States v. Regenerative Scis., LLC, 741 F.3d 1314 (D.C. Cir. 2014)................ 15

Wyeth v. Levine, 555 U.S. 555 (2009) .................................................................... 14, 24

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Constitution, Statutes, Regulations and Rules

15 U.S.C. § 1117 ........................................................................................................... 54

21 C.F.R. § 314.150(b)(10) ........................................................................................... 28

21 U.S.C. § 355(e)......................................................................................................... 28

21 U.S.C. § 355(j)(2)(A)(v) ............................................................................................ 13

E. Tex. Code § 12-12-12 ............................................................................................... 55

Fed. R. Civ. P. 41(a) ..................................................................................................... 44

Fed. R. Civ. P. 41(d) ..................................................................................................... 38

Fed. R. Civ. P. 54(d) ..................................................................................................... 41

Fed. R. Civ. P. 68(d) ..................................................................................................... 52

U.S. Const. art. VI, cl. 2. ................................................................................................ 8

Miscellaneous

2 PALMER D. EDMUNDS, FEDERAL RULES OF CIVIL PROCEDURE (1938) ....................... 45

ALEX BRILL, FDA’S PROPOSED GENERIC DRUG LABELING RULE: AN ECONOMIC

ASSESSMENT (2014) ................................................................................................... 34

CBO, EFFECTS OF USING GENERIC DRUGS ON MEDICARE’S PRESCRIPTION DRUG

SPENDING (2010) ....................................................................................................... 31

Costs, ANDERSON’S DICTIONARY OF LAW (1889) ........................................................... 41

Costs, BALLENTINE’S LAW DICTIONARY (2d ed. 1948) .................................................. 40

Costs, BLACK’S LAW DICTIONARY (3d ed. 1941) ............................................................ 41

Costs, WEBSTER’S NEW INTERNATIONAL DICTIONARY (2d ed. 1941) ............................ 40

Dalia Buffery, Enhanced Generic Utilization Saves US Healthcare $139.6 Billion in

2009, 3 AM. HEALTH DRUG BENEFITS 274 (2010) ..................................................... 31

Edward H. Hammond, Some Changes in the Preliminary Draft of the Proposed

Rules of Federal Civil Procedure, 23 A.B.A. J. 629 (1937) ..................................... 43

FDA, GENERIC COMPETITION AND DRUG PRICES,

https://www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacc

o/CDER/ucm129385.htm (last updated 5/13/2015). ................................................ 32

GAO, GENERIC DRUGS UNDER MEDICARE PART D GENERIC DRUG PRICES DECLINED

OVERALL, BUT SOME HAD EXTRAORDINARY PRICE INCREASES (Aug. 2016) .............. 36

H.R. REP. 98-857(I) (1984).................................................................................. 8, 16, 30

Joseph Walker, Weaker generic drug prices hit makers, wholesalers, MARKETWATCH

(Aug. 5, 2017) ............................................................................................................ 35

Letter from Lamar Alexander et. al., Member of United States Congress, to

Margaret Hamburg, Commissioner, Federal Drug Administration (Jan. 22, 2014)

................................................................................................................................... 34

Stephen Barlas, Generic Drug Prices Take Flight, 39 PHARMACY AND THERAPEUTICS

833 (2014) ................................................................................................................. 36

Supplemental Applications Proposing Labeling Changes for Approved Drugs and

Biological Products, 78 Fed. Reg. 219 (proposed Nov. 13, 2013) ............................ 34

U.S. DEP’T OF HEALTH & HUMAN SERVS., EXPANDING THE USE OF GENERIC DRUGS 5

(Dec. 1, 2010) ............................................................................................................ 31

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OPINIONS BELOW

The District Court of Illinoza’s order granting judgment on the pleadings (R. at 1) is

unreported. The Court of Appeals for the Twelfth Circuit’s opinion (No. 17-1620, R.

at 9) is also unreported. This Court granted certiorari on July 17, 2017, and that

order is unreported (R. at 23).

CONSTITUTIONAL PROVISIONS INVOLVED

U.S. Const. art. VI, cl. 2, states:

This Constitution, and the Laws of the United States which shall be

made in Pursuance thereof; and all Treaties made, or which shall be

made, under the Authority of the United States, shall be the supreme

Law of the Land; and the Judges in every State shall be bound

thereby, any Thing in the Constitution or Laws of any State to the

Contrary notwithstanding.

STATUTES, REGULATIONS, AND COURT RULES INVOLVED

21 U.S.C. § 355(j)(2) states in relevant part:

An abbreviated application for a new drug shall contain . . . (v)

information to show that the labeling proposed for the new drug is the

same as the labeling approved for the listed drug referred to in clause

(i).

21 C.F.R. § 314.150(b) states in relevant part:

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FDA may notify the applicant, and, if appropriate, all other persons

who manufacture or distribute identical, related, or similar drug

products as defined in 310.6, and for a new drug afford an opportunity

for a hearing on a proposal to withdraw approval of the application or

abbreviated new drug application under section 505(e) of the act and

under the procedure in 314.200, if the agency finds . . . (10) That the

labeling for the drug product that is the subject of the abbreviated new

drug application is no longer consistent with that for the listed drug

referred to in the abbreviated new drug application.

Fed. R. Civ. P. 41(d) states:

Costs of a Previously Dismissed Action. If a plaintiff who previously

dismissed an action in any court files an action based on or including

the same claim against the same defendant, the court: (1) may order

the plaintiff to pay all or part of the costs of that previous action; and

(2) may stay the proceedings until the plaintiff has complied.

STATEMENT OF THE CASE

Brand-name pharmaceutical manufacturer GlaxoCline, LLC, developed

ropidope hydrochloride (“ropidope”), a pharmaceutical treatment for Parkinson’s

disease, during the 1990s. R. at 2. In 1997, GlaxoCline obtained a patent on the

compound and secured FDA approval to market the drug under the brand-name

Equip®. R. at 2. During its twenty-year patent term, GlaxoCline was the sole

manufacturer permitted to sell ropidope. R. at 12. After GlaxoCline’s patent

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expired, Westerly Pharmaceuticals, Inc., submitted an Abbreviated New Drug

Application (“ANDA”), in which it sought to market a generic version of ropidope. R.

at 2. Empowered by Congress since 1984 to use the ANDA process to expedite the

entry of generic drugs into the marketplace, the Food and Drug Administration

(“FDA”) approved within a year Westerly’s ANDA, provided that it be sold with a

label identical to that of Equip®. R. at 2. In 2009, Westerly began manufacturing

and distributing ropidope with a matching label. R. at 2.

During the period that Westerly manufactured ropidope, a doctor diagnosed

Petitioner Alice Ivers, a resident of Cardozo, Illinoza, with Parkinson’s disease and

prescribed ropidope to treat her symptoms. R. at 1. In March 2011, Petitioner

began daily consumption of the cheaper generic form of ropidope manufactured by

Westerly, rather than the more expensive Equip®. R. at 1. It is undisputed that at

this time the label of Westerly’s generic ropidope was the same as the label on the

brand-name Equip®, listed all known necessary warnings, and was in full

compliance with FDA regulations.

In June 2011, nearly three months after Petitioner began taking ropidope,

and twenty-four years after ropidope entered the market, GlaxoCline modified the

Equip® label to reflect that new studies had revealed a possible association between

ropidope use and impulse control, including compulsive gambling and spending. R.

at 2. In January 2012, Westerly submitted a Changes Being Effected (“CBE”)

request to the FDA to update the generic ropidope label to match the modified

Equip® label. R. at 2–3. Within a month Westerly had updated its label. R. at 3.

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Petitioner alleges that in July 2011 she began to develop compulsive

spending and gambling behaviors. R. at 3. Petitioner further alleges that she

transferred the majority of her retirement savings into an online poker account. R.

at 3. Over 2011 and 2012, petitioner won substantial amounts of money gambling

but allegedly spent all of it and depleted her life savings. R. at 3. Petitioner believes

this loss of money was caused by her use of ropidope. R. at 3. During the majority of

this period of alleged spending, Westerly distributed ropidope with an updated

warning label containing the risk of impulse control issues, and Petitioner does not

allege that the added warning label changed her gambling or spending habits. R. at

3.

Despite the fact that Westerly’s ropidope label complied with the Federal

Food, Drug and Cosmetic Act (“FDCA”) and matched the Equip® label when

Petitioner was first prescribed ropidope, as well as during the majority of the time

during which she allegedly spent her life savings, Petitioner believed that the brief

period in which the labels did not match proximately caused her monetary and

personal damages. R. at 3. On January 15, 2013, Petitioner filed a Complaint

against Westerly in the United States District Court for the Western District of

East Texas. R. at 5. On February 14, 2013, the Fifth Circuit issued its opinion

rejecting a similar claim in Morris v. PLIVA, Inc., 713 F.3d 774 (5th Cir. 2013); R. at

5. Less than two weeks after it became clear Fifth Circuit precedent would bar her

claims, Petitioner filed a Notice of Voluntary Dismissal under Federal Rule of Civil

Procedure 41(a)(1). R. at 5.

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Six months later, Petitioner then filed this suit against Westerly in Illinoza

state court, and Westerly timely removed the proceeding to the United States

District Court for the District of Illinoza. R. at 3. Shortly thereafter, Westerly

moved for judgment on the pleadings and an award of costs. R. at 3.

District Judge Alan McBeal granted Westerly’s motion for judgement on the

pleadings and dismissed the complaint. R. at 5. Judge McBeal held that “[b]ecause

Plaintiff alleges that a generic drug manufacturer breached its state-law duty by

failing to alter its FDA-mandated warning label, her claim is preempted,” citing

Morris v. PLIVA, Inc., 713 F.3d 774, 777 (5th Cir. 2013). R. at 5. Judge McBeal

granted Westerly’s motion for costs in part, awarding Westerly $876.52 in court

filing, copying, delivery, research, and telecommunications costs for the East Texas

action, but rejecting the request for $3,442 in attorney fees. R. at 7. Citing a

Northern District of California court, Judge McBeal held that “Rule 41(d) does not

authorize the award of fees Defendant seeks. . . . The Twelfth Circuit has not held

otherwise.” R. at 7.

Petitioner appealed the district court’s judgment on the pleadings to the

Twelfth Circuit and Westerly cross-appealed the court’s denial of attorney’s fees. R.

at 9. The court of appeals affirmed the district court’s judgment on the pleadings,

stating “the state-law ‘reasonableness’ standard is not congruent with the federal

law on label changes, and therefore cannot be enforced.” R. at 15. The appellate

court noted that applying tort liability would “run afoul of obstacle preemption” and

“would contravene the intent of the streamlined ANDA process in Hatch-Waxman.”

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R. at 15–16. It further noted that “leaving reasonableness up to state law and juries

would contravene the FDA’s role as administrator of national drug-safety policy.” R.

at 16.

The court of appeals also upheld the award of costs under Rule 41(d), but

reversed the district court’s decision not to include attorney’s fees. The court joined

a majority of federal appellate courts in finding that attorney’s fees may be included

as costs, holding “[i]ncreasing the deterrent force of Rule 41(d) by including

attorney’s fees in the potential costs of voluntary dismissal and refiling directly

serves both of these purposes and would best effectuate the Rule’s intent.” R. at

17. The court determined that “Iver’s Rule 41(a) dismissal from the Western

District of East Texas plainly seeks to trade disadvantageous law in one forum for

advantageous law in another” and called her actions “the very definition of forum

shopping.” R. at 17. Petitioner timely petitioned for a Writ of Certiorari, which was

granted on July 17, 2017. R. at 23.

SUMMARY OF THE ARGUMENT

Westerly designed its label in the only manner allowable under federal law,

as a mirror image of the brand-name label. As demonstrated by this Court’s

precedents, Westerly both could not update its label prior to a change in the brand-

name label and could not face tort liability for its failure to do so. Unfortunately,

this legal disability meant that Westerly’s generic ropidope did not contain a

warning about compulsive behaviors when Petitioner began taking the drug. Within

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months of the brand-name label’s updated warnings, Westerly updated its label to

match. Petitioner alleges that this was not soon enough, and consequently Westerly

should be liable for her injury.

The problem with petitioner’s theory is that it allows states to determine the

duty of care generic drug manufacturers owe when they update their labels to

comply with the FDA requirement of sameness. When states take on this

responsibility, it directly impedes Congress’s objective to delegate generic drug

policy authority to the FDA and to streamline regulations to lower costs on generic

manufacturers and lower drug prices. The doctrine of preemption exists in order to

prevent such piecemeal determination of the duty of care in compliance with a

federal policy. Thus, the Twelfth Circuit and the District of Illinoza both correctly

held that Petitioner’s claims were preempted by federal law.

The Fifth Circuit similarly concluded that federal law preempted an injured

consumer’s claims against a generic drug manufacturer just a few weeks after

Petitioner filed her initial complaint in the Eastern District of West Texas. Just

days after that decision came down, Petitioner voluntarily dismissed her case. She

then brought the current suit in Illinoza. Rule 41(d) shifts the costs of an

unnecessarily dismissed lawsuit from the defendant to the plaintiff when the

plaintiff brings a subsequent suit. The rule’s purpose is to deter plaintiffs from

abusing the legal system by filing improper lawsuits. The plain language of costs at

the time of the rule’s adoption allows for an inclusion of attorney’s fees, and indeed

such a reading furthers the rules purpose of discouraging forum shopping and

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vexatious litigation. The rule was in fact an effort to codify the Court’s inherent

powers to award fees as a part of costs in these types of situations. The Twelfth

Circuit correctly held that Rule 41(d) allowed the court to award attorney’s fees to

Westerly as a part of costs for the dismissed action.

ARGUMENT

I. IVERS’ STATE TORT LAW CLAIMS ARE PREEMPTED

BECAUSE SUCH CAUSES OF ACTION INTERFERE WITH

CONGRESS’S REQUIREMENTS AND OBJECTIVES IN THE

HATCH-WAXMAN AMENDMENTS.

The Twelfth Circuit correctly held that federal law preempted Ivers’ failure to

warn and defective design claims because those applications of state tort law

irreconcilably conflict with Congress’s purpose in enacting the Hatch-Waxman

Amendments. “[T]he Laws of the United States . . . shall be the supreme Law of the

Land; and the Judges in every State shall be bound thereby, any Thing in the

Constitution or Laws of any State to the Contrary notwithstanding.” U.S. Const.

art. VI, cl. 2.

Congress enacted the Drug Price Competition and Patent Term Restoration

Act, colloquially known as the Hatch-Waxman Amendments to the FDCA, to lower

drug prices and increase the presence of generic drugs on the market. See R. at 14,

H.R. REP. 98-857(I), at 14 (1984). Any state tort liability that adds additional duties

to generic drug manufacturers will either make compliance with the federal

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regulations impossible or directly interfere with congressional objectives to lower

generic drug prices. See R. at 16 (“Imposing additional duties of “reasonableness” for

the process of updating would create additional compliance burdens on generic

manufacturers that contravene the intent of the streamlined ANDA process in

Hatch-Waxman.”) Thus, any state tort liability for a generic drug manufacturer who

has complied with the FDA regulations is preempted by the Hatch-Waxman

Amendments.

Ivers’ claims are preempted under two different theories. The first is

impossibility preemption, in which it is impossible to comply with both federal and

state obligations. The second is objective preemption, in which the state law

frustrates or impedes the objectives and purposes of a federal law. Ivers’ claims are

preempted under both forms.

A. There Is No Presumption Against Preemption in Regulating

Generic Drug Labeling.

As a preliminary matter, there is no presumption against preemption of state

law in this case. First, there is no presumption against preemption in an area in

which the federal government has consistently regulated. Second, the absence of an

express preemption clause is not determinative. Rather, the “purpose of Congress is

the ultimate touchstone in every pre-emption case.” Medtronic, Inc. v. Lohr, 518

U.S. 470, 485 (1996) (internal citations and quotations omitted).

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In United States v. Locke, this Court held that “an ‘assumption’ of nonpre-

emption is not triggered when the State regulates in an area where there has been

a history of significant federal presence.” 529 U.S. 89, 108 (2000). In Locke the

Court held that state regulations on oil tankers were preempted by uniform federal

regulations on maritime commerce. Id. The Court ruled similarly in regards to

fraud-against-the-FDA claims. Buckman Co. v. Plaintiffs’ Legal Comm., 531 U.S.

341 (2000) (noting “the relationship between a federal agency and the entity it

regulates is inherently federal in character because the relationship originates

from, is governed by, and terminates according to federal law.”). Likewise,

Congress has extensively regulated the labeling of generic drugs for decades, and

the field of pharmaceuticals for over a hundred years. Similar to policing fraud,

policing the updating of generic drug labels is historically the role of the FDA and

not the states.

Petitioner may argue that the Amendments’ lack of a preemption clause in

comparison to other sections of the FDCA conclusively demonstrates that Congress

did not preempt either cause of action. However, in Buckman this Court rejected

that very argument. 531 U.S. at 352 (stating “neither an express pre-emption

provision nor a saving clause bar[s] the ordinary working of conflict pre-emption

principles”) (internal quotes and citation omitted).

Therefore, neither of these two threshold arguments should impede this

Court from conducting an ordinary preemption analysis. When this Court analyzes

Congress’s intentions in enacting the Hatch-Waxman Amendments, it will find

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Congress preempted state causes of action against generic drug manufacturers for

defective design and failure to update.

B. Ivers’ Defective Label Claim Must Fail Because It Would

Have Been Impossible for Westerly to Design Initially a

Label That Differed from That Approved for the Brand-

Name Drug Without Violating Federal Law.

Ivers is preempted from pursuing any claim that Westerly initially designed

its label in a defective manner, when it contained no warnings about the risk of

“impulsive behavior” as a side-effect, because it would have been impossible for

Westerly to design a label that included such warnings. State laws are preempted

“where compliance with both federal and state regulations is a physical

impossibility for one engaged in interstate commerce.” Florida Lime & Avocado

Growers, Inc. v. Paul, 373 U.S. 132, 142–43 (1963).

In PLIVA, Inc. v. Mensing, this Court considered two cases where generic

drug manufacturers were found liable under state tort law for inadequate warnings.

564 U.S. 604, 610–11 (2011). This Court reversed the Fifth and Eighth Circuits,

noting that “[b]rand-name and generic drug manufacturers have different federal

drug labeling duties.” Id. at 613. While a “brand-name manufacturer seeking new

drug approval is responsible for the accuracy and adequacy of its label . . . a

manufacturer seeking generic drug approval . . . is responsible for ensuring that its

warning label is the same as the brand-name’s.” Id. at 613. Thus, while brand-

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name drug manufacturers could face state tort liability under a failure to warn

theory,1 such claims against generic manufacturers are preempted. Id. at 618 (“We

find impossibility here. It was not lawful under federal law for the Manufacturers to

do what state law required of them.”)

A few years later, this Court again considered whether state tort liability

could attach to generic drug manufacturers whose labels matched the brand-name

drug. Mut. Pharm. Co. v. Bartlett, 133 S.Ct. 2466, 2471 (2013). It held that allowing

a jury to determine liability under New Hampshire law by assessing whether the

risks of a generic drug outweighed the benefits, was preempted by the FDA

regulations. Id. at 2476 (“Thus, federal law prohibited Mutual from taking remedial

action required to avoid liability under New Hampshire law.”). This Court noted

that the only way the generic manufacturer could avoid liability was to stop selling

the drug and determined that “this ‘stop-selling’ rationale [is] incompatible with our

pre-emption jurisprudence.” Id. at 2477.

It is undisputed that “[t]he labeling on Westerly’s generic ropidope [was]

identical to the approved brand-name or ‘reference-listed drug’ (RLD) Equip® in all

relevant aspects” when it was introduced to the marketplace in 2009. R. at 2. In

fact, similar to the defendants in PLIVA and Bartlett, Westerly could not have

possibly designed any other label for ropidope and still obtain FDA approval. 21

U.S.C. § 355(j)(2)(A)(v). Further, at the time Petitioner began her use of ropidope,

GlaxoCline had not updated its brand-name label to reflect any danger of

1 See Wyeth v. Levine, 555 U.S. 555, 567 (2009)

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compulsive behavior. Federal law therefore prevented Westerly from updating its

label prior to Petitioner’s use of ropidope, thus any state tort liability for design

failure of the label is pre-empted as impossible under this Court’s precedents.

C. Ivers’ Failure To Update Claim Must Fail Because Congress

Preempted State Tort Law Causes of Action Against Generic

Drug Manufacturers That Comply With FDA Regulations.

Subjecting generic drug manufacturers to liability under state tort law

definitions of reasonableness directly interferes with Congress’s objectives in

enacting the Hatch-Waxman Amendments. A state law cannot be given effect

under objective preemption when “under the circumstances of [a] particular case,

[state] law stands as an obstacle to the accomplishment and execution of the full

purposes and objectives of Congress.” Hines v. Davidowitz, 312 U.S. 52, 67 (1941).

There would undoubtedly be fewer harmful side effects from prescription

drugs if Congress were to increase the requirements for a new drug to come to

market. Congress could increase the number of clinical tests required; it could

decrease the allowable amount of side effects found in those tests. It could go to the

logical extreme and make it illegal to sell any drug that has ever exhibited a side

effect in any patient. But, of course, that would drive nearly all pharmaceuticals

from the marketplace and leave millions of Americans without access to

prescription drugs. Instead, Congress must engage in a delicate act of balancing

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patient safety with patient access to life-saving drugs. This Court should hesitate to

interfere with the balance Congress has struck for two reasons.

First, the Twelfth Circuit correctly held that state-by-state determinations of

reasonableness in updating generic drug labels would directly interfere with the

FDA’s role as the administrator of a nationally uniform generic drug policy. Second,

state tort liability for generic drug manufacturers would contravene the purpose of

the Hatch-Waxman Amendments to lower generic drug prices and make them more

readily available to the public.

While the FDCA was initially enacted to increase regulation of

pharmaceuticals and thus increase safety (with a side effect of increased cost),

Congress enacted the Hatch-Waxman Amendments to decrease regulation of

generic drugs and make them cheaper and more accessible. Contrast Wyeth, 555

U.S. at 574 with H.R. REP. 98-957(I), at 15 (1984). Congress made an explicit

decision that the slight safety risks of decreased clinical trials for generic drugs

must be tolerated to decrease the price of such drugs and ensure they are accessible

to the public. This Court should not interfere with that directive by allowing juries

across the states to substitute their own interpretation of how these delicate issues

should be balanced for the reasoned determinations of Congress and the FDA.

1. State Tort Liability For Generic Drug Labeling Would

Interfere With Congressional Balancing Of The Benefits

And Risks Of Generic Drugs In The Marketplace Under

The Hatch-Waxman Amendments To The FDCA.

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The Hatch-Waxman Amendments were a congressional effort to create a

uniform federal regulatory scheme for generic drugs under the FDCA. See United

States v. Regenerative Scis., LLC, 741 F.3d 1314, 1319 (D.C. Cir. 2014). The

Amendments make regulations for generic drugs purposefully different than those

for brand-name drugs. They “allow[] manufacturers to develop generic drugs

inexpensively, without duplicating the clinical trials already performed on the

equivalent brand-name drug.” PLIVA, 564 U.S. at 612. As the legislative history

shows, the “purpose of Title I of the Bill [which became the Amendments] is to make

available more low cost generic drugs by establishing a generic drug approval

procedure for pioneer drugs first approved after 1962.” H.R. REP. 98-957(I), at 15

(1984).

Congress’s decision required a careful balancing of the need for patient safety

and the need to keep drug prices affordable so that members of the public could

benefit from them. It decided that, for generic drugs, some regulations must give

way to increase drug affordability. To the extent that state tort law conflicts with

this objective, it is preempted. Further, because the objectives of Congress when

regulating generic drugs are different than those when regulating brand-name

drugs, it is entirely logical that different preemption results occur.

a. Congress Enacted a Nationally Uniform Regulatory

Scheme for Generic Drugs, and Liability Sounds in

Federal Law, Not in State Law.

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In enacting the Hatch-Waxman Amendments Congress intended to create a

nationally uniform policy encouraging generic drug manufacturers to make life-

saving drugs available on the marketplace at reasonable prices. Appellant’s state

law tort claims directly conflict with Congress’ purpose for two reasons. First, it

allows the states to create their own standards for regulating generic drug

manufacturers and destroys national uniformity. Secondly, it allows juries to

substitute their determination of reasonable compliance with generic drug

regulations for those of Congress and the FDA. Here, while state tort liability might

increase the objective of safety, it would greatly undermine Congress’s objective to

ensure access to affordable life-saving generic drugs. Pre-emption doctrine exists to

prevent state juries from interfering with the objectives of Congress in enacting a

nationally uniform regulatory scheme.

i. State Tort Liability Would Destroy National

Uniformity in Generic Drug Regulation.

The Hatch-Waxman Amendments provide a nationally uniform generic drug

policy that regulates generic drug manufacturers in an efficient and consistent

manner. National uniformity allows manufacturers to have increased certainty in

complying with regulations, and lowers the costs required to comply with varying

and possibly conflicting standards. Further, it encourages drug manufacturers to

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participate in the national market as opposed to entering state markets one by one

to ensure proper compliance with each state’s laws.

Preventing piecemeal state laws from interfering with federal objectives is

one of the main purposes of preemption. For example, in the vehicular safety

context, this Court has noted that preemption “avoid[s] the conflict, uncertainty,

cost, and occasional risk to safety itself that too many different safety-standard

cooks might otherwise create.” Geier v. American Honda Motor Co., 529 U.S. 861,

871 (2000). In Geier, this Court addressed a conflict between federal and District of

Columbia regulations on airbags. Id. at 881. The Court held that DC requirements

that cars have airbags was preempted by federal objectives to encourage a variety

and mix of safety devices in cars, as it would have required all manufacturers to

comply with the DC requirements to sell cars in that area. Id.

The Second Circuit recognized the importance of national uniformity in

protection for authors. “[C]entral to the principle of preemption generally is the

value of providing for legal uniformity where Congress has acted nationally.”

Barclays Capital Inc. v. Theflyonthewall.com, Inc., 650 F.3d 876, 897 (2d Cir. 2011).

In that case the court held that federal copyright law preempted state “hot news”

misappropriation claims. Id. The court reasoned that piecemeal state laws would

make what was perfectly permissible in one state actionable in another, which “is

this sort of patchwork protection that the drafters of the Copyright Act” sought to

prevent. Id. at 898.

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The Third Circuit has recognized the “primary rationale for federal

preemption in the field of railroad safety regulation is national uniformity.”

Delaware & Hudson Ry. Co., Inc. v. Knoedler Mfrs., Inc., 781 F.3d 656, 666 (3d Cir.

2015). There the court noted that “preemption allows railroad carriers to abide by a

single set of national equipment regulations, instead of having to meet different

standards and, potentially, to change equipment when a train crosses state lines.”

Id; see also, Kurns v. A.W. Chesterton Inc., 620 F.3d 392, 398 (3d Cir. 2010), aff'd

sub nom., Kurns v. R.R. Friction Prods. Corp., 132 S.Ct. 1261 (2012) (“The goal of

the LIA [Locomotive Inspection Act] is to prevent the paralyzing effect on railroads

from prescription by each state of the safety devices obligatory on locomotives that

would pass through many of them.” (citations and internal quotation marks

omitted).

In the generic drug context, state tort liability for alleged label violations

would lead to complex and conflicting duties of care on generic drug manufacturers

that would directly interfere with Congress’s goal to bring affordable

pharmaceuticals to the national marketplace. It would allow each state to rebalance

the tension between drug safety and drug costs leading to a patchwork of state

requirements. In Illinoza the standard would be to act in a reasonable amount of

time, while New Hampshire would impose strict liability, while other states could

impose absolute liability. Generic Drug manufacturers could thus have to comply

with fifty different standards and would have to engage in different responses in

different states to avoid liability. Like trains, generic drugs travel through the

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national marketplace, and manufacturers would be paralyzed by the necessity of

meeting varying state standards. Furthermore, manufacturers might avoid state

marketplaces that have tilted the balance in favor of consumers. For instance, they

may exit the market in states that impose absolute liability.

In addition, each state’s patchwork of regulations could affect the market in

other states. Generic drug manufacturers likely use distributors that operate in

regional areas. If one state that the distributor operates in imposes absolute

liability, the manufacturer might reasonably withdraw its drugs from the entire

distributor to avoid liability in one state. Allowing each state to reweigh the risks

and benefits of generic drugs and determine their own reasonableness for

compliance frustrates Congress’s intention to enact a nationally uniform generic

drug policy.

ii. State Tort Liability Would Allow State Juries

Instead of Congress and the FDA to Balance the

Benefits and Risks of Generic Drugs.

Beyond imposing inconsistent regulations on generic drug manufacturers,

state tort liability would also replace the FDA and Congress’s balancing

determination with those of state court juries. Such state-by-state rebalancing of

these factors is preempted by a nationwide, congressional directive. Allowing juries

to make determinations that Congress has delegated to the FDA frustrates the

congressional objectives in two ways. First, it interferes with Congress’s goal to

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entrust the FDA with generic drug enforcement policy. Second, it interferes with

objectives of the Hatch-Waxman Amendments to balance safety and drug prices in

favor of lowering drug prices.

First, difficult policy decisions crafted by Congress and delegated to federal

agencies cannot be overthrown by state court juries. “When Congress charges an

agency with balancing competing objectives, it intends the agency to use its

reasoned judgment to weigh the relevant considerations and determine how best to

prioritize between these objectives. Allowing state law to impose a different

standard permits a re-balancing of those considerations.” Farina v. Nokia, Inc., 625

F.3d 97, 123 (3d Cir. 2010).

For example, the Farina court found objective preemption where a class of

plaintiff cell phone users sued cell phone manufacturers and service providers,

alleging that radio-frequency (“RF”) emissions from cell phones violated a state

standard of strict liability, even though the Federal Communications Commission

(“FCC”) had approved the devices under the Telecommunications Act of 1996. Id.

The court affirmed dismissal because it would have empowered states to determine

reasonableness for RF emissions, which conflicted with the “uniformity in

regulation [that] helps ensure that adequate service is accessible throughout the

country at a low cost.” Id. at 124. Further, the court found that Congress had

entrusted the FCC “to establish a set of standards that limit RF emissions enough

to protect the public and workers while, at the same time, leave RF levels high

enough to enable cell phone companies to provide quality nationwide service in a

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cost-effective manner.” Id. at 125. Because “allowing juries to impose liability on

cell phone companies for claims like Farina’s would conflict with the FCC’s

regulations” and “could vary from state to state, eradicating the uniformity

necessary to regulating the wireless network,” the court found the claims

preempted. Id. at 125–26.

Similarly, this Court has already recognized that state juries should not

substitute their own balancing determinations for those entrusted by Congress to

the FDA. Buckman, 531 U.S. at 348. In Buckman, this Court held that state-law

fraud-on-the-FDA claims upset “the somewhat delicate balance of statutory

objectives” enacted in the federal statutory scheme. Id. The Court recognized that

the FDA must ensure “both that the medical devices are reasonably safe and

effective and that . . . [they] are on the market within a relatively short period of

time” and that “the balance sought by the Administration can be skewed by

allowing fraud-on-the-FDA claims under state tort law.” Id. at 348, 350. Further,

“[c]omplying with the FDA’s detailed regulatory regime in the shadow of 50 States’

tort regimes will dramatically increase the burdens facing potential applicants--

burdens not contemplated by Congress in enacting the FDCA and the [Medical

Device Amendments].” Id. at 350.

Just as the Telecommunications Act empowered the FCC to regulate RF

emissions and the Medical Device Amendments empowered the FDA to regulate

medical amendments, so too the Hatch-Waxman Amendments empowered the FDA

to regulate generic drugs. And like regulating RF emissions or medical devices,

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regulating generic drugs requires balancing safety with efficiency. This balance

must be applied in a uniform manner.

Second, while Petitioners may argue that state tort liability is in harmony

with the federal requirement of sameness of labels between generic drugs and their

reference brand-name drug and in fact encourages compliance with federal law, this

overlooks the fact that it would allow state juries to determine the reasonable

standard of care for compliance with the regulations. Contrast Delaware & Hudson,

781 F.3d at 666 (“[T]he enforcement under state law of a federal standard of care

does not undermine national uniformity because it does not impose conflicting

regulations that a railroad must heed during interstate travel.”). Surely Congress

did not intend that juries across the states would determine how generic drug

manufacturers should comply with federal regulations.

The mechanisms and timing of updating a generic drug label are a matter of

federal policy and law, to be determined by Congress and the FDA. Indeed, the Fifth

Circuit has recognized that “a claim that [a generic manufacturer] breached a

federal labeling obligation sounds exclusively in federal (not state) law, and is

preempted.” Morris v. PLIVA, Inc., 713 F.3d 774, 777 (5th Cir. 2013). The only

circuit that has applied tort liability for failure to update did so when the

manufacturer failed to ever update the label. Fulgenzi v. PLIVA, Inc., 711 F.3d 578

(6th Cir. 2013). The Twelfth Circuit correctly distinguished Fulgenzi from the

instant case because Fulgenzi deals not with a determination of reasonableness or

how to comply with the federal duty of sameness, but rather with a complete failure

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to adhere to that duty. R. at 16. The trier of fact in Fulgenzi did not determine how

a generic drug manufacturer must comply with federal regulations. In other words,

tort liability in that case did not substitute a state jury’s determination of

reasonable compliance with that of the FDA. In contrast, when the trier of fact

determines the “reasonable” time for response to a brand-name label change, then it

essentially also regulates how generic drug manufacturers must comply with FDA

regulations.

It would be irrational to allow fifty different standards for how quickly or in

what manner generic manufacturers must update their label because it would

directly contravene the Hatch-Waxman Amendment’s goals of streamlining the

regulations for generic drugs to lower drug prices for consumers. Congress’s generic

pharmaceutical goal requires a uniform, federal policy—not the patchwork of

different standards that state tort liability would provide.

b. Generic Drugs Are Regulated Differently Than Brand-

name Drugs to Accomplish Different Congressional

Objectives.

Generic drug policy involves different statutory sections, regulations,

objectives and concerns than brand-name drug policy. Whereas brand-name drug

regulation focuses on increased safety at the expense of cost, generic drug policy

focuses on decreased cost at the potential expense of safety. This policy recognizes

two major differences between brand-name drugs and generic drugs. First, brand-

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name drugs enjoy high prices due to their initial monopoly on the market, whereas

generic drugs sell at much lower prices. Second, brand-name drugs come to market

long before generics, when risks are less likely to be known.

This Court has recognized that it “is beyond dispute that the federal statutes

and regulations that apply to brand-name drug manufacturers are meaningfully

different than those that apply to generic drug manufacturers.” PLIVA, 564 U.S. at

626. It is entirely logical that “different federal statutes and regulations may, as

here, lead to different pre-emption results,” especially where the statutes and

regulations serve different purposes. Id.

In Wyeth v. Levine this Court determined that state tort liability for brand-

name drugs was not preempted by the FDCA. 555 U.S. 555 (2009). The majority

held that “it appears that the FDA traditionally regarded state law as a

complementary form of drug regulation” to further Congress’s goal in enacting the

FDCA to “protect the public health and assure the safety, effectiveness, and

reliability of drugs.” Id. at 566, 579. State tort liability for brand-name drug

producers could coexist with federal drug policy because state tort liability

strengthened, rather than interfered with, Congressional objectives. Whatever the

merits of this decision,2 it cannot be extended to generic drug policy.

Congress regulates generic drugs differently than brand-name drugs for good

reason. For instance, generic drugs only appear on the market after both the patent

2 See Wyeth, 555 U.S. at 604 (Alito, J. dissenting) (“This case illustrates that tragic facts make bad law. The Court

holds that a state tort jury, rather than the Food and Drug Administration (FDA), is ultimately responsible for regulating warning labels for prescription drugs. That result cannot be reconciled with . . . general principles of conflict pre-emption.”).

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term and exclusivity of the brand-name drug expire. This creates two fundamental

differences between generic and brand-name drugs for purposes of liability.

First, the brand-name drug has an extended monopoly on the market

allowing the manufacturer exclusive sales for a number of years and a higher price

and profit margin. Thus, Congress in enacting the FDCA placed the duty of proof of

safety and efficacy on the brand-name manufacturer. State tort liability arguably

does not detract from this purpose. In contrast, generic drug manufacturers must

compete in the market only after the expiration of the patent, and, at that point,

they must charge lower prices. To encourage generic manufacturers to enter the

marketplace and to lower the cost of drugs for consumers, the Hatch-Waxman

Amendments lessened the regulations generic drug manufacturers face. Thus, state

tort liability, an additional burden and expense on generic manufacturers, directly

interferes with Congressional generic drug policy.

Second, by the time generic drugs come to market any risks are likely to have

been discovered. PLIVA, 564 U.S. at 635 n.9. In fact, new risks in generic drugs “are

apparently so rare that the FDA has no ‘formal regulation’ establishing generic

drug manufacturers’ duty to initiate a label change, nor does it have any regulation

setting out that label-change process.” Id. Thus, it is reasonable to place a greater

duty on the first manufacturer of the drug to enter the marketplace, i.e., the brand-

name manufacturer, than on those who manufacture drugs that come years later

when years of additional data have been collected. The premise of the Hatch-

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Waxman Amendments is that the safety risks of generic drugs are less than those of

brand-name drugs due to the presence of the drug on the marketplace.

To be clear, Respondents do not argue that generic drug manufacturers are

not required to update their labels when the brand-name manufacturer does so. But

the requirements for doing so must be determined by uniform federal law enacted

by Congress or the FDA, not the states in piecemeal fashion. In fact, the FDA does

have a mechanism in place to ensure generic drug manufacturers update their

label: any manufacturer with a non-compliant label risks having their FDA

approval revoked. 21 U.S.C. § 355(e); 21 C.F.R. § 314.150(b)(10). Thus, federal law

provides a mechanism for ensuring compliance with the duty of sameness. This

Court has recognized that federal enforcement efforts of federal regulations preempt

state causes of action. See Buckman, 531 U.S. at 348. Presumably, Congress and the

FDA have determined that the possibility of federal enforcement action is sufficient

to encourage generic manufacturers to update their labels in a reasonable time

frame without driving up the cost consumers must pay for generic drugs. If this

system is inadequate, it is a policy decision to be made by Congress and the FDA,

not the courts. See PLIVA, 564 U.S. at 626 (“As always, Congress and the FDA

retain the authority to change the law and regulations if they so desire.”)

2. Generic Drug Manufacturer Liability in Tort Would

Frustrate the Primary Objective of the Hatch-Waxman

Amendments.

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Congress engaged in a delicate balancing act when it determined that some

risk must be tolerated to ensure wide public access to affordable drugs, and this

Court should hesitate before it chooses to disrupt that balance. While this Court

may be sympathetic to Ms. Ivers, millions of Americans depend on affordable

prescription drugs every day. If this Court tips the scales Congress has carefully

balanced towards Ms. Ivers, then it also tips the scales against other generic drug

consumers. Tragic accidents should not blind the Court to the vital role affordable

drugs play in our healthcare system and the rationale for Congress’s enactment of

the Hatch-Waxman Act. If the Court increases liability for generic drug

manufacturers, then it will counteract the positive effects Hatch-Waxman have had

on the drug market and contribute to a dramatic increase in the price of generic

drugs.

This Court recognized long ago that “where the federal government, in the

exercise of its superior authority in this field, has enacted a complete scheme of

regulation . . . states cannot, inconsistently with the purpose of Congress, conflict or

interfere with, curtail or complement, the federal law, or enforce additional or

auxiliary regulations.” Hines, 312 U.S. at 66–67. Congress unequivocally enacted

the Hatch-Waxman Amendments to encourage generic drugs to enter the market to

drive down costs. H.R. REP. 98-857(I), at 15 (1984). While individuals may disagree

with this policy, they should direct such disagreement to the legislature. See, e.g.

Kimble v. Marvel Entertainment, LLC, 131 S.Ct. 2401, 2414 (2015) (“Kimble’s real

complaint may go to the merits of such a patent policy . . . [but] the choice of what

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patent policy should be lies first and foremost with Congress. . . . Congress, not this

Court, is the proper audience.”)

a. The Hatch-Waxman Amendments Have Successfully

Lowered Drug Prices and Made Life-Saving Drugs

More Accessible to the Public.

Tort liability for generic pharmaceutical manufacturers will frustrate

Congress’s objective because it will drive up costs of prescription drugs. The Hatch-

Waxman Amendments were enacted to streamline the regulations on generic drugs

and encourage their entry to the market to lower costs for consumers. For instance,

the House Report found that generic drugs would save consumers $920 million

dollars over twelve years. H.R. REP. 98-857(I), at 15 (1984). The evidence

demonstrates that this effort has been successful and that the decreased regulation

created by the Amendments has successfully attracted generic manufacturers to the

market.

When generic pharmaceuticals enter the marketplace, they create savings in

health care, which are realized by private citizens, insurers, as well as government

healthcare organizations. U.S. DEP’T OF HEALTH & HUMAN SERVS., EXPANDING THE

USE OF GENERIC DRUGS 5 (Dec. 1, 2010).3 The Congressional Budget Office

estimates that generic drugs saved Medicare $33 billion in a single year. CBO,

EFFECTS OF USING GENERIC DRUGS ON MEDICARE’S PRESCRIPTION DRUG SPENDING

3 Available at http://aspe.hhs.gov/sp/reports/2010/GenericDrugs/ib.pdf.

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(2010).4 Generics saved the entire healthcare system an estimated $139.6 billion in

2009. Dalia Buffery, Enhanced Generic Utilization Saves US Healthcare $139.6

Billion in 2009, 3 AM. HEALTH DRUG BENEFITS 274 (2010).5 This cost savings is

possible because the FDA, not state juries, regulate generic drugs and have created

streamlined regulations to ease costs.

The main success of Hatch-Waxman has been to increase competition in the

marketplace by incentivizing generic manufacturers to enter the market. As the

FDA discovered in a study of generic drugs, it is the presence of multiple generic

competitors that truly drives down drug prices:

FDA, GENERIC COMPETITION AND DRUG PRICES,

https://www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/

CDER/ucm129385.htm (last updated 5/13/2015).

4 Available at https://www.cbo.gov/sites/default/files/111th-congress-2009-2010/reports/09-

15-prescriptiondrugs.pdf. 5 Available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4106599/.

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Thus, the key to Hatch-Waxman’s success is to maintain high levels of

competition to keep prices competitive. Manufacturers can only compete in an

environment of legal and regulatory certainty. This certainty would be frustrated if

states are permitted to apply their own causes of action against generic drug

manufacturers and thus determine reasonable standards of care in drug labeling. It

is for Congress and the FDA to determine where to draw the line and dictate our

federal generic drug policy, not the states.

b. State Tort Liability Would Increase the Costs to

Generic Drug Manufacturers, Dramatically Increasing

Prices of Prescription Drugs.

In order to be effective, Hatch-Waxman Amendments requires a lessened

regulatory framework for generic drugs. If generic manufactures were to face tort

liability, the states would effectively impose additional regulatory burdens.

Additional regulation would undermine Congress’s intent because it would raise

drug prices for at least four reasons.

First, the increased compliance costs and liability costs would directly drive

up drug prices. The FDA has previously considered a rule change that would

abrogate PLIVA v. Mensing’s holding that generic manufacturers cannot be held

accountable for the brand-name manufacturer’s failure to update. Supplemental

Applications Proposing Labeling Changes for Approved Drugs and Biological

Products, 78 Fed. Reg. 219 (proposed Nov. 13, 2013). One researcher found that if

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consumers could sue generic manufacturers for failing to update their labels

independently of the brand-name drug, combined liability, compliance, and

insurance costs could add $4 billion a year in healthcare costs. ALEX BRILL, FDA’S

PROPOSED GENERIC DRUG LABELING RULE: AN ECONOMIC ASSESSMENT (2014).6

Congressional leaders wrote a letter to the FDA commissioner opposing this rule

change as it would “conflict directly with the statute, thwart the law’s purposes and

objectives, and impose significant costs on the drug industry and healthcare

consumers.” Letter from Lamar Alexander et. al., Members of United States

Congress, to Margaret Hamburg, Commissioner, Federal Drug Administration (Jan.

22, 2014) (see Appendix A).

Second, because generic manufacturers face higher levels of competition and

lower profit margins, even slight increases in costs could encourage manufacturers

to leave the market, which would drive up costs. As demonstrated in the previous

section, the price of drugs is extremely dependent on the number of competitors in

the marketplace. It is basic economics that—holding demand constant—the greater

the supply, the lower the price. More competition thus benefits consumers. In fact,

the FDA has noted that even the difference between six generic manufacturers and

five leads to significant differences in cost. FDA, GENERIC COMPETITION AND DRUG

PRICES,

https://www.fda.gov/AboutFDA/CentersOffices/OfficeofMedicalProductsandTobacco/

CDER/ucm129385.htm (last updated 5/13/2015). Regulatory action that drives even

6 Available at

http://www.gphaonline.org/media/cms/Economic_Impact_Study_FDA_Labeling_Rule_-

_MGA.pdf.

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a few manufacturers out of the market is likely to increase prices dramatically. See

Joseph Walker, Weaker generic drug prices hit makers, wholesalers, MARKETWATCH

(Aug. 5, 2017) (“But in recent years, prices for many generics increased—sometimes

dramatically—because of market disruptions that decreased competition.”).7

Third, if profitability decreases for generic manufacturers, competitors are

likely to merge, further lessening the competition and driving up prices. See

Stephen Barlas, Generic Drug Prices Take Flight, 39 PHARMACY AND THERAPEUTICS

833, 843-845 (2014).8 Despite media attention on a few exceptions where generic

drug prices have spiked, on average generic drug prices have declined, and Hatch-

Waxman has been successful in bringing affordable drugs to the marketplace. GAO,

GENERIC DRUGS UNDER MEDICARE PART D GENERIC DRUG PRICES DECLINED

OVERALL, BUT SOME HAD EXTRAORDINARY PRICE INCREASES (Aug. 2016).9 The major

driver of this decrease is competition. Id. (“Manufacturers reported that

competition, determined by the price and availability of the same drug from other

manufacturers, is the primary driver of generic drug prices, as less competition

could drive prices higher.”).

Fourth, a state-by-state scheme will drive up the costs of compliance.

Further, manufacturers may be forced to pull out of certain state markets where

liability and compliance costs are greatest. For example, manufacturers are likely to

exit any state market with absolute or strict liability, or where states determine

7 Available at http://www.marketwatch.com/story/weaker-generic-drug-prices-hit-makers-

wholesalers-2017-08-05. 8 Available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4264670/. 9 Available at https://www.gao.gov/assets/680/679022.pdf.

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reasonableness in a very narrow fashion. This clearly frustrates the very purpose of

the Hatch-Waxman Amendments—to encourage generic drug manufacturers to

enter the market and make affordable life-saving drugs accessible to consumers.

Because many of the costs of drug manufacturing are shared across the entire

market, when drug manufacturers remove their products from some states, it will

also drive up the drug prices in other markets.

In conclusion, Congress has made the balancing determination of how to

increase competition and drive down costs. This Court should not allow state juries

to reject this congressional decision and re-weigh the costs and benefits of generic

drugs. This is a difficult, complicated and controversial policy decision, and it should

be made by our elected officials, not judges and juries. It is an understandable

impulse to reason that when a person has been injured by a product, then a

manufacturing company should pay. But the Court must pause and remember that

it is the public who will pay, and the public who will lose if drugs are not accessible

to those who need them. Congress has made its balancing decision, and state tort

law must yield to that Congressional determination, for our constitution decrees

that federal law is to be the supreme law of the land. Because Congress has created

a uniform federal policy to regulate generic drug labels, state tort causes of action

for drug labels are preempted.

II. ATTORNEY’S FEES WESTERLY INCURRED DEFENDING

AGAINST IVERS’ SUIT IN EAST TEXAS ARE TAXABLE TO

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IVERS UNDER RULE 41(D) BECAUSE THAT RULE ALLOWS

FEE SHIFTING.

The Twelfth Circuit correctly held that the district court may assess

attorney’s fees that Westerly incurred defending the ropidope litigation in East

Texas. Rule 41(d) authorizes a district court to “order the plaintiff to pay all or part

of the costs of the previous action,” where the plaintiff files successive suits alleging

the same claim. Fed. R. Civ. P. 41(d). Where a statute “evinces an intent to provide

for [attorney’s] fees” as part of costs, a court may do so. Key Tronic Corp. v. United

States, 511 U.S. 809, 815 (1994). Because “[c]osts awarded under Rule 41(d) . . . are

intended to serve as a detriment to forum shopping,” Rule 41(d) evinces an intent

for an expansive definition of costs that encompasses attorneys’ fees. Simeone v.

First Bank Nat’l Ass’n, 971 F.2d 103, 108 (8th Cir. 1992).

Three separate grounds support the conclusion that Rule 41(d) embraces a

definition of costs that may include attorney’s fees. First, the plain meaning of the

word costs is broad enough to include litigation-related expenses, such as attorney’s

fees. Second, the various sections of Rule 41 should be interpreted as a concerted

effort to curb abuses to the judicial process perpetrated by plaintiffs. Third, this

Court’s prior decisions, as interpreted by the lower courts, suggest Rule 41 allows

for an award of attorney’s fees because it fits into one of the exceptions to the

American rule that parties are generally responsible for their own expenses unless

otherwise specified by statute. Specifically, through Rule 41(d) Congress either has

empowered courts to use their inherent powers to deter vexatious conduct or has

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instructed courts to look to an underlying substantive statute to determine whether

they have the authority to tax fees to deter vexatious conduct.

A. The Plain Meaning of the Word Costs Is Broad Enough to

Include Attorney’s Fees.

The word costs as it appears in Rule 41(d) may include attorney’s fees

because costs, at the time of the Rules’ adoption, was understood to encompass all

expenses incurred by litigants. When a court interprets a statute, it is called upon

“to give effect to the will of Congress, and where its will has been expressed in

reasonably plain terms, that language must ordinarily be regarded as conclusive.”

Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 570 (1982) (internal quotations

omitted). However, when a term is ambiguous, the Court must “then seek guidance

from the legislative history and the Rules’ overall structure.” Green v. Bock Laundry

Mach. Co., 490 U.S. 504, 508 (1989).

When the Federal Rules of Civil Procedure achieved the force of

congressionally enacted law, the word costs was generally understood to include

component subsets of expenses. A general-audience dictionary published three years

after the Rules’ implementation broadly defines costs as an aggregate; they are

“[e]xpenses incurred in litigation, as: (a) Those payable to the attorney or counsel by

his client, especially when fixed by law;—commonly called fees. . . .(b) Those given

by the law or the court to the prevailing against the losing party.” Costs, WEBSTER’S

NEW INTERNATIONAL DICTIONARY (2d ed. 1941). Legal dictionaries of the era also

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reflect the aggregation of expenses. Ten years after the Rules’ implementation,

Ballentine listed only two entries under costs, “the expenses of litigation as between

litigants,” and “statutory allowances to a party to an action for his expenses

incurred in the action and having reference only to the parties and the amounts

paid by them.” Costs, BALLENTINE’S LAW DICTIONARY (2d ed. 1948).

While some contemporary legal dictionaries distinguished costs from fees,

those authorities frequently explained how attorney’s fees could be subsumed as

costs. For instance, Anderson, in 1889, illustrated his definition of costs through a

case abstract that concludes about a lawyer’s fees, disbursements, and expenses

incurred by a prevailing party, “when these united sums are taxable in the case they

constitute ‘the costs’ for which [a losing party] is liable.” Costs, ANDERSON’S

DICTIONARY OF LAW (1889) (emphasis added). One legal dictionary published three

years after the promulgation of the Rules noted, “[t]he word costs is frequently

understood as including attorney’s fees.” Costs, BLACK’S LAW DICTIONARY (3d ed.

1941).

The Rules themselves illustrate this point. Like Rule 41(d), Rule 54(d)

originally included an undefined reference to costs. In 1993, the Advisory

Committee updated and further subdivided Rule 54(d) to clarify how costs included

two components, “costs other than attorney’s fees” and “attorney’s fees.” Fed. R. Civ.

P. 54(d).

The plain meaning of costs thus admits attorney’s fees. Courts that have

refused to include attorney’s fees as part of Rule 41(d) costs have done so on the

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basis that the rule does not contain an explicit statutory grant of attorney’s fees.

E.g., Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 874 (6th Cir. 2000). The

explicitness requirement, however, should not be elevated to a search for “magic

words.” Key Tronic Corp., 511 U.S. at 823 (Scalia, J., dissenting). The word costs can

still have plain meaning even where it does not include a definition that contains

the magic words attorney’s fees. Marek v. Chesny, 473 U.S. 1, 9 (1985). See also

Cadle Co. v. Beury, 242 F.R.D. 695, 697–98 (S.D. Ga. 2007) (observing that the

Rogers court’s reasoning mirrored the dissent’s in Marek). However, even if this

Court finds the term was ambiguous when promulgated by the Advisory Committee

and given the force of law by Congress, the purpose of Rule 41(d), its legislative

history, and its functions in the context of the Rules all support the Twelfth

Circuit’s reading of the Rule.

B. Rule 41’s Multiple Provisions Work in Concert to Empower

Judges to Punish Plaintiffs Who Abuse the Judicial Process.

If the plain meaning of costs is ambiguous, this Court should decide its

meaning in the context of Rule 41’s framework to derogate a plaintiff’s common-law

right to dismiss a cause of action without consequences. Courts should interpret a

statute “as a symmetrical and coherent regulatory scheme and fit, if possible, all

parts into an harmonious whole,” Food & Drug Admin. v. Brown & Williamson

Tobacco Corp., 529 U.S. 120, 133 (2000) (internal quotation marks and internal

citations omitted).

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Two years prior to the adoption of the Rules, this Court described a plaintiff’s

common-law right to dismiss a complaint voluntarily as “unqualified . . . unless

some plain legal prejudice will result to the defendant other than the mere prospect

of a second litigation upon the subject matter.” Jones v. Sec. & Exch. Comm’n, 298

U.S. 1, 19 (1936). The framers of Rules specifically characterized the new Rule 41 as

a departure from this tradition. For example, in a 1937 address to the Judicial

Conference of the Fourth Circuit, a staff attorney from the Rules Advisory

Committee explained how what became Rule 41 moved away from the common law

position:

The rule on dismissal of actions has been redrafted. Without leave of

court or the consent of the other parties, a plaintiff may not dismiss

without prejudice, . . . and he can only do that once. Under the

preliminary draft [a plaintiff] could dismiss at any time before the

introduction of evidence and as many times as he wanted to. After an

answer has been served, under the new draft, the court can dismiss at

the plaintiff’s instance without prejudice, imposing terms and

conditions if it sees fit. . . .

Edward H. Hammond, Some Changes in the Preliminary Draft of the Proposed

Rules of Federal Civil Procedure, 23 A.B.A. J. 629, 632 (1937) (emphasis added). The

staff attorney further underscored how the Rules would further derogate the

plaintiff’s absolute right to dismiss when he announced that the proposed rule

added “a provision giving the court power to require a plaintiff to pay the costs of an

action previously dismissed by him and to stay proceedings in the new action until

he pays.” Id. at 633.

Since the adoption of the Rules, courts interpreting Rule 41(a)(2) have

consistently held that attorney’s fees may, at a court’s discretion, be part of the

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“terms” of voluntary dismissal and have recognized the change in policy that it

effectuated. See Fed. R. Civ. P. 41(a). See also, e.g., Jochum v. Schmidt, 570 F.2d

1229, 1232 (5th Cir. 1978) (upholding a district court’s condition that plaintiff pay

defendant’s attorney’s fees as a condition of dismissal without prejudice because it

would be “grossly inequitable to allow the defendant to suffer the duplicative costs

and fees”). In McCann v. Bentley Stores Corp., decided two years after the adoption

of the Rules, a district court included attorney’s fees as part of the conditions for a

voluntary dismissal. 34 F. Supp. 234, 234 (E.D. Mo. 1940). In explaining its

decision, the court praised the newly adopted Rule 41 noting how subdivision (a)

has “done much to put an end to that evil . . . [where] a defendant is damaged by

being dragged into court and put to expense with no chance whatever (if there is a

dismissal without prejudice) of having the suit determined in his favor.” Id.

(parenthetical in original).

Similarly, subdivision (d) works in tandem with subdivision (a)(2) to punish

voluntary dismissals under (a)(1) where the vexatious conduct occurs on the filing of

the second suit. As a commentator to the 1938 edition of the Rules noted,

“Subdivision (d) is obviously designed to punish a plaintiff who has once dismissed

an action and commenced it again.” 2 PALMER D. EDMUNDS, FEDERAL RULES OF

CIVIL PROCEDURE 1190 (1938). This Court should interpret Rule 41(d) costs to allow

attorney’s fees as part of costs to harmonize the subdivisions of Rule 41 that have a

punitive and curative purpose.

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C. Rule 41(d) Allows for an Award of Attorneys’ Fees Under

Two Exceptions to “the American Rule.”

A district court applying subdivision (d) to award costs to Westerly could

include attorney’s fees under two exceptions to the American rule that each party

must bear its own costs of litigation. “[A]ttorney’s fees generally are not a

recoverable cost of litigation absent ‘explicit Congressional authorization.’” Key

Tronic, 511 U.S. at 815. First, the district court, having found bad faith on the part

of Ivers, may invoke subdivision (d) to award attorney’s fees under

“unquestionabl[e] assertions of inherent power in the courts.” Alyeska Pipeline Serv.

Co. v. Wilderness Soc’y, 421 U.S. 240, 258 (1975). Second, the district court may

award attorney’s fees because Ivers originally filed suit in East Texas, a jurisdiction

where the legislature had abrogated the American rule, and the “underlying statute

defines ‘costs’ to include attorney’s fees.” Marek, 473 U.S. 1 at 9 .

1. Courts Can Use Their Inherent Power to Deter Vexatious

Conduct by Awarding Attorney’s Fees as Part of Costs.

Because Ivers’ back-to-back lawsuits indicate forum shopping, a court may

award attorney’s fees to Westerly for Ivers’ first action because a court has the

inherent power to punish abuses of the judicial process. “Congress has not

repudiated [certain] judicially fashioned exceptions to the general rule against

allowing substantial attorney’s fees,” which emanate from “unquestionabl[e]

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assertions of inherent power in the courts to allow attorneys’ fees in particular

situations. . . .” Alyeska, 421 U.S. at 259–60. Among these assertions of inherent

power that Congress has not repudiated, “[a] court may . . . , within its discretion,

award attorneys’ fees where it makes a specific finding that the plaintiff has acted,

‘in bad faith, vexatiously, wantonly, or for oppressive reasons.’” Andrews v.

America’s Living Ctrs., LLC, 827 F.3d 306, 311 (4th Cir. 2016) (quoting Alyeska, 421

U.S. at 258–259).

For example, a federal court in Colorado exercised its inherent power to tax

the costs of a previous action, including attorney’s fees, to a plaintiff shareholder

who voluntarily dismissed his direct and derivative actions and then refiled them in

another jurisdiction. Oteng v. Golden Star Res., Ltd., 615 F. Supp. 2d 1228, 1241 (D.

Colo. 2009). In Oteng, the plaintiff stockholder claimed that he voluntarily

dismissed his previous action in the District of Columbia and refiled his complaint

in Colorodo, where the foreign corporation defendant allegedly had its principal

place of business, after he “realized that Defendants' filings with the SEC were not

as extensive as [he] thought.” Id. The court found this reasoning “a weak basis for

trying to have asserted [the District of Columbia court’s] jurisdiction in the previous

case.” Id. Furthermore, the court analyzed the complaints filed in both actions, and

it found the new complaint tracked “almost verbatim” the previous complaint. Id.

On these grounds, the court decided to award costs from the D.C. litigation,

including attorney’s fees, to the defendant before the Colorado litigation could

continue. Id.

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Similarly, when a plaintiff novelist refiled a complaint concerning property

rights in cinematic adaptations of her novels, a federal court in California held her

conduct warranted a 41(d) award of costs including attorney’s fees before her suit

could continue. Esquivel v. Arau, 913 F. Supp. 1382, 1388 (C.D. Cal. 1996). In that

case, the author voluntarily dismissed her complaint in the Southern District of

New York after the defendants had filed a motion to dismiss based on the court’s

lack of personal jurisdiction over the parties. Id. at 1386–87. Even though the

plaintiff’s California complaint included several new claims, the court found that

her choice to refile in California “constitute[d] blatant forum shopping,” Id. at 1386,

and evinced a “recognition that her suit in the Southern District was vulnerable on

the grounds asserted in the motion.” Id. at 1387. Specifically, the court noted that

the litigation had no significant ties to the original forum, “neither party is a citizen

or resident of New York, the complaint made no allegations of acts taking place in

New York, and none of the witnesses or documents are in New York.” The court

held that the plaintiff’s forum shopping led to the defendants “incurr[ing] needless

expenditures,” which could be offset with a Rule 41(d) award including attorney’s

fees. Id. at 1388.

Even in cases where the initial and subsequent forums may both

appropriately exercise personal jurisdiction, courts have held that fees may be

appropriate where a plaintiff forces a defendant to engage in “fruitless litigation.”

E.g., Behrle v. Olshansky, 139 F.R.D. 370, 374 (W.D. Ark. 1991). As an example, the

Seventh Circuit affirmed a lower court’s ruling that a pre-trial detainee’s successive

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§ 1983 claims against a jailhouse nurse warranted an award of attorney’s fees.

Esposito v. Piatrowski, 223 F.3d 497, 501 (7th Cir. 2000). In Esposito, the plaintiff

detainee stipulated to dismiss without prejudice his claim against a particular

nurse in his original complaint. Id. at 498. He thereafter filed a second action

against the same nurse alleging the same constitutional violations. Id. The

appellate court affirmed the trial court’s ruling that the second action be stayed

until the detainee paid the defendant nurse’s costs in the first litigation, inclusive of

attorney’s fees. Id. at 502.

In contrast, the Fourth Circuit held that a plaintiff in an employment

discrimination case did not act vexatiously, and thus should not be taxed her

opponent’s attorney’s fees when she refiled a “much more detailed” complaint in the

same district. Andrews, 827 F.3d at 314. In Andrews, the plaintiff had missed the

twenty-one day deadline that allowed her to unilaterally amend her complaint. Id.

at 308. The court of appeals found that the magistrate judge led the plaintiff to

believe reasonably that the plaintiff’s choice to dismiss and refile a more detailed

complaint would avoid a situation where the plaintiff would have to expose herself

to the magistrate’s possible adverse ruling on whether to deny the plaintiff leave to

amend the complaint on account of futility. Id. at 313. The appellate court affirmed

the lower court’s power to include attorney’s fees as part of a rule 41(d) award of

costs. Id. at 311. However, the appellate court held that district court abused its

discretion to award those costs because plaintiff had engaged in neither forum

shopping nor other vexatious conduct. Id.

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In the instant case, Ivers chose to file her original complaint in East Texas.

Like the plaintiffs in Oteng and Esquivel, Ivers’ choice of forum is suspect. Neither

Ivers nor Westerly are citizens or residents of East Texas, and none of the acts

alleged in Ivers’ complaint ostensibly occurred in East Texas. Westerly is

incorporated in Texas and has its principal place of business in New Jersey. Both

Oteng and Esquivel demonstrate that a plaintiff’s mistake of an appropriate forum

is a cost that a federal court may equitably shift back to the plaintiff. Esquivel also

suggests that a court may use a 41(d) award of costs to punish a plaintiff whose

conduct suggests that she has chosen a jurisdiction under the impression that its

laws are hospitable to her claim. Here, the district court noted in its opinion that

Ivers dismissed her suit immediately after the Fifth Circuit handed down a decision

that created negative binding precedent relating to one of Ivers’ claims. R. at 5.

Furthermore, as the Esposito and Andrews courts’ holdings demonstrate,

vexatious behavior that gives rise to a 41(d) award of attorney’s fees is not limited

to forum-related abuses of justice. Here, as in both those cases, Ivers’ initial

litigation had not progressed much further than the filing of an initial complaint

before she filed notice of her voluntary dismissal. The plaintiff’s conduct after

dismissing the initial complaint created a situation where either the defendant

reasonably could have expected the litigation not to continue, as in Esposito, or to

continue immediately but with a substantially modified claim, as in Andrews. Here,

Ivers waited two years and then filed substantially the same claim. And just as the

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Esposito court held, such conduct constitutes vexatious behavior that gives rise to

the court’s power to use 41(d) to authorize an award of attorney’s fees.

2. Courts Can Look to the Underlying Statute’s Definition of

Costs to Resolve Whether They May Award Attorney’s

Fees.

The Illinoza district court could have discretionarily awarded Westerly

attorney’s fees because East Texas law expressly defines them as part of a litigant’s

costs. When a federal rule refers to costs without defining that term, courts should

look to how “the underlying statute defines ‘costs’” to determine what may be

included in those costs. Marek, 473 U.S. at 9.

For example, this Court held in Marek that Rule 68 “costs” in a civil rights

lawsuit included attorney’s fees because the civil rights statute giving rise to a right

of recovery defined costs as including attorney’s fees. Id. at 11. Rule 68 encourages

parties to settle by shifting any “costs incurred” to a prevailing party that has

refused a settlement offer “[i]f the judgment that the offeree finally obtains is not

more favorable than the unaccepted offer . . . .” Fed. R. Civ. P. 68(d); see Marek, 473

U.S. at 5. In Marek, the executor of a man wrongfully killed by policemen recovered

at trial a money judgment that was smaller than what the policemen had offered as

a settlement. Id. 3–4. This Court reasoned that because 42 U.S.C. § 1988, the

statute giving rise to a right of recovery for costs in civil rights suits, included

“reasonable attorney’s fees” in its definition of costs, then the attorney’s fees were

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subject to Rule 68’s cost-shifting provisions. Id. at 9. The court rejected the dissent’s

notion that Rule 68’s cost-shifting provisions could not be applied in favor of a civil

rights defendant merely because the civil rights statute would not have allowed the

defendant to recover attorney’s fees. Id. at 11. See also id. at 22 (Marshall, J.,

dissenting) (criticizing the majority’s Rule 68 cost-shifting approach because outside

of such a context case law would prohibit a prevailing civil rights defendant from

recovering attorney’s fees unless it can show a plaintiff’s bad faith.). Instead, this

Court reasoned that “Section 1988 encourages plaintiffs to bring meritorious civil

rights suits; Rule 68 simply encourages settlements. There is nothing incompatible

between these two objectives.” Id. at 11.

Although federal appellate courts have purportedly extended the Marek

Court’s reasoning to Rule 41(d) contexts, they have frequently misapplied the

precedent because they have focused not on the statutory definition of costs but the

statutory recipient of costs. Esposito, 223 F.3d at 501; Andrews, 827 F.3d at 311–12.

For example, the Fourth Circuit in Andrews examined the Fair Labor Standards

Act (“FLSA”), to determine which costs a defendant employer might recover after a

plaintiff voluntarily dismissed her first suit and filed a second suit alleging the

same claims. 827 F.3d at 308–09, 312. Even though FLSA includes attorney’s fees in

its definition of costs, the court held that because “the statute is silent as to

attorneys' fees in suits where the defendant prevails . . . an award of attorneys' fees

on a statutory basis would be improper.” Id. at 312. The court thus erroneously

applied Marek to stand for the proposition that costs are defined based on the

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purpose of the underlying statute, whereas Marek stands for the proposition that

when the term costs is ambiguous or undefined by the rule, costs should be defined

by the statute.

The Esposito/Andrews analysis conflates how a statute defines costs with a

statute’s requirements for obtaining those costs. However, courts have successfully

separated these two inquiries when deciding Rule 41(d) motions in other cases. See,

e.g. Sanderson v. Spectrum Labs, Inc., 248 F.3d 1159, 2000 WL 1909678, at *1 (7th

Cir. 2000) (unpublished); Platinum Logistics, Inc. v. Platinum Cargo Logistics, Inc.,

No.: 3:15-CV-617-CAB-KSC, 2015 WL 11921401 (S.D. Cal. Sep. 15, 2015). In

Sanderson, the Seventh Circuit affirmed a district court’s award of costs including

attorney’s fees in a case where a plaintiff brought successive Lanham Act claims.

Sanderson, 2000 WL 1909678, at *1. Under the Lanham Act only a prevailing party

is entitled to costs, including fees, and only in exceptional cases. See 15 U.S.C. §

1117; Cent. Basin Mun. Water Dist. v. Water Replenishment Dist. of S. Cal., No.

CV11-7531 CAS (RZx), 2012 WL 1378650, at *1 (C.D. Cal. Apr. 19, 2012)

(defendants could not seek costs including attorneys' fees under Lanham Act

because voluntary dismissal without prejudice did not confer “prevailing party”

status on defendants). However, as the Sanderson court noted, the defendant did

not need to achieve “prevailing party” status to receive costs through a Rule 41(d)

motion. Sanderson, 2000 WL 1909678, at *5. The court could award attorney’s fees

because the Lanham Act defined costs as inclusive of fees, and the plaintiff’s second

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complaint “raised the same Lanham Act claim against [the defendant] as his first

complaint did . . . .” Id.

In this case, the relevant inquiry is not whom the East Texas Code would

allow to recover costs because Rule 41(d) sets out the qualifications for whom may

recover. Rather, the relevant inquiry is merely whether the term costs includes fees,

as defined by East Texas Product Liability Law. As Marek illustrates, a court may

apply a federal rule’s cost-shifting provisions to deny plaintiffs the attorney’s fees

they otherwise would have been granted. Thus, where the underlying statute

defines costs for the plaintiff’s benefit in one context, the definition applies to their

detriment in another.

Furthermore, this application of the East Texas Product Liability Law’s

definition of costs is fully compatible with Rule 41(d). The East Texas statute

defines costs to include attorney’s fees, probably to encourage plaintiffs to bring

suit. E. Tex. Code § 12-12-12 (“[T]here shall be taxed and allowed to the plaintiff, as

part of the costs of the action, a reasonable amount to be fixed by the court as

attorney’s fees.”). Rule 41(d) exists to discourage vexatious litigation and forum

shopping by shifting costs onto the plaintiff for the unnecessary suit. As this Court

said, “application of Rule 68 will require plaintiffs to ‘think very hard’ about

whether continued litigation is worthwhile”; likewise application of Rule 41(d) will

require plaintiffs to “think very hard” about bringing vexatious litigation. Marek,

473 U.S. at 11.

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Petitioner chose to bring her first cause of action in the Western District of

East Texas where the relevant substantive laws define costs as including attorney’s

fees. Thus, when she dismissed her claims to seek a more advantageous forum, Rule

41(d) authorized the District Court to award reasonable attorney’s fees for

defending the frivolous action.

The district court could properly award Westerly attorneys’ fees from the

East Texas litigation under either of these interpretations of subdivision (d). Under

the first interpretation, the district court could use its inherent power, which the

Advisory Committee codified in Rule 41, to remedy an inequity. Under the second

interpretation, the district court could use the discretion entrusted to it by the

Advisory Committee to look to the underlying statute to determine whether it

authorized a departure from the American rule.

This court should thus affirm the Twelfth Circuit’s holding regarding the

availability of attorney’s fees under subdivision (d) or affirm its judgment on the

alternate grounds that the East Texas Product Liability statute’s definition of costs

authorizes a departure from the American rule.

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CONCLUSION

For the foregoing reasons this Court should affirm the Twelfth Circuit’s

rulings affirming both the judgment on the pleadings dismissing Plaintiff’s

complaint the award of costs, including attorney’s fees, to the defendants under

Rule 41(d).

TEAM #2629

COUNSEL FOR RESPONDENTS

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