1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 ZACHARY SILBERSHER, et al., 7 Case No. 18-cv-03018-JCS Plaintiffs, 8 ORDER GRANTING MOTION TO v. CERTIFY ORDER FOR IMMEDIATE 9 APPEAL AND FOR STAY, VACATING ALLERGAN INC., et al., FEBRUARY 5, 2021 MOTION 10 HEARING AND CONTINUING Defendants. FURTHER CASE MANAGEMENT 11 CONFERENCE TO JUNE 4, 2021
12 Re: Dkt. No. 136
13 14 I. INTRODUCTION 15 Plaintiff-Relator Zachary Silbersher (“Relator”) brings this action against two sets of 16 defendants: 1) the Allergan Defendants (“Allergan”); and 2) the Adamas Defendants (“Adamas”). 17 He asserts claims under the federal False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3733, based on 18 allegations that Adamas and Allergan misled the United States Patent Office (“PTO”) into issuing 19 invalid patents protecting the drugs Namenda XR® and Namzaric®, thus perpetuating their 20 monopoly power and allowing them to overcharge the federal government and the States for these 21 drugs under various programs, including Medicare and Medicaid. Adamas and Allergan brought 22 motions to dismiss, which the Court denied. Dkt. No. 135 (“December 11, 2020 Order”). 23 Defendants now bring a Motion to Certify Order for Immediate Appeal and Stay (“Motion”), 24 asking the Court to certify its December 11, 2020 Order for immediate interlocutory review under 25 28 U.S.C. § 1292(b) and to either: 1) stay the case for the duration of the appeal; or 2) stay the 26 case pending the Ninth Circuit’s decisions in United States ex rel. Silbersher v. Valeant 27 Pharmaceuticals International, Inc., No. 18-cv-1496 JD, United States District Court for the 1 Providence Health & Servs., No. CV 17-1694 PSG (SSX), United States District Court for the 2 Central District of California. (“Integra”). The Court finds that the Motion is suitable for 3 determination without oral argument and therefore vacates the hearing set for February 5, 2021 4 pursuant to Civil Local Rule 7-1(b). For the reasons stated below, the Motion is GRANTED.1 5 II. ANALYSIS 6 A. Interlocutory Appeal 7 Defendants contend the December 11, 2020 Order should be certified for interlocutory 8 appeal based on at least the following issues addressed in the Court’s Order: 9 1. Whether the PTO’s consideration of a patent prosecution is a “Federal . . . hearing, 10 audit, or investigation” within the meaning of Section 3730(e)(4)(A)(ii) of the FCA; 11 2. Whether information reported by the PTO on its public Patent Application Information 12 Retrieval website (“PAIR”) is a “Federal report” under the same subsection; and 13 3. Whether information published on the public version of PAIR qualifies as “news media” 14 as that term is used in Section 3730(e)(4)(A)(iii). 15 See Dkt. No. 136 at ECF p. 6. The Court agrees. 16 Under 28 U.S.C. § 1292(b), a federal district court may certify an order for immediate 17 interlocutory review where: (1) “the order involves a controlling question of law”; (2) “as to which 18 there is substantial ground for difference of opinion;” and (3) “an immediate appeal from the order 19 may materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b). By its 20 terms, § 1292(b) requires the district court to expressly find in writing that all three § 1292(b) 21 requirements are met. Id. “Section 1292(b) is a departure from the normal rule that only final 22 judgments are appealable, and therefore must be construed narrowly.” James v. Price Stern Sloan, 23 Inc., 283 F.3d 1064, 1067 n.6 (9th Cir. 2002). In seeking interlocutory appeal, a movant must 24 show that “exceptional circumstances justify a departure from the basic policy of postponing 25 appellate review until after the entry of a final judgment.” Coopers & Lybrand v. Livesay, 437 26 U.S. 463, 475 (1978). 27 1 1. Controlling Questions of Law 2 A controlling question of law “is not necessarily one that is dispositive of the litigation.” 3 Spread Your Wings, LLC v. AMZ Grp. LLC, No. 20-CV-03336-VKD, 2020 WL 7122513, at *2 4 (N.D. Cal. Dec. 4, 2020). “‘Rather, all that must be shown in order for a question to be 5 ‘controlling’ is that resolution of the issue on appeal could materially affect the outcome of 6 litigation in the district court.’” Id. (quoting In re Cement Antitrust Litig., 673 F.2d 1020, 1026 7 (9th Cir. 1981)). “Examples of such ‘controlling’ questions include ‘fundamental’ issues 8 concerning ‘the determination of who are necessary and proper parties, whether a court to which a 9 cause has been transferred has jurisdiction, or whether state or federal law shall be applied.’” Id. 10 (quoting United States v. Woodbury, 263 F.2d 784, 787 (9th Cir. 1959)). “Issues that are collateral 11 to the merits of an action may be the proper subject of a § 1292(b) appeal, see In re Cement 12 Antitrust Litig., 673 F.2d at 1027 n.5, and ‘an order may involve a controlling question of law if it 13 could cause the needless expense and delay of litigating an entire case in a forum that has no 14 power to decide the matter,’ Kuehner v. Dickinson & Co., 84 F.3d 316, 319 (9th Cir. 1996).” Id. 15 “The controlling question of law in an interlocutory appeal generally is a purely legal one that can 16 be resolved quickly without delving into a particular case’s facts.” Henley v. Jacobs, No. C 18- 17 2244 SBA, 2019 WL 8333448, at *2 (N.D. Cal. Oct. 25, 2019) (citing Steering Comm. v. United 18 States, 6 F.3d 572, 575-76 (9th Cir. 1993)). 19 The Court concludes that the issues identified by Defendants are controlling questions of 20 law. While it is true that Relator’s claims could escape the public disclosure bar if he is found to 21 have been an “original source” – an issue the Court did not address – the legal questions the Court 22 decided with respect to whether the disclosures were made via a permissible channel could 23 nonetheless materially affect the outcome of the litigation. Likewise, the Court’s conclusions that 24 the disclosures in this case fell outside the ambit of the public disclosure bar, if reversed on appeal, 25 would cause needless expense and delay litigating a case where Relator’s claims are barred if an 26 immediate appeal is not permitted. Therefore, the Court finds that this requirement is satisfied. 27 2. Ground for Difference of Opinion 1 on an issue’s resolution, not merely where they have already disagreed.” Reese v. BP Exploration 2 (Alaska) Inc., 643 F.3d 681, 688 (9th Cir. 2011). “Courts traditionally will find that a substantial 3 ground for difference of opinion exists where ‘the circuits are in dispute on the question and the 4 court of appeals of the circuit has not spoken on the point, if complicated questions arise under 5 foreign law, or if novel and difficult questions of first impression are presented.’” Couch v. 6 Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010) (citation omitted).
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 ZACHARY SILBERSHER, et al., 7 Case No. 18-cv-03018-JCS Plaintiffs, 8 ORDER GRANTING MOTION TO v. CERTIFY ORDER FOR IMMEDIATE 9 APPEAL AND FOR STAY, VACATING ALLERGAN INC., et al., FEBRUARY 5, 2021 MOTION 10 HEARING AND CONTINUING Defendants. FURTHER CASE MANAGEMENT 11 CONFERENCE TO JUNE 4, 2021
12 Re: Dkt. No. 136
13 14 I. INTRODUCTION 15 Plaintiff-Relator Zachary Silbersher (“Relator”) brings this action against two sets of 16 defendants: 1) the Allergan Defendants (“Allergan”); and 2) the Adamas Defendants (“Adamas”). 17 He asserts claims under the federal False Claims Act (“FCA”), 31 U.S.C. §§ 3729-3733, based on 18 allegations that Adamas and Allergan misled the United States Patent Office (“PTO”) into issuing 19 invalid patents protecting the drugs Namenda XR® and Namzaric®, thus perpetuating their 20 monopoly power and allowing them to overcharge the federal government and the States for these 21 drugs under various programs, including Medicare and Medicaid. Adamas and Allergan brought 22 motions to dismiss, which the Court denied. Dkt. No. 135 (“December 11, 2020 Order”). 23 Defendants now bring a Motion to Certify Order for Immediate Appeal and Stay (“Motion”), 24 asking the Court to certify its December 11, 2020 Order for immediate interlocutory review under 25 28 U.S.C. § 1292(b) and to either: 1) stay the case for the duration of the appeal; or 2) stay the 26 case pending the Ninth Circuit’s decisions in United States ex rel. Silbersher v. Valeant 27 Pharmaceuticals International, Inc., No. 18-cv-1496 JD, United States District Court for the 1 Providence Health & Servs., No. CV 17-1694 PSG (SSX), United States District Court for the 2 Central District of California. (“Integra”). The Court finds that the Motion is suitable for 3 determination without oral argument and therefore vacates the hearing set for February 5, 2021 4 pursuant to Civil Local Rule 7-1(b). For the reasons stated below, the Motion is GRANTED.1 5 II. ANALYSIS 6 A. Interlocutory Appeal 7 Defendants contend the December 11, 2020 Order should be certified for interlocutory 8 appeal based on at least the following issues addressed in the Court’s Order: 9 1. Whether the PTO’s consideration of a patent prosecution is a “Federal . . . hearing, 10 audit, or investigation” within the meaning of Section 3730(e)(4)(A)(ii) of the FCA; 11 2. Whether information reported by the PTO on its public Patent Application Information 12 Retrieval website (“PAIR”) is a “Federal report” under the same subsection; and 13 3. Whether information published on the public version of PAIR qualifies as “news media” 14 as that term is used in Section 3730(e)(4)(A)(iii). 15 See Dkt. No. 136 at ECF p. 6. The Court agrees. 16 Under 28 U.S.C. § 1292(b), a federal district court may certify an order for immediate 17 interlocutory review where: (1) “the order involves a controlling question of law”; (2) “as to which 18 there is substantial ground for difference of opinion;” and (3) “an immediate appeal from the order 19 may materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b). By its 20 terms, § 1292(b) requires the district court to expressly find in writing that all three § 1292(b) 21 requirements are met. Id. “Section 1292(b) is a departure from the normal rule that only final 22 judgments are appealable, and therefore must be construed narrowly.” James v. Price Stern Sloan, 23 Inc., 283 F.3d 1064, 1067 n.6 (9th Cir. 2002). In seeking interlocutory appeal, a movant must 24 show that “exceptional circumstances justify a departure from the basic policy of postponing 25 appellate review until after the entry of a final judgment.” Coopers & Lybrand v. Livesay, 437 26 U.S. 463, 475 (1978). 27 1 1. Controlling Questions of Law 2 A controlling question of law “is not necessarily one that is dispositive of the litigation.” 3 Spread Your Wings, LLC v. AMZ Grp. LLC, No. 20-CV-03336-VKD, 2020 WL 7122513, at *2 4 (N.D. Cal. Dec. 4, 2020). “‘Rather, all that must be shown in order for a question to be 5 ‘controlling’ is that resolution of the issue on appeal could materially affect the outcome of 6 litigation in the district court.’” Id. (quoting In re Cement Antitrust Litig., 673 F.2d 1020, 1026 7 (9th Cir. 1981)). “Examples of such ‘controlling’ questions include ‘fundamental’ issues 8 concerning ‘the determination of who are necessary and proper parties, whether a court to which a 9 cause has been transferred has jurisdiction, or whether state or federal law shall be applied.’” Id. 10 (quoting United States v. Woodbury, 263 F.2d 784, 787 (9th Cir. 1959)). “Issues that are collateral 11 to the merits of an action may be the proper subject of a § 1292(b) appeal, see In re Cement 12 Antitrust Litig., 673 F.2d at 1027 n.5, and ‘an order may involve a controlling question of law if it 13 could cause the needless expense and delay of litigating an entire case in a forum that has no 14 power to decide the matter,’ Kuehner v. Dickinson & Co., 84 F.3d 316, 319 (9th Cir. 1996).” Id. 15 “The controlling question of law in an interlocutory appeal generally is a purely legal one that can 16 be resolved quickly without delving into a particular case’s facts.” Henley v. Jacobs, No. C 18- 17 2244 SBA, 2019 WL 8333448, at *2 (N.D. Cal. Oct. 25, 2019) (citing Steering Comm. v. United 18 States, 6 F.3d 572, 575-76 (9th Cir. 1993)). 19 The Court concludes that the issues identified by Defendants are controlling questions of 20 law. While it is true that Relator’s claims could escape the public disclosure bar if he is found to 21 have been an “original source” – an issue the Court did not address – the legal questions the Court 22 decided with respect to whether the disclosures were made via a permissible channel could 23 nonetheless materially affect the outcome of the litigation. Likewise, the Court’s conclusions that 24 the disclosures in this case fell outside the ambit of the public disclosure bar, if reversed on appeal, 25 would cause needless expense and delay litigating a case where Relator’s claims are barred if an 26 immediate appeal is not permitted. Therefore, the Court finds that this requirement is satisfied. 27 2. Ground for Difference of Opinion 1 on an issue’s resolution, not merely where they have already disagreed.” Reese v. BP Exploration 2 (Alaska) Inc., 643 F.3d 681, 688 (9th Cir. 2011). “Courts traditionally will find that a substantial 3 ground for difference of opinion exists where ‘the circuits are in dispute on the question and the 4 court of appeals of the circuit has not spoken on the point, if complicated questions arise under 5 foreign law, or if novel and difficult questions of first impression are presented.’” Couch v. 6 Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010) (citation omitted). “To determine if a ‘substantial 7 ground for difference of opinion’ exists under § 1292(b), courts must examine to what extent the 8 controlling law is unclear.” Id. “Courts traditionally will find that a substantial ground for difference of 9 opinion exists where ‘the circuits are in dispute on the question and the court of appeals of the circuit 10 has not spoken on the point, if complicated questions arise under foreign law, or if novel and difficult 11 questions of first impression are presented.’” Id. (quoting 3 Federal Procedure, Lawyers Edition § 12 3:212 (2010) (footnotes omitted)). Here, the undersigned has addressed difficult questions of first 13 impression with respect to the significance of recent amendments to the FCA, and it has reached 14 different conclusions from another judge of this Court who, in Valeant, addressed similar claims. The 15 undersigned has no difficulty in concluding that there is ground for difference of opinion as to the 16 holdings in its December 11, 2020 Order. 17 3. Advancement of Termination of Litigation 18 “Courts within the Ninth Circuit have held that resolution of a question materially 19 advances the termination of litigation if it ‘facilitate[s] disposition of the action by getting a final 20 decision on a controlling legal issue sooner, rather than later [in order to] save the courts and the 21 litigants unnecessary trouble and expense.’” United States ex rel. Atlas Copco Compressors LLC 22 v. Rwt LLC, No. CV 16-00215 ACK-KJM, 2017 WL 2986586, at *11 (D. Haw. July 13, 2017) 23 (quoting United States v. Adam Bros. Farming, Inc., 369 F. Supp. 2d 1180, 1182 (C.D. Cal. 24 2004)). “‘Courts apply pragmatic considerations to determine whether certifying non-final orders 25 will materially advance the ultimate termination of the litigation.’” United States ex rel. Integra 26 Med Analytics LLC v. Providence Health & Servs., No. CV 17-1694 PSG (SSX), 2019 WL 27 6973547, at *4 (C.D. Cal. Oct. 8, 2019) (quoting Beeman v. Anthem Prescription Mgmt., Inc., No. 1 finds that the cost of discovery in this case will impose a heavy burden on the parties and the 2 Court and that the Ninth Circuit’s rulings on Defendants’ appeal of the December 11, 2020 Order 3 could result in a significant reduction of that burden or even eliminate it altogether. See id. 4 Therefore, the Court concludes that this requirement is satisfied. 5 In sum, the Court finds that Defendants have demonstrated that “exceptional 6 circumstances” warrant an immediate appeal and that the requirements of 28 U.S.C. § 1292(b) 7 have been met. 8 B. Stay 9 A petition for certification of an interlocutory appeal pursuant to 28 U.S.C. § 1292(b) 10 “shall not stay proceedings in the district court unless the district judge or the Court of Appeals or 11 a judge thereof shall so order.” In determining whether a stay is warranted, the district court 12 should consider: 1) whether the stay applicant has made a “strong showing” that it is likely to 13 succeed on the merits; 2) whether the applicant will be irreparably injured without a stay; 3) 14 whether the stay will substantially injure the other parties in the proceedings; and 4) whether a stay 15 is in the public interest. Leiva–Perez v. Holder, 640 F.3d 962, 964 (9th Cir. 2011). Courts apply 16 these factors flexibly, taking a “sliding scale approach” akin to the approach taken with respect to 17 preliminary injunctions. Id. at 965. Here, the Court concludes that these factors, on balance, 18 support entry of a stay. 19 The Ninth Circuit has explained that the first factor, a “strong showing” on the merits, does 20 not require that a party seeking a stay must demonstrate that it is more likely than not to prevail on 21 its appeal. Leiva-Perez, 640 F.3d at 968. Instead, so long as other factors support a stay, it is 22 enough that there are “serious questions going to the merits.” Id. For the reasons discussed 23 above in connection with the request to certify the December 11, 2020 Order, the Court concludes 24 that Defendants have demonstrated the existence of such serious questions. Further, the Court 25 concludes that the remaining factors support a stay. 26 The second and third factors, which address the relative harms to the parties of entering a 27 stay as opposed to allowing the case to move forward in the trial court, favor a stay because going 1 needless, depending on the Ninth Circuit’s decision on appeal. This burden outweighs the 2 || countervailing burden on Relator caused by the delay associated with an immediate appeal. The 3 || Court also finds that it is in the public interest to stay the case while it is on appeal because doing 4 so 1s likely to save judicial resources. See Integra, 2019 WL 6973547, at *8. 5 || I. CONCLUSION 6 The Motion is GRANTED. The Court certifies its December 11, 2020 Order for 7 immediate appeal. Defendants may petition the United States Court of Appeals for the Ninth 8 Circuit within ten days of entry of this order to permit an appeal to be taken. The Court exercises 9 |} its discretion under 28 U.S.C. § 1292(b) to stay this case pending the Ninth Circuit’s resolution of 10 || Defendants’ petition to permit an appeal and any appeal that the Ninth Circuit agrees to consider. 11 The Further Case Management Conference scheduled for February 5, 2021 is continued to June 12 || 4,2021 at 2:00 p.m. The parties’ joint Case Management Conference statement shall be filed by 13 || May 28, 2021. IT IS SO ORDERED. 3 15 Dated: January 28, 2021 ho CZ J PH C. SPERO 17 ief Magistrate Judge 18 19 20 21 22 23 24 25 26 27 28