                                                                 NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 ____________

                                      No. 14-4632
                                     ____________

                     IN RE: LIPITOR ANTITRUST LITIGATION


             RP HEALTHCARE, INC.; CHIMES PHARMACY, INC.;
            JAMES CLAYWORTH, R.Ph., d/b/a Clayworth Pharmacy;
          MARIN APOTHECARIES, INC., d/b/a Ross Valley Pharmacy;
    GOLDEN GATE PHARMACY SERVICES, INC., d/b/a Golden Gate Pharmacy;
      PEDIATRIC CARE PHARMACY, INC.; MEYERS PHARMACY, INC.;
               TONY MAVRANTONIS R. PH., d/b/a Jack's Drugs;
           TILLEY APOTHECARIES INC, d/b/a Zweber's Apothecary,
                                                           Appellants
                            ____________

                      On Appeal from United States District Court
                               for the District of New Jersey
          (D.N.J. No. 3-12-cv-05129) / (MDL 2332) / (D.N.J. No. 12-cv-02389)
                       District Judge: Honorable Peter G. Sheridan
                                       ____________

                           Argued September 27, 2016
               Before: AMBRO, SMITH* and FISHER, Circuit Judges.

                                (Filed: January 3, 2018)




      *
        Honorable D. Brooks Smith, United States Circuit Judge for the Third Circuit,
assumed Chief Judge status on October 1, 2016.
      
         Honorable D. Michael Fisher, United States Circuit Judge for the Third Circuit,
assumed senior status on February 1, 2017.
Joseph M. Alioto, Esq. [ARGUED]
Angelina Alioto-Grace, Esq.
Theresa Driscoll Moore, Esq.
Alioto Law Firm
One Sansome Street, 35th Floor
San Francisco, CA 94104

James M. Dombroski, Esq.
P.O. Box 751027
Petaluma, CA 94975

Timothy A. C. May, Esq.
Gil D. Messina, Esq.
Messina Law Firm
961 Holmdel Road
Holmdel, NJ 07733

Jeffery K. Perkins, Esq.
1550-G Tiburon Boulevard, #344
Tiburon, CA 94920

Tom Pier, Esq.
Alioto & Alioto
505 Sansome Street
Two Transamerica Center, 17th Floor
San Francisco, CA 94111

Ekaterina Schoenefeld, Esq.
32 Chambers Street, Suite 2
Princeton, NJ 08542
       Counsel for Appellants

Jonathan D. Janow, Esq.
John C. O'Quinn, Esq.
Kirkland & Ellis
655 15th Street, N.W., Suite 1200
Washington, DC 20005




                                      2
Jay P. Lefkowitz, Esq. [ARGUED]
Kirkland & Ellis
601 Lexington Avenue
New York, NY 10022

Joseph Serino, Jr., Esq.
Latham & Watkins
885 Third Avenue, Suite 1000
New York, NY 10022
      Counsel for Appellees Ranbaxy Pharmaceuticals Inc., Ranbaxy Laboratories Ltd.,
      Ranbaxy Inc.

Dimitrios T. Drivas, Esq.
Raj S. Gandesha, Esq.
Bryan D. Gant, Esq.
Sheryn E. George, Esq.
Robert A. Milne, Esq. [ARGUED]
Brendan G. Woodard, Esq.
White & Case
1221 Avenue of the Americas
New York, NY 10036

Eleonore Ofosu-Antwi, Esq.
Liza M. Walsh, Esq.
Walsh Pizzi O'Reilly & Falanga
One Riverfront Plaza
1037 Raymond Boulevard, Suite 600
Newark, NJ 07102

Rukhsanah Singh, Esq.
Connell Foley
1085 Raymond Boulevard
One Newark Center, 19th Floor
Newark, NJ 07102
      Counsel for Appellees Warner Lambert Co. LLC, Warner Lambert Co., Pfizer
      Ireland Pharmaceuticals, Pfizer Inc.




                                         3
Katherine A. Helm, Esq.
Noah M. Leibowitz, Esq. [ARGUED]
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017

David C. Kistler, Esq.
Blank Rome
301 Carnegie Center, Third Floor
Princeton, NJ 08540
       Counsel for Appellees Dai Ichi Sankyo Co. Ltd., Dai Ichi Sankyo Inc.

Philip S. Goldberg, Esq.
Shook Hardy & Bacon
1155 F Street NW, Suite 200
Washington, DC 20004
       Counsel for Amicus Appellee American Tort Reform Association, Pharmaceutical
       Research and Manufacturers of America

Peter J. Curtin, Esq.
William A. Rakoczy, Esq.
Rakoczy Molino Mazzochi & Siwik
6 West Hubbard Street, Suite 500
Chicago, IL 60654
       Counsel for Proposed Amicus-Appellee

Steve D. Shadowen, Esq.
Hilliard & Shadowen
919 Congress Avenue, Suite 1325
Austin, TX 78701
       Counsel for Amicus Appellants 48 Law Economic and Business Professors and
       American Antitrust Institute




                                           4
                                       ____________

                                         OPINION*
                                       ____________


PER CURIAM

       The present matter is one part of the complex antitrust litigation involving the

pharmaceutical product Lipitor and a settlement agreement between Pfizer Inc. and

Ranbaxy Inc. This Court has already issued two precedential opinions in this case. Lipitor

III was jurisdictional in focus and we concluded that the Plaintiffs’ antitrust claims did

not “arise under” patent law.1 Consequently, we denied the Defendants’ motions for

transfer to the Federal Circuit.2 In the subsequent merits opinion, Lipitor IV, we reversed

the District Court’s dismissal of the Plaintiffs’ consolidated complaints.3

       The present Plaintiffs—a group of California pharmacists collectively referred to

as RP Healthcare—constitute a distinct party within the broader Lipitor litigation, and

their complaint presents unique legal questions, both substantive and jurisdictional. In

contrast to the other Plaintiffs, RP Healthcare bases its claim exclusively on California’s




       *
        This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
       1
        In re: Lipitor Antitrust Litig., 855 F.3d 126, 145 (3d Cir. 2017). We continue the
same numbering scheme used in our previous opinions. Lipitor I and Lipitor II are
opinions of the District Court.
      2
        Id.
      3
        In re: Lipitor Antitrust Litig., 868 F.3d 231 (3d Cir. 2017).

                                              5
antitrust statute, the Cartwright Act.4 Therefore, whether we may exercise jurisdiction

turns on the diversity of the parties.5 In Lipitor III, we held that the record lacked

sufficient evidence to determine the citizenship of each Defendant, so we directed the

District Court to conduct limited discovery on that issue.6 Of course, with the

jurisdictional question undecided, we could not reach the merits of RP Healthcare’s

complaint in Lipitor IV. On remand, the District Court found that there was complete

diversity amongst the parties and upheld jurisdiction on that basis. We will affirm.

       Turning to the merits, we will also affirm the District Court’s dismissal of RP

Healthcare’s complaint, but for different reasons. Finally, we will affirm the District

Court’s ruling that it lacked personal jurisdiction over one of the Defendants, Daiichi

Sankyo Company, Ltd.

                                                   I.

Diversity Jurisdiction

       RP Healthcare filed its initial complaint in California state court. Following

removal—and transfer by the Judicial Panel on Multidistrict Litigation—the District

Court declined to remand the case back to state court, grounding its finding of federal

jurisdiction in potential patent defenses of the Defendants. Because federal “arising

under” jurisdiction must be based on a plaintiff’s complaint, not possible defenses, we


       4
         Cal. Bus. & Prof. Code § 16700 et seq.
       5
         The parties agree that the amount in controversy exceeds $75,000.
       6
         Lipitor III 855 F.3d at 134.

                                               6
observed in Lipitor III that this ruling was in error.7 That did not end our analysis,

however, because after the District Court declined to send the case back to state court, but

prior to final judgment, RP Healthcare voluntarily dismissed what appeared to be each of

the remaining non-diverse Defendants, with the “appeared to be” resulting from the

aforementioned uncertainty over the citizenship of several Defendants. Our Order in

Lipitor III asked the District Court to resolve this uncertainty.8

       Back in the District Court, the parties stipulated that at the time of final judgment

all of the Plaintiffs were citizens of California and none of the Defendants were citizens

of California. Complete diversity being established, the District Court held that it had

jurisdiction under 28 U.S.C. § 1332. We agree. As discussed in Lipitor III, a District

Court may exercise jurisdiction if, at the time of final judgment, there is a proper basis.9

This is the case even if, at an earlier point in the proceedings, there was no basis for

federal jurisdiction.10 RP Healthcare’s original remand motion should have been granted

for lack of jurisdiction, but, by the time of final judgment, there was complete diversity

between the parties. Therefore, the District Court’s jurisdiction was ultimately proper,

notwithstanding the prior erroneous decision.

                                                  II.

RP Healthcare’s Complaint

       7
         Id.
       8
         Id.
       9
         Id. at 150 (citing Caterpillar Inc. v. Lewis, 519 U.S. 61, 64 (1996)).
       10
          Caterpillar, 519 U.S. at 64.

                                              7
       Having established jurisdiction over RP Healthcare’s complaint, we may now turn

to its merits. Put very briefly, a reverse settlement occurs (almost exclusively in the

pharmaceutical sector) when a patent holder sues an alleged infringer and the suit is

settled with a large payment from the patent holder to the infringer. Such a settlement is

usually accompanied by a promise from the infringer to exit the market for a certain

length of time. A distinguishing feature of a reverse settlement is that the bargained-for

abstention period falls within the term of the patent at issue, when the patent holder

would normally enjoy a government-conferred monopoly. Absent the patina of patent

protection, the agreement would be nakedly anti-competitive. In this case, Pfizer sued

Ranbaxy for infringement of a Lipitor patent and the parties entered into an agreement

bearing many of the now-familiar hallmarks of a reverse settlement. RP Healthcare’s

complaint alleges that this agreement constituted a per se antitrust violation under the

Cartwright Act.

       The District Court previously dismissed the RP Healthcare complaint under Rule

12(b)(6) for the same reason it dismissed those of the other Plaintiffs: its failure to

calculate the reasonable value of the alleged “reverse payment” between Pfizer and

Ranbaxy. As to those other Plaintiffs, we reversed this dismissal in Lipitor IV, concluding

that in reverse settlement cases “[t]he Supreme Court did not require the advanced

valuations . . . required by the District Court.”11 Throughout this litigation, however, RP


       11
            Lipitor IV, 868 F.3d at 255.

                                              8
Healthcare has been at pains to stress that it is alleging a per se antitrust violation, not a

reverse settlement claim under FTC v. Actavis,12 so the same reasoning ought not to

apply. We agree, and this distinction is fatal to its claim. Under California antitrust law, a

reverse settlement may not be attacked on a per se basis, so the District Court’s dismissal

was proper.

       As we observed in Lipitor IV, “[p]rior to [the Supreme Court’s decision in]

Actavis, several courts had held that [reverse settlement] agreements were immune from

antitrust scrutiny so long as the asserted anticompetitive effects fell within the scope of

the patent.”13 In Actavis, the Court rejected this categorical rule and held that, in general,

“patent and antitrust policies are both relevant”14 in determining the proper level of

antitrust immunity conferred by a patent, and, in particular, reverse settlements implicate

antitrust concerns when their payments are “large and unjustified.”15

       The California Supreme Court applied the reasoning of Actavis to the Cartwright

Act in In re Cipro Cases I & II.16 Of particular importance to the RP Healthcare

complaint, the California Supreme Court first determined what degree of antitrust

scrutiny should apply to a reverse settlement. Under California law, “certain categories of

agreements or practices that can be said to always lack redeeming value . . . [are] per se


       12
          133 S. Ct. 2223 (2013).
       13
          868 F.3d at 250 (internal citations and quotations omitted).
       14
          Actavis, 133 S. Ct. at 2231.
       15
          Id. at 2237.
       16
          61 Cal. 4th 116, 142-43 (2015).

                                               9
illegal.”17 However, reverse settlements do not fall within the per se category and must

instead be scrutinized under a structured rule of reason analysis.18 Because the agreement

between Pfizer and Ranbaxy was a reverse settlement, RP Healthcare’s claim of a per se

violation of the Cartwright Act necessarily fails under Cipro.

       Perhaps cognizant of this unremarkable application of California law, RP

Healthcare attempts to escape Cipro’s reach by arguing that the agreement between

Pfizer and Ranbaxy was not a reverse settlement at all. Whereas reverse settlements

regulate activity within the term of a disputed patent, it argues, the agreement in this case

only covered the time period following the expiration of the Lipitor patent. RP Healthcare

dates this expiration to June 28, 2011, but this is simply inaccurate. To be sure, a Lipitor

patent expired on that date, but RP Healthcare conspicuously ignores the fact that Lipitor

was covered by at least five other patents that expired between 2013 and 2017, well

outside the period contemplated by the settlement agreement. Whether Ranbaxy could

have designed around these later-expiring patents—thus producing a generic version of

Lipitor without infringing upon them—is relevant under a rule of reason analysis.19 But

questions about the practical durability of a patent have no bearing on its presumed

validity. The settlement agreement’s basic attributes, which cannot be ignored, reveal that

       17
          Id. at 146.
       18
          Id. at 148.
       19
          The ease with which a generic manufacturer could design around such patents
would serve as a relevant indicator of the overall strength of Pfizer’s position in
negotiating the settlement. The weaker a patent holder’s position, the more likely a
reverse settlement will be found anti-competitive. Actavis, 133 S. Ct. at 2236-37.

                                             10
it was a straightforward reverse settlement under Cipro. This forecloses any claim of a

per se antitrust violation.

                                                  III.

Personal Jurisdiction Over Defendant Daiichi Sankyo Company, Ltd.

       One final matter remains from our Order in Lipitor III. When the District Court

originally dismissed the present complaint, it did so under Rule 12(b)(6). One Defendant,

however, Daiichi Sankyo Company, Ltd., had asserted an alternative basis for dismissal

under Rule 12(b)(2) for want of personal jurisdiction. The District Court never addressed

Daiichi Limited’s personal jurisdiction motion, which should have logically preceded any

decision under Rule 12(b)(6).20 Following our limited remand in Lipitor III, the District

Court found that it lacked personal jurisdiction and modified its dismissal order to reflect

Rule 12(b)(2) as the proper basis. We will affirm.

       As the District Court found, Daiichi Limited (1) is a Japanese corporation; (2) is

not incorporated or registered to do business in California; (3) has no offices or other

company facilities in California; (4) has no employees in California; and (5) has no

appointed agent for service of process in California. RP Healthcare claims that personal

jurisdiction exists because Daiichi Limited allegedly conditioned its purchase of stock

from Ranbaxy, an Indian company, upon Ranbaxy entering into the present agreement

with Pfizer. Following a motion for dismissal under Rule 12(b)(2), the burden is on the

       20
            Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422, 430-31
(2007).

                                             11
plaintiff to prove personal jurisdiction by a preponderance of the evidence.21 We agree

with the District Court that RP Healthcare has failed to allege, let alone prove, any facts

that would support a California court’s exercise of personal jurisdiction. Even if the

allegations regarding the sale of stock are true, such an agreement would not show that

Daiichi Limited “purposefully availed itself of the privilege of conducting activities

within” California, as would be required to support personal jurisdiction.22

                                             IV.

       The Order of the District Court will be AFFIRMED.




       21
            IMO Indus. v. Kiekert AG, 155 F.3d 254, 257 (3d Cir. 1998) (citations omitted).
       22
            Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985).

                                              12
