Key Points

  • The Third Circuit held, for the first time in a precedential opinion, that a party's proper adoption of a co-party's appellate arguments under Rule 28(i) does not count toward Rule 28.1(e) word limits, joining the Eighth and Tenth Circuits.
  • Adopted issues must be specifically and explicitly identified; Sandoz's reference to argument Sections I and II of RareGen's brief satisfied that standard.
  • The court reversed summary judgment for Sandoz on breach-of-contract liability, finding the 2015 settlement ambiguous, and vacated the $61,643,251 judgment.
  • The court affirmed dismissal of the Sherman Act and North Carolina unfair trade practices claims, holding United Therapeutics showed unrebutted procompetitive justifications for its cartridge restrictions.
  • The court revived the tortious interference claim for independent analysis and affirmed the denial of United Therapeutics' Daubert motion against Sandoz's damages expert.

A federal appeals court held on Oct. 7 that a party that adopts a co-party's appellate arguments by reference does not use up its own brief's word allowance, settling a question the Third Circuit had never decided in a precedential opinion. The ruling came in a long-running fight over generic treprostinil, in which the court also threw out a $61.6 million judgment against United Therapeutics Corp.

Writing for a panel that also included Circuit Judges McKee and Ambro, Circuit Judge Restrepo rejected United Therapeutics' argument that Sandoz Inc. had forfeited, or given up, its antitrust and state-law claims on appeal by adopting the brief of its marketing partner, RareGen LLC. "Therefore, we join the Eighth and Tenth Circuits in holding that a party's proper adoption of arguments pursuant to Rule 28(i) does not count toward the word limits prescribed by Federal Rule of Appellate Procedure 28.1(e)," Judge Restrepo wrote.

Rule 28(i) of the Federal Rules of Appellate Procedure allows any party in a case with multiple appellants or appellees to "adopt by reference a part of another's brief." The decision means that, in the Third Circuit, such adoptions will not be treated as an end-run around the word caps. United Therapeutics had relied on two Federal Circuit decisions, Promptu Systems Corp. v. Comcast Cable Communications and Medtronic Inc. v. Teleflex Life Sciences, which the panel described as holding that a party may not exceed the word limit when incorporating arguments by reference.

The procedural win did little for Sandoz on the merits of its antitrust case. The panel went on to affirm the dismissal of Sherman Act claims over United Therapeutics' restrictions on drug-pump cartridges. But it reversed summary judgment for Sandoz on liability for breach of a 2015 patent settlement, vacated the damages award and ordered a trial, and revived a tortious interference claim.

United Therapeutics has sold injectable treprostinil under the brand name Remodulin since 2002 to treat pulmonary arterial hypertension. Subcutaneous use of the drug requires a pump and disposable cartridges made by Smiths Medical ASD Inc., which told its specialty pharmacy distributors in August 2015 that it was discontinuing the pump. In September 2015, United Therapeutics settled patent litigation with Sandoz, licensing it to sell a generic version.

After learning in December 2018 that Sandoz was preparing to launch, United Therapeutics had Smiths place the cartridges on allocation status, giving it approval rights over every sale to the specialty pharmacies Accredo and CVS Specialty. The company used that authority as "negotiating leverage," according to the record cited by the court, withholding cartridges until the pharmacies agreed to use them only with Remodulin. Sandoz launched its generic in March 2019 for intravenous use only, and did not launch a subcutaneous version until May 2021, after RareGen arranged for an alternative cartridge.

Sandoz and RareGen sued in April 2019 in the U.S. District Court for the District of New Jersey. U.S. District Judge Brian R. Martinotti granted summary judgment to United Therapeutics on the antitrust and tort claims, granted it to Sandoz on contract liability and, after a bench trial, awarded Sandoz $61,643,251.

On the forfeiture issue, the panel applied its earlier rule that adopted issues must be "specifically and explicitly identified" rather than incorporated through "general statements of adoption." United Therapeutics called Sandoz's adoption a "blanket statement," but the court held that Sandoz's brief met the standard when it said Sandoz "adopts by reference the entirety of the Brief of Appellee RareGen, LLC, including specifically argument Sections I and II."

The panel distinguished its 2016 decision in Papp v. Fore-Kast Sales Co., which barred parties from incorporating their own district court briefs on appeal as "effectively nullify[ing] the page or word limits." Adopting a co-party's appellate brief is different, Judge Restrepo wrote, because the rules expressly permit it and "because the relevant argument has already been raised on appeal by one party, the court must review the argument regardless of whether another party adopts it."

On the contract claim, the district court had found that United Therapeutics unambiguously promised not to "prevent, limit, delay, or otherwise restrict" Sandoz's launch. The panel disagreed, holding that United Therapeutics offered a reasonable reading of the provisions as "catch-all provisions aimed at reinforcing UTC's agreement not to wield its intellectual property rights against Sandoz." Because the language was ambiguous, a fact-finder must decide what the parties intended.

On the antitrust claims, the court applied the rule of reason. It credited United Therapeutics' concern about a cartridge shortage for Remodulin patients and its investment in keeping Smiths' production going. "We do not deny that UTC understood—and even desired—that the cartridge restrictions would hinder Plaintiffs' launch," Judge Restrepo wrote, but "there is nothing pretextual about seeking to protect a procompetitive investment and also seizing the opportunity to disadvantage a competitor along the way."

The tortious interference claim, however, should not have been dismissed simply because the antitrust claims failed, the panel held. Under New Jersey law, "the fact that UTC did not violate the antitrust laws does not alone foreclose a tortious interference claim, which can still stand if UTC's conduct is found to be malicious, fraudulent, or dishonest," the court wrote. The panel affirmed dismissal of a North Carolina unfair trade practices claim.

The court also upheld the denial of United Therapeutics' Daubert motion, a request to exclude expert testimony as unreliable, against Sandoz's damages expert, Dr. Anupam Jena, noting that he had reviewed thirty-three forecast models before relying on an internal RareGen forecast.

United Therapeutics was represented by Charles L. McCloud of Williams & Connolly LLP, who argued the appeal.

The panel vacated the Nov. 1, 2024, judgment and damages award, dismissed the remaining evidentiary and damages challenges as moot, and remanded the case to the district court for a trial on contract liability and for separate consideration of the tortious interference claim.