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International Union of Operating Engineers, Local No. 68 Welfare Fund v. AstraZeneca PLC

May 1, 2009

INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL NO. 68 WELFARE FUND, PLAINTIFF-RESPONDENT,
v.
ASTRAZENECA PLC; ASTRAZENECA PHARMACEUTICALS LP; ASTRAZENECA LP; ZENECA, INC.; TAP PHARMACEUTICAL PRODUCTS, INC.; ABBOTT LABORATORIES; TAKEDA CHEMICAL INDUSTRIES, LTD; G.D. SEARLE COMPANY; SANOFI-SYNTHELABO, INC.; JOHNSON & JOHNSON; ALZA CORPORATION; CENTOCOR, INC.; ORTHO BIOTECH, INC.; ALPHA THERAPEUTIC CORPORATION; HOFFMAN LA-ROCHE INC.; AVENTIS PHARMACEUTICALS, INC.; AVENTIS BEHRING L.L.C.; HOECHST MARION ROUSSEL, INC.; BOEHRINGER INGELHEIM CORPORATION; BEN VENUE LABORATORIES, INC.; BEDFORD LABORATORIES; ROXANNE LABORATORIES, INC.; NOVARTIS INTERNATIONAL AG; NOVARTIS PHARMACEUTICAL CORPORATION; WYETH; WYETH PHARMACEUTICALS, DEFENDANTS-APPELLANTS, AND BAYER AG; BAYER CORPORATION; MILES LABORATORIES, INC.; CUTTER LABORATORIES, INC.; GLAXOSMITHKLINE, P.L.C.; SMITHKLINE BEECHAM CORPORATION; GLAXO WELLCOME, INC.; PHARMACIA CORPORATION; PHARMACIA & UPJOHN, INC.; MONSANTO COMPANY; AMGEN, INC.; IMMUNEX CORPORATION; CENTEON, L.L.C.; ARMOUR PHARMACEUTICALS; BAXTER INTERNATIONAL INC.; BAXTER HEALTHCARE CORPORATION; IMMUNO-U.S., INC.; BRISTOL-MYERS SQUIBB COMPANY; ONCOLOGY THERAPEUTICS NETWORK CORPORATION; APOTHECON, INC.; DEY, INC.; FUJISAWA PHARMACEUTICAL CO., LTD.; FUJISAWA HEALTHCARE, INC.; FUJISAWA USA, INC.; SANDOZ PHARMACEUTICAL CORPORATION; SCHERING-PLOUGH CORPORATION; WARRICK PHARMACEUTICALS CORPORATION; SICOR, INC.; GENSIA SICOR PHARMACEUTICALS, INC.; SAAD ANTOUN, M.D.; STANLEY C. HOPKINS, M.D.; ROBERT A. BERKMAN, M.D., DEFENDANTS.



On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, L-3136-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 17, 2009

Before Judges Winkelstein, Fuentes and Gilroy.

On leave granted, defendants appeal from an order of the Law Division denying their motion to dismiss plaintiff's putative class action complaint with prejudice for failure to comply with class certification discovery, and granting plaintiff's motion to vacate the previously entered dismissal without prejudice and to reinstate the complaint. We affirm.

On June 30, 2003, plaintiff, International Union of Operating Engineers, Local No. 68 Welfare Fund (the Welfare Fund), filed a class action complaint alleging that defendants, pharmaceutical companies, engaged in a fraudulent scheme and conspiracy that caused plaintiff and others similarly situated to overpay for certain prescription drugs. The trial court entered an order appointing a Special Master, Retired Judge William G. Bassler, to "facilitate the resolution of existing and future disputes between and among the parties." The court ordered that all discovery disputes between the parties be resolved by Judge Bassler, who had the authority to recommend discovery schedules, supervise compliance with discovery obligations, and make rulings on all discovery disputes. The court also authorized Judge Bassler to decide any other matters by consent of the parties or as referred by the court.

On November 12, 2007, pursuant to Judge Bassler's recommendation, the trial court entered a case management order, requiring the parties to complete class certification fact discovery by February 29, 2008. To comply with that order, defendants served plaintiff with a notice of deposition for February 5, 2008. The notice required plaintiff to designate "one or more officers, directors, managing agents or other persons to testify on [plaintiff's] behalf." Defendants also served separate deposition notices for three of plaintiff's executives, including its president, Dennis Giblin, noticing his deposition for February 25, 2008.

On February 1, 2008, not having received a response to their request for production of documents previously served on plaintiff, defendants postponed the corporate designee deposition to February 13, 2008. Defendants also requested that plaintiff provide them with the names of the witnesses expected to testify as to each topic identified in the deposition notice. In letters dated February 6 and 7, 2008, defendants again requested plaintiff to respond to their request for production of documents and identify the corporate designees who would be deposed on February 13, 2008. Still having received no response, defendants advised plaintiff on February 8, 2008, that they would proceed with the February 13, 2008, deposition, despite not having received responses to their discovery requests or plaintiff's identification of the corporate designee. On February 12, 2008, without defendants' consent, plaintiff's counsel adjourned the deposition.

At a February 14, 2008, discovery conference, plaintiff's counsel told Judge Bassler that plaintiff was also represented by separate defense counsel in a criminal investigation, and that plaintiff's criminal defense attorney indicated to plaintiff's counsel that it may be impossible for plaintiff to comply with certain discovery requests. Accordingly, plaintiff's counsel advised Judge Bassler that he had "good reason to believe that Local 68 will be withdrawing from [the] case as lead plaintiff." Plaintiff would then "seek a stay of all matters pending so as to allow for an opportunity for lead plaintiff counsel to amend the pleadings to substitute in . . . an acceptable lead plaintiff before . . . we go any further." Judge Bassler ordered a moratorium on all document production until February 19, 2008, and ordered plaintiff's counsel to inform him and the parties by that date as to whether plaintiff would remain in the case as lead plaintiff.

The parties and Judge Bassler reconvened on the latter date. Plaintiff's counsel told him that plaintiff would "seek to be substituted out as the named representative," and counsel would proceed with a motion to stay the case pending an application to substitute the named representative plaintiff for the class action. Judge Bassler continued the moratorium on the exchange of discovery pending plaintiff's motion for a stay.

On February 26, 2008, plaintiff filed a motion for a stay of discovery for ninety days "to fully evaluate the situation and undertake the best course of action, including substituting the named class representative plaintiff if necessary to protect the interests of the putative class." Defendants responded with a motion to dismiss the complaint based on plaintiff's failure to comply with discovery. A class had not been certified as of the date of defendants' motion. On March 28, 2008, the trial court granted plaintiff's motion for a stay, allowing an additional sixty days from the date of the court's order on defendants' motion to dismiss.

During oral argument on the motion to dismiss, the court identified two grounds for defendants' motion: plaintiff's withdrawal from the case and plaintiff's failure to comply with discovery. Defendants argued that plaintiff failed to produce a witness for the corporate designee deposition, or Dennis Giblin, the president of the Welfare Fund. Although plaintiff claimed that it was "ready and prepared" to produce a representative to respond to defendants' corporate designee deposition notice, it did not do so. Plaintiff continued to refuse to produce Dennis Giblin for a deposition. Plaintiff's counsel admitted that defendants were entitled to depose Giblin, but advised the court that Giblin's criminal defense attorney "advised us that we should put a hold on this," as Giblin was apparently a target of a federal investigation. As a result of plaintiff's failure to produce Giblin to be deposed and comply with discovery, on April 11, 2008, the court granted defendants' motion to dismiss without prejudice. The court stated that plaintiff could move to reinstate the complaint if, within ninety days, it complied with defendants' discovery demands and paid $300.

On July 9, 2008, plaintiff moved to vacate the court's April 11, 2008 order dismissing the complaint without prejudice, and to reinstate the complaint. Although plaintiff had not produced Giblin for a deposition, plaintiff represented in its motion that two other unions, Local 690 and Local 322, had "agreed to act as a class representative and to fully participate in all aspects of litigation, including discovery." Plaintiff argued that the complaint should be reinstated and the dismissal order vacated because the two new proposed class representatives "intend[ed] to and [would] provide the outstanding class discovery."

Defendants filed their opposition to plaintiff's motion to vacate the dismissal and, pursuant to Rule 4:23-2(b) and Rule 4:23-4, filed a cross-motion to dismiss plaintiff's complaint with prejudice. Defendants argued that more than ninety days had passed since the April 11, 2008 order had been entered, and that plaintiff failed to cure the discovery deficiencies. Defendants further asserted that the purported ...


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