FILED: SUFFOLK COUNTY CLERK 10/14/2020 06:29 PM INDEX NO.

400000/2017
NYSCEF DOC. NO. 7544 RECEIVED NYSCEF: 10/14/2020

SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF SUFFOLK

IN RE OPIOID LITIGATION

This document relates to:

THE PEOPLE OF THE STATE OF NEW YORK, by INDEX NO.: 400000/2017

LETITIA JAMES, Attorney
General of the State of New York, Hon. Jerry Garguilo

Plaintiff,

v. Index No. 400016/2018

PURDUE PHARMA L.P., et al., Mot. Seq. No. 306
Defendant.

REPLY IN SUPPORT OF JOHNSON & JOHNSON, JANSSEN PHARMACEUTICA,

INC., JANSSEN PHARMACEUTICALS, INC., AND ORTHO-MCNEIL-JANSSEN
PHARMACEUTICALS, INC.’S MOTION TO STAY ADMINISTRATIVE
PROCEEDINGS AND JOIN THE NEW YORK DEPARTMENT OF FINANCIAL
SERVICES AS A NECESSARY PARTY

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TABLE OF CONTENTS

Page

ARGUMENT .................................................................................................................................. 3

POINT I The Court should exercise its inherent authority to stay the parallel
administrative action. .............................................................................................. 3

POINT II Alternatively, the Court should join DFS as a party and then stay its claims. ... 6

CONCLUSION ............................................................................................................................... 7

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TABLE OF AUTHORITIES

Page(s)

Cases

Chaplin v. Nat’l Grid,

171 A.D.3d 691 (2d Dep’t 2019) ................................................................................................ 3

Green v. Santa Fe Indus., Inc.,

70 N.Y.2d 244 (1987) ................................................................................................................. 6

Matter of A.G. Ship Maintenance Corp. v. Lezak,

69 N.Y.2d 1 (1986) ..................................................................................................................... 4

Matter of Pokoik v. Dep’t of Health Servs. of Cty. of Suffolk,

220 A.D.2d 13 (2d Dep’t 1996) .................................................................................................. 3

Matter of Schneider v. Aulisi,

307 N.Y. 376 (1954) ............................................................................................................... 3, 4

New York v. Mountain Tobacco Co.,

942 F.3d 536 (2d Cir. 2019) ....................................................................................................... 6

Paramedics Electromedicina Comercial, Ltda. v. GE Med. Sys. Info Techs., Inc.,

369 F.3d 645 (2d Cir. 2004) ................................................................................................... 3, 6

Plachte v. Bancroft, Inc.,

3 A.D.2d 437 (1st Dep’t 1957) ................................................................................................... 4

Shakur v. State of N.Y.,

54 Misc. 3d 674 .......................................................................................................................... 6

State v. Seaport Manor A.C.F.,

19 A.D.3d 609 (2005) ................................................................................................................. 6

Syncora Guar. Inc. v. J.P. Morgan Sec. LLC,

110 A.D.3d 87, 88 (1st Dep’t 2013) ........................................................................................... 7

U.S. Commodity Futures Trading Com’n v. Amaranth Advisors, LLC,

523 F. Supp. 2d 328 (S.D.N.Y. Nov. 1, 2007)........................................................................ 4, 5

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Defendants Johnson & Johnson, Janssen Pharmaceutica, Inc., Janssen Pharmaceuticals,

Inc., and Ortho-McNeil-Janssen Pharmaceuticals, Inc. (jointly “Janssen”) join in the Endo and

Par Defendants’ Reply in support of their motion to stay the New York State Department of

Financial Services (“DFS”)’s parallel administrative proceedings. See NYSCEF No. 7538.

Janssen submits this brief, separate reply to emphasize this Court’s inherent authority to stay the

DFS proceedings whether or not DFS is joined as a party to this action and to join DFS if joinder

is necessary.

ARGUMENT

POINT I

The Court should exercise its inherent authority to stay the parallel administrative action.

This Court possesses broad inherent “power to do all things that are reasonably necessary

for the administration of justice within the scope of its jurisdiction.” NYSCEF No. 7274 at 2.

That power includes the authority to stay parallel proceedings to prevent inconsistent

adjudications, duplicative litigation, and the “potential waste of judicial resources.” Chaplin v.

Nat’l Grid, 171 A.D.3d 691, 692 (2d Dep’t 2019); Matter of Pokoik v. Dep’t of Health Servs. of

Cnty. of Suffolk, 220 A.D.2d 13, 16 (2d Dep’t 1996); Matter of Schneider v. Aulisi, 307 N.Y. 376,

384 (1954) (affirming stay based on inherent authority); Paramedics Electromedicina Comercial,

Ltda. v. GE Med. Sys. Info Techs., Inc., 369 F.3d 645, 652 (2d Cir. 2004) (staying action of

substantially similar party in separate forum). Neither the New York Attorney General

(“NYAG”), nor DFS deny that this authority exists. See NYSCEF No. 7506 at 8; NYSCEF No.

7522 at 16-17 (“a court has inherent authority to issue a stay”).

Instead, their principal argument appears to be that the Court is precluded from exercising

that authority because doing so would be “inconsistent” with CPLR § 2201. NYSCEF No. 7506

at 8-9. Plaintiffs are incorrect. There is no inconsistency between the Court’s inherent authority

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and CPLR 2201 because CPLR 2201 plainly does not purport to limit a court’s authority to issue

a stay; instead, it enumerates circumstances in which a stay would be proper. But all agree that

courts also retain inherent authority to issue a stay. And that authority must necessarily be

broader than CPLR 2201; otherwise it would have no effect at all. See NYSCEF No. 7522 at 16

(recognizing that a court’s inherent authority is “[i]n addition to” that granted by CPLR § 2201).

Inherent authority, after all, is authority that “exists independently of statute,” Plachte v.

Bancroft, Inc., 3 A.D.2d 437, 438 (1st Dep’t 1957) (emphasis added) and sometimes requires

courts to “craft[] appropriate remedies in the absence of express authority,” NYSCEF No. 7274

at 2 (emphasis added); see also, e.g., Matter of Schneider v. Aulisi, 307 N.Y. 376, 383-84 (1954)

(relying on “inherent power” when there was “no statutory grant of power to issue such a stay”).

Because there is no conflict between CPLR 2201’s grant of authority and this Court’s

broader inherent authority, Plaintiffs argument must fail. This Court has inherent authority to

stay the DFS proceedings to protect its jurisdiction, ensure orderly adjudication of New York

opioids litigation, prevent potentially inconsistent judgments and duplicative proceedings, and

promote the public interest. See NYSCEF No. 7506 at 8. 1

Amaranth Advisors, on which Plaintiffs heavily rely, is not to the contrary. See NYSCEF

No. 7506 at 9-10 (citing U.S. Commodity Futures Trading Com’n v. Amaranth Advisors, LLC,

523 F. Supp. 2d 328 (S.D.N.Y. 2007)). There, the court considered its ability to stay a federal

administrative proceeding under two separate sources—the All-Writs Act and Federal Rule of

1
Plaintiffs cite Matter of A.G. Ship Maintenance Corp. v. Lezak, 69 N.Y.2d 1, 7 (1986), for the proposition that this
Court cannot rely on its “inherent powers” as an “end-run” around the CPLR, see NYSCEF No. 7506 at 8, but that
case has nothing to do with this Court’s inherent authority to issue a stay. A.G. Ship Maintenance concerned the
imposition of attorney’s fees, and the Court held “[i]t [was] not necessary to determine whether the power of the
courts to impose sanctions for frivolous proceedings is inherent to the judicial function or is merely delegable by the
Legislature …. because at the time the petitioner instituted the proceeding, there was neither a statute nor a court
rule authorizing the imposition of sanctions for frivolous actions.” Id. at 6. In other words, A.G. Ship Maintenance
refused to retroactively create a rule allowing the recovery of attorney’s fees, whereas here everyone agrees the
Court has inherent authority to issue stays.

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Civil Procedure 65. See Amaranth Advisors, 523 F. Supp. 2d at 334-35. Of course, neither is

relevant—let alone at issue—in this case, which concerns the Court’s exercise of inherent

authority. To the extent Amaranth is relevant, however, it supports Defendants, not Plaintiffs.

Like this Court’s inherent authority, the All Writs Act authorizes federal courts to issue

injunctions where necessary or appropriate in aid of their jurisdiction. See id. at 335-36.

Amaranth held that this authority “is not limited by Rule 65(d), which restricts the scope of

injunctions to parties and persons in their control or in collaboration with them,” id. at 335

(emphasis added), just as CPLR 2201, by its text, does not purport to limit a court’s inherent

authority. Thus, although the Amaranth court ultimately declined to stay the administrative

action, it held that the All Writs Act granted it the power to do so—a holding Plaintiffs

conveniently omit. See id. at 336 (“I conclude that this Court has the power to stay the FERC

proceeding, even though FERC is not a party to this lawsuit, if such a stay is necessary to protect

this Court’s jurisdiction.”). To the extent there is any takeaway from Amaranth Advisors, then, it

is that this Court does have the power to stay the parallel proceedings. And as explained, this

Court should exercise that power.

Plaintiffs separately appear to argue that this Court cannot issue a stay unless DFS is

joined as a party. See NYSCEF No. 7506 at 9-10; NYSCEF No. 7522 at 17. But the Court need

not join DFS as a party if it exercises its inherent authority. And the Court can in any event still

issue effective relief without formally joining DFS as a party because the State of New York—

the real party in interest here—is already in front of it. Indeed, neither DFS nor the NYAG

disputes that if the Court enjoins the State of New York from prosecuting parallel proceedings,

then that injunction would preclude DFS from prosecuting its administrative action. That

considerations of res judicata and collateral estoppel are “not ripe” and that DFS’s mission is

more “limited” than NYAG’s is irrelevant, since this Court can issue an injunction here whose

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effect will be to stop the State of New York from claim splitting. See, e.g., NYSCEF No. 7538

at 5; see State of New York v. Seaport Manor A.C.F., 19 A.D.3d 609, 610 (2d Dep’t 2005)

(“[T]he underlying facts and statutory scheme establish that the Attorney-General, who was not a

party to the prior enforcement proceedings, was in privity with the DOH.”); New York v.

Mountain Tobacco Co., 942 F.3d 536, 543 (2d Cir. 2019) (affirming district court’s finding that

“[Department of Taxation and Finance] and the New York Attorney General are in privity with

one another”); Paramedics Electromedicina Comercial, Ltda v. GE Med. Sys. Info Techs., Inc.,

369 F.3d 645, 652 (2d Cir. 2004) (affirming court’s stay of parallel litigation where parties were

“substantial[ly] similar” but not identical).

Because the NYAG and DFS share overlapping “functions and responsibilities” and

“allocation of authority,” Shakur v. State of N.Y., 54 Misc. 3d 674, 679 (2016), they share

“substantial identity,” Green v. Santa Fe Indus., Inc., 70 N.Y.2d 244, 253 (1987). This means

that DFS “can be said to [be] represented in the [coordinated] proceeding.” Green v. Santa Fe

Indus., Inc., 70 N.Y.2d 244, 253 (1987).

POINT II

Alternatively, the Court should join DFS as a party and then stay its claims.

In any event, the Court possesses ample authority to join DFS to the extent necessary.

Nothing in the CPLR purports to limit this Court’s inherent authority to join DFS in these

circumstances. And the Endo and Par Defendants are entirely correct that DFS is a necessary

party under CPLR 1001. Plaintiffs essentially argue that because the NYAG and DFS are

different entities with different statutory authorities, and their prosecutions will entail different

formalities, DFS is not a necessary party. For example, Plaintiffs argue that the NYAG’s

“expansive mission and function” “stands in stark contrast” to DFS’s “limited mission,”

NYSCEF No. 7506, at 8, DFS seeks to enforce insurance laws, while NYAG pursues a public

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nuisance claim, id. at 3, the “administrative proceedings are governed by significantly relaxed

rules of evidence,” id. at 4, and judicial review of administrative and judicial proceedings are

authorized by different provisions of the CPLR, id. But these facts, even if true, do not support

Plaintiffs’ argument. The core inquiry in both proceedings—whether Janssen and its co-

defendants fraudulently marketed opioids—is the same.

At bottom, “the critical element is that both suits raise out of the same subject matter or

series of alleged wrongs” and require an answer to the same key question. Syncora Guar. Inc. v.

J.P. Morgan Sec. LLC, 110 A.D.3d 87, 88 (1st Dep’t 2013) (alteration and quotations omitted);

compare NYSCEF No. 101 (First Amended Complaint) with Exhibit A (Statement of Charges).

And although they use different legal tools, the NYAG and DFS both seek to vindicate the

alleged financial harms stemming from Janssen’s misrepresentations in its opioids marketing.

Plaintiffs cannot seriously argue that the prosecutions are about something different. Thus, if

necessary to do so to stay the administrative proceeding, this Court should join DFS as a party to

the coordinated proceedings.

CONCLUSION

For the reasons set forth above, as well as those presented in the Endo/Par motion, the

Court should stay the DFS’s parallel administrative action against Janssen, or, alternatively, join

the DFS as a necessary party to this litigation.

Dated: October 14, 2020

New York, New York
/s/ Charles C. Lifland x
Charles C. Lifland (admitted pro hac vice)
Sabrina H. Strong (admitted pro hac vice)
O’MELVENY & MYERS LLP
400 S. Hope Street
Los Angeles, CA 90071
(213) 430-6000
clifland@omm.com
sstrong@omm.com
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Stephen D. Brody (admitted pro hac vice)

O’MELVENY & MYERS LLP
1625 Eye Street NW
Washington, DC 20006
(202) 383-5300
sbrody@omm.com

Ross Galin
Nathaniel Asher
O’MELVENY & MYERS LLP
7 Times Square
New York, NY 10036
(212) 326-2000
rgalin@omm.com
nasher@omm.com

Counsel for Johnson & Johnson, Janssen

Pharmaceuticals, Inc., Ortho-McNeil-Janssen
Pharmaceuticals, Inc. n/k/a Janssen
Pharmaceuticals, Inc., and Janssen
Pharmaceutica, Inc. n/k/a Janssen
Pharmaceuticals, Inc.

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ATTORNEY CERTIFICATION PURSUANT TO COMMERCIAL DIVISION RULE 17 I,

I, Charles Lifland, an attorney duly admitted to practice law before the courts of the State

of New York, hereby certify that the foregoing affirmation complies with the word count limit

set forth in Rule 17 of the Commercial Division of the Supreme Court, as it contains 1,496 words

excluding the caption, table of contents, table of authorities and signature block. In preparing this

certification, I have relied on the word count of the word-processing system used to prepare this

affirmation.

Dated: October 14, 2020

New York, New York

/s/ Charles C. Lifland x

Charles C. Lifland

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