Suppressed v. Suppressed

Filing 541

MEMORANDUM Opinion and Order: For the reasons stated herein, the Post-Trial Motions of Defendant Eli Lilly and Company are denied with exception to the award of damages to Colorado, Georgia, New Jersey, Oklahoma, and Rhode Island. If the Relator refuses to agree to the Remittitur, the Court will order a new trial as to the issue of damages as to these five (5) states. Signed by the Honorable Harry D. Leinenweber on 4/26/2023: Mailed notice (maf)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
UNITED STATES, ex rel.
RONALD J. STRECK,
Plaintiff,
v.

Case No. 14 C 9412
Judge Harry D. Leinenweber

TAKEDA PHARMACEUTICALS
AMERICA, INC., et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
I. BACKGROUND
After a jury verdict, the Court entered judgment in favor
of the Relator on this federal False Claims Act (the “FCA”) and
various state false claim act complaints. Defendant Eli Lilly
and Company (“Lilly”) has now filed a post-trial Motion under
Federal Rules of Civil Procedure 26(B), 54, and 59 for Judgment
as a Matter of Law or for a New Trial. Lilly raises 12 points:
(1) collateral estoppel; (2) statute of limitations; (3) jury
awarded damages for claims conceded to be invalid; (4) failure
to prove scienter; (5) failure to show objective knowledge; (6)
government acquiescence to Lilly’s conduct; (7) incorrect and
prejudicial comments by the Relator; (8) failure to show the
submissions by Lilly were false; (9) accuracy of Lilly’s final

submissions; (10) failure to prove materiality; (11) the public
disclosure bar; and (12) failure to prove causation.
II. DISCUSSION
A. Collateral Estoppel
This

defense

was

raised

for

the

first

time

immediately

prior to trial when Lilly filed a Motion in limine, arguing that
the

Relator

was

collaterally

estopped

from

arguing

scienter.

After extensive argument, the Court denied the Motion, reasoning
that Lilly had waived the defense by waiting until the eve of
trial. The record shows that the Relator filed this case in
2014. Lilly did not respond until 2018 when it moved to dismiss
under Rule 12(b)(6) for failure to state a claim. In the Motion,
Lilly’s position was that this Court should follow the Third
Circuit’s decision in U.S. v. Allergan, Inc., 746 Fed. App’x.
101 (3rd Cir. 2018) (Streck 1), as persuasive authority. Lilly
did

not

argue

collateral

estoppel

in

either

its

Motion,

its

prayer for relief, or in the body of its brief. The Relator in
response argued the lack of precedential authority of the Third
Circuit’s opinion and that a Third Circuit district court had
refused to follow it because it did not consider the opinion
binding

authority.

See

U.S.

ex

rel.

Streck

v.

Bristol-Myers

Squibb, 370 F.Supp. 3d 491 (E.D. Pa. 2018). Although Lilly did
raise collateral estoppel in a footnote to its brief but, as
noted, it did not raise it in the Motion itself. Nor did it
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argue collateral estoppel in its Reply brief. The Court denied
the Motion to Dismiss, without mentioning collateral estoppel,
on the basis that the Court disagreed with the Third Circuit’s
reasoning. Lilly did not move to reconsider. Lilly filed its
Answer

raising

twenty-two

boiler

plate

affirmative

defenses,

including “[p]laintiff’s claims are barred by estoppel.”
Lilly
several

filed

issues,

a

Motion

including

for
a

Summary
lack

of

Judgment

in

scienter,

2021,

on

government

knowledge, a lack of materiality, and a lack of causality, but
did

not

mention

collateral

estoppel.

After

the

denial

of

Lilly’s Summary Judgment Motion, the case was set for trial in
March 2022, and a schedule for filing the pretrial order and
motions in limine was set.

In the fall of 2021, Lilly changed

attorneys and asked for the trial to be rescheduled for a later
date.

Due to logistical problems associated with the COVID-19

pandemic

and

Lilly’s

request

for

postponement,

the

Court

continued the case to July 2022 and reset the dates for filing
the pretrial order and motions in limine for June 2022. Lilly
filed its Motions in limine, together with the joint Pretrial
Order on June 17, 2022.
The Joint Pretrial Order did include collateral estoppel in
Lilly’s list of defenses, but as noted above, it was raised for
the first time in its Motion in limine No. 1.
prayed

for

an

Order

prohibiting
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the

Relator

This Motion
from

arguing

scienter during the trial which, if granted, would constitute
summary judgment due to the lack of scienter, which is contrary
to the Court’s previous summary judgment decision.
The
Lilly

Court

had

denied

waived

the

this

Motion

defense

in

limine,

through

delay,

concluding
citing

that

Carr

v.

O’Leary, 167 F.3d 1124, 1126 (7th Cir. 1999). In Carr, Judge
Posner, in

finding

a

defendant

had

waived

a

defense,

wrote:

“Normally failure to plead a defense in a timely fashion is a
waiver,” and “a party’s unreasonable delay in advancing a good
ground

for

a

change

in

a

previous

ruling

is

normally

compelling ground for deeming a good ground being waived.”

a

This

Court also noted that Lilly had pled 22 separate affirmative
defenses

in

boilerplate

its

Answer,

language

did

including
not

“estoppel,”

comply

with

but

Rule

that

8(a),

such

citing

Manley v. Boat U.S. Inc., 216 WL 1213731 (N.D. Ill. March 9,
2016).
The Court also relied on the Supreme Court decision in U.S.
v. Mendoza, 464 U.S. 154, 162-163 (1984), which refused to apply
non-mutual

offensive

collateral

estoppel

to

the

government.

Lilly argued that a subsequent Supreme Court decision, U.S. ex
rel. Eisenstein v. City of New York, 556 U.S. 928 (2009) held
that

in

intervene,

qui
it

tam
is

cases
not

a

in

which

party.

the

Thus,

government

the

government

does

not

was

not

entitled to the extended period to file a notice of appeal to
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which the government is entitled. The Supreme Court noted that
this “harsh“ result was dictated by the legislative and not the
judicial process and that a court lacked jurisdiction to grant
relief.

This

Court

distinguished

noting

Eisenstein

that

collateral estopppel is dictated by the judicial process and not
the legislature, so lack of jurisdiction is not an issue.
Lilly now argues in its Post-Trial Motion that the Relator
cannot rely on waiver because he has not shown that he was
prejudiced by Lilly’s late invocation of collateral estopped.
However, Lilly did not argue prejudice prior to this Post-Trial
Motion. Also, Lilly did not, and has not to this day, offered
any

explanation

earlier.

While

why
a

it

court

failed
has

to

raise

some

collateral

discretion

in

estoppel

allowing

a

defendant to amend its answer after discovery is closed and even
after summary judgment, a defendant seeking to present a new
defense

at

explanation

such

a

for

its

late

date

failure

needs
to

to

seek

provide

to

do

so

a
in

reasonable
a

timely

fashion.
Lilly waited until the eve of trial to file its motion,
without

seeking

leave

of

court

and

without

providing

any

justification for delay and used a motion in limine in lieu of a
motion

for

summary

judgment

to

raise

collateral

estoppel.

Although Lilly’s motion in limine seeks to “estop” Relator from
litigating the issue of scienter, the motion clearly seeks to
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relitigate Lilly’s earlier Motion for Summary Judgment which did
not raise collateral estoppel.
As

this

Court

said

in

Rainey

v.

Metropolitan

Water

Reclamation District, 2012 WL 2192241 (N.D. Ill, 2012), motions
in limine are intended to alert the court and the parties of
evidentiary

issues

that

may

arise

during

the

trial

and

to

exclude anticipated prejudicial evidence before it is offered.
They

are

considered

reconsideration

at

preliminary

a

later

date

in
on

nature
a

more

and

subject

complete

to

record.

Motions for summary judgment are supposed to be presented early
enough in the proceedings to allow the opposing party ample time
to defend its position and the Court to consider the motion in
an orderly manner. FED. R. CIV. P. 56(b) restricts filing motions
for summary judgment without leave of court after 30 days past
close of discovery. In addition, Local Rule 56.1 provides many
requirements

on

the

filing

of

motions

for

summary

judgment.

Motions in limine are not intended to be used as a substitute
for

an

untimely

encourages
Boatworks,
2016).

The

summary

trial
Inc.,

by
2016

Court

judgment

ambush.
WL

rejects

See

3390664

at

Lilly’s

motion.

To

Salinas

v.

*2

(C.D.

Motion

Dismissal based on collateral estoppel defense.

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for

do

otherwise

Rock
Ill.

Island

June

17,

Judgment

of

B. Statute of Limitations Defense
Similarly,

the

Court

considered

Lilly’s

statute

of

limitations defense as waived due to its untimely presentation.
Although Lilly did assert the statute of limitations in one of
its twenty-two boiler plate affirmative defenses in its Answer,
it did not present this defense in either its Motion to Dismiss,
in its Motion for Summary Judgment, or in the Pretrial Order. It
also did not present the statute of limitations issue to the
jury or request an instruction concerning its application. See
U.S. ex rel Landis v. Tailwind Sports Corp., 51 F.Supp. 3d 9, 40
(D.D.C.

2014).

Other

than

its

boiler

plate

assertion

as

an

affirmative defense in its answer filed in 2018, the first time
Lilly attempted to argue it substantively, was in its Rule 50(a)
Motion

filed

at

the

conclusion

of

the

Relator’s

case

on

August 31, 2022.
The

question

raised

by

Lilly’s

Motion

is

when

the

government received notice or constructive notice of the alleged
false

payments.

limitations

The

date

commences.

of

Lilly

notice
argues

is
that

when

the

the

statute

service

of

of
the

Streck 1 complaint on the government is notice on the government
as

a

matter

of

law

and

is

the

date

when

the

statute

of

limitation commences to run. However, a statute of limitations
is

an

affirmative

defense

and

can

only

be

decided

prior

to

trial, if there are no factual issues concerning notice. The
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possession

by

the

certainly

some

dismissal

would

government

evidence
raise

of

of

the

notice,

questions

Streck

but

as

to

the
the

Complaint

1

Third

is

Circuit’s

validity

of

the

Relator’s claim. The statute of limitations was argued for the
first time at the conclusion of the Relator’s case, and Court
declined to grant Lilly’s motion. It should have been presented
to the jury for its consideration. It was not submitted to the
jury, and it is too late to relitigate the issue on post-trial
motions. See Elusta v. Rubio, 418 F. App’x 552, 554 (7th Cir.
2011). The Court denies the Motion on the same basis it denied
Lilly’s Rule 50(a) motion.
C. Scienter
Next, Lilly argues that it should receive a judgment as a
matter of law or receive a new trial on the issue of scienter.
However, as Lilly itself stated in its response to the Relator’s
motion

for

summary

judgment

on

scienter,

scienter has been “heavily disputed.”

the

evidence

on

The Court agreed with

Lilly then and still believes the same to be the case after the
trial. The Court also believes the same to be true for the
issues

of

“objectively

“government knowledge.”
summary

judgment

and

reasonable

interpretation”

and

These issues were heavily disputed at
at

the

jury

trial.

No

new

facts

were

elicited at the trial which had not been raised and considered
in

the

cross-motions

for

summary
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judgment.

The

jury

was

correctly instructed on these issues which resulted in a verdict
in favor of the Relator. There is no basis to upset the jury’s
verdict and resulting judgment on these issues.
D. Materiality and Proximate Cause
Lilly contends that no rational jury could have concluded
that

its

false

representations

were

material.

The

jury

was

instructed in the words of the statute that conduct is material
if it had “a natural tendency to influence, or be capable of
influencing, the payment or receipt of money.”

Lilly’s position

is that this is insufficient because the Relator must also prove
that

the

government’s

receipt

and

acceptance

of

money

was

actually influenced by Lilly’s failure to comply. However, the
case relied upon by Lilly, Universal Health Services, Inc. v.
U.S. ex rel. Escobar, 579 U.S. 176 (2016) does not require this.
The Supreme Court in Escobar reviewed the common law definitions
of

materiality

and

determined

that

these

definitions

all

included conduct that a “reasonable man” would attach importance
to in determining a course of action or conduct that a defendant
had reason to know that recipient attached importance even if a
reasonable recipient would not have done so. What the Supreme
Court did decide in Escobar is that the FCA is interested in
serious misconduct, not in cases “where non-compliance is minor
or

insubstantial.”

The

Supreme

Court

remanded

Escobar

to

determine whether the Relator had actually pled a FCA violation.
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In this case, the Court has determined that the Relator had
adequately pled a FCA violation, and the Court now holds that
the evidence submitted, showing Lilly’s false statements caused
a payment shortfall to the government of over $61,000,000.00,
was not of a “minor or inconsequential” nature. The Court finds
that the Relator met the materiality requirement of the FCA.
The

Court

also

finds

that

the

evidence

demonstrated

a

causal relationship between Lilly’s conduct and the loss to the
government. It appears that Lilly’s contention that the Relator
failed to prove causation is based on its position that the
government was aware of Lilly’s treatment of Price Incentive
Value

(“PIV”)

in

its

Average

Manufacturer’s

Price

(“AMP”)

submissions. While there was evidence to the contrary, the jury
was entitled to make a finding of causation, under the Court’s
instruction.
E. Relator’s Statements in Opening and Closing

Lilly contends that the Relator in his opening and closing
statements made many assertions that were clear violations of
the

Court’s

rulings

in

limine.

The

Relator

responds

that

whatever objections Lilly may have as to any alleged erroneous
statements Relator may have made (and he disputes making any),
are waived because Lilly failed to object and, in any event, the
Court’s instructions cured any harm to Lilly. Lilly denies that
it waived any such objections and pointed to remarks of the
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Court which it interpreted to mean that the Court’s rulings in
limine eliminated any need to object during the trial. The Court
did

tell

the

parties

that

in

limine

rulings

constituted

a

continuing objection, but Lilly misses the point. The Court said
that

the

parties

did

not

need

to

object

to

any

evidence,

argument or statement that was either allowed or disallowed by
the in limine rulings. However, the Court did not say that the
parties did not have to make objections to violations of the in
limine
could

rulings.
not

be

Where

the

introduced

Court
or

ruled

that

that

certain

certain

evidence

evidence
could

be

introduced, the parties need not object to the evidence allowed
in, nor make offers of proof of evidence that had been excluded.
The

Court’s

limine

statement

rulings

did

not

a

court

because

include
may

violations

need

a

of

reminder

the
of

in
the

specific in limine ruling that is alleged to be violated, so
that the Court could rule on the alleged violation and properly
instruct

the

jury.

The

matters

complained

of

by

Lilly

are

alleged violations of the rulings in limine so that failure to
object is a waiver. The main objection raised by Lilly is that
the Relator argued to the jury that Lilly was a “big company”
that could afford to devote the appropriate resources to conduct
an adequate inquiry of its legal obligations, rather than rely
on views of one person. This is arguably a violation of the

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ruling in limine that excluded evidence and arguments related to
Lilly’s size. There was no objection, so the matter is waived.
F. Alleged Invalid State Law Claims
Lilly

points

out

that

the

jury

awarded

damages

to

five

states covering periods that predated the effective dates of the
false

claims’

statutes

of

the

five

states.

They

include

Colorado, Georgia, New Jersey, Oklahoma, and Rhode Island. The
damages totaled $147,364.00 (Colorado - $37,622.00; Georgia $25,690.00; New Jersey - $55,738.00; Oklahoma - $15,991.00; and
Rhode Island - $8,320.00).

The Relator argues that Lilly waived

its objections by not countering the Relator’s expert testimony.
The better way to handle the matter is for the Court to order a
Remittitur

of

the

$147,364.00.

The

Court

therefore

orders

a

Remittitur of $147,364.00. If the Relator refuses to agree to
the Remittitur, the Court will order a new trial as to the issue
of damages as to these five (5) states.
G. Other Objections
The other matters raised by Lilly were considered by the
Court previously in the Motions to Dismiss and Summary Judgment,
and the Court sees no reason to reconsider its earlier rulings.
Nor are these matters of sufficient consequence to cause the
Court to grant a judgment in Lilly’s favor or order a new trial.
During the trial the Relator attempted multiple times to get
Lilly’s witnesses to admit that the “claw back” of the monetary
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windfall that Lilly’s customers resulting from the increase in
value of the customer’s inventory of Lilly products after Lilly
increased its prices of these products (the “PIV”), needed to be
accounted for in determining the “Average Manufacturer’s Price”
of its products. Lilly’s witnesses repeatedly denied that the
claw back had to be accounted for in determining the AMP. The
jury heard the testimony and determined that Lilly’s witnesses
were wrong, and its AMPs must include the claw backs and that
failure to so caused Lilly to make multiple false clais.
III. CONCLUSION
For the reasons stated herein, the Post-Trial Motions of
Defendant Eli Lilly and Company are denied with exception to the
award of damages to Colorado, Georgia, New Jersey, Oklahoma, and
Rhode Island. If the Relator refuses to agree to the Remittitur,
the Court will order a new trial as to the issue of damages as
to these five (5) states.
IT IS SO ORDERED.

Dated: 4/26/2023

Harry D. Leinenweber, Judge
United States District Court

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